FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of October, 2018

Commission File Number 001-15266

BANK OF CHILE

 (Translation of registrant’s name into English)

Ahumada 251

Santiago, Chile

 (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   x    Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No   x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-      

BANCO DE CHILE
REPORT ON FORM 6-K

Attached is a Press Release issued by Banco de Chile (“the Bank”) on October 30th, 2018, regarding its financial results for the Third Quarter 2018.

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Key highlights

‘We continue evidencing significant advances in most of our business drivers. Even though our net income recorded a temporary YoY decrease of 4.3%, we have attained remarkable achievements this quarter that prepare the ground for next periods. I would like to highlight this quarter was particularly positive in terms of operating revenues as demonstrated by a top line that grew an impressive 15.0% on an annual basis. An improved funding structure based on growth in demand deposits, higher income from lending, an increase in fee income, as well as a proactive UF gap management, contributed to the substantial expansion in revenues that enabled us to overcome non-recurrent effects in cost of risk and, to a lesser extent, operating expenses.

From the commercial point of view, the 3Q18 was simply exceptional. We reached the highest amount of sales of consumer loans in our history, which amounted to approximately Ch$570 Bn. This coupled with the opening of roughly 30,000 checking accounts and the origination of nearly Ch$327 Bn. in residential mortgage loans in the 3Q18, which represent YoY increases of 19% and 18%, respectively. All of these attainments enable us to keep on growing our customer base while reflecting the effectiveness of all business intelligence tools we have developed and put in practice over the last years, which have translated into tailored value offerings that fit particular ‘life events’ in the customer journey. In addition, our wholesale banking segment continued to grow steadily on a QoQ basis by recording a 1.0% growth. In our view, this trend reflects the clear recovery we are seeing in certain economic sectors, which fosters higher dynamism and growing capital expenditures by main local and multinational companies operating in Chile.

This year we have dealt with diverse non-recurrent effects. However, our solid income-generating capacity has allowed us to successfully overcome these challenges. Without a doubt, this is a consequence of the advances we have achieved in many business areas over the last years that have provided us with strategic strengths, which should permit us to benefit from a more positive business environment as expected for coming quarters.’

Eduardo Ebensperger — CEO

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Financial Snapshot

(In billions of Ch$)

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Economic Outlook

The Chilean economy continues to post signs of recovery. Specifically, GDP has expanded 4.4% this year, well above the 1.5% recorded last year while representing one of the highest growth rates in the region. It is important to highlight that the economic activity is strong, despite the uncertainties that have loomed for the global economy.

Notwithstanding the above, the annual growth rate has shown a tempered slowdown when compared to previous months. In August, for instance, Imacec expanded by 3.2% YoY, although this figure was largely influenced by a robust comparison base. On a sequential basis, adjusting by seasonality, the economy grew at annualized rate of 1.4%, remaining in positive territory since 2Q18. Domestic demand continues to be the main driver of the local economy. On the one hand, retail sales remained strong by growing 4.8% YoY in August, whereas consumer goods imports and car sales rose impressively by 16% YoY and 31% YoY, respectively. Additionally, capital goods imports increased 14% YoY (17% YoY in the previous month), which demonstrates that private investment is strengthening. This recovery has been accompanied by an improved business sentiment.

Aligned with trends in GDP growth, Chile’s CPI has been accelerating by increasing 3.1% YoY in September. Thus, headline inflation reached the Central Bank’s target of 3.0% for the first time in two years. It is likely that the CPI will remain around the policy target, due to higher GDP growth and weaker Chilean peso.

The Chilean Central bank began the tightening cycle in October. Specifically, the board decided to raise the interest rate by 25 bp., from 2.50% to 2.75%. This move, the first since Jun.2017, indicates the board has adopted a less expansionary tone, as explained in the September Monetary Policy Report. In the press release that accompanied this decision, the board mentioned that a gradual normalization process would continue in the future, in order to converge to a neutral reference rate in 2020. Therefore, additional hikes in the overnight rate are expected in the coming quarters.

According to the last Economic Expectations survey, which is conducted by the Central Bank, analysts expect the positive cycle to remain at least until 2019. Specifically, they forecast a GDP growth of 4.0% and 3.8% for this and next year, respectively.

Regarding the banking industry, it posted a 6.3% annual real growth in total loans as of Aug18. This figure continues to reaffirm signals of acceleration, as we have observed in the previous quarters. The expansion in total loans was largely supported by commercial and consumer loans, increasing 6.0% and 6.2% YoY, respectively.

In regards to net income, as of Aug18, the industry posted a bottom line of Ch$1,685 Bn., which represented a 9.3% annual increase when compared to the bottom line reached as of Aug17. The increment is the result of higher operating income that increased by roughly Ch$635 Bn., partially offset by a rise in both operating expenses (Ch$219 Bn. YoY) and loan loss provisions (Ch$80 Bn.).

GDP Growth

(YoY)

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Inflation & Unemployment Rate

(12m % change and %)

Loan Growth(1)

(12m% change as of Aug18, in real terms)

(1)   Figures do not include operations of subsidiries abroad.

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Third Quarter Results

Operating Revenues

The 3Q18 was an excellent quarter in terms of operating revenues, which posted a YoY increment of 15.0%. The Ch$60.8 Bn. change was mainly attributable to an expansion of Ch$40.6 Bn. in non-customer income, followed by a growth of Ch$20.2 Bn. in customer income.

Main effects influencing revenues were:

·                  Positive inflation impact on the contribution of our UF net asset exposure due to a 0.73% increase in the quarter, as compared to a 0.03% decrease recorded in the 3Q17. This effect translated into higher income of nearly Ch$39.3 Bn. YoY.

·                  An increment of Ch$7.8 Bn. in the contribution of demand deposits associated with the 8.4% YoY growth in average balances, which was focused on the retail banking segment that posted an increase of 9.1%.

·                  Other operating income increasing Ch$7.0 Bn. explained by the release of non-credit related contingency allowances during the 3Q18.

·                  An increase of roughly Ch$6.5 Bn. in operating revenues due to the positive impact of 0.4% Ch$ depreciation in the 3Q18 as compared to the appreciation of 3.7% in the 3Q17 on the USD asset position that hedges our exposure to USD—denominated expenses.

·                  Fees increasing by Ch$6.0 Bn. YoY as a result of higher revenues from: (i) Investment Banking, with an increment of Ch$2.3 Bn., linked to a higher  amount of transactions carried out this quarter, (ii) a YoY increase of Ch$1.2 Bn., in fees from stock brokerage as a result  of two specific deals carried out in the quarter and, to a lesser extent, a 24% YoY growth in stock trading turnover, (iii) higher income from mutual funds management equivalent to Ch$1.0 Bn., related to an increase in average assets under management and a change in the portfolio mix that decreased the share in fixed-income, and (iv) additional income of Ch$1.0 Bn. from our Insurance Brokerage due to a 7.8% growth in written premiums.

·                  Income from loans increasing Ch$6.0 Bn., associated with an expansion of 4.6% in average loans, which was focused on the retail banking segment, particularly on commercial loans to SMEs and consumer loans.

Factors mentioned above were partially counterbalanced by:

·                  Negative impact of Credit Value Adjustment (CVA) for derivatives by roughly Ch$6.9 Bn., mostly due to unfavourable changes in probabilities of default, an upward trend in FX and new deals closed by our Sales & Structuring Area.

On a YTD basis, our operating revenues recorded an increase of 7.2% or Ch$92.1 Bn. Similar to quarterly drivers, this expansion was associated with an increment in both customer and non-customer income, including: (i) a positive inflation effect, equivalent to Ch$58.2 Bn. related to an increase in CPI as compared to a year ago, (ii) an increase of roughly Ch$17.4 Bn. due to FX trends on our USD hedging position, (iii) a rise of Ch$17.3 Bn. in income from demand deposits, associated with a 8.1%YoY growth in average balances,  (iv) fees increasing Ch$9.8 Bn. steered by higher income from insurance brokerage, stock brokerage and mutual funds, and (v) higher income from loans by roughly Ch$9.4 Bn. due to the rise in average balances. These results were partly offset by a negative impact of CVA for derivatives by roughly Ch$12.2 Bn.

Operating Revenues

(In billions of Ch$)

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Customer / Non-Customer Income

(In billions of Ch$)

Operating Revenues/Avg. Interest Earning Assets

* Estimated ratio for the 3Q18, based on public data for the months of July and August 2018.

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Third Quarter Results

Loan Loss Provisions and Allowances

Loan loss provisions registered an increment of Ch$44.9 Bn. during this quarter, from Ch$50.4 Bn. in the 3Q17 to Ch$95.3 Bn. in the 3Q18. However, this change was significantly influenced by a one-time effect of Ch$38.7 Bn. When isolating this factor, the growth registered in recurrent loan loss provisions would have been Ch$5.4 Bn., equivalent to 10.6%.

The YoY increment in loan loss provisions was mainly explained by:

·                  A P&L impact of Ch$38.7 Bn., due to the implementation of new group-based risk models, which mostly affected the retail banking segment. This update had to do with changes in both PD and LGD, pursuant to new guidelines and methodologies developed by the Bank, which take into account local and international best practices in this matter. In summary, based on this changes the PD is modelled by using a score by client (given its segment), which should allow us a comprehensive follow-up of customers’ behaviour. As for LGD, we refine the approach to trace lending operations in order to determine the historical track record of payments, at a transaction level, more precisely.

·                  Negative FX impact on USD-denominated loan loss allowances by roughly Ch$4.7 Bn. This effect was caused by a 0.4% depreciation of the Ch$ in the 3Q18 as compared to a 3.7% appreciation in the 3Q17.

·                  An increase in loan loss provisions of approximately Ch$7.1 Bn. explained by loan growth (volume and mix effects). This expansion was almost totally concentrated in the retail banking segment, given average balances increasing by 8.0% YoY.

These effects were partially offset by:

·                  Net credit quality improvement of roughly Ch$5.6 Bn. which was mostly focused on the wholesale banking segment and related to the enhanced credit behavior of a specific customer in the 3Q18. The retail banking segment registered an improvement as well, due to a decrease in charge-offs and higher recoveries that allowed us to offset a higher cost of risk as a result of an increase in past due loans.

Regarding our ratio of loan loss provisions to average loans, in the 3Q18 we posted an increase of 64 bp., as compared to the 3Q17. By isolating the non-recurrent effect mentioned earlier, our ratio would have reached 0.84%, which favourably compares to the figure reached by the industry.

On a YTD basis, our loan loss provisions recorded an increment of Ch$44.4 Bn., equivalent to 25.3%. Nonetheless, Ch$38.7 Bn., relates to the implementation of new models as indicated above. Actually, recurrent loan loss provisions grew only 2.8% or Ch$4.9 Bn., change that was explained by:

·                  Negative FX impact on USD-denominated loan loss allowances by roughly Ch$12.4 Bn., as a consequence of a 6.7% depreciation of the Ch$ as of Sep18 as compared to the 4.7% appreciation as of Sep17.

·                  Higher loan loss provisions of approximately Ch$15.0 Bn. explained by loan growth (volume and mix effects). This expansion was almost totally concentrated in the retail banking segment, with average balances increasing by 7.1% YoY.

These effects were partially counterbalanced by:

·                  Net credit quality improvement of roughly Ch$18.7 Bn., due to the retail banking segment, that showed higher recoveries and a decrease in charge-offs. Similarly, the wholesale segment registered a net credit quality improvement of approximately Ch$2.2 Bn.

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Loan Loss Provisions and Allowances

(In billions of Ch$)

Provisions / Avg. Loans

* Estimated ratio for the 3Q18, based on public data for the months of July and August 2018

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Third Quarter Results

Operating Expenses

During the 3Q18, the operating expenses totalled Ch$211.5 Bn., keeping the level reached in the 2Q18. However, when compared to the 3Q17, this figure represents an increment of 7.3%, equivalent to Ch$14.4 Bn.

Main causes explaining the total expansion were:

·                  An annual increment of Ch$14.1 Bn. in personnel expenses, mostly related to an increase in bonuses, as a result of collective bargaining processes among the Bank and some of its unions. However, part of this increment, equivalent to Ch$6.9 Bn., was a one-time effect.

·                  A YoY increase of 1.9% in administrative expenses, equivalent to Ch$1.5 Bn. This rise was mainly caused by: (i) higher expenses in IT expenses by Ch$2.9 Bn. influenced by IT support and software licensing. However, this increase was partially offset by a decrease in costs related to external consultants, equivalent to Ch$1.7 Bn.

·                  A YoY rise in depreciations and amortizations, totalling Ch$0.5 Bn. YoY associated with higher Capex in software (new CRM and upgrade in Companies’ Website)

These factors were partly counterbalanced by:

·                  An annual decrease of Ch$1.6 Bn. in other operating expenses, as a result of two opposite forces: (i) lower provisions for country risk by roughly Ch$2.7, and (ii) an increment of Ch$1.7 Bn. in expenses related to assets received in lieu of payment.

Based on the above and considering the increase of 15.0% in operating revenues, our efficiency showed an improvement of 327bp, from 48.8% in the 3Q17 to 45.5% in the 3Q18. This ratio continued to positively compare to the indicator posted by the industry.

On a YTD basis, our cost base amounted to Ch$627.5 Bn., showing an increment of 6.9% or Ch$40.7 Bn. This change includes additional charges in the 2Q18 and 3Q18, and still reflects a moderate increase in expenses aligned with our efforts in costs control. As of Sep18, main factors explaining this growth were:

·                  Personnel expenses increasing 6.9% or Ch$20.9 Bn, mainly due to higher bonuses related to the completion of collective bargaining processes and, to a lesser extent, an increment in salaries, mainly due to inflation effect.

·                  A YoY rise in other operating expenses, equivalent to Ch$12.5 Bn., mainly as a consequence of additional operational risk charge-offs due to the technological incident occurred in the 2Q18 and higher costs related to assets received in lieu of payment.

·                  A 2.4% YoY increase in administrative expenses (Ch$5.6 Bn), as a result of mixed effects: higher expenses in IT and external advisory, totaling Ch$8.4 Bn., (ii) an increment in rentals of branches and ATM spots by roughly Ch$1.3 Bn., and (iii) lower expenditures in outsourced services and marketing, amounted to Ch$4.6 Bn.  

Notwithstanding the non-recurrent events occurred as of Sep18, our efficiency ratio reached 45.9%, which favourable compares to 46.0% reached as of Sep17 and to the figure posted by the industry.

Operating Expenses

(In billions of Ch$)

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Efficiency Ratio

Operating Expenses / Operating Revenues

* Estimated ratio for the 3Q18, based on public data for the months of July and August 2018

Third Quarter Results

Results by Business Segments

During this quarter, we registered a YoY growth of 1.6% in income before income tax. Alike other periods, in the 3Q18, the Wholesale Banking Segment registered the highest contribution in terms of income before income tax, by representing a 55.3% of the total amount. It was followed by Retail Banking segment, which represented a 30.9%. Subsidiaries and Treasury reached 11.1% and 2.6%, respectively.

The Wholesale Banking segment recorded an increase of Ch$22.5 Bn. (33.9%) in income before income tax, from Ch$66.4 Bn. in the 3Q17 to Ch$88.9 Bn. in the 3Q18. The positive change was mainly associated with higher revenues from demand deposits, given an increase in average balances and interest rates. In addition, income from loans posted a slight increment, mostly based on loan growth. On the other hand, as some customers continue to improve their financial condition, the segment has benefited from releases of loan loss allowances. Lastly, operating expenses did not registered significant changes.

Regarding our Retail Banking Segment, it showed a decrease of 30.8% YoY in pre-tax result, equivalent to Ch$22.1 Bn.  The change was mainly the consequence of an increase in loan loss provisions, given the implementation of new group-based risk models, which affected this segment. Besides, operating expenses registered an expansion linked to personnel expenses, influenced by the completion of collective bargaining processes, mainly allocated to this segment. However, these effects were partly counterbalanced by an increment of 13.7% in operating revenues, linked to higher income from loans, demand deposits and fees and commissions.

Our Subsidiaries posted a 29.6% YoY rise in income before income tax, equivalent to Ch$4.1 Bn. This improvement was mainly explained by higher results generated by our Investment Banking Subsidiary, associated with an increase in the amount of transactions carried out this quarter and better results in our Stock Brokerage Subsidiary, caused by two specific distribution deals in the period, in conjunction with a 24% growth in stock trading turnover.

Finally, our Treasury segment recorded a bottom line decrease of Ch$2.0 Bn. YoY. This variation was largely influenced by the impact of higher CVA charges for derivatives when compared to the 3Q17. When isolating this effect, Treasury results would have posted an increase in pre-tax income of roughly Ch$5.0 Bn., mainly due to positive results associated with our trading and AFS portfolio.

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Income before Income Tax Contribution

by Business Segment (%)

Income before Income Tax

by Business Segment

(In billions of Ch$)

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Loan Portfolio

Our loan portfolio is returning to a sustainable growth path. Even though YoY industry expansion rates continued to be below trend (2x GDP), we posted a significant QoQ uptick for third quarter in a row. In fact, our loan book increased 6.3% YoY by reaching a total balance of Ch$27,048 Bn. in the 3Q18. Nonetheless, on a QoQ basis, our total loans surged 2.0% when compared to the 2Q18, which represents an annualized growth rate of 8.2%. The upward trend in loans has been influenced by expansions in all lending products, although some of them boosted when compared to previous quarters. Consumer loans, for instance, grew 8.7% YoY and an impressive 3.1% QoQ. Likewise, commercial loans ratified an important recovery by increasing 5.7% YoY and 1.6% QoQ (6.5% annualized). Mortgage loans, instead, maintained the trend seen over the last quarters.

The Retail Banking segment continued to conduct loan growth. In the 3Q18 the segment posted an 8.6% YoY increase in loans, based on the following dynamics:

·                  Personal banking loans (including consumer finance) rose by 8.3% YoY and 2.8% QoQ (equivalent to an annual rate of 11.6%). The YoY increase of Ch$944 Bn. was certainly influenced by an historical high in sales of consumer loans to this segment amounting to Ch$570 Bn. in the 3Q18, which outreached by 30.8% the average quarterly origination since 2016. The recently launched pre-approval model was crucial to achieve this goal by enabling us to target customers by means of tailored offerings (life events) with limited risk. On the whole, consumer loans for personal banking increased 8.7% YoY or Ch$340 Bn. As for mortgage loans, this lending product surged 6.2% YoY in the 3Q18. Over the last two quarters we have intensified the sale of mortgage loans, in line with trends revealed by the Central Bank in the last credit survey, which reported a strengthened demand as well as softened credit requirements due to enhanced economic conditions.

·                  SME banking continued to grow steadily. In the 3Q18 this banking unit recorded a 12.5% increase in the loan book. The demand for loans from SMEs remains strong, as reported by the Central Bank, in connection with the dynamism shown by certain economic sectors. Thus, even though some banks maintain restrictive lending conditions for this segment, our deep knowledge of customers and the improvement of credit risk models intended to support credit origination have permitted us to benefit from the solid demand.

The Wholesale Banking segment recorded a significant boost this quarter by growing 2.8% on an annual basis. More importantly, the segment’s loan book posted an expansion of 1.0% QoQ, which entails an annualized rate of 4.2%. Thus, this segment completed three quarters in a row with positive QoQ expansions, reflecting a solid recovery in comparison with previous years. Main sources of loan growth this quarter were, as follows:

·                  Trade Finance loans boosting 18.3% YoY. When adjusting by Ch$ depreciation, the advance continues to be significant (15.1% YoY).

·                  Factoring loans growing 24.6% YoY, from Ch$442 Bn. in the 3Q17 to Ch$550 Bn. in the 3Q18. These loans also grew by 10.5% QoQ.

·                  Leasing loans growing 4.8% on both a YoY and a QoQ basis.

The Wholesale Banking business has been under pressure in the last years, given strong competition in prices and subdued investment across all industries. Notwithstanding the aforesaid, this segment has shown a clear recovery over the last 12 months, based on positive levels of business confidence and a more robust pipeline of investment projects (more than half concentrated in non-mining industries). These dynamics should foster solid growth for the coming quarters.

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Loans by Segment

(In Billions of Ch$ and %)

Market Share (1)

(1) Figures do not include operations of subsidiaries abroad.

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Funding Structure

We continue to lead the industry in terms of funding. Significant part of our funding is composed of retail customers, which account for 39% of the total funding structure as of September 2018.

Regarding deposits, we present a rate of renewal of time deposits held by retail customer that is in the rage of 70% to 75%, which demonstrates the solid relationship we maintain with depositors and confidence they have in us. On the other hand, our strong presence in demand deposits also contributes to our market-leading position cost of funds. As of September 30, 2018 we had a total balance of demand deposits that amounted to Ch$9,031 Bn., which represents a 10.8% YoY increase when compared to a year earlier. More importantly, approximately 51% of the total balance of DDAs comes from retail depositors that belong to our personal banking and SMEs businesses. The significant share of retail DDA holders allows us to have a core amount of demand deposits that represent a very stable source of funding. This characteristic also supports our market-leading position in demand deposits as a whole, but particularly in personal banking. As of Aug. 31, 2018 (latest available data), we held a market share of 27.4% in DDAs related to personal banking. Likewise, as of the same date we had a market share of 22.6% in total demand deposits as a whole.

As for long-term debt, we remain open to evaluate windows of opportunity as they arise in the local market or overseas, as long as the balance sheet growth supports these actions. As a result, in the 3Q18 we carried out the following debt placements:

·                  Three UF-denominated senior unsecured bond placements in the local market by a total amount of Ch$224 Bn. with tenors ranging from five to 14 years at very low spreads when over the benchmark rate.

·                  One USD-denominated senior unsecured bond under the MTN program registered in Luxembourg for an amount of Ch$32.8 Bn. and a 10-year tenor.

Also, in terms of Commercial Paper (CP), we continue to intensively utilize this source of funding as they permit us to offer competitive Trade Finance products to our wholesale and SME customers. In the 3Q18 we placed a total amount of Ch$397.6 Bn. (~USD605 million).

The above-mentioned actions have enabled us to remain the bank with the best cost of funding in local currency by posting 2.6% as of August 31, 2018 (latest available data).

Funding by Type of Lender

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Time Deposits Rate of Renewal

(30-day Moving Average)

Annualized Cost of Funding by Currency (1)

(As of Aug31, 2018)

(1) Average cost of funding excludes the effect of results from hedge accounting.

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Capital Adequacy & Other Topics

As of September 30, 2018, our equity accounted for Ch$3,223.5 Bn., which represented a 6.1% increase when compared to a year earlier. The YoY variation was due to:

·                  Ch$147.4 Bn. associated with the capitalization of the net distributable earnings recorded in 2017, as decided by our shareholders in the 1Q18.

·                  Higher reserves by approximately Ch$54.6 Bn. on a YoY basis, given our policy to retain the equivalent to the effect of inflation (2017) on our shareholders’ equity. This is a temporary rule incorporated in our bylaws, which must be reviewed when the subordinated debt to the Central Bank is fully paid-off.

·                  An increase of approximately Ch$14.5 Bn. in year-to-date earnings, net of provisions for minimum dividends.

The positive impacts mentioned above allowed us to largely offset the decrease of Ch$31.8 Bn. in other equity accounts. This was the result of:

(i)  A negative change in OCI of derivatives held for cash flow hedge accounting, related to cross currency swaps hedging bonds that we have issued abroad. Unfavourable shifts in interest rates of both the asset legs (off-shore rates) and the liability legs (CLF rate) resulted in an OCI decrease of Ch$25.7 Bn. YoY, as of September 30, 2018.

(ii) Higher losses in OCI related to marking-to-market of AFS assets, most of them associated with positions in off-shore corporate bonds. Given changes in credit spreads (we are only exposed to this market factor as we take derivatives for fair value hedge accounting on reference rates), the OCI of these securities dropped Ch$6.1 Bn. YoY.

As we have mentioned earlier, our balance sheet is growing faster than in previous quarters. Although the above-mentioned positive changes in our capital structure allowed us to partly mitigate the increase in assets, our capital ratios posted a tempered YoY decrease. Thus, as September 30, 2018 our BIS ratio (on RWA) was 14.1%, which is 24 bp. below the ratio posted a year earlier. To a lesser degree, our Tier I ratio (on RWA) decreased 4 bp. YoY by reaching 11.2% as of September 30, 2018.

ADR Split

On October 23, 2018 we announced an ADR ratio change for our ADR program. As a result, the ADR ratio will change from the current level of one American Depositary Share (“ADS”) to six hundred Banco de Chile’s Common Shares to a ratio of one ADS to two hundred Common Shares.

Given this modification, current ADR holders will receive two additional ADSs for each ADS held as of record date (November 15, 2018). Also, existing ADSs will continue to be valid and will not be exchanged for new ones. This modification will go into effect on November 23, 2018.

We firmly believe this ADR split will provide greater liquidity to our ADS in the NYSE while attracting more retail and institutional investors.

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Equity & Capital Adequacy

(In Billions of Ch$ and %)

Definitions:

“Assets” are Bank’s Total Assets.

“Basic Capital” is Bank’s paid-in capital, reserves and retained earnings, excluding capital attributable to subsidiaries and foreign branches.

“RWA” stands for Risk-Weighted Assets.

“Total Capital” refers to “Basic Capital” plus Bank’s supplementary capital.

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Consolidated Statement of Income (Chilean-GAAP)

(In millions of Chilean pesos (MCh$) and millions of US dollars (MUS$))

These results have been prepared in accordance with Chilean GAAP on an unaudited, consolidated basis.

All figures are expressed in nominal Chilean pesos (historical pesos), unless otherwise stated.  All figures expressed in US dollars (except earnings per ADR) were converted using the exchange rate of Ch$656.8 per US$1.00 as of September 30, 2018. Earnings per ADR were calculated considering the nominal net income, the exchange rate and the number of shares outstanding at the end of each period.

Banco de Chile files its consolidated financial statements, together with those of its subsidiaries, with the Chilean Superintendency of Banks and Financial Institutions, on a monthly basis. In addition, Banco de Chile files its quarterly financial statements (notes included) with the SEC in form 6K, simultaneously or previously to file this quarterly earnings report. Such documentation is equally available at Banco de Chile’s website both in Spanish and English.

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Consolidated Balance Sheets (Chilean-GAAP)

(In millions of Chilean pesos (MCh$) and millions of US dollars (MUS$))

These results have been prepared in accordance with Chilean GAAP on an unaudited, consolidated basis.

All figures are expressed in nominal Chilean pesos (historical pesos), unless otherwise stated.  All figures expressed in US dollars (except earnings per ADR) were converted using the exchange rate of Ch$656.8 per US$1.00 as of September 30, 2018. Earnings per ADR were calculated considering the nominal net income, the exchange rate and the number of shares outstanding at the end of each period.

Banco de Chile files its consolidated financial statements, together with those of its subsidiaries, with the Chilean Superintendency of Banks and Financial Institutions, on a monthly basis. In addition, Banco de Chile files its quarterly financial statements (notes included) with the SEC in form 6K, simultaneously or previously to file this quarterly earnings report. Such documentation is equally available at Banco de Chile’s website both in Spanish and English.

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Selected Financial Information (Chilean-GAAP)

(In millions of Chilean pesos (MCh$) and annualized percentages (%), unless otherwise stated)