bancoestado social impact...business name banco del estado de chile rut 97.030.000-7 constitution...

INTEGRATED ANNUAL REPORT

2017

BANCOESTADO SOCIAL IMPACT

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1. SUMMARY OF OUR 2017 31.1. Interview to the chairman of Bancoestado1.2. Financial modernization from the public banking1.3. Empowering the women of Chile1.4. Figures for the period 2014 - 20171.5. Milestones 20171.6. Summary of management 2017: Profitability for the development of Chile1.7. Awards and recognitions 20171.8. Learning and challenges

2. THE PILLARS THAT GUIDE AND STRUCTURE OUR MANAGEMENT 262.1. Corporate governance2.2. Subsidiaries and related entities2.3. Active transparency2.4. Main advances in corporate sustainability2.5. Risk management2.6.Legislative changes

3. A TEAM UNITED AROUND ONE PURPOSE 483.1. Our team3.2. Progress in labor inclusion and gender equity3.3. A culture for the transformation3.4. Our labor relations3.5. Evaluation of performance and internal mobility3.6. Training3.7. Acknowledgments to our labor space 4. INNOVATION FOR FINANCIAL INCLUSION 574.1. We are with our customers all over Chile4.2. Always connected with our customers4.3. Technological capabilities servicing our customers4.4. Our customers’ satisfaction and experiences

5. FINANCIAL INCLUSION AND SAVINGS AS MEANS FOR WELL-BEING 685.1. Retail banking management5.2. Cuentarut impact5.3. Savings as an engine for development and social mobility

6. SUPPORT FOR THE BUSINESS AND WOMEN AS ENTREPRENEURSHIP ENGINES 786.1. Managing business and institutional customers6.2. Women, the main entrepreneurs

7. WORKING HAND IN HAND WITH THE STATE 857.1. Strategic partners at work with the state7.2. Support in catastrophes7.3. Financing of electoral campaigns

8. SUPPORT TO THE COMMUNITY 928.1. Financial education8.2. Program promoting chilean movies8.3. Portal of solidarity donations

9. FINANCIAL STATEMENTS 98

ANNEXS 105A.1 Communication with the countryA.2 Material themes management approaches 2017

CONTENIDOS

Business name Banco del Estado de Chile

RUT 97.030.000-7

Constitution Banco del Estado de Chile was created in 1953 upon the merge of Caja Nacional de Ahorros, Caja de Crédito Hipotecario, Caja de Crédito Agrario and the Instituto de Crédito Industrial, with its own Organic Law included in Decree Law 2,079 and published on January 18, 1978.

Legal domicile City of Santiago de Chile.

Central office address Av. Libertador Bernardo O’Higgins Nº 1111, Santiago.

Web site www.bancoestado.cl

Control and supervision BancoEstado relates to the State through the Ministry of Finance and its operation is supervised by the Superintendency of Banks and Financial Institutions (SBIF).

1. SUMMARY OF OUR 2017

1.1INTERVIEW TO THE CHAIRMAN OF BANCOESTADO

Inclusion is the horizon of BancoEstado

During the last four years BancoEstado has left a legacy not only among tho-se who make up the great team of this corporation but also among customers, beneficiaries and citizens in general. For this reason, in this fourth year of BancoEstado’s Integrated Report, this document has been called the “Social Footprint of BancoEstado” to refer to a management that positively impacts the development of the country and its people.

In this context and through this docu-ment, we seek to place the social impact at the center of the analysis with a presentation of results that demons-trate our management approach and its relationship with improving the quality of life of the people of Chile.

This time, the chairman of BancoEstado, Mr. Enrique Marshall, shares the most important ideas that articulate this Report in the subsequent interview. The emphasis is on those matters that stand out in a retrospective view of the last four years, as well as in the 2017 ma-nagement itself. As a result, he shares his vision on the main milestones, his understanding of the achievements and challenges faced in this period, as well as the great responsibility of BancoEstado in the social and economic development of the country.

What is the balance you make of the bank’s management, both in 2017 and during the last four years?

The year 2017 was a good year in terms of revenue and risk management. Our profitability was 16.7%, which ranks our growth above the market average for the second consecutive year, while our loans grew by 6.8%, consolidating our competitiveness at the industry level. Regarding the goals set forth at the beginning of this administration, which were subject to the capital injection we received from the State of Chile, we can say that not only we have met them but we exceeded them: we opened 50 new branches against a goal of 20 and 10,686 new points of service CajaVecina versus a goal of 4,100 which is, more than double in both cases. Lastly, our net income grew 21% in real terms in the last four years.

What is your balance regarding BancoEstado managing sustainability?

We are certain that it is no longer possible to manage a company without bearing in mind the three areas of sustainability: economic, social and environmental. For us, caring for the economic dimension is a floor that allows us to move up to the next level: environmental and social development. It is in this last area where our administration has committed a special effort and rebuilt our institutional seal.

In effect, the meaning of our work lies in the social role that this institution holds as a bank of the State of Chile. We understand that a developed country is not only measured by its income per capita but also in terms of its social and financial integration. Therefore, we are a bank that tries to reach all the

people of the country in the same way, without making distinctions or differences of any kind, guaranteeing through our work the same service for all customers.

In this context, we can mention progress in financial inclusion as the central milestone. The first step in this journey is to guarantee access to all residents: today we are present at 100% of the municipalities, including Antarctica, thanks to the support of our 22,000 points of service of CajaVecina, which represent 10 times the total number of bank branches that exist throughout Chile and permit to decompress offices through provisioning some financial services. We also have close to 13 million customers and more than 10 million individuals with CuentaRUT, making specific financial inclusion tools available for them.

This would not be possible without technological support and systems capable of supporting billions of transactions a year in a safe, agile and effective manner. With more than 4 million customers using our digital platforms, we have strengthened multiple channels of service in response to the accelerated digitalization our country is experiencing. The continuity of 24/7 services, mobile banking, new applications, enabling the CompraAquí network for electronic payments to small businesses among other initiatives, are advances in this regard.

And what about the environmental dimension?

We made significant progress incorporating it into our management. First of all, we approved BancoEstado’s Sustainability Policy, which gives us a roadmap to guide our actions seeking to improve our

“It is no longer possible to manage a company without considering the three areas of sustainability: economic, social and environmental”

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management in terms of environmental criteria. Secondly, commissioning the EcoVivienda mortgage favors funding homes with energy efficiency systems. In third place, we made important alliances with the Ministry of Energy to support small and micro enterprises in their energy efficiency initiatives and we committed our participation in the electro mobility effort promoted by the Ministries of Energy, Environment and Transport, to favor the development of electric transport in Chile.

Finally, we augmented our in house resources for energy savings in our offices by installing LED lighting, among other measures. Also, we gave continuity to measuring our carbon footprint, which accounts for a real commitment in terms of awareness and responsibility that organizations must have with respect to the environment.

From your perspective and from what has been discussed, what is the Social Footprint of BancoEstado?

The “Social Footprint” refers to the impact this bank has on the country. The relevance of the milestones mentioned above is that they have a direct impact on the people’s daily lives. Everything BancoEstado has done in recent years has a lot to do with the growth and development of Chile.

Being state bank means thinking about projects for the long term that, although we cannot see their results today, tomorrow they will have a significant improvement in the quality of life of people, workers and companies in Chile.

We can see this, for example, in the effects generated by opening a branch in an isolated or vulnerable community. It increases the economic flow, people spend their money in their own localities and start to save, manage payments through the use of financial services and also spend less time traveling and strengthen their sense of belonging to the territory where they live. Only in 2017, we started operations in 14 new municipalities, while 75% of the total openings between 2015 and 2017 were located in municipalities with a level of vulnerability higher than the country average.

Finally, how do you think BancoEstado workers take this vision?

We think the role of our workers is essential. Without a team like ours we could not achieve the ambitious goals and objectives we have proposed ourselves year after year. Once you have satisfied your main needs as a human being, you need to make sense: you need to feel that you get up every day to do something worthwhile. And I think we feel it is worth what we do in here.

It is for this reason that, when we arrived to manage the bank, we defined work on financial inclusion as a priority and that necessarily implied going back to the social purpose of BancoEstado. These four years we have emphasized this awareness, aiming at our workers to integrate our purpose in their daily life.

Our culture includes a permanent communication to reinforce our sense, the social role as a state bank. Consequently, I am sure that our workers care about the meaning of the work we do here: delivering financial and non-financial services to all our customers, because that is important for Chile.

Receive a warm greeting,

Enrique Marshall RiveraChairman of the Board of BancoEstado

“A developed country is not only measured by its per capita income but also in terms of its social and financial integration”

“Delivering financial and non-financial services to all our customers, because that is important for Chile”

“We serve all our customers with the same dignity”.

“You need to feel that you get up every day to do something worthwhile. And I think we feel it is worth what we do in here”.

“What BancoEstado has done in recent years has a lot to do with the growth and development of Chile”

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“Being number one in domestic coverage has made possible for BancoEstado to lead today on personal savings in addition to the traditional and savings accounts for housing”.

“At BancoEstado we are proud to lead an institution that competes successfully in the banking industry promoting financial modernization, delivering important net income to the treasury and maintaining high standards of solvency”.

1.2 FINANCIAL MODERNIZATION FROM THE PUBLIC BANKING

Millions of increasingly digitized customers challenge banks to compete offering products that meet their demands for fast transfers and cyber security. The state bank has not been away from this competition and, on several fronts, is at the front line. To begin with, the replacement of cash by electronic means of payment not only in urban areas but in places as far away as Alto Biobío, Putre or Antarctica.

The virtuous irruption of CuentaRUT has meant not only that over 10 million people have access to a range of financial services they used to see from afar, but also their transactions complete saving more and more time and effort.

For example, electronic deposits increased from 9% to 71% in the last 10 years. In 2008, 70% of payments of the most vulnerable people were in cash. Today they reach only 47%, approaching the 34% held by the higher income group.

In the meantime and while much is said about financial education, the replacement of cash catalyzed by CuentaRUT has silently

evolved thanks to its simple use, thus helping to organize the finances of various segments of people and micro entrepreneurs who until recently used to handle their cash in a box.

During 2017, over 5.5 million customers used our websites and mobile phones to carry out an operation, representing 43% of the customers of the banking industry and 46% of all transactions.

The PagoRUT application lets making transfers without having to resort to the digicard, pay bills or make mobile payments simply and quickly without having to enter the data of the other person. With more than 3.7 million users, PagoRUT is among the 10 most downloaded applications in the country.

Financial transactions from a mobile phone have increased by 137% since the application was made available. Safety of CuentaRUT is protected by a limit to the balance amount and number of transactions, reinforced by the inclusion of chips.

Our range of digital products includes consumer loans and microfinance loans, insurance, time deposits and mutual funds for customers with CuentaRUT. Nowadays our customers can purchase insurance of various types in a completely digital manner in our dedicated portal. Even the claim and collection of loss is not face-to-face (by phone and web).

Now, financial progress is not just offering greater security and swiftness in transactions. It also requires in-person management of qualified executives, a necessary condition for bringing into the

system those users with lesser financial education, especially in most remote places.

Being number one today in national coverage has made possible for BancoEstado to lead on personal savings in addition to the traditional and savings accounts for housing.

Also since this year, our bank is the largest collector of mutual funds for voluntary retirement savings of the middle class (APV, regime A) throughout the country.

At BancoEstado we are proud to lead an institution that successfully competes in the banking industry promoting financial modernization, delivering important net income to the treasury and maintaining high standards of solvency.

Juan H. Foxley RiosecoVice Chairman of BancoEstado

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We are living a new era in a number of senses: on the irruption of new technologies, on ensuring that we leave a sustainable world for future generations and on increasing the incorporation of women into the world of work, politics, science, etc. All these trends are already rooted and hold no return. This has led all companies and institutions to find the best way to adapt to these challenges imposed by the new times.

In this scenario, BancoEstado has not been inattentive. We have tackled each of the challenges according to the importance they have for our operation. Most especially, we have challenged ourselves to contribute to greater economic empowerment of women, both in relation to our workers as well as to our customers.

The new policies on people approved during the current year contemplate the goal of achieving gender balance. This means that at least 40% of the workers in each group are women and on the other hand we also want at least 40% of the workers to be men.

This is a great challenge, considering that in Chile, women reach only from 20% to 30% at decision levels. At BancoEstado, 27% of the members of executive teams are women today. There is a pending task and we are going to tackle it.

For this reason, our bank developed various programs that contribute and promote the visibility, empowerment and development of capacities of women in our organization because we want them to have greater growth options within the organization.

For example, at BancoEstado we have developed “gender awareness” programs aimed at all working men and women of the bank in all regions of the country and independent of the hierarchical level of their position in the organization. Our purpose is to make visible the existing gender gaps, explain their origins and foundations and discuss them in order to seek the ways that will allow us to eradicate them.

We believe this way of promoting greater and better participation of women in the organization should be a challenge for all private and public companies. In our case, the challenge is greater because we are an institution that supports the deployment of public policies and we are where Chile needs us and on top of that, more than 6 million women are our customers.

For this reason, we created the program CreceMujer, which seeks the inclusion of all women in the financial system and starting from there, promote their empowerment and economic autonomy.

At the web site www.crecemujer.cl, interested women can learn and share the experience of other women and their businesses as well as have the opportunity for training and education in financial education, business management, communications and women empowerment. In short, it is an initiative that helps reducing the gender gap by improving the skills of women in the workplace and strengthens their social and commercial networks.

Early progress is already in sight as we have 320,000 women registered. We know that still there is a long way to go to achieve full economic development and at BancoEstado we have it clear. We are making our share and all the tasks we are tackling have the same and clear sense: make Chile a more just, equitable country and with opportunities for all to reach.

Jessica López SaffieChief Executive Officer of BancoEstado

“Most especially, we have challenged ourselves to contribute to a greater economic empowerment of women, both in relation to our workers as to our customers”.

1.3 EMPOWERING THE WOMEN OF CHILE

“Our bank has developed various programs that contribute and promote visibility, empowerment and development of women in our organization because we want them to have greater growth options”.

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1.4 FIGURES FOR THE PERIOD2014 - 2017

10 MILLIONcuentarut by the end of 2017

OVER

in 2014 - 2017

million customers by the end of 2017

12.9 2.5 millionsnew customers in 2014 - 2017

over

22,000OVER

10,000O P E N E DIN 2014 - 2017

over

cajavecina points of service opened

409branches by the end of 2017

FIFTYBRANCHES OPENED IN 2014 & 2017

6.8%growth on loans in 2017

15,005workers at corporación bancoestado

NINE SUBSIDIARIES

8.9 MILLIONcustomers with savings account at bancoestado

mus$ in 2014 mus$ in 2017

NET INCOME PROGRESSIVELY HIGHER:

392 450growth in

14.7% net income for 2014-2017

1. Net income before tax.

3,800,000

17.3%AVERAGE GROWTH OF ROE

RANKED 15th

IN GREAT PLACE TO WORK SURVEY

BANCOESTADO

(mus$ 445 in 2014mus$ 447 in 2016)1

OVER

(93% of the financial system’s savings accounts)

OVER 100,000APV ACCOUNTS AND OVER

255,000 NEW CUSTOMERS OF MUTUAL FUNDS

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GOALS AND RESULTS ON 2014-2017 PERIOD, PRODUCT OF THE CAPITALIZATION (Source: Public Report)

FIGURES 2017

• Customers: 12.9 million.

• Loan growth: 6.8% real.

• Loan growth for Lesser Size Business: 8.6% real.

• Net income: US$ 450 million2

• ROE: 16.7%3

SOCIAL FOOTPRINT: MAJOR MILESTONES 2017(Public Report):

• 700,000 new customers added to the financial system through CuentaRUT. We exceeded the threshold of 10 million customers with CuentaRUT.

• 2,882 new CajaVecina service points, exceeding 22,000 points and reaching 100% of the country’s municipalities, including Antarctica.

• New CompraAquí acquisition network for small businesses

• We extended the in person network by opening 14 branches in vulnerable municipalities, 17 in total

• We boosted the voluntary pension savings (APV) of the middle class: we surpassed 100,000 customers in APV accounts

• Over four million customers use our digital platforms

• We implemented selling Fonasa service bonds throughout the CajaVecina network

• 444,478 immigrant customers

• Insurance: 300 thousand new customers, reaching a total of 3.7 million insured people

2 Net income before tax. Tax rates effective in 2017: 65% for BancoEstado and 25.5% for the rest of the industry.3 ROE calculated before taxes.

• 65,000 new micro and small business customers funded.

RESULT: 67,000 funded.

• US$1,5 million growth on loans on lesser size business.

RESULT: US$1,95 million

• UF 28 million on mortgage loans. RESULT: UF 44 MM per year.

• 20 branches; 4,100 CajaVecina. RESULT: 50 branches; 10,686 CajaVecina

• 22,3 million new CuentaRUT accounts. RESULT: 3,7 million new accounts.

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We are there when people of the country need us

To alleviate the difficult situation of people at localities declared Catastrophe Zones in the center-south of the country after the forest fires that occurred between January and February 2017, the bank ordered an extension of payment of installments of consumer and mortgage loans. And within the framework of supporting the deployment of public policies, thanks to an agreement signed between Fonasa and BancoEstado, more than 10 million users of public health insurance can now pay their vouchers for medical consultation at CajaVecina.

CajaVecina reached Antarctica and exceeded 22 thousand points of service

After many months of work, an agreement was signed between BancoEstado, CajaVecina and the Chilean Antarctic Institute (INACH) to install for the first time a financial service of this type on Rey Jorge Island. With this milestone, BancoEstado fulfilled its desired goal of having presence at all municipalities of the country. In addition, during 2017, CajaVecina, the largest transactional network in the country, exceeded 22,000 points of service (22,147).

Opening new branches

In this period, the bank continued with its plan to open new branches aiming at increasing territorial coverage and deepening financial inclusion in the country. In this manner, 17 offices were incorporated: Tongoy, Hijuelas, El Tabo, Viña Las Salinas (Viña del Mar), Calle Larga, Paredones, Santiago Santa Ana, San Pedro (Prov. Melipilla), San Rafael, Yerbas Buenas, Sagrada Familia, Claro River, Chillán Viejo, Negrete, Curarrehue, Cholchol and Ranco Lake. All the new branches opened include the principles of universal access for the autonomous and independent access of people with physical disabilities, reduced mobility for whoever requires it; new branches have handrails, ramps, retractable floors, counters and cashiers with double height, among other features.

BancoEstado support for the electoral funding process

Same as in the municipal elections of the previous year, BancoEstado in 2017 collected financial contributions for candidates in the framework of parliamentary, presidential and CORE elections. This so as to facilitate the implementation of Law Nº19,884, which regulates funding of political campaigns, closing an agreement between the entity and SERVEL.

Started operations of ComprAquí, BancoEstado’s acquisition network

Through this network, BancoEstado made available to customers and non-customers a system to buy with a credit or a debit card from any financial institution, thus representing a specific contribution to the financial inclusion of the country.

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1.5MILESTONES 2017

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BancoEstado leader in the APV market

According to information provided by the Association of Mutual Fund Administrators, BancoEstado led the ranking with more than 100,000 participants in the APV market, largely in the “A” tax regime.

CuentaRUT exceeded 10 million customers

CuentaRUT is an emblematic product that has facilitated financial inclusion in the country. During 2017, we exceeded 10 million customers, consolidating BancoEstado as the financial institution with the largest number of operational debit cards nationwide.

Successful placement of bank bonds

The financial entity made its first placement of bank bonds in Chilean pesos, $50,000 million and equivalent to US$80 million, for a term of five years and duration of 4.1 years. BancoEstado also stood out by becoming the first Chilean bank to issue a bond in the Australian market for A$110 million Australian dollars over a period of 10.5 years and the first Latin American entity to access the Swiss market with a bonus of SFr100 million Swiss francs for a period of 10 years.

Hosts of ALIDE 2017

BancoEstado hosted the 47th General Assembly of ALIDE, the most important annual event of the Development Bank of Latin America and the Caribbean. The event brought together about 200 representatives from 24 countries belonging to development financial institutions, international financing agencies and government authorities of Chile.

Acquisition of a new corporate building

In October 2017 started the move of some of our workers to the new Santa Ana corporate building, located in Santo Domingo Nº1568 and one of the icons of our transformation process. This 9,000 m2 building has the capacity to house almost 900 workers and was designed to meet the challenges proposed by the new generations in terms of their work spaces, that is, multifunctional spaces, flexible environments, rest areas and sustainability criteria; the facility holds LEED certification.

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1.6 SUMMARY OF MANAGEMENT 2017: PROFITABILITY FOR THE DEVELOPMENT OF CHILE

1.6.1 Summary of results

Under a scenario of slow economic growth in 2017and the consequent low dynamism of loans, BancoEstado continued to strengthen the financial inclusion of less favored sectors, both at the level of individuals as well as smaller companies in order to make banking services more accessible and thus contribute to the greater economic and social welfare of the population of the country. Likewise, the bank maintained sound commercial and financial indicators, which reflect good management that strengthen its growth and outlook of future sustainability.

Regarding financial inclusion, BancoEstado continued to expand offering payment means for the medium and low income sectors of the country by exceeding 10 million CuentaRUT holders; our share in the total of working debit cards in the banking system reached 53%.

In a complementary manner, the distribution network was extended with the integration of nearly 2,900 new CajaVecina service points, thus reaching a total of 22,147 throughout the country; add to this opening of 17 new branches focused on municipalities that did not have a branch and correspond to the most vulnerable and remote areas of the country. In turn, digital coverage, which is fundamental and becomes increasingly important in a bank with more than 12 million customers, continued to grow, so that 4.2 million customers in 2017 accessed

BancoEstado through the Internet (Web site ), 2.9 million through the Web-Mobile platform and 1.5 million through the bank’s mobile application.

On loans, the 6.8% real expansion of the bank’s total loans for 2017 stands out as a rate much higher than the 2.9% recorded by the financial system as a whole. BancoEstado’s growth was driven by the greater dynamism of retail loans, where consumer loans rose 8.6% and mortgages 8%, while commercial loans representing 52% of total loans increased 5.6%, compelled by those granted to smaller companies (EMT) that reached 8.6%.

As for results, net income before tax of BancoEstado and subsidiaries in 2017 was similar to the one achieved on prior year in real terms, which is $276 billion (approximately US$450 million). With this result and given a capital increase close to 5% in 2017 (equivalent to US$120 million), the annual return measured on capital decreased slightly, therefore the consolidated ROE of the institution was 16.7% , a figure similar to that obtained by the system. On the other hand, efficiency was 62.9%, as of December 2017, an indicator that was affected by the operating result due to low income from readjustments and support expenses that rose in a limited manner.

Finally, it should be noted that BancoEstado was highlighted in 2017 as the safest bank in Latin America for the sixth consecutive year, according to the ranking carried out by the magazine ‘Global Finance’, a position that clearly reflects its solvency and institutional strength.

In 2017 we managed to maintain our economic results despite a challenging context, with figures as competitive as the rest of the industry

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1.6.2 Global Results BancoEstado Corporation

BANK Nº216%

OTHER14%

BANK Nº39%

BANK Nº48%

BancoEstado’s share in debit cards(% Dec-17)

BancoEstado is the leader in bank debit cards thanks to the remarkable and continuous growth of CuentaRUT.

2017

BancoEstado: Total Lending*(MMM$ Dec-17)

22.000

20.000

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

1990 1995 2000 2005 2010 2015

*Consolidated since 2008Source: BancoEstado

Important growth in loans during the entire period. The stock of total loans reached over $ 22 billion in Dec-17.

BancoEstado53%

In the last 27 years, BancoEstado loans have grown more than twice the speed of the country’s GDP.

Between 2000 and 2017, loans raised 9.8% on the average per year, while the GDP expanded at an annual average rate of 3.8%.

Loans Evolution BancoEstado and GDP (Index 1990=100)

BancoEstado loans

PIB

*Source:: Banco Central, BancoEstado

1991 1993 1995 1997 1997 2001 2003 2005 2007 2009 2011 2013 2015 2017

800

600

400

200

0

*Total active cards: 21.6 millionSource: SBIF

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Net Lending Evolution* 2008-2017(var. real anual, %)

24

20

16

12

8

4

0

On Dec-17, total loans registered an annual increase of 6.8% real in BancoEstado and 2.9% in the system.

In BancoEstado, the evolution of loans during 2017 was driven by consumer and mortgage loans.

*Total loans (excludes interbanking loans)Source: SBIF, BancoEstado

BancoEstado

Sistema

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

8,510,4

21,7

0,5 0,6

6,1 6,1

12,9

7,7

9,7

4,3

8,0

6,44,7

10,3

6,6 5,8

2,4

6,8

2,9

Loans BancoEstado System*

Total Net 6,8% 2,9%

Commercial (business) 5,6% 0,2%

Retail 8,1% 6,7%

Mortgage 8,0% 7,9%

Consumer 8,6% 4,2%

Activity Expansion(var. real anual, dic-17, %)

*Loans include subsidiaries abroadSource: SBIF, BE

BancoEstado Mortgage Loans(MMM$ aa of Dic-17)

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

1990 1995 2000 2005 2010 2015 2017

Source: BancoEstado

BancoEstado leads funding mortgages for the middle and low income sectors.

BancoEstado Commercial Loans(MMM$ as of Dic-17)

12.000

10.000

8.000

6.000

4.000

2.000

0

1990 1995 2000 2005 2010 2015 2017

* Consolidated from 2008Source: BancoEstado

BancoEstado provides permanent support to business and entrepreneurship.

In Dec-17 commercial loans expanded 5.6% real annual.

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Profitability(Net income before tax/ equity: %)

30%

25%

20%

15%

10%

5%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Profitability of BancoEstado between 2004 and 2008 was higher than the system; between 2009 and 2011 the system performed better than the bank, while between 2012 and 2017 both have had a similar performance.

BancoEstado

System

Source: SBIF y BancoEstado

16,7%

15,4%

Net income before tax(MMM$ as of Dec-2017)

300

250

200

150

100

50

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2017

Source: BancoEstado

74

2010 2011 2012 2013 2014 2015 2016

107

148

170

134

196

228

274 276

Net income before taxes average MMMS$ 227 between 2008 and 2017.

Net income before taxes as of December 17 reached MMMS$276 (MMUS$450).

Rating Agency Long Term (1) Short Term (2)Outlook

Moody’s (3) Aa3 P-1 Negative

Standard & Poor’s (4) A+ A-1 Stable

Fitch Ratings (5) A F1 Stable

BancoEstado’s International Risk Rating 2017

Source: Moody’s, Standard & Poor’s y Fitch Ratings

(1) Foreign currency debt, longer than one year

(2) Foreign currency debt, less than or equal to one year

(3) In August 2017, Moody’s upheld the long and short term risk rate and downgraded the outlook

(4) In November 2017, S&P upheld the long and short term risk rate and the outlook

(5) In November 2017 Fitch Rating upheld the long and short term risk rate and the outlook

BancoEstado continues to be the safest and most solid bank in Latin America for the sixth consecutive year, according to the ranking carried out by the magazine “Global Finance” in 2017, which reflects solvency and institutional strength; It is, at the same time, an acknowledgment to the professional and responsible management of the bank.

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BancoEstado Efficiency Index(Support expenses/Gross operational result)

Source: SBIF y BancoEstado

Efficiency of the system and BancoEstado’s holds in 2017 at levels similar to those in recent years. The difference between the bank and the system is largely explained by the social role it plays; it serves more than 12 million customers, preferably medium and low income people and is the only bank with a branch in 127 municipalities of the country, for which it has relatively higher costs than the rest of the bank.

2009 2010 2011 2012 2013 2014 2015 2016

58,6%

53,1%

62,8% 62,9%

2017

70%

60%

50%

40%

30%

20%

10%

0%

2004 2005 2006 2007 2008

65,2%

60,8%

55,8%

BancoEstado

Sistema

Automated Transactions of BancoEstado’s clients*(annual)

* Completed through automated channels of BE (ATMs, CajaVecina, PagoRUT, internet site and mobile) and other external networks such as RedCompra and Redbanc; excludes the ones carried out at tellers in BancoEstado and ServiEstado

Automated transactions have been crucial to the extension of BancoEstado’s services, as operating costs are reduced and closer to customers.

Automated transactions increased 23% in 2017, representing 96% of the bank’s total transactions.

2.400

2.000

1.600

1.200

800

400

0

2004 2005 2006 2007 2008 2009 2010

60,4%

2011 2012 2013 2014 2015 2016

61,6%

74,0%

87,6%93,4% 94,7% 96,4%

Number of automated transactions

% over total transactions

2017

100%

80%

60%

40%

20%

0%

133 131256

610

1.059

1.435

2.195

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Consolidated corporate data of BancoEstado and subsidiaries(figures in millions of pesos)

(a) Financial statements under IFRS standards(b) Support expenses over gross operational income(c) ATMs, self-service dispensers and mailboxes

Source: BancoEstado

BancoEstado: ROE(Income before tax over equity)

25%

20%

15%

10%

5%

0%

1991 1995 2000 2005 2010 2015 2017

Source: BancoEstado

BancoEstado achieved 16.7% profitability, as of Dec-17.

Profitability obtained by the bank over time has allowed it to continue with its social role and achieve sustainable growth.

BancoEstado: Market share (%)

16%

12%

8%

4%

0%

1990 1995 2000 2005 2010 2015 2017

Source: SBIF, BancoEstado

At the end of 2017, BancoEstado’s share of loans in the system was 15.3%, having earned 55 base points in the year.

BancoEstado: Equity(MMM$ as of dec-17)

1.800

1.500

1.200

900

600

300

0

1991 1995 2000 2005 2010 2015 2017

Source: BancoEstado

BancoEstado’s equity in Dec-17 was MMM$1,654.Capital contributions are usually funded with:• Extraordinary capitalizations in order to

sustain the growth of the institution, such as those made in 2009 and in 2014-15.

• Capitalizing part of the net income, as in 2017, which corresponded to 50% of net income of the previous year.

Var. real

Indicators 2010 2012 2014 2015 2016 2017 17/16

Income before tax 138.602 195.461 221.400 261.750 270.044 276.463 0,7%

Base capital 931.344 1.136.838 1.236.936 1.487.444 1.565.410 1.645.624 3,4%

Effective equity 1.405.605 1.707.041 2.057.958 2.398.956 2.516.111 2.599.357 1,6%

Total lending 11.416.304 13.894.809 16.614.586 19.071.559 20.745.293 22.531.470 6,8%

Total consolidated assets 18.801.835 23.153.311 28.116.028 32.549.582 34.787.632 38.115.383 7,7%

Income before tax over total assets (%) 0,74 0,84 0,79 0,80 0,78 0,77 -1,0 p.b.

Income before tax over equity (%) 14,8 17,1 17,8 17,5 17,2 16,7 -50 p.b.

Efficiency index (b) 58,6 53,1 57,3 62,8 60,7 62,9 +220 p.b.

Provisions/Lending (%) 2,92 2,64 2,71 2,79 3,02 3,03 +1,0 p.b.

Base capital/total assets (%) 4,62 4,55 4,10 4,30 4,18 4,05 -13 p.b.

Basilea index (%) 12,14 11,47 11,49 11,70 11,30 11,03 -27 p.b.

Number of branches 344 345 364 381 393 410 17

Number of ServiEstado branches 84 96 107 107 107 108 1

CajaVecina 4.564 10.289 13.520 16.504 19.265 22.147 2.882

Automated services (c) 2.995 3.578 3.488 3.603 3.619 3.683 64

Total annual transactions (million) 581 925 1.427 1.567 1.919 2.332 412

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Contribution to the Treasury (*)(MMUS$ as of Dec-17)

The good results obtained by BancoEstado (including its subsidiary companies) allow it to make substantive contributions to the Treasury by way of taxes and profit sharing.

Between 2001 and 2017, BancoEstado transferred to the Treasury a total of MMM$2,690, which corresponds to an annual average of MMM$158 (approximately US$250 million).

* From net income and taxes of prior yearSource: SBIF, BancoEstado

600

500

400

300

200

100

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

For taxes

Total

For profits

1.6.3 Economic scenario

In 2017, the Chilean economy grew slow, both in terms of activity and domestic demand. In this context, banks presented restrictive conditions for the supply of loans, while demand was perceived as weak for a large part of the year.

Notwithstanding the above, banks maintained solid grounds in their main indicators of risk, solvency and profitability; and total loans of the system grew at a rate slightly higher than those reached in 2016, anticipating for 2018 a greater expansion aligned with a more dynamic economy.

International scenario

The world economy has shown greater dynamism in the last year and, after expanding 3.2% in 2016, it would grow at a rate close to 3.7% per year for the period 2017-2019. Activity figures confirm a scenario of greater global growth largely associated with the good performance of developed economies and a rebound in some emerging markets, especially the reactivation of investment, international trade and industrial production, together with progress in confidence indicators of consumers and companies.

Outlook for the most developed countries has improved, while the world trade has been heightened by an improvement in industrial

activity and also by better prospects for the manufacturing sector. However, in many of them, inflation has remained bounded despite greater dynamism and the gradual withdrawal of the monetary stimulus. The latter reflects monetary policies that are still expansive and that have generated global financial conditions that continue to be favorable.

In this context, international interest rates, as well as risk premiums, have remained at low levels, boosting asset prices internationally and favoring the entry of capital into emerging economies.

The growth prospects for the coming years anticipate greater dynamism, but not without risk. Among the main ones identified, stand out those associated with the effects of withdrawal of monetary stimulus in developed economies and their effect on international financial conditions and market volatility; the eventual commercial war that could be produced by the implementation of protectionist measures and their consequent impact on trade and the world economy, as well as the geopolitical tensions observed in different regions, also generate uncertainty.

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Local economy

In 2017 the local economy experienced low growth, a rate that increased towards the end of the year given the greater momentum that the global economy is contributing and improvement in the perspectives of internal agents; despite this upturn, GDP expanded 1.5% per year. During the year, economic activity was affected by a fall in mining production together with an environment characterized by the weak performance of sectors linked to investment in construction.

On the spending side, consumption showed a stable evolution in the face of resistance of the labor market, maintaining an expansion close to 3.0% per annum, thus contributing to sustain domestic demand. Although confidence of business and consumers remained depressed during the year, it began to rise in the second semester, reflecting to a large extent a greater optimism in the economic expectations in the medium and long term

In the monetary environment, during the first months of the year inflation remained within the target range set by the Central Bank, that is between 2% and 4% per

annum. On the other hand, in the second semester, the consumer price index (CPI) recorded an annual increase of 2.0%, with which inflation closed the year at 2.3% per year. For the medium term (24 months) expectations remain around 3.0% per year, the center of the target range

According to a weaker evolution in the macroeconomic scenario and lower inflationary pressures, the Central Bank applied a more active monetary policy. In effect, the interest rate of monetary policy was reduced by one percentage point during the first half of the year, reaching 2.5%, an expansive level that was maintained during the rest of the year.

Regarding fiscal policy, spending priorities were focused on social policies and the containment of the economic cycle to the downside in an environment characterized by lower revenues and the increase of public debt. In this context, some risk rating companies downgraded Chile’s credit rating.

Outlook

During 2018 the Chilean economy would increase its dynamism, projecting an expansion of GDP in the range 3.0% - 4.0%. Among other factors, the local economy would be driven by a more dynamic international context with positive figures of activity and outlook that would favor external demand. Exports would show an important advance, as well as imports, promoted by the better performance of Chile’s main trading partners. On the other hand, domestic demand would reflect the spread of investment -which in recent years has retreated- and the expansion of consumption, which would be higher than 2017’s.

In this context, it is anticipated that the interest rate of the monetary policy would slightly, increase, although it would still maintain a relatively expansive level; this impulse would be enhanced at the same time with the expansion of public spending, which would exceed the GDP’s growth.

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1.6.4 Banking industry: activity and results

In 2017, the loans activity showed slow dynamism reflecting the low expansion of the economy and the weakness of the expectations of the agents, which began to rebound towards the end of the year. In effect, the banks maintained more restrictive conditions offering loans to business in much of the year, although in the last quarter they reported certain neutrality; on the other hand, in terms of retail loans, conditions continued to be more restrictive compared to a demand that was felt most strong during most of 2017.

Total loans of the system reached 2.9% real annual growth last year, mainly due to the stagnation of commercial loans, which represent 58% of total loans and had an increase of only 0.2%; meanwhile, loans to individuals showed greater dynamism, 4.2% for consumer and 7.9% to mortgages, the latter rate higher than the previous year. It should be added that the expansion of total and commercial loans would have been greater were it not for the significant appreciation of the peso; discounting the accounting effect of the drop in the exchange rate, this growth would have reached 4.3% and 2.4% real annual, respectively.

In this scenario, where less risky loans tended to hold an edge, the risk indicators of the system had a slight improvement, focused on the commercial and the homeowner’s portfolio.

4 They basically correspond to the consolidation of income from a subsidiary abroad with those generated by the local parent bank and, in addition, to the restitution of expenses made the previous year by another bank.

In the financial area, results of the system grew 15% in real terms in 2017 with similar increases detected in both the large private banks and medium and small-sized segments; it should be noted that this good performance was positively affected by the presence of extraordinary4 revenues and the weak 2016 comparison base. Reflecting the expansion of net income, ROE for the system reached 15.4%, standing at 1.6 pp above the closing rate of the previous year.

On the subject of solvency of the bank, the BIS ratio (effective equity on risk weighted assets) closed the year at 13.8%, a level similar to the previous year.

Outlook for 2018 for the banking industry anticipates a more powerful scenario, consistent with a more dynamic local economic activity which will benefit from the greater growth in the rest of the world.

In turn, for the next and following years, banks will have to face new challenges associated both with the profound transformation that the progressive digitalization of the sector implies as well as with greater capital requirements contemplated by the modernization project due to the General Banking Law, currently being processed in Congress.

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1.7AWARDS AND RECOGNITIONS 2017

BancoEstado is the most solid and secure bank in Latin America

For the sixth consecutive year, the corporation was awarded by the magazine Global Finance as the safest and most solid financial institution in Latin America, in addition to being among the 50 safest banks in the world.

BancoEstado is chosen among the top 10 Best Chile companies 2017

BancoEstado was acknowledged as one of the top 10 Companies of the Best Chile 2017 Award, holding its previous year’s leadership. This award is granted by Principal Financial Group and recognizes those companies that demonstrate greater commitment to the welfare and financial future of its employees in the short and long term.

BancoEstado Microempresas is chosen as the second best company for young professionals

The FirstJob platform evaluates the commitment, opportunities and appeal generated by domestic companies in the so-called “Millennial Generation”. In this study, BancoEstado Microempresas scored second place, being recognized as one of the best organizations to work for.

BancoEstado chosen as Citizen Brand

A study performed by CADEM recognized the organization among the select group of “citizen brands”. This study measures the perceptions that people have regarding 200 brands and the value they assign to each of them based on a positive impact on the quality of life of consumers. The term “citizen brand” defines those companies whose interest in making a positive change in the community is equivalent to the interest it has to generate net income.

Contacto 24 horas receives Chile Inclusive Seal 2016

BancoEstado subsidiary Contacto 24 Horas was distinguished with the Chile Inclusive Seal in the Medium and Large Company category, for accessibility to web and environments. The Inclusive Seal recognizes public and private institutions in the country for containing labor inclusion measures in accessibility and environment for people with disabilities.

Corporación BancoEstado is one of the 15 best companies to work for in Chile

The Great Place to Work Institute announced its annual ranking of the best companies to work for in Chile, where BancoEstado ranked 15th, while BancoEstado Microempresas ranked second, holding the same positions as last year, consolidating themselves in the select group of the 50 best places to work for.

BancoEstado is chosen as the best Employer Brand of Chile

In the survey carried out by Trabajando.com, BancoEstado was recognized as leader of the general ranking, being the best Employer Brand. This study seeks to make an x-ray of the market perception about the best employer brand among companies in Chile, in order to know the interests, motivations and what people value most of their workplace.

CajaVecina is certified as Company B and recognized as one of the best B Companies in the world (Best for the World)

CajaVecina was certified as Company B, being recognized for its work and dedication to improve its impact within the global “B Corporation” community and listed in the annual The Best for the World 2017 in the “General” and “Customers” categories of the Impact Assessment.

BancoEstado among the 10 most trusted brands, leaders in banks category

In the 2017 edition, 206 brands were evaluated, distributed in 28 categories, where BancoEstado was highlighted among the top 10 companies and led the banks category. The survey, carried out by Icreo, seeks to identify the level of confidence that Chileans have regarding public and private institutions, services, consumer brands and political actors.

BancoEstado Corredores de Bolsa obtains first place in amounts traded

For the tenth consecutive year, BancoEstado brokerage subsidiary received the first place in amounts traded in the financial intermediation category, a prize that recognizes the volume of transactions made during 2016.

Subsidiaries are among the best companies for working mothers and fathers

In the survey made by Revista Ya and Fundación Chile Unido, two branches of the bank were recognized again for developing actions aimed at reconciling work & family and the assessment their workers make of them. This is BancoEstado Microempresas (BEME), which obtained the first place in the Large Corporations category and BancoEstado Corredores de Seguros, with the fifth place in the Small and Medium Enterprises category.

BancoEstado recognized as a significant Brand

Meaningful Brands research led worldwide by Havas, aims at defining which are the most significant brands for consumers and what benefits they offer to people. The study considered 1,500 brands and more than 375,000 consumers in 33 countries. BancoEstado was highlighted among the ten most significant brands nationwide.

Brand of Excellence 2017 and leading banks category

For more than 11 consecutive years, GfK Adimark carries out the CHILE3D study, which presents the evolution of our lifestyles and the relationships we establish with brands. In its 2017 version and among 432 organizations evaluated, BancoEstado was recognized as one of the 26 brands of excellence, obtaining the first place in the banks category

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1.8LEARNING AND CHALLENGES

The last four years of BancoEstado have been marked by great progress in terms of economic sustainability and social development, even in a restrictive macroeconomic context. Consequently, in our fourth Integrated Report we have an opportunity to account not only for the positive points and the great results that our efforts have generated but also for the lessons learned from them and the challenges opening up for the next period.

In the first place, our country is close to implement the new General Banking Law, which will imply the adoption of a new series of requirements in the banking system to comply with international financial management standards (Basilea III). Our

bank must be prepared to adequately adapt to the new rules of bank capitalization, not only in terms of our administrative structure and capital investment but also in matters related to relationships with our employees and customers.

Second, progress in financial inclusion, which has been the hallmark of our institution, should give way to a unified strategy of social inclusion, placing financial education at a central place and deepen the bankarization of those who are now part of the system in a responsible manner. In effect, work in this field has taught us to identify the need to strengthen a culture beyond access to the financial system, capable of accompanying the people of

the country in a proper decision-making regarding their own financial management and investment of their resources.

In other words, universal and decentralized access to the financial system, total coverage of the national territory, support for women and greater inclusion of immigrants and people with disabilities must give way to a long-term work, which necessarily involves the financial education of our population, from the school time to adulthood. Thus, we hope that our work will lead to strengthen municipalities, especially in those localities with higher levels of vulnerability, where people can reinforce their cooperation networks, consolidate their social capital and thus accomplish true social participation of all the people of the country.

For these purposes, it will be essential to generate a unifying and systematic effort that provides the institution with an organic body of operation. The multiple initiatives that we have generated to make the social role of BancoEstado happen to have tended to fragment the focus on the great objective that provides form, producing situations of inefficiency that we must identify and correct. Therefore, a strategy is required to provide coherence to these actions in order to enhance the positive impact in this area.

On this approach, we can mention the advances in the definition of an integrated commercial strategy that undoubtedly has contributed to presenting the value offer of the bank with a commercial unification approach for our customers. However, greater coordination efforts will

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be necessary to deepen this line of work not only at the commercial level but also on social and environmental development of the country, for which we must expand and strengthen the collaborative work with other State institutions, as well as between our main management offices.

A third element and closely related to the above is the work in pursuit of management efficiency, which should be extended to all areas of our institution. The transformation plan and the Empathy Efficiency program have focused on better customer service as well as on our productivity and management of internal and external processes, but we also need to include workers from all the bank’s plants and from all our subsidiaries, with special emphasis on executive teams.

Our bank is part of the history of the country and perceived as an agent of change. While we carry this responsibility with great pride, it also sets up the challenge of moving forward according to current times. Hence the importance of preparing our teams on the flexibility and dynamism required to carry out this task.

In this sense, the natural resistance to change must be replaced by a provision of collective collaboration and the determination of our leaders to build a modern, efficient and proactive bank.

Fourth, relationships with our workers have left us important lessons in these four years. The experience of collective bargaining, which finally culminated in an anticipated manner and with very good results for both

parties in 2017, showed us that dialogue, empathy and collaboration between the executive staff and the representatives of our workers should be the pillars to maintain a healthy and fruitful relationship, both in the present and in the future.

Along this line, it is necessary to deepen the equitable and decentralized development of our workers. BancoEstado is a company with more than 10,000 employees throughout the country, which requires a management model and an organizational development that benefits everyone in the same way and allows everyone to feel accompanied, comfortable and happy to work at an institution like ours.

On the other hand, the challenge of responding to the changes that the banking and financial industry is experiencing, as well as the accelerated digital transformation, leads us to deepen the advances towards digital services and increase the quality standards demanded by customers. In this line, the Transformation Department was created in 2016 and the Transformation Program was deployed during 2017, whose main mission is to accelerate the change process of the organization with special focus on the digital sphere, integrating new practices, tools and methodologies that streamline processes and modernize the bank in a comprehensive manner, digitizing the experience of customers and increase the efficiency of internal processes.

Looking into the future, we have the challenge of improving service to our customers and workers through innovative

digital channels. The digital transformation must reach all the people of our country, with a universal approach. Therefore, we need to strengthen our digital channels, and become the best digital platform for financial and non-financial services.

Finally, our great long-term challenge will be to maintain an adequate balance between the commercial bank condition that operates with the same rules as the rest of the industry and strengthening of the social sense of our organization, given by our owner, the State of Chile. While much of our efforts have gone in these directions and we see favorable results in this regard, we must always look beyond the figures and maximize the long-term impact of our social footprint on the development of the country and the quality of life of all the people, including in our daily work the great responsibility of being the most important bank in Chile.

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INSERT OF BANCOESTADO MATERIAL ISSUES 2017

To define the matters that we include in this document, which are also the most relevant for a sustainable management of our company, we made a review of the main internal documents and interviews to upper management of Head Office and subsidiaries. At the level of our stakeholders, we talked with representatives of our workers, customers, individuals and companies, mayors, members of State institutions and other beneficiaries of our work as a public bank.

Total interviews with managers, heads of groups and subsidiaries

12

Total interviews with external interest groups

29

Based on this survey, we built the 2017 matrix of subject matters. These, reflect the impacts that we generate and provides us insights into our risks and opportunities

In order to ease reading of the document, we built a series of annexes where information on BancoEstado’s management on sustainability matters is deepened.

• Please review Annex A.2 for more information about the Management Approaches of material issues indicated in the matrix presented above.

Technical Sheet BancoEstado Report 2017

• Performance between January 1 and December 31, 2017 of the entire BancoEstado Corporation including its eight subsidiaries

• Compliance with requirements demanded by the Superintendency of Banks and Financial Institutions (SBIF).

• Aligned with the principles of the International Committee of Integrated Reports proposed by the International Integrated Reporting Council (IIRC)

• Follow-up of the new standards on principles delivered by the Global Reporting Initiative to prepare reports related to the definition of quality.

• To answer questions or queries about this Report and the information it contains, you can write to the following email: [email protected]

Matrix of Subject Matters 2017

Infl

ue

nce

on

evalu

ati

on

s a

nd

de

cis

ion

s o

f g

rou

ps

of

inte

rest

Importance of economic, environmental and social impacts

Financial inclusion and coverage

Empowerment of women

Work with the State

Customers’ experience

Financial education

Quality of life and work relationships

Diversity and inclusion

Digital banking and transformation

Support to the community

Environmental contribution

Probity

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On September 25, 2015, the world leaders grouped in the United Nations (UN) defined 17 objectives that seek to contribute to Sustainable Development (SD) of the world for the next 15 years. The SDs spawn 169 goals, whose purpose is for the State, business and each citizen turn into promoters of sustainable development. During 2017, Chile signed the Declaration of Santiago, becoming part of this challenge and challenging companies to contribute from those sources that relate to their business.

Given our public role, we have always held in BancoEstado an active and decisive participation in the social and economic development of the country and for that reason, we adhere to the 2030 Agenda set forth by the UN and ratified by the State of Chile, contributing in those objectives that relate more directly to our mission and social task, seeking to reduce the inequalities that impede the social and economic integration of people.

In this Integrated Report 2017, the initiatives that support the achievement of these objectives are highlighted in each of their chapters, indicating them with a specific symbol.

ODS#5 Gender equality

ODS#8 Decent work and economic growth

ODS#10 Action due to weather

ODS#13 Action due to weather

ODS#16 Peace, Justice and solid institutions

ODS#17 Alliances to reach the objectives

COMMITTED TO THE OBJECTIVES OF SUSTAINABLE DEVELOPMENT

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2. THE PILLARS THAT GUIDE AND STRUCTURE OUR MANAGEMENT

2.1CORPORATE GOVERNANCE

The Corporate Governance of our corporation is composed of two main organizations, the Board of Directors, responsible for senior management of the bank and the Executive Committee, in charge of our administration and operation.

2.1.1 Board of Directors

Seven members make the Board of Directors, six of whom are exclusively appointed by the President of the Republic, appointed by an Executive Decree produced by the Ministry of Finance. The seventh member is a representative of the workers, elected by direct voting, who undertakes as an appointed director, along with an alternate director, also elected as of the preferences of our team of workers.

The main functions of the Board are the supervision and internal control of BancoEstado, opening and closing branches, both in Chile and abroad, describe the general policy, as well as internal regulations and approval of procedures and regulations that govern our operation. It is also responsible for sanctioning the compensation system of the workers, establish salaries and approve the final destination of net income at the end of each year. At the same time, the board must check out the final approval of the financial statements and this integrated report.

chairman

Enrique Marshall Rivera1

vice chairman

Juan H. Foxley Rioseco2

directors

Andrea Repetto Lisboa

Francisco Vidal Salinas

Sergio Páez Verdugo

Pedro Neira Asenjo

3

4

5

6

labor director, regular

Edith Signé Rodríguez7

labor director, alternate

Ricardo Morales Cordero 8

12 34 5 678

For more information on the functions of the Board of

Directors, please visit the following link

The President of the Republic appointed Mr. Enrique Marshall Rivera as Chairman of BancoEstado on October 5, 2017, after the departure of Mr. Jorge Rodríguez Grossi, who accepted the position of Minister of Economy. Until that date, he served as Vice Chairman of the bank.

HERE

CHA

PTER

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http://www.corporativo.bancoestado.cl/acerca-del-bancoestado/gobierno-corporativo/consejo-directivo

jessica lópez saffie chief executive officer

Ms. Lopez holds a Bachelor of Arts in Business Administration from Universidad de Chile with minor in Economics. She holds a vast experience in the banking sector, both in the private sector at positions of director and adviser, as well as in the public sector.

She joined BancoEstado in 1990 and has served as risk manager, controller and vice chairman, being the first woman to occupy this position in a national bank. Her current role has compelled her to promote female participation in the working world, being recognized nationally and internationally for this objective.

As CEO, her main function is the general administration of the bank, report on the state of affairs, performance of the bank to the Board of Directors and coordinate management jointly with the area managers. Also, she is an extrajudicial representative of the bank and responsible for submitting for approval of the Executive Committee the financial statements and the annual report of our corporation.

enrique marshall rivera chairman

Bachelor of Arts in Business Administration from Universidad de Chile, Master and PhD in Economics from the University of Notre Dame, United States. He holds a long professional career in the banking industry, as superintendent of Banks and Financial Institutions, adviser, vice chairman and chief executive officer of Banco Central de Chile.

Added to his experience in banking, he participates in directories of foundations and non-profit organizations, such as the Chilean Pacific Foundation and the Guillermo Subercaseaux Institute of Banking Studies, among others.

As chairman, his role is to guide the meetings of the Board of Directors and the Executive Committee and call for out of schedule meetings if the situation warrants it. Also, he is the extrajudicial representative before public authorities and banking entities.

juan h. foxley riosecovice chairman

Graduated from the University of Pennsylvania (Master of Arts in Econometrics and Finance), Bachelor of Arts in Business Administration from Universidad de Chile with Unanimous Distinction; Master of Arts in Monetary and Fiscal Economics at this same university.

Member of the Panel of Experts of the International Monetary Fund for the administration of international reserves; he has participated in technical assistance missions for the central banks of Bolivia, Cambodia, Cape Verde, Dominican Republic, Guyana, Iran, Israel (WBGS), Rwanda, Seychelles, Sierra Leone, Solomon Islands, Vanuatu, Vietnam and Yemen. He was manager of the International Division of Banco Central de Chile, responsible for the administration of international reserves and regulations on capital accounts.

At BBVA’s investment banking, Mr. Foxley was Executive Director for services to central banks and official entities of Latin America and the Caribbean; he has been manager, advisor and director of companies in Chile.

He joined the Good Practices Committee in development banking (IDB - MIF - ALIDE), advised the IDB with the governments of Ecuador, Mexico, Brazil, Honduras and Panama. He has been a professor and researcher at the Universidad de Chile and at Pontificia Universidad Católica de Chile; graduates level professor in Risk Management at Georgetown University / Alberto Hurtado University.

He is a regular member of the Audit Committee and participates in the Financial and Global Assets and Liabilities Committee and Commercial and Strategy committees, among others. In addition, he participates in the committees of: Administration, Credit, Communications, Risk, Commercial Coordination, Processes and Technology, Human Resources and Compliance.

chairmanEnrique Marshall Rivera

vice chairmanJuan H. Foxley Rioseco

chief Executive officerJessica López Saffie

counselDarko Homan Varljen

1

2

3

4

1 34

For more information on the functions of the Executive

Committee, please visit the following link

The second body of our Corporate Government is the Executive Committee, composed by three members appointed on the exclusive trust by the President of the Republic, in addition to the legal advisor of our organizational structure, holding the right to speak.

The main function of the Executive Committee is management and operation of the bank including the agreement, execution and completion of any act, contract, pact or convention required for the fulfillment of the established objectives, in addition to the periodic report on the operation and development of the bank. It is also responsible for monitoring compliance with current regulations, setting the definition concerning the conditions and modes of operation, establish guarantees, maximum amounts and interest rates and approval of the budget of investments and expenses and the annual report.

2.1.2 Executive Committee

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http://www.corporativo.bancoestado.cl/acerca-del-bancoestado/gobierno-corporativo/comit%C3%A9-ejecutivo

2.1.3 Internal Control Structure In addition to the Executive Committee, we have other units that support our daily operation, coordinate and maintain it through an internal control system.

audit committee

The Audit Committee holds five members in addition to the chief executive officer, the legal advisor and the controller.

This committee is in charge of the operation, deployment and maintenance of the internal control systems of the entire corporation, including subsidiaries. This task involves the analysis of documents prepared by external auditors, balance sheets, financial statements, reports of risk rating agencies and reports of the Comptroller’s Office, among others. It is also responsible for ensuring compliance with the rules and procedures specific to the banking industry, proposing external auditors and risk rating agencies, supervise management of customer complaints and possible money laundering operations and report on related practices.

Chair: Sergio Páez Verdugo

Members: Juan H. Foxley RiosecoPedro Neira AsenjoGuillermo Ramírez Vilardell (independent)Juan José Ossa Santa Cruz (independent)

risk committee

The Risk Committee holds five permanent members. These are bank officials, that is, there are no independent or external members. The Committee holds the following members:

Chair: Eduardo de las Heras Val, Gerente Corporativo de Riesgos

Members:· Representative of the Executive Committee

· Chief Executive Officer· Credit Manager or Retail Banking Manager or Chief Financial Officer or Operations and Systems Manager

· Planning and Management Control Manager

· Representative of the Legal Department for meeting matters on operational and technological risk.

This committee was created on March 24, 2015, as established by Executive Committee Nº0327 of the same year with the mandate of being the body responsible for proposing the Policies on Credit Risk, Operational Risk and Financial Risk to the Executive Committee, including Valorization, Credit Risk Policies for Customers of the Chief Financial Officer and Liquidity Policy, as well as ensure that the actions of the bank and subsidiaries are consistent with a reasonable level of risk for the execution of its business strategy. During 2017, the committee met 35 times, that is, one meeting every two weeks on the average.

legal department

This unit is responsible for delivering legal services to the bank in addition to supervise compliance with current policies and laws and ensure management performs in accordance to current regulations.

It is also responsible for providing legal advice on organic management and administrative matters to the bank, its subsidiaries and areas.

Counsel: Darko Homan Varljen

compliance office

This unit is responsible for the prevention and early detection of money laundering, with the director being the compliance officer in these matters and acting as the bank’s representative in the committee on this subject at the Association of Banks, ABIF.

Add to this, the fact this unit ensures the conduct of workers is aligned with the ethical values of the institution, while concerned with the prevention of internal and external fraud, prevent damage to property, image or reputation. All of this, based on the application of the crime prevention model established by Law Nº20,393 on Criminal Liability for Legal Entities.

Compliance Director: Álvaro del Barrio Reyna

controller

The Controller Office is responsible for the internal inspection and control of accounts, services and areas of the corporation and helps to protect the resources and equity of the bank. This office operates independently from the administration, as defined by the statute that gave rise to its creation.

Its functions include reporting its results to the Bank’s Corporate Governance, verification of risk mitigations and the evaluation and recommendation of improvements regarding the internal control of the company and its subsidiaries.

Controller: Pedro Bolados Morales

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2.1.4 General Area Managers The General Area Management offices are the units responsible for carrying out the objectives established by the Executive Committee and they are supervised by the Chief Executive Officer’s office.

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chief executive officer

Jessica López Saffie

general credit area manager

Emiliano Figueroa Sandoval

chief financial officer

Carlos Martabit Scaff

general administration area manager

Victoria Martínez Ocamica

operations and systems manager

Rodrigo Collado Lizama

corporate risk manager

Eduardo De Las Heras Val

planning and management control manager

Óscar González Narbona

retail banking manager

María Cecilia Vergara Fisher

branch management manager

Antonio Bertrand Hermosilla

transformation management manager

Luis Alberto Soto Illanes

controller

Pedro Bolados Morales

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For more information on the functions of the General Area Managers, please visit the following link HERE

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http://www.corporativo.bancoestado.cl/acerca-del-bancoestado/gobierno-corporativo/gerentes-de-area



directorsPedro Neira Asenjo

Sergio Páez Verdugo

Francisco Vidal Salinas

Andrea Repetto Lisboa

labor directorsEdith Signé Rodríguez

Ricardo Morales Cordero


Board of Directors

Executive Committee


chief executive officerJessica López Saffie

general counselDarko Homan V.

controllerPedro Bolados M.

chief executive officerJessica López S.

planning and management control managerÓscar Gonzalez N.

chief financial officerCarlos Martabit S.

corporate risk managerEduardo De Las Heras V.

operations and systems manager

Rodrigo Collado L.

general credit area managerEmiliano Figueroa S.

retail banking managerM. Cecilia Vergara F.

branch management manager

Antonio Bertrand H.

general administration area manager

Victoria Martínez O.

manager corporate identityMichel Moure C.

compliance managerÁlvaro del Barrio R.

quality managerGloria Jiménez F.

transformationmanagement manager

Luis Alberto Soto

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Our operation would not be possible without the support of our subsidiaries and related entities, since these are the units that let us to carry out our mission through an efficient and transversal management, reaching millions of customers throughout the country. They are, therefore, key in the role entrusted to us in the economic development of Chile.

2.2 SUBSIDIARIES AND RELATED ENTITIES

bancoestado s.a. administradora general de fondos

This entity offers a number of investment services both to individuals and business, institutions and investors, with a wide range of options such as terms, investment purposes and risk thresholds, according to the preferences of our customers.

The French bank BNP Paribas Investment Partners owns 49.99% of the shares of this subsidiary.

General ManagerPablo Mayorga Vásquez

2.2.1 BancoEstado Subsidiaries

bancoestado centro de servicios s.a.

Under the brand name ServiEstado, this institution complements the offer of financial and non-financial services of our branches, allowing drafts, deposits, foreign currency exchange and payment of services and credits. It has an extended timetable from 08:00 to 19:00 hours from Monday to Friday and from 09:00 to 17:00 hours on Saturdays, throughout its 108 service offices.

General ManagerRené Esquivel Cabrera

bancoestado contacto 24 horas s.a.

With its center of operations in the city of Lota and the purpose of supporting the work reconversion of this community, this subsidiary is responsible for managing the telephone service of our customers, provide information, resolve queries and carry out actions of sale and post-sale of products.

General ManagerJimmy Molina Molina

bancoestado s.a. corredores de bolsa

Created as the first subsidiary of BancoEstado, this institution’s main function is consulting individual customers and companies on their investments in the stock market pointing at obtaining the best profitability with competitive and transparent costs.

General ManagerJorge Ramírez Oñate

bancoestado corredores de seguros s.a.

This subsidiary offers a number of life and general purpose insurance to individual customers, companies and institutions; 49.9% of the ownership of this subsidiary belongs to MetLife Chile Inversiones Ltda.

General ManagerCristián Wolleter Valderrama

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bancoestado microempresas s.a. asesorías financieras

This is one of the bank’s emblematic subsidiaries and with more than 20 years of operation supports the development of micro-enterprises in the country, thus contributing to economic development at the national level.

General ManagerEmilio Vélez Hormazábal

bancoestado servicios de cobranzas s.a.

This entity is responsible for the normalization of the bank’s delinquent customers through various sustainable solutions over time and focus on financial education. As a relevant player in the development of responsible indebtedness, it concentrates its actions in initiatives that help the re-entry into the banking system of this group of customers.

General ManagerCarlos Eterovic Urzúa

red global s.a.

Established as an Activity Support Company (SAG in Spanish) in partnership with SumUp Limited, this subsidiary was created in February 2017 with the objective of supporting the country’s economic and social development based on the implementation of a new acquisition network under the brand name ComprAquí. As a new player in the electronic payment market for credit and debit cards for all banks and without fixed costs, this network makes available to our customers (small businesses, micro-enterprises and self-employed workers) a reader of POS cards specially designed to facilitate its portability and low cost, maintaining the standards of security and data protection required by the industry and current regulations.

General ManagerÁlvaro De la Fuente Marciani

sociedad de servicios transaccionales cajavecina s.a.

A bank correspondent network created more than 10 years ago, which operates through neighborhood shops installed throughout the country, bringing banking closer to the most isolated places. This system makes banking transactions such as withdrawals of money, deposits, payment of credits and accounts, among other services. During 2017, the possibility of acquiring Fonasa bonds was incorporated through this network of points of service, which exceeds 22,000 all over Chile.

General ManagerMarta Jancso Acuña

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general manager bancoestado corredores de seguros s.a.

Cristián Wolleter

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general manager centro de servicios s.a. (serviestado)

René Esquivel

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general manager bancoestado servicios de cobranzas s.a.

Carlos Eterovic

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general manager sociedad de servicios transaccionales cajavecina s.a.

Marta Jancso

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general manager bancoestado s.a. corredores de bolsa

Jorge Ramírez

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general manager bancoestado s.a. administradora general de fondos

Pablo Mayorga

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general manager global s.a. (compraquí)

Álvaro de la Fuente

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general manager bancoestado contacto 24 horas s.a.

Jimmy Molina

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gerente general bancoestado microempresas s.a. asesorías financieras

Emilio Vélez AGF

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THE MOST OUTSTANDING MILESTONES OF OUR SUBSIDIARIES IN 2017

agf

In 2017, we stood out for our leadership in voluntary retirement funds focused on the middle class (tax regime “A”), closing the year with more than 100,000 customers in mutual funds for the APV (by its acronym in Spanish). This meant a more than 400% jump compared to the almost 20,000 customers we had at the end of prior year, while achieving a 35% market share and surpassing two other fund managers in customers. We want to state that this achievement is due to the commitment of the commercial team, both our administrator and all BancoEstado, who value the importance of the APV as a means to improve future pensions of Chileans.

Moreover, our Administradora General de Fondos was again ranked second place in the industry with 493,835 participants total, which is equivalent to a 32.4% growth over the previous year. Also, we made fourth place in market share in assets managed by the mutual fund industry as a result of management carried out by the Retail Segment, which generated a $240 million growth, as well as the Corporate and Institutional Segment of our bank, which helped to receive over $133 million from customers.

Finally, by the end of this year we reached a 7.7% market share with over $2,603 million in managed assets, which is a 16.8% growth compared to an 8.8% increase experienced by the industry.

centro de servicios

In 2017, we were able to consolidate ServiEstado as a strategic service channel, generating services to meet the needs of new and different kind of customers, thus contributing to the corporation’s objectives. We expanded our services for business and BancoEstado institutions, which represent a starting point seeking new customers and establishing the basis of the future growth of our organization.

In addition, this year we implemented the following services: International Money Transfers for Peru, Bolivia and Ecuador; specialized services; insurance promotion; implementation of web totem and biometrics in post-sale services. All these services contribute to consolidate ServiEstado as a facilitator of commercial solutions for the various banks of the corporation with special focus on operational and commercial management.

contacto 24 horas

We can summarize our 2017 milestones by progress at social inclusion, by fulfilling our commercial goals and by the result at the Great Place to Work (GPTW) survey. On inclusion, we received the Chile Inclusive Seal, granted by the State of Chile through Senadis, along with the “Inclusion of the Disabled Worker” Award granted by the ACHS in the category “Back to work of a rehabilitated worker”; and the Socially Inclusive Company Award (ESI by its acronym in Spanish) granted by Mutual de Seguridad of the Chilean Chamber of Construction (CChC).

While meeting our business goals, we highlight the 109% achievement activating credit cards, 90% of insurance contracts and 86% in consumer loans.

Likewise, we consolidated our growth in the Great Place to Work ranking of the last two years, whereby in 2016 we achieved a 25 points increase in a result of 93 points out of a total of 100, while in 2017 we managed to hold it, dropping just one point, that is, 92 out of 100 points.

corredores de bolsa

In 2017, we advised our customers regarding their local and international investments for an amount of US$4,500 million. In addition, we implemented the remittance service for the immigrant municipalities of Peru, Bolivia and Ecuador and signed contracts with Haiti and the Dominican Republic for the same purpose, which will be implemented in 2018.

In the area of inclusion, we joined efforts to promote financial education in the country by developing various actions during 2017, such as video capsules explaining products like shares and early purchase of time deposits at the Corredora de Bolsa website; the integration of Read Speaker on the website, which is a tool of product information for blind customers; and the alliance with the Santiago Stock Exchange, including activities to promote an approach to the stock market such as the Heritage Day in the BCS building, the Internal Investment Portfolio Contest and the National Investment Portfolio Contest, where we participated making presentation tours to universities, colleges and trade associations.

corredores de seguros

During 2017, BancoEstado Corredora de Seguros (BECS) sold 2.2 million worth of insurance covering health, accident, education, unemployment and mortgages, among others. Likewise, we have granted insurance coverage to 3.7 million people at the end of 2017, which is equivalent to saying that one out of every four residents in Chile has insurance coverage intermediated by BECS. In this way, we have positioned ourselves as the leading insurance broker in the “bank insurance” market, in terms of number of customers.

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microempresas

We highlight the 2017 milestone of closing the year with more than 600,000 current customers, whereof 43% correspond to women. We grew 7.8% in 2017 over the previous year to reach this total. Along with this mark, we managed to surpass the trillion pesos in the commercial balance.

servicios de cobranzas

At BancoEstado Cobranzas (BECO - collection), we improved the 57% delinquency rate of our customers in 2017 across all segments of the current portfolio served by our subsidiary. Additionally, our 2017 Service Satisfaction Survey, which monitors the service delivered through the Domiciliary channel, Call Center and branches, showed that 71% of our customers evaluated the subsidiary with grades between 6 and 7 (on a scale of 1 to 7), maintaining the grade of the previous year.

We also highlight our result in the 2017 GPTW ranking, where we reached the historical figure of 91 points. Thus, we have increased our performance in a sustained manner since 2015, the year when we scored 84 points, while in 2016 we achieved 88 points. Along with this track record, we received the “Revolución Wellness” 2017 award for the second consecutive year, a distinction that highlights public and private organizations and NGOs that promote the well-being and quality of life of its employees in areas such as physical activity, food, health, benefits and recreation.

Last of all, our Crime Prevention Model at BancoEstado and subsidiaries was again certified by BH Compliance, a company authorized by the SVS to carry out this process. The model monitors the internal processes or activities that are exposed to the crimes indicated in Law Nº20,393, including money laundering, financing of terrorism and bribery to the national or foreign public officials.

cajavecina

For 2017 we highlight the implementation of selling Fonasa bonds throughout our CajaVecina network, which reached more than 400 million pesos in transactions through this channel and opening of a service point in Antarctica, an action that was possible due to signing an agreement between BancoEstado, CajaVecina and the Chilean Antarctic Institute (INACH) that lets us to have two operational points, guaranteeing our arrival at the most extreme points of the country, regardless of their remoteness.

With this milestone, CajaVecina achieved presence in 100% of the national territory, in addition to opening our service point number 20,000 as a sample effort of collaborative and committed work of the various management offices of our entity, thus extending our transactions offer to new segments.

Also, we renewed our certification as Company B, acknowledging the positive impact of our business model in social and environmental areas. In 2017, our subsidiary achieved a B re-certification with 158 points, a significant increase over the 141 points achieved in 2016.

red global

During the first three months of operation after acquiring the network, we managed to have presence in 100% of the regions of Chile and at 45% of the country’s municipalities, including Easter Island. All in all, we sold 1,847 devices (POS), reaching $735 million and 44,000 transactions.

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THE MOST OUTSTANDING PROGRESS OF OUR SUBSIDIARIES IN THE PERIOD 2014-2017

AGF

In this period, we highlight two important distinctions received by our subsidiary in 2016: on one hand, the double recognition of the Salmon Awards, organized by Diario Financiero jointly with LVA, winning the first place for “Mutual Fund BancoEstado” Series A, and second place for the “Mutual Fund BancoEstado Acciones Nacionales” Series APV, which reflect the professionalism of our investment strategy and the positioning of our subsidiary AGF in assets management.

On the other hand, the Global Risk Rating Agency “Fitch” allocated the “High Standard” rating to our AGF, according to an international evaluation scale for asset managers. The evaluation confirmed that our administrator has an investment platform and a “strong” operating model in terms of standards applied to institutional investors in international markets.

Centro de Servicios

In these last four years, we think we have contributed to generate a cultural change in our organization. Aiming at delivering an integral service to our customers, we started in 2015 a process of transforming the organizational culture at ServiEstado from a transactional approach to a commercial focus, with a focus on service quality.

During the first year we put into practice various initiatives, such as the Process Map, the Service Protocol, the Leadership Program and the Post Sale Care Model, which allowed us to rise our Customer Satisfaction score from 65% in June 2014 to 76% in December 2016. Today we are proud to announce that we have completed 2017 with 80% of our customers evaluating the service received in ServiEstado with grades 6 and 7.

Contacto 24 horas

In 2015 we decided to start the evaluation and audit process to qualify for the International COPC (Customer Operation Performance Center) certification, a Results-Oriented Integral Management Model that works on quality and on processes aimed at improving service, quality and customer satisfaction. As a result, in 2016 and 2017 we managed to gain access to the standard and consolidate ourselves as the first Chilean Contact Center in the financial field to achieve this International Certification.

Corredores de Bolsa

During the last four years we managed to position ourselves as the brokerage house that traded the highest amount in this period. If we consider all markets, we scored 19% of the total traded on the Santiago Stock Exchange, reflecting our great gain over institutional customers. On the other hand, we occupied the first place in financial intermediation during the entire period, while we were always in the top three places in the fixed income market. This achievement, which spreads 10 years now, is by and large due to the joint work between our Corredora de Bolsa and BancoEstado.

Corredores de Seguros

At BECS we have distinguished ourselves by overcoming all goals established by the corporation in the last period. Among these we highlight our financial results, which have been above plans and the implementation of Process Management, which focuses on improving the experience of our customers.

We have also worked hard identifying improvements based on what our customers said through their claims and requirements, which has allowed us to lower claims by 20% between 2014 and 2017 and score a rate of 1.7 claims per 1,000 customers. The above is reflected in an 83% average satisfaction according to surveys conducted among our insured customers that have had losses in the last four years.

On the prior subject, we have had a significant participation supporting our customers by reason of natural catastrophes of national relevance, particularly regarding the following events: the Iquique earthquake of 2014, where we compensated 3,319 claims; the storm of Copiapó in 2015, where we compensated 1,317 claims; and the Illapel earthquake the same year, where we compensated 1,419 claims.

Microempresas

The year 2017 marks the end of the three-year commitment established in the capitalization of BancoEstado in 2014. In this context, our goal was to increase 65,000 new funded customers and reach a balance of $2,849 million in loans for small and micro enterprises. Both goals were exceeded, as we closed the period totaling 67,804 new customers with funding in both segments, while on the commercial balance we reached $3,259 million, which is 35% more than committed.

Along this line, we also complied with the five pillars that underpin our management: Quality in Loans; Risk; Organizational Climate, where we highlight the last five consecutive years in first places at the GPTW ranking; Customer Satisfaction and Sustainability, all of which we managed to reflect in the certification as Company B of our subsidiary.

Servicios de Cobranzas

The cultural base of BECO is centered on people, which has allowed us to achieve the important advances mentioned in 2017. Furthermore, from the perspective of suppliers, we have helped to ensure growth of micro, small and medium-sized business in the country by paying invoices issued in a period no longer than 30 days, which we fulfilled through the accreditation of the Propyme Seal since 2014.

Each of these milestones is consistent with the strategic statements contained in our mission and vision, endorsing the social commitment that exists with customers through standardization, despite the high risk rates present in the market in recent years.

CajaVecina

Our key milestone for the period was achieving certification as Company B in 2016, which was renewed in 2017. B companies are those entities committed to social and environmental development with a strong emphasis on sustainability, as defined by the Company B Lab, which grants worldwide recognition. Certification requires outstanding work in areas such as Governance, Workers, Environment, Customers and Community in a proper assessment of reality of each company. Thanks to our performance in 2016 in these points, we managed to obtain the “The Best B” recognition, which distinguishes the 10% most sustainable companies in the world in the Community category.

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BancoEstado participates in a number of institutions and also holds partnerships with other companies in order to expand its range of services with the help of international experts.

Based on the above, we have an agreement with MetLife Chile Inversiones Ltda., which has been a subsidiary of MetLife Inc. Co. for more than 13 years, for the joint ownership of the subsidiary Corredores de Seguros.

Likewise, there is an agreement with BNP Paribas Investment Partners since 2009 for managing mutual and investment funds, which is channeled through the subsidiary Administradora General de Fondos (AGF).

Finally, we established in 2017 an alliance with SumUp Limited, a leading company in the mobile payment industry in Europe and an entity authorized as a financial institution by Autoridad de Conducta Financiera for the creation of the Acquirencia Network under the ComprAquí brand name.

2.2.2 Related entities related entities

Are those companies where we have some kind of participation as a corporation.

Entity Percentage RUT

Administrador Financiero Transantiago S.A. 21% 99.597.320-0

Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. 14.96% 99.571.580-5

Operadora de Tarjetas de Créditos Nexus S.A. 12.9% 96.815.280-7

Transbank S.A. 8.71% 96.689.310-9

IMERC-OTC S.A 14.60% 76.307.486-2

associated entities

Are those business where, holding no control over them, our corporation owns directly or through another natural or legal person, 10% or more of its capital with the right to vote or capital, in case it is not a stock company, or may select or appoint or have appointed at least one member of the board or its management.

Entity Percentage RUT

Administrador Financiero Transantiago S.A. 21% 99.597.320-0

Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.

14.96% 99.571.580-5

Operadora de Tarjetas de Créditos Nexus S.A. 12.9% 96.815.280-7

IMERC-OTC S.A 14.60% 76.307.486-2

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Starting from a modernization process that we have experienced at BancoEstado since 2014, we have defined the axes of our Strategic Planning, updating ourselves according to what the Chilean society requires today. Based on this, we have established the following central elements for our actions.

2.3 ACTIVE TRANSPARENCY

2.3.1 Mission, vision and values

vision “We are a State Bank, committed and efficient, working for the development of the country and of all Chileans.”

mission “We exist so Chile becomes a more inclusive and equitable country with opportunities that reach everyone.”

values “The service we provide to our customers every day lets us fulfill our mission and achieve our vision. To this end, we will deepen the pillars of a culture centered on and committed to customers, seeking to empathize with their needs and realities and place them in our minds and hearts.”

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collaboration

“The collaborative work between our teams and other state agencies allows us to enhance our services and our contribution to the country. This will be possible by deepening the trust and appreciation for the other, all based on sharing a common project for BancoEstado.“

excellence

“Our challenge is to carry out high-quality work in all our areas, particularly in customer service. We serve more than 10 million customers and must ensure adequate response times, high quality, ease of use and services 24/7.”

commitment

“We commit ourselves to a more fair country with opportunities that reach everyone. We support the development of people and their initiatives in business and organizations, so that Chile may achieve development. The commitment of each worker to honor every day our mission and vision is transmitted to our customers and is an integral part of the goal of delivering the highest quality in our service.”

responsibility

“We are the Bank of the State of Chile and that forces us to act responsibly, taking care of everyone’s assets, and ensure its sustainability and reputation. Internally, we force ourselves to report our obligations and the work accomplished is an essential pillar to achieve excellence in the workplace.”

inclusion

“At BancoEstado everyone has a place, regardless of their condition. Our services are available to all, without exclusion and with equal dignity. It’s part of our hallmark.”

CORPORATE VALUES

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Based on the concepts mentioned above, we have an ethical management system that includes an autonomous and externally audited channel for the resolution of queries and complaints, where the requirements of our workers or any person linked to the organization are received in a confidential manner.

Also, there is a group of documents that set the general operating rules of our team and that support the determination of our actions, among which we highlight the following:

2.3.2 Ethic and integrity managemen

• Organic Law of Banco del Estado de Chile, which establishes our creation as an autonomous State company, as well as the framework for our operation.

• In force legislation applicable to the entire financial industry, this is externally supervised by the Superintendency of Banks and Financial Institutions (SBIF) and internally by our own Executive Committee.

• Ethics Manual, consisting of the group of guidelines that regulate labor relationships of our employees throughout the entire corporation, along with the main interest groups.

• Purchasing Policy, rules the commercial relationships and purchasing processes of products and services.

• Policy for servicing Politically Exposed Persons, complying with the provisions of Circular W-49 of the Financial Analysis Unit and Chapters 1-14 and 1-16 of the Updated Compilation of Rules and Regulations of the Superintendency of Banks and Financial Institutions.

• Manual for Promoting Free Competition, which seeks to guide our operation in a framework of promoting competition in the markets. At the same time, it defines the guidelines to foresee possible conflicts in free competition matters.

• Manual of Rules and Procedures for the Prevention of Money Laundering and Terrorism Financing, which includes a series of policies aimed at preventing money laundering, in line with the provisions of Law Nº20,393.

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Through our Corporate Sustainability Policy we seek to enhance our historical contribution to development of the country and social inclusion through a responsible action that integrates the economic, social and environmental contribution in our policies, processes and products. We trust that the economic development of the country goes hand in hand with its social and environmental progress and that as a state financial institution we can mobilize various players, generating important changes for the benefit of the country.

To support the latter, our Policy includes a number of principles that account for the commitments we have assumed as an institution and that strengthen our actions in society.

• Respect for human rights• Compliance with legislation• Transparency and information• Prevention of illicit behavior• Risk management• Due process of complaints• Integration of social and environmental

criteriaA t t h e s t r a t e g i c leve l , a mi lestone in our sustainability management 2017

consisted in the voluntary measurement under the standards of the Dow Jones Sustainability Indexes in order to evaluate our work and compare ourselves with the world leaders in the best practices being valued by customers, investors and other interest groups. This measurement resulted in a 2018 work plan aimed at deepening our work in the areas identified as priority.

2.4 MAIN ADVANCES IN CORPORATE SUSTAINABILITY

2.4.1 Ethics and compliance

In terms of probity, we highlight the implementation of the Free Competition Model in BancoEstado. This model seeks to guarantee regulatory compliance and healthy competition among market players, establishing a series of responsible action guidelines.

The implementation of this model involved the publication of a Manual of Promotion of Free Competition that includes guidelines, action plans and recommendations to prevent deviations in terms of dominant position and unfair competition, among others. In a complementary manner and with the purpose of promoting the integration of this model, a sequence of training sessions was carried out for workers and suppliers.

At the same time, the annual training plan was held on various matters related to business probity. The breakdown of the number of training sessions is shown in the following table.

Training matters Number of sessions

Total attendees

Total training hours

Free competition 3 100 5

Free competition 1 8,673 4,337

Money laundering 17 797 34

Crime Prevention Model (Law 20,393), Ethics and Compliance

74 3,336 111

Crime Prevention Model (Law 20,393) 1 10,053 5,027

Ethics and compliance 1 8,271 4,136

Internal and external fraud 12 692 24

2.4.2 Environmental fraud

We position our-selves as an im-portant player that mobilizes the different sectors

of the public and private world to develop projects that are friendly to the environment and contribute to the reduction of carbon emissions starting from their financing.

2.4.3 Social and environmental risk policy

Banks play a special role in the economy by relating to all productive sectors, placing them in a privileged role at the time of influencing positive changes in society.

At BancoEstado we assume th is responsibility bearing in mind the risks and socio-environmental opportunities when evaluating loans so as to fund projects that are solid on environmental and social matters, thus promoting better projects for the country. These criteria are reflected in the Social and Environmental Risk Policy that integrates the various variables up for evaluation in the matter and that complements the Credit Risk Policy.

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Electricidad

Alcance 2

%CO2e

91%

7%

1%

1%

0%

Electricidad

Alcance 2

GWh

32

1

0,2

0,2

0,1

Electricidad

Alcance 2SistemaEléctrico

SIC

SING

Aysén

Magallanes

ERNC

2.4.4 Green financial offer

We have designed an offer of financial products that seeks to finance initiatives that demonstrate their contribution to mitigate environmental impacts and hold an added value.

Among the available financial offers, Eco-Vivienda stands out as the first product of its kind in Chile, which seeks to finance the purchase of new homes throughout the country (with or without mortgage subsidy) that hold an energy classification higher than that required by the Chilean norm (D or higher). This product, developed from an alliance with the German bank KfW, closed 2017 with 359 homes sold.

Additionally, and focused on small and medium entrepreneurs, we have a special funding product in energy efficiency for non-conventional renewable energies that we have developed in partnership with the Ministry of Energy and the Chilean Energy Efficiency Agency (ACHEE), who provide the support in the technical analysis of the initiatives.

2.4.5 Carbon footprint

With the purpose of measuring the amount of CO2 emitted in our operation, we went back to our carbon footprint measurement of 2017, both for BancoEstado and our subsidiaries CajaVecina, BancoEstado Microempresas and ServiEstado.

This information helps us to observe where the footprint has the highest percentage of carbon emissions and provides a guide to manage future action plans aimed at reducing these indexes.

Bearing in mind that 48% of our carbon footprint comes from the use of electrical energy, we have started several actions that take care of a cleaner and more efficient operation; first, we have defined that every new luminaire and every spare part of it must have Led technology, adding 134 offices that reduce our emissions. On the other hand, we have installed photovoltaic panels in 11 branches and in terms of energy management we have an energy monitoring plan in 48 branches.

A 2017 milestone in terms of energy efficiency was enabling the Santa Ana Corporate Building. This 20,000 m2 site has LED Certification in the GOLD category for the Core and Shroud (Core & Shell 2009); this category is the second highest to which it is possible to achieve.

Finally, it should be noted that thanks to the extensive coverage of our not-in-person channels such as ATMs, web, mobile transactions, POS outlets, which exceed 190 million transactions per month and account for 40% of all transactions of the country’s financial system, we contribute to lessening the physical displacements of our customers, favoring the reduction of carbon emissions by transport.

Carbon footprint BancoEstado 2016Inventory of Greehouse Gas Emissions

Fuels and refrigerating gasesScope 1

Carbon footprint %

37%Diesel

21%Gasoline

1%Natural gas

41%Refrigerating gas

Electronic commerce

Scopee 3

Carbon footprint %

41%ATM

naPOS - Points of sale

59%Web Clientes

Moving workers

Scope 3

Carbon footprint %

58%Car

42%Public transportation

0%Bicycle and walking

Other

Scope 3

Carbon footprint %

52%Main supplies

32%Securities transport

13%Corporate travel

2%Various

Electricity

Scope 2

0,7ktCO

2e

14,0ktCO

2e

3,3ktCO

2e

7,4ktCO

2e

3,6ktCO

2e

29 ktCO2e

2% 48% 12% 26% 12%

* Source: Proyectae

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2.4.6 Universal service

In the area of economic and social inclusion and specifically focused on minority groups of our society, BancoEstado continued with the nationwide

deployment of the Universal Customer Service Program, whose objective is to facilitate financial access for people with disabilities, senior adults, immigrants, indigenous peoples and the sexual diversity collective, doing what is necessary to reduce physical and technological infrastructure barriers, social and / or cultural, which must face the 5.5 million people that make up these groups.

To this end, this program ponders adjustments in the Bank’s infrastructure and development of new face-to-face and remote assistance tools in order to deliver a service with equal treatment and autonomy. At the same time and in order to strengthen the principles of universal service in our branches during 2017, e-learning training sessions were conducted to more than 6,000 officials throughout the country and awareness talks attended by 1,800 executives in the Metropolitan Region.

universal branches

BancoEstado holds an infrastructure plan associated with the Universal Customer Service Program that totals 29 new universal branches deployed throughout Chile, including locations such as Tongoy, Hijuelas, San Pedro, Calle Larga, Sagrada Familia, Paredones, El Olivar, Chochol, Paillaco, and Hualaihúe among others and a schedule of adjustments in the accessibility of the current offices that closed in 2017 with 135 accessible branches.

At BancoEstado we have universal branches that have all the necessary characteristics for equal service, such as counters and boxes with double height and all the conditions for autonomous access and circulation such as ramps, vertical platforms and tactile footprints wherever is required.

georeferencing accessible branches

To locate the universally accessible branches, BancoEstado has arranged a geo-referential tool in its public and mobile site. With this help, people with physical disability, reduced mobility or whoever needs it, may plan their trip in advance and go to the office that eases their autonomous access.

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web and mobile access

BancoEstado has adjusted its public website so more people are autonomously aware of their products thanks to enabling audio-reading (read-speaker), which is compatible with the reading programs used by blind people. These modifications generate benefits for the blind community, as well as for the elderly and those who do not master reading Spanish.

On the other hand, BancoEstado has deployed two tools developed through an alliance with the Lazarillo Mobile application for people with visual disabilities. The first one allows to be audibly guided to the door of any of our BancoEstado and ServiEstado branches simply by downloading the application. The second tool, currently available in five branches and soon to be deployed in 30 more points, provides interior accessibility by audio signaling the location of ATMs, counters and all the service modules.

embossed cards

To respect all people’s identity, BancoEstado has modified its procedures so that its customers may print the plastic of their current account cards, electronic checkbook or savings account with the name that identifies them.

call center

Through its call center, BancoEstado serves in Creole language the queries of the Haitian community not skilled enough in Spanish, thus facilitating its financial integration. In addition, we have brochures in their language for them to know our products, make password changes and solve banking emergencies.

keeping mapudungun alive

BancoEstado promotes the richness of the language of the native people for it pays attention to the Mapuche community through its call center in Mapudungun talk; it also has information about its products available in said language as audiovisual support.

2.4.7 Sustainable purchases

We have confidence we can promote better social and environmental practices playing for change and development through our supply chain. To this end, we have integrated in 82 tenders the inclusion of social and environmental criteria as evaluation measures, which represents 62% of the largest purchases. This initiative seeks to materialize our socio-environmental commitment by giving an important signal to those who wish to be our partners.

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2.5 RISK MANAGEMENT

2.5.1 Credit Risks

Credit risk management at BancoEstado is based on a comprehensive view of the risks linked to the stages of Admission, Monitoring, Normalization and Credit Recovery. The aforementioned has allowed us to expand the base of loans preserving a bounded risk and show performance, measured as an expense in provisions and net write-offs on loans, consistently better than the rest of the financial system in recent years (see Chart 1).

Upholding a conservative profile determining provisions, we have at BancoEstado a solid reserve base to cover the expected losses of the portfolio (see Chart 2), which allows us to exhibit hedges on past due loans above the rest of the financial system in all the product lines (see graph 3). Supplementing the regulatory provisions, we maintain the largest proportion of additional provisions in the banking system as a backup to cover potential losses in the face of stress scenarios, either due to changes in the economic cycle or risks associated with portfolio concentration (see Chart 4).

Gráfico 1Net Charge / Loans(Expenses on provisions and write offs - recovery)

2,00%

1,80%

1,60%

1,40%

1,20%

1,00%

0,80%

0,60%

0,40%

0,20%

0,00%2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Rest of Financial System

BancoEstado

2006

0,67%

0,81%

1,30%

0,70%

1,00%

1,39%

1,82%

1,32%

0,96%

1,26%

0,71%

0,93%

0,92%

1,12% 1,12%

1,00%

1,18%

0,55%

1,12%

0,72%

1,09%

0,84%

1,09%

0,79%

Gráfico 2Provision/ Loans(Support expenses/ Gross operational income)

BancoEstado


2,11%

1,78%

1,50% 1,41%1,43%

1,63%

2,17%

2,75%2,92%

2,71%2,64%

2,84%2,71% 2,79%

3,02% 3,03%

3,50%

3,00%

2,50%

2,00%

1,50%

1,00%

0,50%

0,00%

2002 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 201720042003

Gráfico 3Coverage over Past Due LoansDec 2017

Commercial

BancoEstado


Consumer Mortgage Total

378%

225%

1298%

889%

153%113%

326% 284%

Gráfico 4Additional provisions over loansDec 2017

Commercial

BancoEstado


Consumer Mortgage Total

3,85%

2,71%

10,80%

6,18%5,38%

0,66%

5,02%

2,66%

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2.5.2 Operational Risks

The operational and technological risk model of Corporación BancoEstado focuses on the identification, measurement-evaluation, control and mitigation of its risks, in order to reduce the impact on our customers and the business.

In 2017, a world-class technological processing site was implemented that allows us to strengthen and increase the security and availability of our technological platforms in order to maintain the standards our customers require.

We developed a permanent training and awareness plan, which lets bank officials know the best practices in matters of operational and technological risk prevention.

Additionally, we performed real tests on the business continuity plans throughout the branch network and technological contingency sites, in order to validate the ability we have to maintain continuity of our customers’ operations in the face of disruptive scenarios.

Efforts deployed consistently and focused have permitted us to improve our operational risk standards, which has been recognized and confirmed by the regulator.

2.5.3 Market Risk

Managing market and liquidity risks at BancoEstado holds clear policies for its measurement and practice, being the application of these policies controlled by independent entities of risk-taking areas within a framework of established powers and collective decisions.

The main actions carried out during 2017 were focused on the implementation of complementary measures of market and liquidity risk, as well as improvements to Risk Policies and the implementation of tools that improve measuring these risks.

During the year, the risk levels of market and liquidity remained within the margins defined by the bank and regulatory bodies.

Market Risk as of 12/31/2017(Support expenses/ Gross operational income)

Long Term interest Rate

Foreign currency

30%

25%

20%

15%

10%

5%

0%

% P

atr

imo

nio

Efe

cti

vo

ERM OptionsRe-adjustability Short Term interest rate

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2.6 LEGISLATIVE CHANGES

As of the end of 2017, the new General Banking Law still is undergoing discussion in Congress. The implementation of this law brings a number of structural changes in the Chilean banking system, which has been described by the Superintendency of Banks and Financial Institutions (SBIF) as the largest reform to the system since 1997.

The guidelines contained in the reform seek to create a solid and modern financial system, which will lead us to comply with high international standards (Basilea III Agreement) and to strengthen capital requirements, as well as firming up system regulations and the role of the SBIF.

At BancoEstado we have prepared ourselves well in advance in the best way to adapt to this scenario, which is why we anticipate that our financial management structure will be fully capable to comply with the new rules of bank capitalization without compromising our financial strength and projection or the way in which we have carried out our social role towards the country and our collaborators, workers and customers.

2.5.4 Reputational Risk

Soon after breaking the news on the embezzlement inside Carabineros de Chile early in 2017, an investigation was initiated by the justice system and subsequently, an inquiry panel was formed in the Chamber of Representatives to determine the responsibilities in this case.

As a result of this investigation and bearing in mind the payment agreement our bank has with numerous public and private institutions, a number of improvements were made in our control processes.

These initiatives promoted by the Executive Committee of BancoEstado were agreed on October 31, 2017, and focused on three main lines of action, as detailed below:

I. The Executive Committee of BancoEstado requested an external audit to evaluate all the procedures related to the administration of agreements and analyze the scope of the current systems and levels of monitoring, as well as propose measures and / or additional actions in the area of compliance of the Bank.

This advice-giving was awarded to the company KPMG, being constituted as expert counterpart the professional Ms. Tamara Agnic.

II. Some committees related to these matters were reorganized. The changes made were the following:

In a meeting held on October 31, 2017, the Executive Committee of BancoEstado agreed to modify the bylaws, their composition and broaden the scope of action and functions of the Committee

for the Prevention of Money Laundering and Terrorist Financing, now renamed Compliance Committee, as well as the Operating Committee for the Prevention of Crimes.

In the former one, an independent member was added. In this way, said committee was composed by the members of the Executive Committee, the legal advisor and an independent member. Meanwhile, the Operations Committee for the Prevention of Crimes was integrated by the Compliance Director, the Corporate Risk manager and the Head of the Group of the Corporate Counsel and Financial Office.

III. The Executive Committee also agreed to entrust Vice Chairman, Mr. Juan H. Foxley, with the mission of establishing technical cooperation ties with the Compliance Directors of four of the largest banks in the United States (BOFAML, JPMorgan Chase, HSBC and Citi).

In this task, the vice chairman of the institution traveled to New York accompanied by the former superintendent of banks and member of the bank’s Audit Committee, Mr. Guillermo Ramírez

As a result of this mission, the new Compliance Committee of BancoEstado discussed a specific proposal to improve our control practices in payroll administration. This proposal was approved ad-referendum and it is expected to complete its execution enhanced by the contribution of executives of the respective areas and the opinion of the new administration of the bank.

2.5.5 Social and Environmental Risk Policy

S t a r t i n g 2 0 1 7, w e h a v e a t B a n c o E s t a d o a S o c i a l a n d

Environmental Risk Policy, which aims to ensure that our customers in segments Corporate Corporation, Large Business, Real Estate, Construction, Concessions and Project Finance, develop their activity in a sustainable manner with an environmental management that minimizes the negative impacts on ecosystems and municipalities.

This document complements the bank’s current Risk Policy providing a comprehensive vision of the company while taking into consideration the environmental management actions and procedures that companies have to minimize, control and properly manage the impacts that their economic activities have on the environment and municipalities.

The Social and Environmental Risk Policy, in addition to making an allowance for compliance with the provisions of national legislation regarding the environment, takes as a reference to determine, assess and manage risks, abiding by the provisions of some international standards that on the Bank’s judgment hold the best practices in this area.

Currently, the policy is in the process of being implemented through an organizational structure specially created for it and contemplates issuing a manual and training for all the involved areas, including commercial executives of the wholesale banking included in it.

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3. A TEAM UNITED AROUND ONE PURPOSE

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3.1 OUR TEAM

WORKFORCE BANCOESTADO 2010-2017

Region 2010 2011 2012 2013 2014 2015 2016 2017

Tarapacá 110 96 96 97 99 96 100 94

Antofagasta 176 175 183 200 209 206 231 225

Atacama 114 109 116 122 113 114 126 128

Coquimbo 270 257 269 275 268 303 305 292

Valparaíso 673 673 682 685 739 700 716 717

O’Higgins 308 297 332 333 338 350 355 331

Maule 296 298 303 310 300 291 324 336

Biobío 626 637 648 643 641 682 686 684

La Araucanía 353 350 354 357 321 331 387 377

Los Lagos 341 365 376 376 316 318 350 317

Aysén 65 58 59 54 59 71 65 73

Magallanes 90 80 85 82 90 81 86 80

Los Ríos 126 122 121 125 175 169 177 207

Arica y Parinacota 50 58 65 73 74 70 75 77

Metropolitana 5.141 5.056 5.424 5.473 5.535 5.756 6036 6.324

TOTAL 8.739 8.631 9.113 9.205 9.277 9.538 10.019 10.262

Source: BancoEstado

Our workers are an essential part of the effort required to achieve the ambitious goals and objectives that we set forth ourselves each year. The social role of BancoEstado is at the base of our motivation as a team and we try to demonstrate it in each of our activities. This is why, in the last period, we have special focus on consolidating the dialogue with our workers expanding the possibilities of personal and professional growth in an equitable way for everybody.

The table below shows the distribution of BancoEstado workforce for all regions of the country, from 2010 to the end of 2017. Last year, the total allocation was 10,262 workers, of which 62% is located in the Metropolitan Region.

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Likewise, the workforce of subsidiaries BancoEstado, Centro de Servicios (ServiEstado) and BancoEstado Microempresas in 2017, stand out with 68%, 11% and 8% of the total, respectively. At the global level, adding all units that are part of the corporation at the end of 2017, our staff was 15,005 workers.

Corporación BancoEstado 2017

BancoEstado 10,262

BancoEstado Corredora de Bolsa 59

BancoEstado Microempresas S.A. 1,246

BancoEstado Administradora General de Fondos (AGF)

71

BancoEstado Corredora de Seguros S.A. 128

BancoEstado Centro de Servicios S.A. (ServiEstado) 1,675

BancoEstado CajaVecina 62

BancoEstado Cobranzas 670

BancoEstado Centro de Contacto 24horas S.A. 798

Oficina en Nueva York 27

Red Global S.A. (ComprAquí) 7

TOTAL WORKFORCE CORPORACION 15,005

As regards to the type of contract, 9,830 workers have permanent contract, equivalent to 95.8% of the total staff, while the remaining 4.2% work under a fixed-term contract. On the other hand, we have 2,477 external collaborators that serve in branches, reaching a monthly average of 306.

The table below shows our workforce according to the type of contract and gender for 2017.

NUMBER OF WORKERS BY TYPE OF CONTRACT BROKEN DOWN BY GENDER 2017

Type of contract Permanent contract Fixed term contract

Gender Women Men Women Men

Total 4,733 5,097 211 221

Percentage 48.1% 51.9% 48.8% 51.1%

TOTAL 9,830 432

Source BancoEstado

Finally, the legal minimum wage in Chile is $276,000 pesos (as of January 2018). At BancoEstado, the minimum wage is $503,079 pesos, both for men and women, which is 82% above the minimal legal compensation. Moreover, the average wage among our workers at the end of 2017 is $2,163,628 pesos.

In global terms, the average employment age of our workers is 12.3 years.

Distribution of our workforce by age in 20175

10.9%N° of workers younger than 30 years olds

53.8%N° of workers between 30 and 45 years old

5.06%N° of workers older

than 60 years old

30.3%N° of workers between 46 and 60 years old

Distribution of the workforce according to seniority in 2017

28.4%N° of workers employed over 16 years

5.9%N° of workers with less than 1 year of employment

26.9%N° of workers employed between 1 and 5 years

25.8%N° of workers employed between 6 and 10 years

13%N° of workers employed between 11 and 15 years

5. From this figure onwards, all the data to be shown consider BancoEstado workforce as a total base, which at the end of 2017 was 10,262 workers.

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Offering an inclusive workplace for all the people of our country is one of the key objectives of our human resources management. We seek that all our workers feel under equal conditions, each one delivering their contribution to our institution.

According to our strategic guidelines 2014-2018, we produced concrete strategies to promote hiring workers with a focus on equal opportunities. In this regard, our main milestone in 2017 was approving the Policy of Inclusion and Diversity, whereby we seek to frame our inclusion practice, in addition to comply with Law Nº21,015 that encourages working with people enduring disabilities at the world of work, which is mandatory for companies with 100 or more workers.

Also, today we are in the process of building an updated survey of workers in a situation of disability, called “Knowing Our Diversity”, with the purpose of identifying and characterizing in depth their realities and needs in the workplace.

In this way, we have been concerned not only generating inclusion strategies but also the appropriate infrastructure to do so.

3.2 PROGRESS IN LABOR INCLUSION AND GENDER EQUITY

In November 2017, as part of our expansion plan, we inaugurated our new Santa Ana Branch in the Metropolitan region, one of the largest and most modern in the region. This office is located in the new corporate building, which houses more than 700 workers from areas such as the Office of Transformation, Large Size Organizations (OMT) and the Wholesale Banking Management.

The adoption of video-interpretation system is another tool in this direction, which allows job interviews in regions, guide recruiters and candidates in the hiring processes from devices such as tablets or computers.

Additionally, we continue our work with inclusion programs for immigrants, taking advantage of the cultural richness they bring to our workplace. Although we have always had foreigners in our workforce, today we have expanded its presence to directly service our customers, thus contributing significantly to provide comprehensive care and improving the overall experience of our customers.

HIRING FIGURES OF FOREIGNERS AND PEOPLE WITH DISABILITIES - 2017

• 0.6% of our staff is foreign workers, who come mainly from Peru, Venezuela and Argentina, among 11 other countries, including Europe and Oceania.

• 0.2% of our staff relates to people with disabilities.

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For its part, BancoEstado subsidiary Contacto 24 Horas was honored in 2017 with the Inclusive Chile Seal 2016, in the Medium and Large Company category, by reason of incorporating work inclusion measures in accessibility in the web environment and accessibility for people with disabilities.

Regarding female participation in BancoEstado during 2017, the distribution on record in 2016 was held, that is 52% of men and 48% of women altogether. The itemization last year according to role or positions is shown below:

Role distribution 2017 Men (M) Women (W)

Executives 73% 27%

Heads, Agents and Supervisors 63% 37%

Workers 50% 50%

TOTAL 52% 48%

Through our recruitment processes, we seek to aim at a balanced representation of men and women in different positions, more so in those of greater responsibility. This gender balance contemplates a participation of at least 40% of women or men in these levels.

Although it is not a short-term job, we note an increase in the participation of women in executive positions in the last period. Indeed, between 2014 and 2017, there was a 56% growth in the female representation on the executive floor compared to a 16% growth among men.

At this point, the program “Mentoring Women and Leadership” has contributed in a substantial manner; it is an initiative springing from our Empathy Culture Program that we developed together with Comunidad Mujer, an organization that promotes women’s rights. This program is motivated by the interest of strengthening leadership and mentoring role of executives who occupy the position of managers of the bank and its subsidiaries. Likewise, the program delivers tools of empowerment and leadership for career development of women leaders of our corporation.

In 2017 we registered 22 male mentors and 34 female mentors.

Along with this initiative, from 2017 onwards we implemented the Gender Sensitization Program, aimed at workers and executives of our corporation in order to work for an equitable inter-gender treatment given our commitment to the economic empowerment of women who live in our country. The program includes meetings and conversations around stereotypes, gender equality and equity, as well as material actions to avoid situations of discrimination and inequitable treatment where workers from branches and central areas of our organization participate. At the end of 2017, we reached an 80% advance against plan, which means 113 meetings.

2017 52%Men

48%Women

BENEFITS FOR OUR TEAM, WITH A GENDER FOCUS

• According to current regulations, we have a nursery (with breastfeeding rooms) and also our own kindergarten, exclusively for our team. In the case of mothers who live outside of Santiago or who cannot take their children to the bank’s facilities, the bank pays a special benefit.

• Our workers in pre and post natal period receive the full salary with progressive reimbursement and the corporation covers the eventual gap regarding the calculation with their health system.

• We included in our HR policy a balanced rate of gender. This means for all areas to be at least 40% of men or women.

• Under equal conditions and competences, BancoEstado prioritizes the selection of a woman for a leadership position. This matter is aligned with the point above of reaching the 40% goal previously mentioned

• Finally, 100% of the benefits associated with marriage are extended to all those who adopt the Civil Union Agreement.

We also carried out face-to-face workshops with 68 attendees, where managers from the bank and subsidiaries participated in 8 and 4 hour sessions with individual work and group work.

It is important to highlight that these actions are showing results through the sustained increase in the number of women at all levels of work since 2014 to date.

Position2014 2015 2016 2017

W M W M W M W M

Executives 21% 79% 24% 76% 27% 73% 27% 73%

Heads, Agents and Supervisors 34% 66% 35% 65% 36% 64% 37% 63%

Workers 50% 50% 51% 49% 51% 49% 50% 50%

Finally, regarding compensation according to gender, at BancoEstado we maintain an Income Position Policy, which implies that any person who occupies a certain position in our organization will receive the same salary, regardless of their origin, gender or career.

“After this experience, I feel that I have a big task to do with female heads of area in the branch I lead. I am in charge of a staff where 80% are women and four of them are heads; that’s why my challenge is to download this program at the micro level with them, provide them with a personalized mentor and thus support them to achieve greater prominence”.

“Thanks for this opportunity that has let me grow as a professional, as a person and above all as a woman. This space allowed me to worry about my main role: to be me”.

(Staffers guided by the Mentoring program for women)

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In our organization, workers are united for one purpose: to deliver a high quality service to all our customers, with equal dignity. In this

way, the emphasis is not only on customer orientation and efficiency, but also on our work being developed in a framework of continuous digital transformation under a work environment of excellence, thus allowing our staff to grow and progress in various areas.

At the beginning of the 2014-2017 term we defined a set of goals articulated in a process of transformation, which pointed to a significant change in the bank’s management. This process required a great effort to improve relationships with and among our workers, so it was established as a strategic guideline. We assumed, therefore, the challenge of integrating this change in our system of people’s management, creating a new horizon of labor improvement that helps to provide a sense of purpose to our daily work.

Today, our results endorse us. We can highlight great milestones achieved during this period: the continuous improvement in internal climate assessments, together with the consolidation of dialogue with our union organizations, as well as the growth

3.3 A CULTURE FOR THE TRANSFORMATION

in programs of labor inclusion and female participation. Also, the incorporation of digital language and technological support in our efforts have simplified and streamlined processes that were previously very cumbersome and slow.

Along this line, we have put into practice a mechanism to enhance the work experience from the perspective of the employee, as we have already done for the customer experience. This will allow us to identify the dynamics of the relationships between our workers and their environments, together with the perceptions about the characteristics that we must preserve and those that need improvement.

On the other hand, it was essential to carry out a direct effort with management to develop good leadership. The training sessions with our leaders made possible to establish forms of assertive communication with their teams, as well as improve the administration mechanisms, the process of compliance with productivity goals, mobility aspects and the recognition and incentives to their workers. The latter aspect was one of the weakest items in our evaluations, which is the reason we defined a special effort to strengthen leadership capacities during this year.

Finally, the new Policy on Personnel Management was approved in 2017, seeking to update the definition of roles and responsibilities of employees, heads and executives of our organization. This new version aims at improving working conditions, professional development, relationships between our workers and how

we internally organize ourselves to meet our long-term goals. It should be noted that this instrument is part of the process of transformation and modernization of our institution and the result of collaborative work between the executive administration, the union and the different layers and areas of the bank.

The initiatives that arise from these lines of work, framed by the implementation of the Empathy Culture and Efficiency programs, have led us to strengthen an organizational culture focused not only on excellent care but also on having room for the development of people, where they can also be projected in our institution through work that is based on the social purpose of BancoEstado.

To be precise, the work we do in the corporation and subsidiaries is not only focused on achieving indicators and figures but also on collaboratively build a friendly workplace for all those who want to join our team without distinction of gender, age, ethnicity or physical abilities. Our goal is for our value of respect and inclusion to adequately represent the great diversity and richness of the people who today inhabit our country.

“What we expect from our collaborators is not only that the time they spend in the bank brings the best of them but above all, for them to be happy “.

“I feel our workers dear the bank a lot. Today we have to face the new scenario of workers who have a heterogeneous work horizon and expect much more from their companies and employers.”

(Victoria Martínez, General Manager of Administration, 2017).

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3.4 OUR LABOR RELATIONS

The collective bargaining process was carried out ahead of time, signing the agreement in August 2017. This agreement, which

culminated in a new collective agreement and started to be enforced in October of the same year for a period of 24 months, constitutes a great milestone in labor relations between the BancoEstado administration and its workers; we became the first major bank in the country to reach an agreement with its workers in the framework of the new Labor Reform .

This new contract gathers the main demands of the workers, tackling significant parts for their development such as the compensation conditions, workforce, social and health protection, benefits, along with the expansion of training possibilities, mobility and professional development.

Experience has led us to focus our attention on the need to maintain a fluid and effective dialogue with our union organizations to face the future.

One of the main results of this process was the creation of the Labor Relations Management Office starting in 2016, which

aims at the correct implementation of labor and contractual conditions, integrating and strengthening the relationships between the company, the union and workers, in order to improve productivity along with job satisfaction.

In 2017, this management office played a central role by generating a strategic agenda for continuous work with the union guaranteeing, in turn, opening everlasting communication channels with all our workers. This weekly agenda discusses the issues of greatest concern to our workers, both in the short and long term.

This formula aims at proactive work, discussing matters that not only are points of potential conflict or immediate issues but those that take significant dimensions for the overall development of our team.

Regarding the 2017 process, both the workers’ representatives and the bank’s executive floor highlighted the seriousness and responsibility that characterized the negotiation carried out in a tone of absolute collaboration and dialogue between all parties.

In this way, with the desire for a long-term collaboration on the part of our workers, we have been able to comply with the strategic guidelines focused on our labor relations, from the perspective of a public bank that puts at the center of its action the orientation to its customers, with special emphasis on the participation and collaboration of all its workers.

MIBLOG

Total visits to the blog: 240,023 Total visits to sections of the blog: 528,017Total monthly average of users: 8,600

Main contents displayed

• Benefits for workers, how to apply and when to take advantage of them according to the season.

• Stories of overcoming• Solidarity among Bank workers• Labor and Union Agenda• The side B of the people in the Bank• Screening to the different areas and

work team• News• Internal contests• The new Labor Reform

MIBE

Active users: 6,098Total app visits: 1,038,023

Main contents displayed

• Information on workers • Games• Off work ing hours press ing

information• In addition, the application allows

workers to access discounts in cinemas, restaurants and department stores, as well as take a look at basic information on human resources (holidays and vacation time available, AFP, Isapre, among others).

INTRANET

Total visits: 8,983,354

Main contents on display:

• Corporate Information (commercial initiatives, internal policies, internal campaigns, new developments, etc.).

• In addition, it allows access to all the necessary documentation of BancoEstado

COMMUNICATION CHANNELS WITH OUR WORKERS – 2017

At the end of 2017, the BancoEstado Union listed 10,024 workers, which is equivalent to 98% of the workforce, consolidating the union as the one with the highest rate of participation at the national level in a single union.

For more information of the BancoEstado Union, please visit the following link: www.sindicatobancoestado.cl

6. Source: Interview with the Chairman of BancoEstado and press releases.

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3.5 EVALUATION OF PERFORMANCE AND INTERNAL MOBILITY

The performance evaluation system we use at BancoEstado has become a very useful tool to encourage the continuous improvement of our work.

Our system evaluates the competences and how our collaborators deployed their talents in order to comply with the goals and objectives that we periodically set forth in our teams.

The next step after the evaluation is for the heads to communicate the results of the process to their collaborators, so they can integrate the improvements in their work in an effective manner and in constant support with both the team and the leaders. Through this strategy, we seek to create the conditions for our teams to improve their standards with enriching and challenging contexts for their professional growth.

During 2017, 92% of our employees were part of this evaluation process. The remaining 8% corresponds to workers who were not affected due to medical licenses or legal holidays, among other reasons. The evaluation follows a set of phases, beginning with preparing the data and set up of an evaluation committee in the corresponding area to then proceed to a self-evaluation by the worker and an evaluation by an evaluation committee, as such. Finally, the

feedback interview from the heads takes place and the process is closed with the worker validation, which contemplates the possibility of appealing.

On the other hand, it is of special interest for the bank to provide possibilities for internal mobility in all areas of our organization, in order to expand the opportunities for growth and professional development of our workers, enhancing their talents, while creating new prospects for exchange and knowledge shared between the different areas.

In 2017, more than 1,300 positions were filled with own workers, a figure distributed among men and women as 51% and 49%, respectively. The process of internal mobility occurs mainly through internal competition, transfers or re-categorizations.

During the year 2017 we implemented the Professional Development Model, whereby merit becomes the axis of development for workers considering a number of dimensions at the time of evaluating the candidates;

the model holds internal competitions and direct invitations as long as the necessary conditions are met.

In addition to this, we are including new technologies in this process, such as remote interviews and collaborative selection committees where the candidates in the short list are carried out in a more collaborative manner, combined with representatives of counterpart areas in the final interviews, thus allowing a more comprehensive approach to the final selection. The latter is carried out through Collaborative Selection Committees in leadership positions, in person and / or via web interview when distances are an impediment to perform them in person.

Regarding our turnover rate, we reached 4.8% in 2017. This estimate is the ratio of workers who left the bank over the total workforce, which tells a slight difference according to gender, that is 6.1 % for women and 3.4% for men.“We sent a signal on how to carry out serious and responsible

labor relations. Everything, in the framework of a mature debate, where we show that it is possible to distribute equitably the bank’s net income, generated by the workers with sacrifice and effort “

(Marco Beas, president of the BancoEstado Union, 2017)

“In summary, it has been four years of corporate management where we wanted to deepen the integration, the “bankarization” and the social role of BancoEstado. That has been the mandate the Executive Committee had and has found in the union a strategic partner to carry out this task, even in bad times for labor relations but more so in the good ones. “

(Marco Beas, President of the BancoEstado Union, 2017)

Campaign: “Press Play to your Professional Development”

Its objective is to spread among all the workers of our institution the Professional Development Model, which will allow them to set up a proactive attitude when it comes to professionally develop them, grow up and move into different areas of the bank.

This campaign ponders progressive stages of information. During 2017, the focus was on obtaining updated professional information in the resume of the workers that is kept available in the HR website, so that the Selection area has more information about the workers and matches their interests with the needs of the business.

By 2018, we expect to circulate the model’s matrix and the training opportunities that our team has, as part of working at BancoEstado.

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3.6TRAINING

During 2017 we deployed a wide variety of training programs for our workers, including internal leveling courses, training for our heads as well as funding scholarships for higher level, technical and professional studies, such as graduate and master’s degrees. In this way, we seek to ratify our support to

our collaborators for the full deployment of their potential.

Below we show the details of our programs and the workers benefited in each of them:

Education Program Description Number of workers

Scholarships, graduate and magister

Tuition and fees funded up to 50% 82

Under graduate and graduate studies

Shared Financing Grant for workers with more than two years of employment who wish to study careers related to banking in certified universities or institutes. The scholarship is 60% for undergraduates and up to 50% for graduate studies.

342

Banking Technical School Efobech

Vocational school and internal leveling that contributes to the development of careers.

657

Personnel inductionsHelps the insertion process into the bank, providing new hires with an overview of the institution and the rules that regulate it.

537

Induction to Customer Service Assistants

Specific training in products and services of the bank and critical processes for customer service, aimed at people who join the customer service desk in branches.

183

Training on commercial skills

Diverse programs focused on employees of the Branch Network of BancoEstado with focus on developing the commercial skills required for the function of their positions.

729

Other programsDiverse training programs such as seminars, round tables, office automation, etc.

3,274

Leadership, labor relations and experience

Program aimed at heads of the Corporation with focus in matters of leadership, labor relations and customer experience.

1.500

Total 7,304

During 2017, the bank’s training program benefited 7,304 workers, which represents 71% of our staff. This figure points at a 27 percent growth over prior year.

3.7 ACKNOWLEDGMENTS TO OUR LABOR SPACE

In 2017 we were widely recognized as a good place to work, as well as to reconcile the relationships between work and

family. Our BancoEstado Corporation was once again one of the best companies to work for in Chile, according to the annual ranking of the Great Place to Work Institute. In this ranking, BancoEstado occupied the 15th place, while the subsidiary BancoEstado Microempresas occupied 2nd place, retaining the same position as last year and consolidating itself as a working space of excellence. Likewise, for the fourth consecutive year, we were chosen as the best Employer Brand of Chile, in the study carried out by Trabajando.com, which seeks to make a screening of the perception about the best employer brand of companies in Chile based on interests, motivations and valuations of people regarding their place of work.

Another recognition received by the bank was the Best Chile 2017 Award, from Principal Financial Group, which placed our corporation among the 10 companies that demonstrate the greatest commitment to the welfare and financial future of its employees in the short and long term.

For its part, subsidiaries BancoEstado Microempresas and BancoEstado Corredores de Seguros were once again recognized for developing actions aimed at reconciling work-family and the valuation

that workers make of it. In the measurement made by Revista Ya and Fundacion Chile Unido, BancoEstado Microempresas (BEME) obtained 1st place in the Large Corporations category and BancoEstado Corredores de Seguros ranked 5th in the Small and Medium Enterprises category, holding on to their positions of the previous year.

Finally, BancoEstado Microempresas was also chosen as 2nd best company to work for among young professionals. According to what was indicated in the measurement carried out by the FirstJob platform, representatives of the millennial generation in Chile valued the commitment, opportunities and attractiveness that BancoEstado generates, positioning it as one of the best organizations to work for in the country.

These distinctions reinforce our sense in the work we do every day, while at the same time indicate that we are on the right track, especially in terms of improving our labor relations, developing possibilities of our workers and in the collective construction of a workplace that continues to stand out among its peers.

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4. INNOVATION FOR FINANCIAL INCLUSION

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4.1 WE ARE WITH OUR CUSTOMERS ALL OVER CHILE

In 2017 we fulfilled a long-awaited goal for our bank: to be in all regions of Chile, from the far north to the southernmost point. With our arrival to Antarctica, we can say that we have managed to be where our customers are, linking all points in our country. Through the expansion of different channels and the continuous innovation of formats, we have succeeded deepening the fulfillment of one of our most important strategic objectives: to generate a decentralized financial inclusion for our inhabitants at our localities.

On the other hand, the arrival of a new branch or point of service to a community that previously did not have banking presence or that holds high levels of vulnerability generates a significant impact on the quality of life of its inhabitants. Not only allows them to save travel time and expenses associated with moving from one location to another to perform their banking procedures but also strengthens community ties and the sense of belonging to the land they live.

In 2017, 82% of the branches opened by BancoEstado were located in municipalities with a high index of social vulnerability (14 out of 17, in total), while between 2015 and 2017, 75% of the total openings were located in municipalities with a level of vulnerability higher than the country’s average.

Below we show the main figures reached by the expansion of our service network in the last year, which allowed us to improve our service offer, as well as strengthen our commitment to customers and the community.

• Opening 17 new branches, focused on municipalities that did not have banking offices. At the national level, the network is composed of 409 branches distributed in 249 municipalities, covering 95.3% of the country’s population

• These openings made possible to bring bank services closer to around 200,000 people who did not have a bank branch in their locality, thereby contributing to local development and improving their living conditions, especially those in isolated areas

• We became the only bank present in 127 municipalities in the country, which accounts for 14.3% of the total population. In 15 of these we have had presence for more than 100 years.

Geographical distribution of new branches 2017

The 17 new branches opened in 2017 let us to strengthen our service network in the following regions and municipalities:

Southern Zone

San Rafael, Maule RegionYerbas Buenas, Maule RegionSagrada Familia, Maule RegionRío Claro, Maule RegionChillán Viejo, Biobío RegionNegrete, Biobío RegionCurarrehue, Araucanía RegionCholchol, Araucanía RegionLago Ranco, Los Ríos Region

Central Zone

Santiago Santa Ana, Metropolitan RegionSan Pedro, Metropolitan Region

Northern Zone

Tongoy, Coquimbo Region Hijuelas, Valparaíso Region El Tabo, Valparaíso Region Viña del Mar Las Salinas, Valparaíso RegionCalle Larga, Valparaíso RegionParedones, O´Higgins Region

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Next, we may notice growth of our branch presence between 2013 and 2017 by 14% in said period. The largest increase occurred between 2014 and 2015 and last year (between 2016 and 2017) with 17 new branches.

Evolution of the Branch Network(Number of branches nationwide)

2013 2014 2015 2016 2017

420

410

400

390

380

370

350

340

330

358363

380

392

409

Source: BancoEstado

Considering the entire service network, including branches, the ServiEstado service center, CajaVecina service points and ATMs, we table the following details for each of the country regions.

VIII Del Biobío 46 10 2.863 251

XV Arica y Parinacota 5 3 523 26

I Tarapacá 7 3 438 40

II Antofagasta 15 3 594 73

III Atacama 10 3 596 46

IV Coquimbo 21 4 1.535 105

V Valparaíso 46 13 2.181 289

RM de Santiago 127 46 5.690 938

VI Lib. Bernardo O’Higgins 29 5 1.630 135

VII Del Maule 24 5 2.156 145

XII Magallanes y la Antártica 5 1 226 36

XI Aysén 4 1 280 16

XIV Los Ríos 13 2 535 74

X Los Lagos 28 5 1.508 134

IX La Araucanía 29 4 1.392 134

customers with a cuentarut account

10,200,000CUSTOMERS OF MICRO AND SMALLBUSINESS

customers with savings account

migrant customers

444,478internet customers

3,800,000BRANCHES IN THE COUNTRY

409ALL OUR BRANCHES HAVE AT LEAST ONE INFORMATION DISPENSER

SERVIESTADO BRANCHES

108 MAILBOXES DISPENSERS

341 900CAJAVECINA POINTS

22,1472,442 ATMs

Branches ServiEstado CajaVecina ATMs

8,900,000

654,000

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extensive network of service points in the country, holding presence in all municipalities.

During 2017, the bank opened 17 new branches, especially in municipalities with no presence of other banks, such as El Tabo, Hijuelas, Calle Larga, San Pedro, Paredones, Yerbas Buenas, San Rafael, Rio Claro, Sagrada Familia, Negrete, Curarrehue, Cholchol and Lago Ranco, among others. These openings are part of the bank’s strategy to advance in the inclusion of smaller or more isolated locations in the area of banking services.

People who live in areas far away from the big cities or in densely populated municipalities, may access banking services through ServiEstado and / or CajaVecina points located in places closer to their homes.

BancoEstado reaches Antarctica, covering 100% of our country’s municipalities.

Thanks to the agreement signed between BancoEstado and the Chilean Antarctic Institute (INACH) in February 2017, a CajaVecina service point was set up enabling for the first time a financial service of this type in Rey Jorge Island.

This CajaVecina point will allow researchers, support personnel, members of the Armed Forces and tourists to carry out banking operations with BancoEstado cards, electronic transfers, cell phone recharges and payment of services, among other transactions, thus helping their daily life and increase the financial connectivity throughout the country.

On this matter, our Chief Executive Officer Ms. Jessica Lopez, said that “this is a very important milestone for the bank because we fulfilled our desire to reach all municipalities in Chile. We only lacked Antarctica and now we achieved the goal of providing financial services to this place, where hundreds of tourists, officers and researchers go every year. “

On the other hand, Edgardo Sepúlveda, a client of CajaVecina in Antarctica, points out that having this service “has meant establishing a simple, fast and reliable connection to solve necessary procedures in Chile from Antarctica, which are difficult to do any other way and slows down activities in Chile. Having this type of facilities in remote areas and subject to harsh weather conditions accounts for improvement in the level of connection carried out by Chilean deployments in favor of science and where BancoEstado is supportive. “

BancoEstado inaugurates the first bank branch in Tirúa As part of the plan to open new branches, increase territorial coverage and deepen financial inclusion in the country, BancoEstado opened a branch in this community, the first banking office in its history.

On this opportunity, our Chairman Mr. Enrique Marshall, emphasized that this community represents an example of the harmonious coexistence between people of different heritage and habits, an initiative that consents advancing in the construction of a more inclusive, equitable and solidary country.

For his part, the mayor of Tirúa, Mr. Adolfo Millabur, said “in Tirúa we observe greater dynamism in the local economy, business now is simpler, people save time in transactions. Now, in half an hour or less they do all their banking procedures; before it took at least a full day. Moreover, all the expenses tied with that trip are now left in Tirúa. The branch improved the self-esteem of the Tiruans because now is a different thing to have a bank in our own community; and a state bank above all. People hear that we have our bank; the people have their own bank. It gives us a sense of belonging, we no longer feel that it is a small community because now it has a banking service and that gives it a different anchor.”

In this context, i t is worth highlighting the progress of the Universal Attention Program. This initiative contemplates adjustments in the bank’s infrastructure and

developments of new face-to-face and remote assistance tools in order to deliver a service with equal conduct and autonomy at providing services to minority groups of society, integrated by people with disabilities, immigrants, senior citizens, indigenous peoples and the sexual diversity collective.

In terms of infrastructure, the program sets that all new branches built from 2016 must be designed with all the necessary elements so that people may access and move independently through the construction, elevators, ramps, counters and boxes in double height, among others.

By the end of 2017, we have 29 new branches with universal design. At the same time, we have an infrastructure readjustment plan for offices opened before 2016 with a goal by 2019 of attaining 100% accessible offices. On this commitment, by the end of 2017 we have made 40% progress, which is equivalent to 135 branches equipped for autonomous access for people.

4.1.1 Our different formats

At BancoEstado we strive to reach our customers wherever they are, offering services of the highest quality and with the best security standards. Thus, as of December 2017, we have 22,147 CajaVecina service points in the country, which represents an increase of 15% over the previous year; 26% of them are in the Metropolitan region and the remaining 74% in regions.

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523Arica y Parinacota Region

438Tarapacá Region

594Antofagasta Region

596Atacama Region

1,535Coquimbo Region

2,181Valparaíso Region

5,690Metropolitana Region

1,630Libertador

Bernardo O’Higgins Region

2,156Maule Region 2,863

Biobío Region

1,392La Araucanía Region

535Los Ríos Region

280Aysén Region

226Magallanes y la Antártica Region

1,508Los Lagos Region

Advances in Plan Minga

In 2016 we launched the Minga Plan to bring CajaVecina services to all inhabitants of the Chiloé archipelago, who through a wireless device (POS) in boats may carry out their banking procedures while they move to their homes or to their working places.

In 2017, we continued strengthening this initiative. We have three boats that help providing financial services to 131 areas of the Chiloé archipelago and by the end of said year we totaled 3,504 transactions including draws and deposits. In this way, we implemented CajaVecina’s mission, which is, bring banking services to the most remote locations in the country and thus, expedite the financial inclusion of thousands of people.

Property taxes paid through CajaVecina

Adding property tax payments through CajaVecina eased payment of this tax obligation to all home owners of the country, regardless of where they are. At the end of 2017, the results are:

• 26,616 payments of property tax.• 12.8% of payments made through payment means in 2017.• 77.3% of payments concentrated in Metropolitan, Biobío,

O’Higgins and Valparaíso regions. • 3,884 points of service activated for this purpose,

corresponding to 17.3% of the CajaVecina network.

Testimony of CajaVecina client number 20,000

Mr. José Navero has lived in Puerto Edén for 30 years now, in the Patagonian channels facing the ice fields, south of Gulf of Penas. He arrived as a port captain and today he is keen on processing sea products with a small plant. Regarding his experience with CajaVecina in this land of Kawéskar, Don José shares with us the following testimony:

“We are far off, three days sailing from Puerto Montt and 26 hours from Puerto Natales. CajaVecina has contributed to solve our connectivity problems, giving us the possibility to recharge, make transfers and pay debts. In addition, it is essential for tourists to do their banking procedures. It is a great initiative for the State of Chile to be present in these lands. So we want to give our sincere thanks from our entire community. Hopefully this service will reach all the remote towns in Chile. “

Office distribution of CajaVecina service

BancoEstado moves ahead complying with Decree Law 222

In view of the increase of ATM robberies during 2013, the Ministry of the Interior, through Decree Law Nº222, established a number of measures to regulate and increase security standards for these machines.

BancoEstado decided an early compliance with the requirements of the decree and had implemented by December 31, 2016 all the measures required by the authority for its 2,378 ATMs throughout the country. This implied 100% compliance two years before the deadline established for the banking industry, that is, December 31, 2018.

In this way, we moved forward one new step in our commitment to accompany customers and the rest of the community in the provision and access to our services throughout Chile, with higher security standards in all our ATMs and without the need to reduce the number of these machines at the national level.

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Source: BancoEstado

CajaVecina holds presence in all municipalities of Chile, including Antarctica, thus allowing people living far away from bank branches to access various financial services offered by BancoEstado with the convenience of being in stores and commercial premises in their district.

2006 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

22.147

16.504

11.461

7.130

3.327

1.003

CajaVecina Service Points

24.000

20.000

16.000

12.000

8.000

4.000

0

The accelerated digitalization we live in Chile has led to profound transformations in bank management, integrating to our strategic goals the task of guaranteeing access to our customers at all times and places as well as become skilled and competent managing the digital relationships with our customers.

In this innovation process, the creation of a technological and operations system robust enough to handle billions of transactions in a safe and stable environment has been fundamental. We are the largest digital bank in the country with more than four million digital customers, while considering that 96% of the bank’s transactions are carried out outside the branch network.

The massive volume of transactions and banking operations we have achieved, added to the continuous strengthening of our processing systems allowed us to reach our customers with a universal approach. As a result, progress in this area is an essential means of financial inclusion. By including technology in the core of our management, we have managed to democratize access to a variety of banking products and services that previously had no place in the horizon of our customers.

4.2 ALWAYS CONNECTED WITH OUR CUSTOMERS

In particular, the focus of commercial management to enhance multiple channels has been the relationship with the digital customer, improve the digital experience, strengthen the knowledge of the digital customer and enhance the digitization of cash. As a result, in 2017 we increased by 22% the number of digital customers, who rather use our Mobile Banking and the BancoEstado App.

Among the2017 milestones, we highlight the growth of our App BancoEstado, which is ranked as the most downloaded app in the industry, with 3,760,947 downloads, as well as the consolidation of PagoRUT, a tool that expedites online transactions for our customers that are CuentaRUT holders and has been used by more than 700,000 customers.

Add to these initiatives the sustained growth of our followers in social networks, who have almost quintupled since 2014 to date, the continuity of our services 24/7 and the acquisition of the ComprAquí network for electronic payments to small businesses.

Our journey has shown us that going from “bankarization” to true financial inclusion is part of the social footprint of BancoEstado, mobilizing and deepening the relationship with customers in the digital environment and aiming at a better knowledge and support of digital customers through a personalized communication.

CONTACTO 24 HORAS - FIGURES 2017

At the end of 2017, our service Contacto 24 horas reported the following results:

• 88.6 million phone queries through the 600 200 7000 line

• 64% of them channeled via the Transacción Nueva service

• 20% of them via the Pre-Perfil Todo Cuenta service

• 14% of them asking for the balance of the checking account

• 252 seconds as the average response time

600 200 7000

BANCOESTADO SOCIAL NETWORKS - FIGURES 2017

The sustained growth of our followers in social networks has allowed us to strengthen our online community, as well as remain attentive to the needs of our customers at all times. Next, we share the results for the year 2017 compared to the previous year, showing the annual growth in each case.

In total for 2017, we have 444,801 followers of BancoEstado on Facebook and Twitter. We highlight the great increase of our community on Facebook, where in one year we more than doubled the total number of followers.

296.917Fans

113.943(last year)

161%Community growing

+ 182.974New Fans

44%Community growing

+ 45.082New Fans

FACEBOOK BANCOESTADO

TWITTER BANCOESTADO

147.884Followers

102.802(last period)

SOCIAL NETWORKS GROWTH 2014-2017

Our growth trend in these networks can be seen in the charts below, where 2017 stands out for the large increase in followers of both networks, Facebook and Twitter.

500.000

400.000

300.000

200.000

100.000

0

On the other hand, the “Pato BancoEstado” (a cute duckling), which is a brand icon of the identity of our institution, reported 302,408 followers on the Facebook Fan page and 15,329 on Twitter at the end of 2017.

Finally, our financial education program “En Fácil y en Chileno” also stands out for the high numbers of followers on social networks; that is, 178,334 followers on Facebook Fan page and 28,418 on Twitter, by the end of 2017.

2017

2014

2015

2016

Facebook Twitter Total

444,801

216,845

144,874

91,536

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The wide coverage throughout the country along with the large volume of transactions and information handled by BancoEstado requires reliable systems that guarantee continuity and maximum security for our customers. Therefore, in 2017 we improved the technological platforms and internal processing models to ensure the durability of the technologies in use without disturbing our process chains.

Specifically, in 2017 two internationally certified data centers were incorporated to ensure service continuity. We approved the migration of one of these technological platforms to one of the new KENOS data centers within the framework of the Empathy Program 24/7; this move provides better support, increases our capacity and optimizes incident resolution, therefore, decreases their probability of occurrence in a significant way.

In this way, we managed to provide our institution a “processing site” in line with the highest international standards that

4.3 TECHNOLOGICAL CAPABILITIES SERVICING OUR CUSTOMERS

RESULTS OF APP BANCOESTADO, 2017 strengthen business continuity and let us deliver a service with great stability and continuity to our customers and collaborators. The KENOS project involved the service migration of our payment chain to continue with websites, CajaVecina services and financial core of the bank.

To achieve this, it was necessary to migrate approximately 60 servers per week over 22 weekends minimizing the impact on our internal users and customers. The migration work was possible thanks to the work of offices Technology Management and

Operational and Technological Risk, jointly with the support of each of the employees of our institution who quickly adapted and contributed to the change.

For its part, the second acquired data center called COQUENA, is designed to function as a backup for KENOS in case of failure or an unforeseen event. Construction of physical facilities should complete by the end of 2018 and stand fully operational on that date.

BancoEstado App downloads

Registered Customers

Financial Transactions in App & PagoRUT

Transfers Payments made

Customers used PagoRUT

Financial Transactions

Customers using App BancaMovil

Queries

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Information security for our customers and workers is a priority to ensure comfort and confidence in our services. Hence, in 2017 we updated in our website for customers the contents of the Security Portal referred to “E-mails with fake sites”, “Viruses that steal your data”, and the “Fraud Gallery”. In addition, we sent mass e-mail to our customers for the safe use of their banking products.

On the other hand, every month of 2017 we published under security issues at Facebook and Twitter accounts articles related to the use of passwords, ATMs, internet, prevention, alerts and use of data. We can illustrate this with the following examples of publications and recommendations in our networks:

Also, during 2107 we reinforced spreading information on security matters with the purpose of raising awareness among all our employees of BancoEstado Corporation on the importance of protecting our customers’ information, which we did through articles in Intranet, the MiBE App and email. Furthermore, an e-learning module on information security was designed and deployed to circulate the policies and standards that our bank has established in these matters.

INFORMATION SECURITY INITIATIVES AND CAMPAIGNS TO PREVENT FRAUD

4.3.1 Acquisition Network ComprAquí: expanding our payment systems

In 2017 we launched the CompraAquí Network, as part of the technological and business innovations we offer to our customers. This payment system aims at complementing the offer of electronic payments in the country led by Transbank, focusing on small businesses. In this way, we expect to reduce the use of cash and reach stores in all areas of the country, especially those where a person could not pay with cards.

ComprAquí operates in beta test mode since October 2017, aligned with its growth plan. This responds to the need to ensure that all the technological and business innovations integrated by the network are efficient, which includes online affiliation, no fixed monthly cost charge and a low cost mobile payment terminal, which works through the cell phone.

While ComprAquí is a service available for businesses and cards of all banks, 50% of the businesses are BancoEstado customers; sales through the CuentaRUT product are 37% of all transactions carried out in the network, as of December 2017.

The implementation of this innovative system strengthens our service network as well as the inclusion of our SME and entrepreneur customers, regardless of their place of residence or sales volume. It is configured as a response to the needs of our customers, making available a modern and safe tool that, in turn, will help to boost the economy of our localities.

Our goal is to reach 100,000 businesses and entrepreneurs in a period of three to four years, and cover 100% of the municipalities of Chile during 2018. By the end of 2017 we have 1,847 devices (POS) sold in all regions of Chile and presence at 45% of the municipalities.

ADVANCES OF COMPRAQUÍ IN 2017

1,847 devices sold in 2017

During the first three months of operation we managed to have presence in 100% of the regions of Chile and in 45% of the country’s municipalities, including Easter Island.

44,000 transactionstotaling $735 million.

TESTIMONY CUSTOMER TRADE WITH COMPRAQUÍ: Ms. Angélica Tolosa, AREMKO Spa, Puerto Varas, 2018.

Our client Ms. Angélica Tolosa, in charge of Aremko Spa, a spa and lodging center located 23 km off Puerto Varas, acquired the ComprAquí system to offer more payment means to its customers in an area of difficult access. Angelica shares her statements with us:

“The device works very well; we can use it even with foreign cards. This form of payment has increased our sales by at least 30%; today we reach customers we did not have access to before. Besides expanding our customer range, it has meant the convenience of not going so often to the bank and cut down the cash the company handles, making our transactions safer. There is less cash and everything is much easier. Before we had to go every other day to deposit and now, with luck, we go once a week .“

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4.3.2 Synthesis of multichannel results

Transactions of BancoEstado’s customers through Internet have grown exponentially in recent years. Until Dec-17 they reached 923 million, with an average of 262 transactions (financial and administrative) per customer per year.

BancoEstado’s customers massively use Internet to execute their banking operations; these customers exceeded 3.7 million in December 2017.

Between 2006 and 2017 these customers of BancoEstado increased 32% annual average, while those of the system grew, on the average, 19% annual.

About 2.5 million customers used Mobile Banking and / or the Mobile Application, as of Dec-17; this is a 30% growth during the year.

20062005 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

28 40

215

369

566

9231.000

750

500

250

0

Annual transactions of BancoEstado’s customers via internet (million)

Source: BancoEstado

20062005 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

98

236

693

1,157

1,887

2,735

3,7784.000

3.000

2.000

1.000

0

Internet customers(thousands, index 2005=100)


BancoEstado clients BancoEstado index Systema index

2012 2013 2014 2015 2016 2017

356

650

952

1,255

1,903

2,4772.500

2.000

1.500

1.000

500

0

BancoEstado Mobile* customers(000s)

*Clients using Banca Movil and/or Mobile application

Share of banking customers in internet (%, dec-17)

*Total internet customers: 9.3 millionSource:SBIF

16%BANCO 3

11%BANCO 4

40%BancoEstado

20%BANCO 2

13%RESTO

40% of the banking customers that occupy Internet for their transactions in the banking system are from BancoEstado

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4.4

OUR CUSTOMERS’ SATISFACTION AND EXPERIENCES

As a universal bank, we have the challenge of serving a variety of customers seeking to build long-lasting relationships with them. To achieve this goal, we have a strategy that pursues to improve the satisfaction of our customers and their recommendation through a management model that contemplates periodic measurements of satisfaction and actions oriented to listen to their experience at each interaction with the bank.

The latter is supported by a tactical management structure through channels and branches; at the operational level, via management of the customer experience; at the strategic level, via model definitions. Also, we have a system of continuous improvement associated with specific goals, which allows us to evaluate the effectiveness of the initiatives on a permanent basis

At a higher level, we have a Quality Committee led by the Chief Executive Officer, which meets monthly and has the power to request the responsible management area action plans to better handle the various satisfaction and quality metrics. Its main function is to periodically monitor the goals established in Quality of Service against the results obtained in studies and measurements made in terms of satisfaction and NPS recommendations, quality, transparency selling products and managing claim indicators.

In managing 2017, we surveyed 20,000 customers each month in order to assess the level of satisfaction in 12 channels. This

Evolution of client satisfaction 2014 2015 2016 2017

Customers’ satisfaction 70% 71% 73% 76%

was carried out thanks to the application of short rating surveys on the attributes that make up the satisfaction of the channel. Add to this data a direct evaluation of satisfaction with the bank in general. This information is delivered monthly to the Quality Committee.

Satisfaction of individual customers is monitored every day through interviews via an IVR (Interactive Voice Response) with voice recognition, which is applied with a maximum delay of one week after the client’s experience has been recorded at any of the contact points associated with each segment of people.

At the top level of indicators, during 2017 the bank’s overall satisfaction level reached 76%, earning three improvement points over the previous administration and exceeding the committed goal of 75%. It also highlights the sustained evolution since 2014, reflecting a 6 point increase since that year.

On the other hand, the score assigned with the Net Promoter Score’s (NPS) methodology for the corporation was 22%.

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5. FINANCIAL INCLUSION AND SAVINGS AS MEANS FOR WELL-BEING

Financial inclusion is one of the central pillars of our 2014-2018 strategic guidelines, as it is a goal to maximize our positive impact on society, that is, our social footprint. This materializes in a management aimed at promoting a financial system that guarantees better conditions for entrepreneurship and access to new opportunities that result in improving the quality of life of all residents of our country.According to the World Bank, the first step to achieve financial inclusion is banking or access to financial products and services, such as transactional accounts. Then, it is necessary to strengthen the knowledge and practices of people to properly function as users of the financial system through financial education strategies and others of similar nature.In Chile, financial inclusion has raised up steadily in the last decade, which tripled between 2006 and 2016. By the end of 2017, the industry recorded a total of 21 million debit and credit accounts .

Our bank also led the transfer of funds between financial system accounts from 41% in 2014 to 55% in 2017, endorsing the trend of the last four years in total of transfers between accounts in the period.

These results, accompanied by others that we will review in this chapter, only make sense when we achieve a positive impact on the well-being of people from a perspective of citizen’s access and economic empowerment.

Thus, our north as a bank of the State of Chile is to put the focus beyond the numbers, offering an integral participation experience in the banking system at the national level, which allows all people in our country to make better decisions about their own economy.

In the words of our Retail Banking manager, Ms. Cecilia Vergara:

“Our greatest achievement in the last four years deals with returning to the path of social inclusion of the bank and consolidate it beyond holding individual products but from a comprehensive perspective of access, which allows us to build a long-term relationship with our customers, through total coverage, both physical and digital “

5.1 RETAIL BANKING MANAGEMENT

Our bank has been recognized by the Superintendency of Banks and Financial Institutions (SBIF) as a relevant agent promoting financial inclusion of broad segments of the population. In particular, the SBIF highlights our CuentaRUT product as an instrument with a high national incidence in terms of bank inclusion. At the end of 2017, we can proudly say that we have exceeded 10 million CuentaRUT customers, reinforcing our work in banking, precisely in line with what the World Bank points out.

On this matter, our scope not only includes the total number of customers but also loans and transactions, as we will see later in this report. In this exercise, our debit cards were in 42% of these operations in the system, which is a progressive increase since 2014, a year when we scored 33%. Thus, in the last four years we have consolidated our leadership as currently our participation in debit operations doubles the one of the runner up bank .

BancoEstado concentrates 53% of the debit cards of the system.

7. Asociación de Bancos e Instituciones Financieras (ABIF), 2017. Available at: https://www.abif.cl/wp-content/uploads/2017/03/INFORME-Abif-N-96-Inclusión-Financiera.pdf.

8. SBIF, Report on debit cards, December 2017.

FINANCIAL INCLUSION: THE NUCLEUS OF OUR SOCIAL FOOTPRINT

At BancoEstado we strongly believe that financial inclusion is about guaranteeing access to quality financial products and services for all people in our country, with equal dignity, during all their lives and throughout our territory. We highlight the following figures of our 2017 management9.

• 12.9 MILLION CUSTOMERS BY THE END OF 2017.

IN ADDITION TO, FOR 2014-2017:

• We contributed to shrink the gender gap: we increased financing to 15% of women customers, reaching 979,000 by the end of 2017.

• More than doubled the number of immigrant customers: we increased 126% and reached a total of 444,478 in 2017.

• More than doubled the number of digital customers: we rose 107% and reached a total of 3.8 million customers

Further information available at www.huellasocialbancoestado.cl9. Source: BancoEstado Retail Banking Public Report 2017.

“BancoEstado is a meeting place, a citizen’s town hall. What makes us so special is that we are a bank that builds citizenship. We are an institution at the service of the community”.(Ms. Cecilia Vergara, Retail Banking manager, 2017).

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Below, we display details on customer and products by the end of 2017.

BancoEstado customers

Customers with savings account 8,899,455

Checking account 667,476

CuentaRUT customers 10,179,823

Electronic checkbook customers 1,212,131

In force credit cards 1,174,003

Mortgages 489,528

Insurance 3,698,707

Consumer credits 1,002,867

Student loans 169,419

Small business customers 653,929

Internet customers 3,778,463

Mobile (use Mobil Portal and/or Mobile App) 2,476,740

People receive monthly paychecks, pensions and scholar-ships. 3,649,974

Source: SBIF, BE

Between 2001 and 2017 BancoEstado has multiplied its consumer loans more than six times.

Actual Evolution of Consumer Loans (Balance, Dec index 2001=100)


2006200520042001 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

700

600

500

400

300

200

100

0

BancoEstado System

Strong expansion of insurance: the bank’s insurance subsidiary holds more than 8.5 million insurance policies in force that cover various risks for families and companies.

In force Insurance (000s)

Related to mortgages Others

200620052004 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

1.536

2.7761.883

3.328 1.924

4.186 3.069

4.9994.271

5.5315.421

6.908

7.051

8.570

9.000

6.000

3.000

0

Source: BancoEstado

1.240

1.445

2.262

1.930

1.260

1.488

1.519

BancoEstado concentrates the largest number of debtors in the system with more than 1.6 million (28%).

Share of total debtors in the system* (dec-17)

23%REST OFSYSTEM

12%BANK 4

27%BancoEstado

21%BANK 217%

BANK 3

*5.8 million debtors in the systemSource:SBIF

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In 2017, our bank continued to expand and deepen the financial inclusion of the people in our country. Of the 17 branches opened this year, 14 of them have high vulnerability indexes.

In addition, our focus in this process was to reach municipalities that did not have banking offices. As a result, we covered about 200,000 residents at isolated localities that did not have a bank branch before; this process not only made a positive impact on local economies but also improved the living conditions of people providing better connectivity to our country.

Below, we show the growth of customers from 2012 to 2017. In the period 2014-2017 we increased by 2.5 million new customers, while since 2012 this increase was 3 million, which translates into an increase of 30% in the last five years. On the other hand, this expansion has allowed changing from an average of 2.4 banking products per client to 3.0, a considerable increase according to the volume of our customers.

10. Source: Business Intelligence. The base figure for the calculation of product crossover includes customers of the Retail segment over 18 years of age; therefore it is less than the total number of customers presented in other sections of this Report.

2012 2013 2008 2009 2010 2011

Products’ crossover for BancoEstado Retail10

Retail banking customers (MM)

Products’ crossover

9,9 10,4 10,811,1

11,9 12,0

2,40 2,50 2,30 2,40

2,92 3,00

This is a benefit program that allows our credit card customers to accumulate points, which can then be exchanged for discounts on purchases. The discount is credited in the credit card account based on the calculation that for every $100 purchased in Chile or abroad, the card holder accrues 1 point, which is equivalent to $ 1 peso.

Exchange i tems are : educat ion, supermarkets, large stores, drug stores, fuel, airlines, travel agencies, hotels.

By the end of 2017, we had over 655,000 customers accruing TodoSuma points.

Further information at www.todosuma.cl

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In 2017 we reached a total of 10,179,823 customers with CuentaRUT. From them

• 52% are women• 69% earn less than $400,000 pesos• 40% hold a banking debt

In addition, of the 444,478 immigrant customers, 72% have CuentaRUT.

In January 2007, we launched CuentaRUT, a universal access on sight deposit account, available without distinction to all people in Chile. In 2017, we exceeded the threshold of 10 million customers in a country of 17.6 million people, with an annual customer growth rate of 11%, an unprecedented figure for any other banking product. This sustained growth has allowed us to concentrate most of the cash management accounts and become the main payment method for our banking customers11.

As a result, we can speak of the indisputable consolidation of this emblematic product, becoming one of the main financial inclusion tools in our country. The reasons for its success lie in areas such as the few requirements for opening an account12,

as well as the possibilities to manage money in a safe and modern way, among which include taking deposits, transfers, draw money, use it for electronic payment (RedCompra or ComprAquí) and recently, use BancoEstado’s App and PagoRUT App.

The PagoRUT App was launched in 2016 to ease digital transactions among CuentaRUT customers, letting them to send and receive money efficiently and free of charge. In addition to saving time and reducing transaction costs for our customers, this service was implemented as part of the efforts of our institution to deepen financial inclusion and the digitization of our customers.

At the end of 2017, both applications strengthened their presence with 3,760,947 downloads in total, whereby over 1.7 million customers have used Mobile Banking and more than 700,000 PagoRUT.

In this way, at BancoEstado contributes to financial inclusion through tools that allow us to better manage people’s financial risks, thus contributing to reduce the vulnerability of low-income households, while at the same time give them equal opportunities to function in the financial system in an efficient and safe way.

5.2 CUENTARUT IMPACT

11. The main payment instrument used by banking customers, in terms of the number of transactions; SBIF, 2016.

12. The requirements are to be a natural person with a valid identity card and at least 12 years old for women or 14 years old for men.

2006 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

0,6

2,3

4,2

6,4

8,3

10,2

CuentaRUT(million of active cards)

Source: BancoEstado

12

10

8

6

4

2

0

TESTIMONY OF CUENTARUT CLIENT Nº 10.000.000

As mentioned before, in 2017 we managed to exceed the threshold of 10 million customers with CuentaRUT. At the exact moment this milestone occurred, there were two customers who simultaneously contracted this emblematic product on the same day and at the same time. One of them wanted to share this experience with us: Bárbara Tapia, a young student, recently graduated from high school.

Barbara and her family shared that in this important moment of her life when she was getting ready to join the world of work, she had to have a means of payment where she could deposit the payment of her first work experience as well as manage her money in a safe way. Barbara comments that “the main benefit of having a CuentaRUT for me is to be able to make transfers, deposit my wages there and withdraw money from ATMs. Above all, with this account I will be able to keep my money in a safe place as it will be better than walking around with cash. In addition to insurance, it is much more convenient, because I can pay directly in shops with my card”.

CuentaRUT customers exceeded 10 million, which is considerable in a country of 17.6 million inhabitants.

CuentaRUT customers continued to grow strongly during the year at an annual rate of 11%, which represented nearly one million new cards.

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On the other hand, our efforts to improve the attention to immigrants have been reflected in initiatives such as service in Creole language, implemented at the Contact Center 24 hours in 2016 (also known as “Contact Lota”), to support our customers from Haiti, who have increased considerably in recent years.

This action was framed in the “Multi cultural Project” of our organization, which integrated the possibility of answering multiple queries from customers not only in Creole but also in the Mapudungun language. With this work we strengthen our commitment to be the bank of all the people that inhabit our country, with special focus on the diversity that characterizes us.

TESTIMONY OF HAITIAN CLIENT WITH CUENTARUT

In this context, Romex Nerestan from Haiti has been a CuentaRUT customer for about four years now. He has lived seven years in Chile in the Pudahuel district, in the city of Santiago, where he works in sales. It is important to mention the possibility that is given to migrants when opening a CuentaRUT, as it benefits their employment through access to new means of payment and electronic transfers, on top of receive payment for their work and manage their cash in a modern and safe way. In this issue, Romex says.

“Opening a CuentaRUT was a great help when I arrived to Chile and it continues to be so today. Thanks to this account, I can handle my money much safer and have no need to walk around with cash on the street. In addition, I can make transfers and receive my salary. In that sense, it has been a great help; it has worked very well for me.”

(Romex Nerestan, CuentaRUT client)

5.3 SAVINGS AS AN ENGINE FOR DEVELOPMENT AND SOCIAL MOBILITY

At BancoEstado, we understand that saving plays a significant role in improving people’s quality of life, as it allows to acquire durable goods and access services such as education, while at the same time provides resources to cope with at old age and battle adverse situations in a better way.

At the end of 2017, we reached 8.9 million customers with savings accounts. Moreover, we observe that 78% of our women customers have savings, compared to 66% of male customers. On the other hand, our savings accounts represent 93% of the savings accounts of the system. Thus, our role as promoter of savings is very strong in the country’s economy, which is why the promotion of saving habits continues to be a central focus of our work.

13. Source: Figures taken from www.huellasocialbancoestado.cl

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12%BANK 4

Share of number of customers with mortgages*(% Dec-17)

18%REST OFSYSTEM

17%BANK 2

10%BANK 4

12%BANK 3

*Total clients in the system: 1,053,274Source: SBIF

Share of mortgage balances*(% Dec-17)

*Total mortgages MMM$ 43,911Source: SBIF

30%REST OFSYSTEM

21%BANK 1

17%BANK 3

43%BANCOESTADO

20%BANCOESTADO

BancoEstado is leader in mortgage loans in the country for low and middle income segments.

The bank serves 43% of the customers of the banking system with mortgage loans.

Share by tranches of customer balances

with savings accounts at BE (% Dec-17)

15%Up to M$1

9%+ de M$1.000

58%M$1-M$100

13%M$100-M$500

5%M$501-M$1.000

*Customers with in force savings accounts: 8.9 millionSource: BancoEstado

Share of savings account balances by bank* (% Dec-17)

1%BANK 4

5%BANK 2

2%BANK 3

*Total time savings: MM$4,669Source: SBIF

88%BANCOESTADO

4%REST OFSYSTEM

73% of customers with BancoEstado savings accounts have balances of up to $ 100,000.-

BancoEstado continues to be the undisputed leader in Savings Accounts for people.

Our customers also have other relevant means to save and invest such as mortgage and the Voluntary Pension Savings (APV) accounts. Regarding mortgages, we observed an average debt14 of UF 1,278 and our share is shown on the following charts.

14. Source: Figures taken from www.huellasocialbancoestado.cl

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BancoEstado is leader in mortgage loans for homes up to UF 1,000 with a 72% market share.

BancoEstado clients with mortgages by debt tranche (% Dec-17)

2%More thanUF 3.000

27%Between UF 1.000and UF 3.000

43%Up to UF 400

28%Between UF 400and UF 1.000

Source: SBIF, BancoEstado Source: SBIF, BancoEstado

+ U.F. 3.000U.F. 1.000-3.000U.F. 400-1.000UP TO U.F. 400

100%

80%

60%

40%

20%

0%

Share of mortgages by tranche of in force debt (% Dec.17)

4%

33%35%

4%

96%

67%65%

96%

Almost 30% of students who finance their studies with bank loans do so at BancoEstado.

Clients with college loans (Total debtors Dec-17)

5%REST

6%BANK 4

38%BANCO 1

24%BANK 3

*Total debtors: 626 thousandSource: SBIF, BancoEstado

Student loans(Balance* Dec-17)

*Total stock de créditos: MMM$2.617Source: SBIF

10%REST

7%BANK 4

27%BANK 2

24%BANK 3

27%BANCOESTADO

32%BANCOESTADO

BancoEstado Resto

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Along this line and recognizing our commitment to the country’s sustainable growth, the agreement called EcoVivienda signed by our bank and the Ministry of Energy for the purpose of launching a mortgage loan for the promotion of energy efficiency and Non-Conventional Renewable Energies (NCRE) stands out as a milestone in 2017.

This initiative is linked to the agreement signed in 2016 with the German bank KfW with the purpose of financing the purchase of new homes with subsidies and with energy efficiency certification at a preferential rate.

The loan, a consequence of the alliance with the Ministry of Energy, seeks to increase the efficient use of energy resources in our customers, carrying out joint actions and acting in a coordinated, cooperative and complementary manner. In addition, the agreement includes the design of technical instruments to evaluate and implement energy efficiency and NCRE projects. At the end of the year we had 359 homes sold with this loan.

Along with the above, we highlight our participation in the 20th version of the ExpoVivienda 2017, which aims at publicize mortgage offers and provide advice to thousands of visitors on funding alternatives for purchasing houses. There were more

Mr. Juan Ávila owns the construction company AVIFEL Ltda., in the city of Osorno, where he has lived for 37 years. Some time ago he helped with the sustainability certification for a set of housing projects in the Island of Chiloé, which ensures thermal insulation of heating houses, contributing to energy efficiency through fuel savings and reduction in emanation of gases to the environment. Thanks to this, we granted mortgages through the EcoVivienda Mortgage. With regard to this experience, Juan tells us:

“I am a BancoEstado client with several contracted products; I have a checking account, supplier’s payment and payroll payment for my construction company. So we easily and quickly arrived at the possibility of this certification and got EcoVivienda mortgages for the projects in Chiloé. The experience was very good; the loan came out rapidly and without major formalities. I think it’s a very good idea to be replicated throughout Chile and I definitely recommend this mortgage for all homes that contribute to energy efficiency and care for the environment. “

than 60 exhibiting companies, including real estate and construction companies, which made known different housing projects that privilege the concept of neighborhood, technologies for efficiently saving energy and security systems.

Our corporation was the only financial institution present in that fair, with which we completed 20 years of uninterrupted participation at all versions of ExpoVivienda positioning ourselves as the most important bank in mortgage funding.

Another important milestone this year in the field of housing was our participation as sponsors in the Construye Solar project, the first contest for sustainable social housing in the world. The project consists on developing sustainable social housing prototypes, jointly with national and foreign universities, which are built on a 1:1 scale and subject to 10 tests during the 10 days of the Villa Solar fair, a free event open to the public.

The 2017 version of the fair was held between April 28 and May 7 and was open to the public including weekends. Likewise, it had the participation of executives of our bank in a stand especially designed for this occasion where, besides supporting the activities of the event, we publicized our mortgage product EcoVivienda.

For its part, the Voluntary Pension Savings or APV is a savings system that allows improving the pension of people when retired while getting attractive tax benefits. Among the advantages of opening an APV account in BancoEstado is that lets you to discount monthly savings through an automatic charge to a BancoEstado payment mean such as a checking account, electronic checkbook or CuentaRUT, just by entering Online Banking; moreover, these savings are immune from seizure, there is no minimum investment and allows for early withdrawals for other purposes.

At the end of 2017 we reached 104,920 APV customers, which not only placed us in first place in the Mutual Funds industry in the country but also managed to quadruple this figure in just one year, since on the same date in 2016 we counted a total of 25,726 customers. Along with this, having exceeded the threshold of 100,000 customers, means that we hold 35% of the market share.

The total equity managed by our subsidiary Administradora General de Fondos (AGF) was $14,732 million pesos, thus tripling our 2016 result of $4,665 million pesos, which allowed us to rise from the 15th to the 13th place in the market ranking.

TESTIMONY: ECOVIVIENDA MORTGAGE

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“We want to be a bank present at all stages and throughout all the roles our customers may assume in their lives.”(Cecilia Vergara, Retail Banking manager, 2017).

It is worth mentioning that the market of APV participants grew by 38% in the country during 2017, an increase in which our bank embodied 90% of the total, thanks to our new customers. In this line, our commercial strategy for this achievement focused on three pillars, which are closely linked to the social and public role of our institution.

First, we targeted the lower income sectors not covered by the rest of the industry. For this, we specialized on APV Regime A, where the benefit consists of a state contribution of 15% of the savings made by a person during a year. The rest of the mutual fund industry specializes mostly in regime B, which includes individuals with higher incomes.

Second, it was essential to offer simple and cheap funds, that is, simplify the offer of funds for these customers. Even though there are 14 funds available ranging from very conservative (money market funds) to very aggressive (international common stock funds), there are three funds that we promoted the most: Balanced Funds, which combine papers of fixed income with variable income in different ways called Profile A, Profile C and Profile E, in reference to AFPs’ multi-funds A, C and E. People are already familiar with AFP alternatives A to E, so we offer them three funds that replicate three of them.

Third and finally, we prioritized highlighting the cost reduction when promoting the APV. The Annual Cost Rate (TAC by its acronym in Spanish) charged by BancoEstado for the APV series of the Balanced Funds is 0.75%, one of the lowest in the industry, which averages 1.63% for the APV series.

Summarizing, this great experience shows that our customers have great interest at improving their future pensions, that they value the attributes of the products generated by our AGF and that they fully trust in the institutional quality of BancoEstado. This is even more significant for us in a year marked by the questioning of the pension system in the country with the movement “No + AFP”, and the consequent citizen’s need to review the retirement system.

In this context, our bank continues to deploy the capacity to respond specifically to the demands of our customers, continuously providing them with samples of safety and confidence in the proper management of their retirement savings. This is why we will continue to make an important effort to improve the future pension of all the people of the country, as well as to strengthen our leadership in the APV industry in Mutual Funds.

TESTIMONY OF APV CLIENT

Mr. Jonathan Hernandez is 30 years old and lives in the community of San Miguel, in the city of Santiago where he works as an elementary school teacher. His employer discounts some amount from his salary for his AFP and Jonathan recently he opened an APV account with our bank. He shares his experience with the following words:

“I thought it was a very good offer when my bank executive told me about it. His words impressed me, the information he gives me has always been very clear and in case of any doubt regarding this or any other products I have in the bank, he has the best attitude.

The APV looked very convenient to increase the savings when I get old. My executive told me the conditions, I had no doubts and I took it. If I am persistent, I will increase my pension by at least 15%, in addition to the tax benefits that I have in case of not making withdrawals from the account. So I added it to my monthly payroll discounts and it has been very easy and simple for me. No paperwork and very good quality of information.

I also want to share that BancoEstado has always given me the best products. I also have a checking account and everything works perfect, unlike other banks I have had and where I have had to close the account. At BancoEstado they always strive to deliver the best solution, the truth is that I am a very loyal customer. “

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6. SUPPORT FOR THE BUSINESS AND WOMEN AS ENTREPRENEURSHIP ENGINES

At BancoEstado we have the important mission of working with all Chilean companies supporting their development from early

stages of entrepreneurship to consolidation and corporate development within the framework of a wide variety of financial and non-financial products and services.

We understand business are a fundamental column for the development of the country and its people, particularly the medium and small size ones, which have a large share in employment and require greater support in terms of financing and building capacities. Hence, work with our client companies turns into a catalyst for a more inclusive Chile with equal opportunities, which contribute to improve the quality of life of all people.

In this sense, we set for the 2014-2017 period the goal of provide loans to 65,000 new customers of micro and small companies, which is a growth in loans among Small Businesses (EMT by the Spanish acronym) of US$1,500 million. By the end of this period, we can proudly say that we funded more than 67,000 new customers in this segment totaling US$1,995 million in EMT loans15.

Right now, we have a direct line of work with all business segments, including entrepreneurs, micro, small and medium enterprises, large companies and corporations. Likewise, our work with State institutions that are part of our Institutional Banking client segment is especially relevant.

6.1 MANAGING BUSINESS AND INSTITUTIONAL CUSTOMERS

PROGRAM ALMACENES DE CHILE

In 2016 we joined the initiative promoted by the Ministry of Economy called Almacenes de Chile Program, which aims at improving the competitiveness of businesses and neighborhood shops in the country by delivering training tools, funding and information, so they can reduce

their costs, increase their sales and attract more customers to their business.

These stores involve nearly 11% of the total number of active business in the country and generate more than 400,000 jobs, that is, close to 20% of the employment generated by all microenterprises

In detail, the program is managed by Sercotec (a Service that is part of the Ministry of Economy), where the storekeeper may access training courses, apply for competitive funds and access useful information for his business, as well as be part of and contribute to the creation of the largest stores community in the country.

At the end of 2017, the program had 17,000 registered people, more than 4,000 graduates and 1,200 storekeepers who applied for Sercotec’s competitive fund to make improvements in their businesses, in addition to 200 businesses that directly entered into the page asking for funding.

Finally, to supplement the tools of the program, our bank makes a special offer to all registered storekeepers who have completed their training courses. Additionally, through Sercotec, a new competitive fund was created, specially designed for this type of companies, which lets them finance the development projects of their business.

For more information, visit www.almacenesdechile.cl.

BANCOESTADO DELIVERED THE ENTREPRENEUR AWARD 2017

This year our Entrepreneur Award turned 13 years old. Through this initiative, which we jointly developed with subsidiary Microempresas, we sought to recognize successful experiences of effort and innovation and, in this way, support development and growth of enterprises as sustainable businesses over time

within the framework of our institutional seal of financial inclusion.

In this process, we have rewarded nearly 400 entrepreneurs throughout the country, including customers and non-customers, to whom we have delivered 106 work vehicles and more than $268 million in prizes, allowing their businesses to continue growing, improve their quality of life and thereby contribute to the development of their municipalities.

In the current version of the program, we granted a work vehicle to 12 winners nationwide in our categories, namely: Commerce, Transportation, Services and Tourism, Agricultural and Fishing, Small Business and Innovative Entrepreneurship. At the regional level, there were 29 winners of one million pesos in the same categories.

15. Source: BancoEstado Public Report, 2017.

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EMPRENDE + EMPRESAS PROGRAM: ENHANCING THE CONNECTION OF OUR ENTREPRENEURS WITH STARTUPS

In August 2017, as part of our collaborative model with startups, we launched the Emprende + Empresas program jointly with Fundación Chile with the purpose of inserting more dynamism and innovation into our traditional ventures. This platform offers links with startups or technological entrepreneurs to provide them with digital tools that help them improving their business and increase their productivity.

This initiative is the result of work that started in 2015 with our Open Innovation Challenges program, which allowed us to observe the great opportunity to connect our entrepreneurs with incubators and the best technological innovation projects, so they could collaborate with their experience and learning to traditional ventures. As a result, we generated a virtuous circle where some SMEs support others for the benefit of both.

Thus, the program seeks to enhance the collaborative work generated among startups, BancoEstado and Fundación Chile, so the best evaluated entrepreneurs in the current process may be welcomed by our institution to make available their solutions at the corporate level or among our business customers during 2018.

This year, six startups were selected to generate collaborative work in order to help our bank to scale up the business, and potentially, adopt the service: Zoco, Becual, VESII, Shipit, Organizame and BeBetter Hotels.

6.1.1 Microfinance

Our subsidiary BancoEstado Microempresas (BEME) holds the purpose of promoting the inclusion and economic-social development of the country’s microentrepreneurs, contributing to their progress and welfare, by delivering financial advice to a portfolio of more than 650,000 customers, including micro and small business.

After 21 years of work, BEME serves entrepreneurs of segments commerce, artisanal fishing, peasant agriculture, passenger or cargo transport, professional services or independent technicians, production, crafts and tourism.

Currently, we have more than 1,230 employees and 248 specialized service platforms throughout Chile with a service model focused on field executives that generate trust relationships, reaching the most remote places in the country. We also have 276 customer service offices.

At the end of 2017, we have 605,603 active micro-entrepreneur customers, whereof 228,776 hold some type of financing with the bank, that is, 38% of the total. This is equivalent to a 7.8% growth over the previous year. It should also be noted that 43% of our customers are women.

This year 2017 marked the end of our three year commitment (2014-2017) established in the capitalization of BancoEstado in 2014. Part of our goals in BEME was to fund 65,000 new customers in micro and small companies and a loans balance of $2,849 million, including medium-sized companies.

Both goals were exceeded: we closed the three year term funding a total of 67,000 new small and micro enterprise customers. On loans to smaller companies (micro, small and medium size companies), the

commercial balance was $3,250 thousand million and for micro enterprises $1,020 thousand million.

To achieve the above, it was necessary to carry out an exhaustive work in the five pillars that support our management in the world of micro-enterprises: Quality in Placements, Risk, Organizational Climate (five consecutive years in the first places of the GPTW), Customer Satisfaction and Customers and Sustainability, which was ratified in our certification as Company B.

Loans to microfinance(MMM$ as of dec-17)

200620052004 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

195

395

580

694

767

865

1.020

1.200

1.000

800

600

400

200

0

Source: BancoEstado

BancoEstado has given microenterprises important support in the last 10 years, more than doubling their loans, which reached MMM$1,020 in Dec-17 (more than US$1,600 million).

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200620052004 2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

289

487

668589

716

826

9811.000

800

600

400

200

0

Loans to Small Business

(MMM$ as of dic-17)

Source: BancoEstado

In the last decade, BancoEstado has permanently supported small and medium-sized companies, more than doubling their loans in these segments.

BANCOESTADO MICROEMPRESAS PRESENTED THE ACADEMIC PERFORMANCE AWARD 2017

At BEME we are committed to improve the education of our country and the quality of life of our customers for the long run. The award for academic achievement is aimed at children, grandchildren, siblings and nephews of micro-entrepreneurs and is an incentive for outstanding students to continue their studies and motivate other young people and children with their example.

This award has been dispensed for the last 11 years and more than 90,000 students have applied; a total of 1,500 children and young people in the country have been recognized.

In its 11th version, ceremonies held in Arica, Valparaíso, Concepción and Santiago, awarded 122 students from all over the country in categories Basic Education, Middle Education, Higher Education, PSU Score, Special Education and Student Micro-entrepreneur, receiving each winner an important economic incentive.

TESTIMONY CUSTOMER BANCOESTADO MICRO-ENTERPRISES

Jaime Pérez, a client of our subsidiary BancoEstado Microempresas, owns the fleet “Taxi Buses Jaime Pérez”, whose work is to carry passengers in a mid-size bus in the Talagante district of the city of Santiago. Jaime has a checking account in our bank, plus a loan to improve his business.

In this regard, he points out:

“Thanks to this loan I have been able to develop my business. I have seen a definite growth thanks to the improvements I have implemented. In addition, I have had access to credits that I did not know and that in other banks they never offered me. Everything worked fine, my financing went very fast and it was very accessible. The truth is that I cannot complain; it was a very good decision to change to BancoEstado.

16. Further information at www.empresariosenred.cl

“We want to leave the feeling among our entrepreneurs that we accompany them and that we are there for them, that we care what happens to them. That makes a very big difference in a much discredited financial system; that is to say, there is a “human” way of doing banking. We want to build a human bank that believes in people. “

(María Soledad Ovando, Small Business manager)

6.1.2 Small Business

In 2017, we reached over 50,000 customers in the Small Businesses segment, surpassing the projected goal for this year. That total is a 15% growth over the previous year. Of these, 30,000 companies were financed in 2017.

Regarding our coverage by the end of 2017, we have 111 customer service platforms throughout the country, of which 26 were added in 2017.

As part of our non-financial offer, we highlight progress in the Empresarios en Red web platform, especially designed for the digital integration of our customers in the Small Business segment. This tool offers the opportunity to share experiences and knowledge with other customers, as well as the possibility of doing business and review the latest market news and commercial offers in one place.

In 2017, the platform reached a total of 22,015 registered users with a total of 342,086 visits. This year, we also added to the platform the new Digital Solutions Store for SMEs, in order to strengthen the offer of digital tools for our customers16.

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6.1.3 Midsize Business

In accompanying enterprises during their development stages, our bank has a specific line of work for medium-sized companies, consistent with our strategic guidelines of being leaders in financial and non-financial support to our customers in this segment.

Loan growth to these companies has been sustained in the last ten years, reaching a total of $1,135 million pesos by the end of2017.

2007 2008 2009 20172010 2011 2012 2013 2014 2015 2016

264

407

490

700

916

1.1351.200

1.000

800

600

400

200

0

Loans in Mid-Size Companies(MMM$ as of dec-17)

Source: BancoEstado

6.1.4 Corporate Banking

In working at Large Business and Corporate Banking, our role is to offer a range of competitive products and services that strengthen the consolidation and progress of these companies, as well as their positive impact on the country’s growth and development.

Regarding the structure of the bank’s assets by segments, as of June 2017, wholesale banking accounted for 24% of it, behind Treasury and International (36%) and retail banking (35%). On the other hand, operating income was 24%, ranking second behind retail banking (64%) and ahead of Treasury and International participation (11%)17.

17. Source: Feller Rate on Banco del Estado de Chile, sep 2017.

INTEGRATED COMMERCIAL STRATEGY OF BANCOESTADO WHOLESALE BANKING

In order to develop and strengthen the business relationship with our Wholesale Banking customers, companies and institutions, we have launched an Integrated Commercial Strategy (ECI in Spanish), in order to define a value offer with a commercial unification approach and to maximize the impact for our customers.

This initiative finds its origin in 2016, within the framework of the Empathy Program for Large Organizations (OMT in Spanish) as a need to provide our customers with an offer that allows them to add value from a platform that brings together our multiple products and services, thus increase the positive impact that could be generated at an economic, social and environmental level, that is, over the core axis of sustainability.

This strategy involved moving towards understanding our client as a complex ecosystem, with a multiplicity of relationships and interest groups. Our bank has, in fact, an important presence in that environment; therefore it was necessary to adopt a comprehensive view of the client and its environment, which would allow raising added value at all its edges.

Thus, in 2017 we enhanced our internal coordination in this area and among the various banks and subsidiaries, as well as our alliances, seeking a solid assembly of the ECI. We started by performing prospective work of value identification in 10 cases and then execute our deployment plan called “130-30”, which had two phases: first, develop ECI learning in 130 customers and second, select 30 customers among them to make a team

and perform work focused on management of customer relations and generation of new business.

At the same time, we worked with 12 learning cases, moving forward developing business with customers, rescuing tools and business practices. The following institutions participated in this effort: Agrosuper, Avon, Copec, SMU, Novojet, Diaconales Colleges, Catalog Vendors, INDAP, Municipality of El Monte, Municipality of Quinta Normal, MINSAL and the General Treasury of the Republic

This change in management in the relationship with the client generated a positive impact on the Global Satisfaction of Wholesale Banking customers in 2017, which grew by 6% with respect to 2016. This growth points at a better disposition of customers towards the bank, a product of the positive expectations generated by optimizing our relationship with them.

Regarding gauging the impact of this strategy, we are currently working on establishing joint goals and measurements with the areas of Retail, Small Businesses (EMT) and Large Business (OMT), which will allow us calculate approximately, continuous and systematically, the results associated with the ECI.

An example of this initiative is the joint effort with the Chilean Chamber of Construction, through which we added to our main offer the possibility that construction workers may access special benefits in their mortgages through a specific guarantee fund. In this way, we promoted the workers’ savings interest, loyalty of the workers of the Chamber and Retail Banking holds a privileged chance to work with them. This creates a win-win scenario for all involved parties.

In the words of our Manager of Wholesale Projects, Mr. Juan José Ruiz: “Thanks to the Integrated Commercial Strategy, we realized that the relationship with BancoEstado is not only based on a financial product but also on a global work plan, which expands the offer and the added value in the most important dimensions of the companies. Thus, our bank becomes a relevant partner in the value offer of the client company, allowing to increase its impact on important areas such as the contribution in the community, among others “.

In the future, the challenge lies on strengthening this articulating role of our bank in the State, in the market and in the civil society triad, inviting representatives of state entities as well as organizations of the civil society to join the ECI. Likewise, it is essential to generate trust within our organization, strengthen the collaboration networks between the different banks and subsidiaries, so we present a clear, sound and solid offer for the client.

“The greatest value of ECI is to move to this view of understanding BancoEstado as a transversal business platform that generates a link between customers, which allows us to add value and better focus our digitalization strategy, especially in collections and payments”.(Juan José Ruiz, manager of Wholesale Projects, 2017).

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6.1.5 Institutional Banking

Our Institutional Banking offer is aimed at institutions in the public sector and their workers through agreements to pay wages, collection of payments and transfers of financial and banking information. It is in this way that services to our customers contribute to modernize and make more efficient the administrative and financial management of this sector.

Part of our strategic development program for the period 2015-2018 was to provide a special focus to State services and servicing citizens, turning our bank into the main payer of benefits and collections of the State.

Through the Institutional Banking Management office, we also offered our entire variety of financial products and services, along with personalized attention of our account executives, specially prepared to provide efficient and proactive services in the face of the administrative and financial needs of the public sector.

We have a long and successful track record servicing public companies and institutions revealed in our 735 institutional banking customers at the end of 2017, which represents a 1.8% growth compared to prior year, corresponding to 13 new institutions. We add to this, a total of 12,472,908 transactions for wage payments, 7,828,943 transactions of supplier’s payments and 12,596,027 transactions for various installments in 2017.

6.2 WOMEN, THE MAIN ENTREPRENEURS

In 2015, our bank took the big step of promoting the integration of women in the job market and its economic empowerment through the Programa CreceMujer Emprendedora, in conjunction with the Ministry of Women and Gender Equity. The objective of this program is promote and assist access to financial and non-financial services to micro and small business women from all over the country, thus contribute to the development and growth of their businesses with a specific gender focus.

Within the framework of this program, we established in 2017 an agreement to adhere to the Women’s Empowerment Principles of UN Women, thereby formalizing our commitment to promote gender balance and women’s economic empowerment.

A central element of our 2014-2018 strategic guidelines for achieving greater

financial inclusion is working with women entrepreneurs, especially through improving the access conditions to funds for the growing number of women who manage their own company and thus contribute in a concrete way to meet the barriers that limit the incorporation of women into the world of work.

Due to the importance of this goal in our management, we decided to expand the scope of the program making “CreceMujer Activa” available to dependent workers, students, homemakers, heads of household and retirees by distributing information and guidance on issues related to funding, jobs, legal and benefits because today they are part of our six million customers. This improvement made us rename the program as “Programa CreceMujer”.

In this context, we list next the main figures at the end of 2017:

• 320,000 members of CreceMujer, which translates into a growth of more than 100% over the previous year

• This figure is significant in relation to the national context that indicates that 39.2% of the enterprises in Chile are led by women, equivalent to approximately 782,000 enterprises .

• As of September 2017, we have 6,622 women customers in our Small Business segment, exceeding the goal of 6,470 customers for the same year. In addition, we account for a 20% growth in our customers between 2016 and 2017.

• The program’s platform and web community register over 2.1 million visits and hold more than 1,500 articles and training videos on business management, employability, career development, empowerment, leadership, financial

18. Source: Encuesta Nacional de Microemprendimientos 2017, realizado en conjunto por el Ministerio de Economía y el Instituto Nacional de Estadísticas (INE).

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“At BancoEstado we recognize that women are a special segment, which is why we see as a very powerful advance in recent years to have consolidated our offer for them, taking into account their daily needs and challenges, through our program CreceMujer and its variants, CreceMujer Activa and CreceMujer Emprendedora “.

(María Cecilia Vergara, Retail Banking manager)

education, technology and legal issues, taxes, as well as interesting content on state benefits and services.

Along with this, we highlight the women’s entrepreneurship tour carried out in 12 cities of the country jointly with Fundación Mujeres del Pacífico (Women of the Pacific Foundation), where we managed to train nearly 2,000 women on issues that addressed both the relevance of women’s economic empowerment as specific elements of business models and the relevance of a marketing strategy.

Another key milestone in 2017 to promote the participation of female labor and the economic development of women was signing the collaboration agreement with the Ministry of Women and Gender Equity, whereby both institutions committed to

BANCOESTADO PRESENTED THE TOURISM BUSINESS WOMAN AWARD 2017

2017 marks the 8th anniversary of the Tourism Business Woman Award, which seeks to recognize women whose enterprises are sustainable not only in economic terms, but also in social and environmental terms.

This time, about 280 micro and small tourism businesswomen from all over the country applied for the contest, which adds to the 3,700 women who have already participated since the beginning of this initiative, carried out jointly by Sernatur, the Ministry of Women and Gender Equity and BancoEstado.

In 2017, two entrepreneurs distinguished themselves with their work in the tourism sector, including sustainability criteria in their business models. The winners were, in the first place, Ms. Emiliana Marihuan Ancan, owner of the restaurant Bill Iyal Inche Tan Mapu, “Sabores de mi Tierra”, located in the Alto Bio Bío community, in the Bio Bío region; she stood out for rescuing the Pehuenche food and the sustainable work done to obtain each of the ingredients of the products offered.

The runner up was Ms. Claudia Jiménez Parra, from the community of Pozo Almonte, in the Tarapacá Region, thanks to her work at the Chachawarmi Hotel; her business highlights the work of Aymara women, boosting tourism in the town of Pozo Almonte.

The winner of the first place, Ms. Emiliana Marihuan, wanted to share her impressions about winning the prize:

“I saw the information on the internet and I was impressed to see that I could apply, that I met the requirements, and right here, so far away, in Alto Bio Bío”

The prize was a $2 million promotion for her restaurant and a trip to Santiago to receive the award, which she thought was a great extra because she did not know Santiago. Her touristic undertaking is an intercultural restaurant where she prepares ancestral food and piñón coffee, her own innovation. Emiliana tells us she used the money to invest in her restaurant, mainly to improve the furniture.

“This prize helped me a lot; I’m very grateful. It helped me to fix my restaurant, to become better known and that means more customers will come. Sernatur made a video and taped me doing my work; and I was able to show how I live and what I pick up from one’s own nature. I think I even came out in the Los Angeles newspaper and sometimes they recognize me on the street; now I’m even famous”

” I think it’s very good to reward women entrepreneurs because it’s important for Chile. I hope more women like me apply for this award. “

carry out an action plan to promote financial autonomy and economic consolidation for women, in order to reduce gender gaps and inequalities.

As a result of this agreement, we completed eight Ferias de Emprendedoras CreceMujer, where 100 entrepreneurs of the program did participate. These initiatives were aimed at creating spaces for commercialization and visibility to strengthen the work of women entrepreneurs in our country. In the latest version, held in the city of Santiago in December 2017, the “Leadership” and “Resilience” workshops were added in order to reinforce the psychosocial tools required by a business entrepreneurship model.

Another relevant agreement signed in 2017 was with the organization Mujeres Empresarias through the CreceMujer Emprendedora program, which responds to the support and integration the bank provides to women entrepreneurs to encourage their growth, development, work and financial inclusion in the country.

Lastly, delivery of Bono al Trabajo de la Mujer (Women’s Work Bonus) along with Premio Mujer Empresaria Turística 2017 (Tourism Business Woman Award 2017) added to the initiatives to strengthen the role of working women as a material contribution to society. The first award relates to the availability of the bank’s means to collect a bonus encouraging employability of women belonging to the country’s 40% most vulnerable, while the second, jointly with Sernatur and the Ministry of Women, rewards two outstanding entrepreneurs from the tourism sector.

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7. WORKING HAND IN HAND WITH THE STATE

One of our main strategic guidelines for the period 2014-2018 was “to become a bank that works hand in hand with the State to deliver services that generate value for all.” We wanted to highlight our role as a state bank, supporting management of the public sector and its modernization, not only from a bank-client perspective, but from an integral approach, as co-executors in the action to promote the development of the country in all its dimensions.

Given this scenario, we identified the need to strengthen our collaborative alliances with the state administration, as well as to serve with a modern and efficient platform for the deployment of public policies, both locally and nationwide. This way, we seek to move forward in a coordinated manner towards greater social integration with policies of equity and inclusion, which provide opportunities for all the people of our territory.

In these four years, our Institutional Banking has managed to offer public institutions a wide variety of financial and non-financial products and services. Correspondingly, the bank has completed various initiatives to improve management in the country, whose work has led us to collaborate with institutions such as Corfo, SERCOTEC, Social Security Institute (IPS in Spanish), Correos de Chile, SERNAM (part of the current Ministry of the Women and Gender Equity), Fosis, Fonasa and the Armed Forces, along with various ministries and government services. As a result of these alliances, in prior years we have highlighted milestones

7.1 STRATEGIC PARTNERS AT WORK WITH THE STATE

such as the BancoEstado Cuenta Vista account for alimony or support payments, tax payments and pension payments to IPS retired persons at our CajaVecina service points, among others.

On the other hand, our broad territorial coverage lets us reaching with public services segments of the population that require preferential attention in key areas such as health benefits and pension payments, even on locations that are difficult to access or far from urban centers, thus helping to the objective of decentralization in the administration of public goods and services.

In this way, we have become a strategic partner for the State delivering support in catastrophes that have hit our country in recent years. On these occasions, we have contributed with our banking services as well as providing support to state aid and helped the municipalities in financial activities related to reconstruction, an aspect where we highlight the exceptional commitment of all our workers.

IN 2017, OUR MAIN MILESTONES HAVE BEEN19:

• We completed funding of large investment projects in key sectors of social development: health, transport and roads.

• We made 2.8 million payments worth of subsidies and state contributions reaching 5.7 million people

• We channeled support to those affected by forest fires and floods.

• We cooperated with the new regulatory system to manage financing electoral campaigns.

Next, we describe progress in our main lines of work with the State, detailing the results at the end of 2017.

19. Source: Public Report, 2017

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of this segment by way of a highly focused work and consider their activities with municipalities, which are often configured as their main allies.

This work deals with providing the possibility for CSOs to manage their funds in a safe and efficient manner, having our extensive network of branches and points of service, along with an automated service 24 hours a day and accessing associated benefits, such as the Cuenta Crece Comunidad (former ISFL), a means of payment created for these organizations, tailored to their needs, with flows often sporadic and insufficient to qualify for a checking account.

During 2017 we continued working with the purpose of promoting financial inclusion of this segment, reaching 80,000 active customers and a total of 150,000 registered customers.

On the other hand, the role of municipalities is crucial to work with CSOs and our approach to them. The organizations identify opportunities and share them with the municipalities to carry them out and, in turn, they spot the needs in the municipalities, to which CSOs can contribute thanks to their knowledge or specific function.

In 2015, our organization entered into a process of internal transformation in order to respond to the needs of different segments of society. In these changes, the need to consider Civil Society Organizations (CSOs) in a relevant way came up, and according to the “Map of Civil Society Organizations” prepared by the Center for Public Policies UC and Fundación Chile, they exceeded 230,000 in Chile. These organizations are deployed in a decentralized manner and include foundations, neighborhood councils, sport clubs and community associations among other non-profit civil organizations.

Against this background, in 2016 we created the Management of Civil Society Organizations Assistant Office based on the work of our Institutional Banking, so as to contribute to the financial inclusion

7.1.1 Civil Organizations and Municipalities

“Through our work with Civil Society Organizations we have modernized the way these organizations manage money, which is collective, helping with their management style and its integration into the financial system. Our support aims at this management is transparent and orderly, allowing them to fulfill the dream for which they became an organization, be it rural, a water association, adult club, sport, culture and so many other dreams for which people group together in an organization.”(Caroll Brown, Deputy Manager of Civil Society Organizations).

20. Further details on branches opened under this format on section 4.1 of this Report

SALE OF FONASA SERVICE BONDS IMPLEMENTED THROUGHOUT THE CAJAVECINA NETWORK

In May 2017, our bank signed an agreement with the National Health Fund (Fonasa) that allows more than 10 million users of public health insurance pay their health bonds for medical consultation in the more than 22,000 points of service

CajaVecina in the country.

The agreement means that Fonasa users no longer have to go to a Fonasa branch to obtain a voucher or health bond for their medical consultations as they can pay at the store or business closest to their home, thanks to our subsidiary CajaVecina and its associated services.

Thus, people who live in remote areas or densely populated municipalities, can perform a series of banking and non-banking transactions in continuous hours and through electronic terminals installed in stores and shops in their neighborhoods.

Since the pilot plan started in February 2017 and to the end of the same year, we totaled 393,664 Fonasa vouchers for an amount that exceeds $2,562 million pesos. Just in the month of December 2017, we totaled 66,065 vouchers for a total of $424 million. The graph below shows the quarterly evolution of the Fonasa vouchers issued between March and December of the same year, going from 86 to almost 230 thousand, respectively.

Thanks to this agreement, we managed to benefit more than 10 million people. In sum, with the figures developed by the end of 2017, we estimate a reduction in transportation costs and time of the order of US$5 million per year, equivalent to $3 billion pesos.

Quarterly evolution of FONASA service bonds sold through CajaVecina

2017 Nº

March 86June 40.817September 123.364December 229.997

7.1.2 Initiatives with public institutionsTherefore, we generated a l ine of Agreements with Municipalities to support Civil Society Organizations, aimed at strengthening, sustain and develop these organizations.

To date, we have signed a total of 55 agreements with municipalities across the country, which has allowed us to deepen inclusion initiatives, through an action plan that contemplates:

• Financial education for leaders and associates.

• Access (banking).• Declaration of subsidy payments and

competitive funds.

Another relevant line of work with the municipalities has been the deployment of BancoEstado branches within municipal facilities or on land assigned by them20. This initiative arose from the interest of our administration to be present in all parts of our country, especially in those places where there are no banking services or it is scarce. By 2017, we have near to 50 branches opened under this format.

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PENSION PLAN PAYMENTS FROM THE SOCIAL SECURITY INSTITUTE (INSTITUTO DE PREVISION SOCIAL)

In 2015, after the floods in the province of Chañaral and the subsequent breakdown of securities transport companies, several services and institutions were affected by the lack of pension and benefit payments of the Social Security Institute (IPS). Since then, BancoEstado was again the agent of IPS in charge of paying pension monies to their beneficiaries, an agreement that we have managed to consolidate today.

We offer the beneficiaries of this system payment service in a bank account, as well as the collection in any of our branches, ServiEstado and CajaVecina, while employers of the country that use this system can pay their workers through the IPS web site, quickly, continuously and safely. In addition, they can access the statement of Casualty Insurance, Occupational Diseases and Fonasa through this same means.

This new payment method offers greater flexibility to all beneficiaries, since they can collect any business day of the month, unlike the previous system in which they had to go to the payment center at a predetermined day and time.

To date, we are responsible for 25% of IPS payments, covering close to 600,000 beneficiaries. Our CuentaRUT product and our CajaVecina service points play a key role in the payment process by crediting the account, thus expanding the possibilities of receiving payment in all corners of our country.

AGREEMENT BETWEEN BANCOESTADO AND CORREOS DE CHILE

In March 2017, our institution signed an agreement with Correos de Chile so our customers, microenterprises and SMEs that contract domestic and international services in Correos de Chile with BancoEstado’s means of payment such as CuentaRUT, credit and debit cards, receive a 15% discount.

The objective of the agreement is to provide support to the micro and small companies of the country, as well as to the nearly 13 million customers of our bank on their domestic and international shipments, connecting our customers through their shipments throughout the country and abroad.

At the end of this year, in Domestic and International Dispatch, we handled more than 140,000 transactions benefiting our customers with the discount, which meant a 60% growth over the previous year. Moneywise, we exceeded one billion pesos, which means a 50% increase over 2016’s.

Finally, Correos de Chile has a system of qualified customers for the use of their services with a 30-day payment, which is called “Agreed Postage”. Part of our alliance includes generating an integrated value offer for those business customers who cannot take this option with Correos and hold a funding alternative with BancoEstado, so that we can also strengthen their business and encourage the use of the services that Correos offers.

This alliance is part of a relationship longer than 45 years with Correos de Chile as a client of Institutional Banking of BancoEstado, from which we will continue exploring the possibility of extending this agreement in the near future and add more benefits to those already embraced.

AGREEMENT BETWEEN BANCOESTADO AND THE GENERAL TREASURY OF THE REPUBLIC

In July 2017, our bank signed an agreement with the Treasury of the Republic (TGR) for our institution to fulfill the role of paying entity of local bond issues through our branches and service points. The agreement regulates the obligations and rights of the bank as the responsible entity to pay interests, readjustments, capital and any other obligation arising from the bonds and perform any other necessary procedure for said purpose.

At the end of 2017, we totaled 2,123 transactions for a total amount exceeding 691.4 billion pesos.

On the other hand, TGR paid a bonus through our banking services to almost 170,000 members of electoral voting tables of the first round of the presidential election. The total amount paid exceeded $3.4 billion pesos, distributed among the voting table members and members of the Electoral College; almost 95% of the voting table members requested a deposit in their bank accounts.

ALLIANCE FOR THE PROMOTION OF ENERGY EFFICIENCY AND THE USE OF NCRE

In joint effort between the Small Business Management Office and the Sustainable Development Office, we developed a special funding product for energy efficiency initiatives and Non-Conventional Renewable Energies (NCRE). This project was developed jointly with the Ministry of Energy and the Chilean Energy Efficiency Agency (ACHEE), which provides support in the technical analysis of the initiatives.

With this funding product aimed at small and medium business customers, we seek to promote initiatives of energy efficiency and non-conventional renewable energy that prove a reduction of carbon emissions and energy expenditure, thus contributing to achieve the country’s goals in the reduction of CO2. To date we have over 40 initiatives funded.

PROGRAM ALMACENES DE CHILE

The Almacenes de Chile Program is one of the milestones of the year in terms of combined work with other public institutions supporting our microentrepreneurs. Although it was jointly launched in 2016 with the Ministry of Economy and Sercotec, it was the following year when their most tangible effects were consolidated. As a result, we have reached 17,000 registered users and more than 4,000 graduates of the program, which provides training tools, financing and information, so shop owners in the country can increase their net income and expand their clientele.

For more information about this program, please refer to section 6.1 of this Report or enter at www.almacenesdechile.cl.

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Since the devastating earthquake in February 2010 we began an intense learning journey that led us today to have an agile, efficient and coordinated response mechanism ensuring our presence in localities that most need us in times of catastrophe.

We have been present in different ways with our banking products and services and special benefits for those affected, as well as delivering support from the State and assistance on the field to help localities to get back on their feet in the shortest possible time.

Since 2013, we are part of an Emergency Roundtable along with other state owned institutions, which has allowed us to deploy a coordinated effort and react quickly to these events. At present, we have defined strategies to respond to a catastrophe through lines of action for our workers, customers and the community in general. In the case of our workers and their families, the work consists on identifying who has been directly affected, suffered damage to their integrity and / or their homes and daily infrastructure, in order to deploy a mitigation plan and carry out customized support for them.

Our team is core to the success of our work and we know that in this type of situation, our customers will require special attention. That is the reason we seek to support our collaborators as a first step.

For individual, micro and small business customers, we have offered the benefit of postpone their financial obligations to the

7.2 SUPPORT IN CATASTROPHES

bank, freeze or delay their consumer or mortgage credit debts with the possibility for our microentrepreneurs to access loans with preferential rates to rebuild their businesses and the option of contracting special insurance for catastrophes. In addition, we seek means to continue functioning as a bank at all times, either by installing temporary infrastructure in the affected places by way of tents or partnering with other institutional players and public services to do so.

To support the damaged municipalities, including our workers, we have toured the localities providing help where needed; for example, delivering drinking water, staple foods and basic necessities. Likewise, we activate our services in alliance with the State for paying emergency bonds, such as bonuses for appliances, leases and basic services, where the main tool has been CuentaRUT. In 2016, we distributed 80,004 bonds and 96% were delivered through CuentaRUT, while in 2017, of the 42,430 bonds delivered, 91% was through that account.

EMERGENCY STEPS MADE IN THE FACE OF CATASTROPHES

The Support Plan approved by our institution for catastrophe situations includes the following measures for our customers:

• Special conditions for CuentaRUT casualty customers who receive benefits from the State, goods, lease or shelter bonus (for the period the benefit is granted):

DRAWS (monthly)

BancoEstado ATMRedbanc ATMServiEstadoCaja Vecina

2 free of charge

BALANCE QUERY (monthly)

ATM BancoEstadoRedbanc ATMMailboxesDispenserrPresto ATMCaja Vecina

2 free of charge

DRAW IN PERSON

BancoEstado branch 1 free draw

Additionally, people can make the following transactions free of cost:

• Payments in retailers adhered to RedCompra or ComprAquí.

• S e n d m o n e y ( t r a n s f e r ) f r o m a BancoEstado account to another BancoEstado account via Internet, cell phone or CajaVecina.

• Query balance by Internet or cell phone

80.000

60.000

40.000

20.000

0

20172013 2014 2015 2016

3.436264

2.944

31.832

8.374

48.323

3.385

76.619

3.841

38.589

Bonos de emergencia entregados durante 2017

CuentaRUT

Other means of payment

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Last year, the main environmental catastrophes were floods in the Atacama Region and forest fires that spanned the Valparaíso and Bio Bio regions. The greatest impact was the one grieved by Santa Olga residents, near Constitución, where unfortunately more than a thousand houses burned to the ground.

In this town, to continue with our bank services, we set up a tent along with other public services to continue servicing our customers. Later on, we put together a fast track process so the client could rapidly leave with cash in his hand. Of the thousand families affected, we attended more than 800 in two days.

The role of our workers handling experiences like the above and similar other catastrophes that have shaken our country has been essential. Their commitment has been demonstrated in its entirety upon seeing them work tirelessly, off working hours and not only as employees of BancoEstado but also on a personal basis as concerned citizens of their community. Next, we share the testimony of one of our workers, as a sample among many, that demonstrates the great solidarity and responsibility of the people with whom we have the privilege to work with.

Patricio Escudero, our branch agent located in the city of Copiapó, Atacama Region, worked hard supporting our bank’s deployment after the devastation generated by bad weather that crossed the Atacama Region in early 2017 and caused large flush floods in sectors of the districts of Copiapó, Chañaral and Diego de Almagro.

On this experience, Patricio says that support from the bank went to workers who suffered damage to their homes and coordinated the delivery of staple foods and drinking water for them and their families. In addition, they delivered drinkable water to the branches for kitchen and bathroom services. About customers, they were offered the benefit of postponing their obligations with the bank, longer deadlines or freeze their installments of consumer and mortgage loans with Retail Banking, while for micro and small business they could postpone payment of their commercial credits. Also, they toured the spoiled places, delivering all possible help with respect to the main needs of the people.

These efforts were possible thanks to the prompt response of the bank’s authorities, area and regional managers, branch representatives and the bank’s welfare management among others, who quickly traveled to the area. Along with this, coordination with local government authorities was crucial, including the Intendant, governors and mayors of the affected municipalities. Finally, all individual efforts were very helpful, which we also coordinated and delivered to families in the most efficient way possible.

To wrap it up, Patricio shares with us the following testimony:

“We were pleased to work. We coordinated with local authorities, Corfo and Sercotec and managed for the maximum number of customers to access benefits. This involved, at least, a couple of months intensely engaged in this matter.

We can draw something positive from this experience because these catastrophes give us the opportunity to feel the pride of working in BancoEstado. The existence of a public bank acquires total meaning at this moment, that is, we are an institution that is there in good times and in bad times. I commend the authorities of the bank and the government institutions for how well they performed in this situation. I am sure that our customers felt at that moment that they were not wrong being customers of the bank. They were able to freeze their payments and concentrate on getting ahead with their lives.

I must say this feeling embodies all the workers of the damaged offices. We work in a business with a social ethics to help beyond money. With the firm commitment of being a contribution to the municipalities where is installed, the bank supports people not only through financial services but also through palliative measures in difficult times like these, making catastrophic times less hard for the people who suffer “.

(Patricio Escudero, agent at BancoEstado Copiapó branch)

“In short, in these difficult emergency times, people see the support of the State in our bank, our presence as active partners. We participate side by side with the State delivering a tangible solution for people who are not having a good time and this is a source of pride for us. That’s why we go to work on a Friday afternoon or a Sunday with the bank’s shirt on. “.

(David Durán, Deputy Manager of Development and Financial Inclusion Institutions).

EXTRAORDINARY GUARANTEE FUND FOR SMALL BUSINESSMEN OF CHILE (FOGAPE)

Our institution manages the Fondo de Garantía para Pequeños Empresarios de Chile (Guarantee Fund for Small Businesses of Chile, Fogape), which in January 2017 called an extraordinary tender for environmental emergencies. In total, one million Unidades de Fomento (UF) were made available to finance guarantees for micro, small and medium-sized companies damaged by catastrophes or natural activities that may occur during the year in the country.

It is worth mentioning that in July of the same year, Fogape tendered guarantees for UF 7.8 million among different financial institutions in the country to fund lesser size companies. That is, micro, small and medium size exporting companies were able to apply for these funds to allocate them to working capital and / or investment projects.

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Since the last presidential and parliamentary election in 2013, significant changes have happened in our electoral system. Not only there were changes from the binomial mechanism to a proportional one, but also profound reforms were introduced for transparency, strengthening democracy and political parties. The Electoral Service is now an autonomous body and, for the first time in the history of the Republic, Chileans abroad were able to vote at the consulates to elect the next president in the last elections of December 2017.

Regarding reforms for transparency and strengthening democracy and political parties, Law Nº20,900 enacted in April 2016 set higher standards for transparency and control of political activity. For these purposes, a set of legal bodies was modified, providing greater regulation to electoral advertising, public contribution for campaigns and candidates and sources of funding for both, electoral campaigns and political parties.

Specifically, the law guarantees that the type of bank account that will be opened for each of the candidates participating in the primary elections of city mayors will be BancoEstado’s Electronic Checkbook. We then became a key player in this better transparency for the electoral system through the implementation of a service to collect contributions to the political campaigns associated with elections, according to the new legislation.

In this context, our bank was part of this process change, also cooperating managing the new system of electoral funding normative and designing a new model of funding political parties, through the joint work of Commercial Banking, Branch Management and Corporate Risk Management offices. The model was based on the provisions of Law Nº19.884 on Transparency, Limits and Control of Electoral Expenses regarding funding electoral campaigns.

Our participation included the process of presidential, congressional and CORE’s elections that took place in December 2017; there were no requests to finance political parties in the 2016 municipal elections of mayors and council members. On this process, we granted financing to six political parties totaling $871 million.

7.3

FINANCING OF ELECTORAL CAMPAIGNS

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8. SUPPORT TO THE COMMUNITY

At BancoEstado we believe that education is the cornerstone to achieve true inclusion in financial terms in our society. On this basis, people can make informed decisions regarding the administration of their own resources, improving their quality of life and their families’.

As the only state owned bank in the country, our commitment is to care for the people in economic empowerment that leads to make good financial decisions, including matters such as good information management and responsible indebtedness. In this way, financial education is a central part of our social role as a bank and is present in our strategic guidelines.

By virtue of the above, we have been called to participate in the Advisory Commission for Financial Inclusion led by the Ministry of Finance and composed by the Ministries of Economy, Labor, Social Development, Education and other players in the financial sector. The main mission of this commission is to mobilize and engage public, private and civil society players in the promotion of a better understanding by citizens of concepts, financial and social security products.

Specifically, our work plan in financial education contemplates two action areas complementary to each other: deliver clear and transparent information of financial products and education in the efficient use of service channels; and specific activities to promote financial education in the country with special focus on young people seeking to incorporate this knowledge from an early age.

8.1 FINANCIAL EDUCATION

The latter becomes visible in two lines of work: the program En Fácil y en Chileno (Easy Chilean Slang) and the program Usa bien tu Plata (Use your Money Wisely). Both initiatives aim at the general public, that is, not only customers of our institution.

As a measurement tool for these programs, we follow OECD guidelines. In the case of “En Fácil and Chileno”, we aimed at inform and raise awareness about the issue by evaluating the scope and coverage of the information delivered; with “Usa bien tu Plata”, we aimed at a second level, the development of skills, for which we carry out evaluations before and after the intervention that allows us to measure this learning.

8.1.1 En Fácil y en Chileno Program

At BancoEstado we assume the responsibility that people can better understand the financial concepts and products of what they use, so they optimize their financial decisions. For this reason, we are concerned about dealing with these issues through simple and direct language, which allows any citizen to approach the economy without the distance generated by a complex lexicon.

In October 2014, we activated the “En Fácil y en Chileno” web platform, which was publicized throughout our branch network. With agile and easy language, we use this

platform to deliver information associated to our financial products and services, talk about the organization of a family budget, how to incorporate the habit of saving and avoid over-indebtedness, among others. We pursue the goal of informing our users on the best ways to manage their money to improve their quality of life.

In 2016 we implemented a campaign to advertise the program and promote its use. We used mainly our social networks but also other means of communications such as our branches, bank communications with customers and other mass media. As a result, just that year we received over one million visits and more than 1.5 million reproductions of the tutorials of the program, which showed the great interest of people to know and learn about matters that directly impact their lives every day.

In 2017, we scored 178,334 followers in our fan page on Facebook, while on Twitter we had 28,418 followers, positioning us as the largest financial education community in Chile. Also, the total of visits to the program’s website exceeded 1.9 million, almost doubling the number of the previous year.

Further information at www.enfacilyenchileno.cl

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8.1.2 Usa Bien tu Plata Program

We understand that the school step, as well as the educational community in general, is a privileged space to lay out the foundations of a good financial education. That is why we developed the “Usa Bien Tu Plata” program, aiming at contributing to reduce the education gap in this area and prepare students for their present and financial future by delivering educational tools. Our goal is that junior high and high school students, teachers and parents manage their money in a better way and improve their decision making processes in this area after learning better tools on this matter.

Precisely, the program consists of making financial education workshops in municipal and subsidized private schools of all regions of Chile, dealing with issues such as budgeting, savings and indebtedness. The program includes two 90-minute theoretical-practical workshops free of charge.

Deployment of the program has been possible thanks to the collaborative work

between Open Green Road consultants (OGR), the Faculty of Economics and Business of University of Chile and our bank. In the pilot stage, it allowed gauging the knowledge of the students on the topics to cover in the workshops through a diagnostic instrument based on the PISA methodology.

Along with the above, the program has a web platform where we offer, through a didactic design, pedagogical material on topics such as savings, budgeting and financial health among others, as well as games, a blog and videos that seek to enrich the In-person training of the workshops.

The program started with a pilot in 2015 implemented in 75 schools in the Metropolitan, O’Higgins and Valparaíso regions. Then in 2016, 200 schools were added and Coquimbo, Maule and Biobío regions were added as well as the island of Chiloé in the Los Lagos Region. Last but not least, in 2017 with nationwide coverage, we reached 281 schools.

In 2017, we managed to expand the operation from Arica to Punta Arenas with 8,810 participating students.

Since starting at the end of 2017, the program has had 17,813 students and more than 1,200 teachers from all regions of the country, covering 555 schools in total

In order to measure the effectiveness of the program and the learning made after the workshops, we applied an initial and a final test, which in its latest version showed a 16.5% increase in the indicator of content knowledge.

Finally, our authorities were there presenting the workshops in two emblematic cities of our country: Arica, in the extreme north; and Punta Arenas, in the extreme south. On both occasions, both at Saucache School in Arica and Maria Auxiliadora School in Punta Arenas, our president, Mr. Enrique Marshall, described the objectives of the workshops in its third year.

More information in www.usabientuplata.cl

4Región Metropolitana

44Región del Biobío

56Región de La Araucanía

62Región del Maule

58Región del Lib. O’higgins

8Región de Aysén

18Región de Magallanes y la Antártica

56Región de Los Lagos

40Región de Los Ríos

20Región Arica y Parinacota

22Región de Tarapacá

48Región de Antofagasta

22Región de Atacama

56Región de Coquimbo

50Región de Valparaíso

During 2017 we carried out a total of 564 workshops in 281 schools in the 15 regions of the country, distributed as follows:

TESTIMONY OF COLEGIO MARÍA AUXILIADORA, PUNTA ARENAS

One of the participating schools in our workshops shares with us the effect on their community; in the words of the secretary of the Pedagogic Office, Ms. Alejandra Núñez:

“I think the work is effective in terms of sharing knowledge and the link with schools. With these workshops students acquire habits and value the concept of savings before they have to face these issues in the real world. Thanks to this, I imagine that when they enter into the job market and have to manage a salary, they will be able to manage their earnings in a better way. “

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8.1.3 Other initiatives

In a complementary manner, other ways in which we have worked promoting financial education with our customers is with the micro and small business segments, where we can highlight the workshops held in the framework of the CreceMujer Program covering financial and non-financial products and services with entrepreneurs around the country21.

On the other hand, we decided in May of 2017 to join sponsoring the first long-term research on financial education, indebtedness and delinquency in Chilean households, jointly with the Association of Banks and Financial Institutions (ABIF) and the IDB Bank, through the Inter-American Investment Corporation (CII). The study aimed at sizing the impact of financial education on debt decisions and on payment behavior of bank customers, concentrating the analysis in the emerging segment of consumer loans.

Also, this year we participated in two highly relevant fairs to promote financial education in the country. The first was the Fourth Financial Education Fair, organized by the SBIF and held at Palacio La Moneda Cultural Center, whose objective was to raise awareness of the importance of this issue for the economic well-being of people. Additionally, we work with the Municipality of Doñihue, in the O’Higgins Region, carrying out the Doñihue Financial

Education Fair, in order to promote the development of financial skills and thus improve the economic behavior of young people and adults in the area.

Along with the above, our institution awarded the BancoEstado Prize for Journalistic Quality 2017, which seeks to recognize journalists from the economic sector who stand out due to their contribution to matters of inclusion and financial education. We have granted this award to 34 journalists from various media since 2008.

In its seventh version and out of 150 reports, chronicles and interviews, we distinguished the work of journalist Roberto Saa of Mega TV channel as winner of the Metropolitan Region for his note “New reforms to the pension system”. In the Regions category, we recognized Silvanio Mariani, from Diario Concepción for his work with the article “How will the decisions of the Central Bank affect your pocket?”.

It is worth mentioning that the permanent interest on issues contributing to public opinion awareness in economic matters, with special focus on inclusion and financial education, of both journalists favorably influenced their choosing.

21. There is further information on this program in section 6.2 of this report.

At BancoEstado we are committed to the cultural development of the country; proof of this commitment is our constant support for national audiovisual work. For 13 years, more than 100 feature films and documentaries have received contributions from our institution with the firm purpose of promoting the solid growth of this creative industry in the country.

In 2015, as part of celebrating our 160 years as a bank, we decided to consolidate this line of work under a new competitive fund format by creating the “Chilean Film Development Program”, with the objective of stimulating the national film creation, protect our cultural heritage and contribute to the preservation of the collective memory of the country. Along these lines we seek to value national identity and the motion picture representation of our recent history, which contributes to the continuous development of our culture and confirms our role as a public institution.

Among the films that have benefited from the program since 2004, we can mention “Machuca”, “Story of a Bear”, “No”, “Gloria”, “La Vida de los Peces” and “La Nana”, among other 79 national productions. As of 2015 we have honored “Sin filtro”, “Rara”, “Aqui no ha pasado nada”, “Neruda”, “Mala junta “, “Unfinished Plan: The path of Alain Johannes” (documentary), “Una mujer fantastica “,”No estoy loca” and the documentary “Cheques Matta “, among others.

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In particular, the new format of the program defines its functioning as a competitive fund that has two calls per year, in the months of March and September, respectively. In accordance with the rules of the contest, the jury is composed by the president of BancoEstado; the Corporate Identity Manager of BancoEstado; a representative of the National Council of Culture and the Arts; a representative of the Association of Directors and Scriptwriters of Chile; a representative of the Association of Film and TV Producers; a representative of the Documentary Association of Chile; a representative of the Association of Animators of Chile and the president of the jury, appointed by BancoEstado, bearing in mind his/her career and relevance in the field of national and / or Latin American culture.

As a result, since 2015 we have made five calls, delivering $100 million pesos each instance. In turn, on each call we have awarded six films: one in the Industry Film category with a $50 million pesos fund and five in the category of Author’s Cinema with a $10 million pesos fund each.

During the last year, 60 national productions applied for the two open calls. Furthermore, for the first time we held meetings with winning filmmakers from previous editions of the program where they shared their experience producing their films and discussed the challenges of the industry at a national level.

Beneficiaries of the 4th and 5th Versions Chilean Film Development Program - 2017

In 2017, the audiovisual productions that benefited from the program were:

1ST CALL:Movie: No Estoy LocaDirector: Nicolás López

AUTHOR’S CINEMA Documentary: Jaar, el lamento de las imágenesDIRECTOR: PAULA RODRÍGUEZDocumentary: Robar a RodinDIRECTOR: CRISTÓBAL VALENZUELAFiction: SwingDIRECTOR: LUIS IGNACIO SMOKFiction: Los perrosDIRECTOR: MARCELA SAIDFiction: La isla de los pingüinosDIRECTOR: GUILLE SÖHRENS

2ND CALL:CINEMA INDUSTRY Movie: Y de pronto el amanecer

DIRECTOR: SILVIO CAIOZZI

AUTHOR’S CINEMA Fiction: El Hombre del FuturoDIRECTOR: FELIPE RÍOSFiction: MiércolesDIRECTOR: ESTEBAN CABEZASFiction: Dead CandiDIRECTOR: EUGENIO ARTEAGADocumentary: El Negro: Crónica de un FugitivoDIRECTOR: SERGIO CASTRODocumentary: Cheques MattaDIRECTOR: LEONARDO CONTRERAS

More information available at: www.cinebancoestado.cl

ANIMATED SHORT FILM “STORY OF A BEAR”: THE FIRST OSCAR AWARD FOR CHILE

We are proud to have collaborated with the animated short film “Historia de un Oso”, which finally received the first Oscar award for Chile, in the category Best Animated Short Film.

In February 2016, the production team approached our offices asking for support in the promotion and broadcast campaign before attending the Oscar award ceremony. They found out two weeks before they had to attend the ceremony, so we were able to quickly manage the resources that allowed achieving this historic achievement.

In this regard, Patricio Escala, executive producer of the short film, points out:

“The bank and the area of the Chilean Film Development program quickly supported us to start broadcasting. We used the resources to participate in the academy awards ceremony and continue with activities such as showing our short film in various plazas in Chile during two consecutive years. That is, this contribution allowed the short film to be broadcasted in many places jointly with feature films and other films. We are very happy that our work can reach more and more people each time.The fact that the program supports independent authors, industrial and short film productions reflects the bank’s interest at contributing to national audiovisual development. It also gives an account of the good moment domestic audiovisual productions are going through, the prizes we are getting and a better distribution at the national level. Finally, there is synergy between the bank and the national filmmakers to reach the audience with projects and plays. It is the last step of the audiovisual chain and within that, it is quite valuable to see how the bank’s support grows so that the national cinema has presence in all the cinemas of the country. “

TESTIMONY OF NICOLÁS LÓPEZ, DIRECTOR OF “SIN FILTRO” AND “NO ESTOY LOCA”

Nicolás has twice received funding from our program in the Film Industry category; first with his production “Sin Filtro” and later on in 2017 with “No estoy loca”. Nicolás, tells us about his experience working with us with the next words.

“The relationship with the bank has been incredible. We had an unbeatable experience with BancoEstado, who was instrumental in the blockbuster success of “Sin Filtro”, which reached 1.3 million viewers and “No Estoy Loca”, which already exceeded 500,000 spectators. This support is a great financial backing, while in the case of “Sin Filtro” ... it saved our lives”.

“Then, an extremely valuable and very coherent contribution is given by awarding films in Industry and Independent categories [current category called ‘Authors’ Cinema’], something that no other fund does, which allows cinemas of different genres to grow in parallel and for all audiences. “

TESTIMONY OF LEONARDO CONTRERAS, DIRECTOR OF THE DOCUMENTARY “CHEQUES MATTA”.

Leonardo is the executive producer, scriptwriter and director of the documentary “Cheques Matta”. This documentary deals with some small visual works of painter Roberto Matta, which were sent in envelopes by postal mail to dissidents of the dictatorship in Chile and close to the painter. Later, they sold them to cover their expenses in times of resistance, hence the name “cheques”. There is a lot of mythology about the story, because you do not know how many there are, which ones are original and which are copies.

Leonardo and his team received funds from our program for the category Cine de Autor, which they will allocate to distribute and broadcast the feature film. Regarding this experience, he shares the following testimony with us:

“We finished the movie and had no way to distribute it. There were no resources; neither personal nor from the producer that works with us. That’s when we applied for this BancoEstado fund and we got it.For us was a tremendous help, since we did not have the resources to release the film. Quite often in Chile a film ends and does not have the option to go to a movie theater. Therefore, it is a great contribution for the Chilean cinema, which has grown a lot in recent times and takes a fair amount of resources to hold it and make it grow. This is a great tool; simply without this BancoEstado fund we could have not premiered Cheques Matta “.

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In August of 2017 we implemented the Solidarity Donations Portal, which is hosted in our website. With it, we wanted to give more formality to voluntary donations made to various solidarity organizations in the country, thus contributing to those who are part of this network.

This service allows our customers to make money transfers to various charitable organizations that support vulnerable sectors or those living in poverty, integrating areas such as health, social services, environment, education and culture. Additionally, the platform is available for national contingencies such as, for example, natural catastrophes.

With this initiative we seek to promote and encourage contributions towards foundations and solidarity organizations recognizing the important social role they play in the municipalities and localities of our country. Through this portal, member organizations can reach our almost 13 million customers through a fast, safe and simple mechanism, where our support stands from our knowledge in transactions and digital channels. In addition, the project includes broadcasting small organizations that do not have platforms to collect charities.

In technical terms, the minimum amount to make a donation in the portal is $500 and the maximum will depend on the limit amount of the origin account. On the other hand, service channels work on the public website www.bancoestado.cl and also operate from mobile phones.

8.3 PORTAL OF SOLIDARITY DONATIONS

In this way, we have called all solidarity organizations in the country to be part of our portal. At the end of 2017, we have 22 member organizations, divided into four categories: health, social services, volunteering and environment, and education and culture. On the same date, our portal has received a total amount of $960,024 through 260 donations.

Participating organizations are:

• COANIQUEM• CONIN• FALP• Fundación Gantz• DEBRA Chile• Sagrada Familia• Fundación Paternitas• Hogar de Cristo• Fundación Las Rosas• Fundación Beata Laura Vicuña• Fundación Don Bosco• Corporación para ciegos (Corporation for blind people)

• Fundación Nacional para la Superación de la Pobreza• Fundación ITACA• Fundación de Beneficencia Ayuda y Esperanza (Employment)

• Fundación Rostros Nuevos• Fundación Banigualdad• Fundación Gente de la Calle• Techo – Chile• ONG de Desarrollo Psicólogos voluntarios de Chile• Fundación Toki Rapa Nui• Fundación INFOCAP

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9. FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT

ToBanco del Estado de Chile

We have audited the accompanying consolidated financial statements of Banco del Estado de Chile and subsidiaries (“the Bank”), which comprise the consolidated statements of financial position as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended and the related notes to the consolidated financial statements.

Management’s Responsibility for Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Accounting Standards and Instructions issued by the Superintendency of Banks and Financial Institutions; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the consolidated financial statements, that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Banco del Estado de Chile and subsidiaries as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended, in accordance with Accounting Standards and Instructions issued by the Superintendency of Banks and Financial Institutions.

Other matters

Our audit also comprehended the translation of Chilean Peso amounts into US dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1b) to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Chile.

The accompanying consolidated financial statements have been translated into English for the convenience of readers outside Chile.

February 22, 2018Santiago, Chile

Tomás Castro G.Partner

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12/31/2017MUS$

31/12/2017MCh$

31/12/2016MCh$

ASSETSCash and due from banks 7,777 4,781,085 5,040,591 Transactions in the course of collection 303 186,484 285,759 Financial assets held for trading 3,760 2,311,304 2,080,446 Repurchase agreements and securities loans 525 323,000 266,658 Financial derivative contracts 1,098 675,191 473,545 Loans and advances to banks, net 989 607,882 570,806 Loans and accounts receivable from customers, net 35,540 21,848,261 20,118,494 Financial investments available for sale 8,460 5,200,635 4,111,911 Financial investments held to maturity 41 25,041 29,276 Investments in associates 23 13,882 14,273 Intangible assets 273 167,984 136,123 Property, plant and equipment 594 365,031 337,964 Current taxes 5 2,788 2,222 Deferred taxes 1,333 819,205 704,389 Other assets 914 562,463 388,150

TOTAL ASSETS 61,635 37,890,236 34,560,607

LIABILITIESCurrent accounts and other demand deposits 14,679 9,024,024 7,828,716 Transactions in the course of payment 165 101,578 246,478 Repurchase agreements and securities loans 964 592,523 609,617 Time deposits and savings accounts 27,668 17,009,129 15,482,916 Financial derivative contracts 1,195 734,677 400,720 Obligations with banks 2,293 1,409,545 1,079,779 Debt instruments issued 10,030 6,166,010 6,065,011 Other financial obligations 47 28,825 28,840 Current taxes 232 142,468 224,904 Deferred taxes - 29 233 Provisions 1,122 689,743 724,620 Other liabilities 549 337,228 295,912

TOTAL LIABILITIES 58,944 36,235,779 32,987,746

EQUITYAttributable to equity holders of the bank:Issued capital 935 574,632 574,632 Reserves 1,652 1,015,631 942,297 Valuation accounts ( 8) ( 4,889) ( 2,730)Retained earnings: Net income for the year 196 120,501 147,090 Less: Provision for distribution of income to the benefit of the state ( 98) ( 60,250) ( 95,879)

2,677 1,645,625 1,565,410 Non-controlling interest 14 8,832 7,451

TOTAL EQUITY 2,691 1,654,457 1,572,861

TOTAL LIABILITIES AND EQUITY 61,635 37,890,236 34,560,607

Consolidated Statements of Comprehensive IncomeFor the years ended December 31, 2017 and 2016(In millions of Chilean Pesos - MCh$)

BANCO DEL ESTADO DE CHILE AND SUBSIDIARIES

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31/12/2017MUS$

31/12/2017MCh$

31/12/2016MCh$

Interest income 2,684 1,650,145 1,654,244 Interest expense ( 1,243) ( 763,832) ( 819,856)

Net interest income 1,441 886,313 834,388

Fees and commission income 656 403,313 365,941 Fees and commission expense ( 232) ( 142,997) ( 128,234)

Net fee and commission income 424 260,316 237,707

Net income from financial operations 253 155,499 179,952 Net foreign exchange loss ( 57) ( 34,937) ( 22,173)Other operating income 15 9,025 11,938

Total operating income 2,076 1,276,216 1,241,812

Provision for loan losses ( 302) ( 185,849) ( 209,689)

OPERATING INCOME, NET 1,774 1,090,367 1,032,123

Personnel salaries and expenses ( 683) ( 420,065) ( 401,494)Administrative expenses ( 455) ( 279,880) ( 258,490)Depreciation and amortization ( 133) ( 81,542) ( 77,588)Impairment - - - Other operating expenses ( 56) ( 34,335) ( 26,187)

Total operating expenses ( 1,372) ( 815,822) ( 763,759)

NET OPERATING INCOME 447 274,545 268,364

Income from investments in associates 3 2,069 1,680

Income before income taxes 450 276,614 270,044

Income tax expense ( 234) ( 144,117) ( 110,067)

NET INCOME FOR THE YEAR 216 132,497 159,977

Attributable to: Equity holders of the bank 196 120,501 147,090 Non-controlling interest 20 11,996 12,887

216 132,497 159,977



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12/31/2017 Notes MUS$

31/12/2017MCh$

31/12/2016MCh$

NET INCOME FOR THE YEAR 216 132,497 159,977

OTHER COMPREHENSIVE INCOME (LOSS) THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS

Mark to market adjustments on available-for-sale financial assets ( 12) ( 7,513) 11,323

Exchange differences on translation foreign operations - ( 174) 484

Mark to market adjustments on cash flow hedging instruments 5 3,231 ( 34,456)

Subtotal – other comprehensive income (loss) which may be reclassified to profit or loss ( 7) ( 4,456) ( 22,649)

Income tax relating to other comprehensive income that may be reclassified to profit or loss 4 2,297 14,516

Total other comprehensive income (loss) that may be reclassified to profit or loss ( 3) ( 2,159) ( 8,133)

OTHER COMPREHENSIVE INCOME (LOSS) THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS

Transfer to reserves financial instruments available for sale 2 1,286 -

Actuarial loss on employee benefit plan ( 6) ( 3,936) ( 2,771)

Subtotal - other comprehensive income (loss) which will not be reclassified to profit or loss ( 4) ( 2,650) ( 2,771)

Income tax relating to other comprehensive income which will not be reclassified to profit or loss 4 2,439 1,801

Total other comprehensive income (loss) which will not be reclassified toprofit or loss - ( 211) ( 970)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS) ( 3) ( 2,370) ( 9,103)

CONSOLIDATED COMPREHENSIVE INCOME FOR THE YEAR 213 130,127 150,874

Attributable to:

Equity holders of the bank 193 118,131 137,987

Non-controlling interest 20 11,996 12,887

213 130,127 150,874



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Reserves Valuation accounts

Issuedcapital

OtherReserves

derived from profits

Reserves derived from

profits

Financial investments

available for sale

Cash flowhedge

Exchange differences

on translation

foreign operation

Income tax effect

Prior year’s retained earnings

Income for the year

Provision for distribution of net income for

the year

Total attributable

to equity holders of

the bank

Non- controlling

interest

Total equity

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Equity as of 01/01/2016 574,632 ( 984) 887,960 ( 3,274) 19,861 ( 1,465) ( 9,719) - 112,583 ( 92,149) 1,487,445 6,522 1,493,967

Transfers - - 112,583 - - - - - ( 112,583) - - - -

Dividends paid - - ( 56,292) - - - - - - - ( 56,292) ( 3,956) ( 60,248)

Mark to market adjustments on available-for-sale financial assets

- - - 11,323 - - ( 7,538) - - - 3,785 - 3,785

Mark to market adjustments on cash flow hedging instruments

- - - - ( 34,456) - 22,054 - - - ( 12,402) - ( 12,402)

Exchange difference on translation of New York Branch

- - - - - 484 - - - - 484 - 484

Actuarial loss on employee benefit plan - ( 970) - - - - - - - - ( 970) - ( 970)

Provision for mandatory dividends - - - - - - - - - ( 3,730) ( 3,730) ( 8,002) ( 11,732)

Net income for the year - - - - - - - - 147,090 - 147,090 12,887 159,977

Equity as of 12/31/2016 MCh$ 574,632 ( 1,954) 944,251 8,049 ( 14,595) ( 981) 4,797 - 147,090 ( 95,879) 1,565,410 7,451 1,572,861

Equity as of 01/01/2017 574,632 ( 1,954) 944,251 8,049 ( 14,595) ( 981) 4,797 - 147,090 ( 95,879) 1,565,410 7,451 1,572,861

Transfers - - 147,090 - - - - - ( 147,090) - - - -

Dividends paid - - ( 73,545) - - - - - - - ( 73,545) ( 4,885) ( 78,430)

Capital contribution - - - - - - - - - - - 954 954

Mark to market adjustments on available-for-sale financial assets

- - - ( 7,513) - - 4,224 - - - ( 3,289) - ( 3,289)

Transfers to reserves financial instruments available for sale

- 1,286 - - - - - - - - 1,286 - 1,286

Mark to market adjustments on cash flow hedging instruments

- - - - 3,231 - ( 1,927) - - - 1,304 - 1,304

Exchange difference on translation of New York Branch

- - - - - ( 174) - - - - ( 174) - ( 174)

Actuarial loss on employee benefit plan - ( 1,497) - - - - - - - - ( 1,497) ( 1) ( 1,498)

Provision for mandatory dividends - - - - - - - - - 35,629 35,629 ( 6,683) 28,946

Net income for the year - - - - - - - - 120,501 - 120,501 11,996 132,497

Equity as of 12/31/2017 MCh$ 574,632 ( 2,165) 1,017,796 536 ( 11,364) ( 1,155) 7,094 - 120,501 ( 60,250) 1,645,625 8,832 1,654,457

Equity as of 12/31/2017 MCh$ 935 ( 4) 1,656 1 ( 19) ( 2) 12 - 196 ( 98) 2,677 14 2,691

BANCO DEL ESTADO DE CHILE AND SUBSIDIARIESConsolidated Statements of Changes in Equity. For the years ended December 31, 2017 and 2016.(In millions of Chilean Pesos - MCh$)

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12/31/2017 MUS$

31/12/2017MCh$

31/12/2016MCh$

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:Net income for the year 216 132,497 159,977

Charges (credits) to income that do not represent cash flows:

Depreciation and amortization 133 81,542 77,588 Provision for loan losses 408 250,549 289,899 Mark to market of financial assets held-for-trading 231 142,159 117,191 Income from investment in associates ( 3) ( 2,069) ( 1,680)Net gain on sale for assets received in lieu of payment ( 3) ( 2,067) ( 2,951)Net gain on sale of property, plant and equipment - ( 21) ( 46)Write-off of assets received in lieu of payment 3 1,798 2,464 Other charges to income that do not represent cash movements 347 214,016 150,088 Accrued interest and inflation indexation income ( 244) ( 149,067) ( 74,619)

Changes in assets and liabilities affecting operating cash flows:

Decrease of trading instruments 1,349 829,366 307,282 Increase in loan portfolio ( 3,116) ( 1,915,616) ( 1,789,022)Increase in held-to-maturity and available-for-sale financial investments ( 1,764) ( 1,084,489) ( 91,873)Increase in other credit transactions (60) ( 37,076) ( 81,353)Increase (decrease) in current accounts 1,319 810,739 ( 380,162)Increase of deposits and fundraising 2,961 1,820,456 1,374,810

Increase in other demand and time liabilities147

90,326 30,790

(Decrease) increase of other obligations through brokerage of documents ( 28) ( 17,094) 33,983 Decrease of obligations in letters of credit ( 199) ( 122,577) ( 89,923)Increase of loans obtained from local banks 5 2,864 -

Increase of loans obtained from foreign banks532

326,902 39,426

Decrease of other assets and liabilities ( 783) ( 480,332) ( 130,608)

Net cash flows provided by (used in) operating activities 1,451 892,806 ( 58,739)

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:Purchase of property, plant and equipment and intangible assets ( 232) ( 142,491) ( 115,330)Sale of property, plant and equipment and intangible assets - 25 50 Purchases of investments in associates ( 14) ( 8,672) ( 626)Dividends received from investments in companies 1 477 588 Sale of assets received in lieu of payment 6 3,593 4,754

Net cash flow used in investing activities ( 239) ( 147,068) ( 110,564)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:Issue of bonds 1,822 1,120,148 756,931 Repayment of bonds ( 1,415) ( 869,775) ( 27,216)Payment of mandatory dividends in benefit of the state ( 120) ( 73,545) ( 56,292)Payment of mandatory dividends of non-controlling interest ( 17) ( 10,613) ( 10,332)

Net cash flows provided by financing activities 270 166,215 663,091

NET VARIATION FOR THE YEAR OF CASH AND CASH EQUIVALENTS 1,482 911,953 493,788

Effect of exchange rate changes on the balance of cash held in foreign currencies 1 581 ( 1,497)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 9,799 6,023,808 5,531,517

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 11,282 6,936,342 6,023,808


Consolidated Statements of Cash FlowsFor the years ended December 31, 2017 and 2016(In millions of Chilean Pesos - MCh$)

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ANNEXS

A.1. COMMUNICATION WITH THE COUNTRY

80%

60%

40%

20%

0%

BANCOESTADO

BANCO 2

BANCO 3

BANCO 4

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CONFIDENCE

20172010 2011 2012 2013 2014 2015 2016

BANCOESTADO

BANCO 2

BANCO 3

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0%

CONVENIENCE

20172010 2011 2012 2013 2014 2015 2016

BANCOESTADO

BANCO 2

BANCO 3

BANCO 4

BANCO 5

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MODERNITY

20172010 2011 2012 2013 2014 2015 2016

BANCOESTADO

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SERVICES

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ANNEXS

A.2 MATERIAL THEMES MANAGEMENT APPROACHES 2017

A.2.1 Directrices de sostenibilidad

At BancoEstado, the Corporate Sustainability Policy provides the guidelines for action on the main issues that we want to promote and work in the medium and long term.

As a public bank and understanding our place and relevance in the country, we seek to articulate initiatives of high economic, social and environmental impact that cause a mobilizing and multiplying effect on society.

We do this through the strategies articulated under the following four axes:

Loans and responsible investment

We are concerned about maintaining a continuous work in terms of loans and responsible investment through policies, procedures and work plans. We tend to think that effective risk and operations management are vital for long-term financial planning and the ability to respond to new scenarios. From this axis, we develop issues related to environmental and social risk, operational risk, credit risk, emerging risks and issues correlated to cyber security and data protection.

Environmental support

We have defined ourselves as the first bank in Chile that promotes funding solutions with environmental value. To this end we have a series of green financial products that support the development of projects that positively impact the environment. These funding products hold a medium and long-term perspective that respond to the needs of various players and segments of society providing, for example, support to individuals who want to acquire an energy-efficient home or micro and small entrepreneurs, large companies, public institutions, etc.

To develop these products we seek to promote national policies making alliances with the Ministry of Energy and the Chilean Energy Efficiency Agency (ACHEE).

Social impact

From the social role that has always characterized us, we focus on developing initiatives linked to the financial inclusion of all people of the country, aimed at the most vulnerable gender groups and since 2017, with an emphasis on minority groups, which include people with disabilities, immigrants, senior citizens, indigenous peoples and the collective of sexual diversity.

In order to demonstrate the social impact we generate, we have developed a public website from where you can get some important figures of our role and products.

Ethics and compliance

We constantly worry about reviewing and updating our standards, protocols and codes of conduct, promoting best practices in our value chain based on training and promotional activities.

A.2.2. Materiality

The table below shows the relevant topics for BancoEstado, our objectives and how we manage to accomplish them.

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IMPORTANT MATTER: Financial inclusion and coverage

RATIONALE(why is it important and where is the impact)

RELATED MANAGEMENT (How to manage it; policies, commitments, metrics, etc.)

EVALUATION(December 2017 figures

ODSIMPACTED

Our mission is the financial inclusion of all people in Chile.

We have focused our work on generating products and services adapted to the different sectors of society, as well as expanding our network and coverage to isolated or vulnerable areas with the purpose of incorporating all the population to the financial system.

We favor greater participation of people in the financial sector through inclusive products such as:

• CuentaRUT• Coverage Branches: opening new branches in isolated or vulnerable areas with special focus on

locations where there is no other financial institution. New points of service CajaVecina: Bank correspondent network in neighborhoods,

through convenience stores and small businesses, so a larger number of people can make payments and transactions, saving costs in time and transportation.

Number of customers: 12 million people - 700 thousand companies / institutions / civil society organizations

Cuenta RUT: CuentaRUT new openings: 3.7 million (capitalization target committed to the Ministry of Finance:

2.3 million) Total CuentaRUT customers: 10.2 million

Coverage: Branches: 74% of country municipalities where in 37% of them we are the only bank. New branches: 50 (capitalization goal: 20). New points of service CajaVecina: 10,686 (capitalization goal: 4,100) Total CajaVecina: 22,147 points of service. Number of transactions 2017 in CajaVecina: 300 million

IMPORTANT MATTER: Work with the State and impact on public policies




ODSIMPACTED

Being a state company, we contribute to the development of the country through an efficient and profitable management, which contributes to fund public policies, which in turn lets the bank to be an ally of the State for the implementation of private as well as public initiatives.

We are a universal bank, present in all market segments and socioeconomic levels. We hold net income above market average and risk similar to the industry. Loans shows a 6.8% increase versus 2.9% in the banking system.

Agreements and alliances with ministries and other institutions of the State, stand out: issuing bonds of medical consultation for the public health system (Fonasa); paying social security benefits for the Social Security Institute (IPS); agreement with the General Treasury of the Republic for paying bonus to public employees; deploying program Almacenes de Chile (Ministry of Economy and Sercotec); agreement to develop green financial products (Ministry of Energy) and work with the Ministry of Environment and Transportation in the design of new green financial offers.

Net income: 16.7%

Growth in loans: 6.8%

Profit before tax 2017: US$450 million

From 2001 to 2017, BancoEstado has transferred to the Treasury US$4,375 million, which tallies US$257 million annual average.

Subsidies and state contributions.

Payments of state benefits to 5.7 million people.

Social Welfare Institute: we are responsible for 25% of this institution’s payments covering close to 600,000 beneficiaries per year.

Fonasa Agreement: collections from 393,664 people covered by this National Health Fund for a total amount of US$4.1 million.

IMPORTANT MATTER: Customers’ experience




ODSIMPACTED

In tune with the expectations and the needs of our customers in every interaction they have with our bank; we try to guarantee the levels of satisfaction of the people in the provision of financial services and increase their level of approval towards BancoEstado.

Our strategy aims at improving customer satisfaction and their level of endorsement based on their loyalty and the creation of long-term relationships. This strategy contemplates framing the service model, gauging satisfaction and its evolution by way of integrating improvements based on artificial intelligence and big data tools.

Overall satisfaction level: 73%Accumulated Net Promoter Score (NPS) indicator for BancoEstado: 22%

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IMPORTANT MATTER: Economic empowerment of women




ODSIMPACTED

We are the only inclusive bank in the country that through tangible actions reduces the barriers that certain groups of our society must face in order to fully join the financial system. In line with this, we have signed the UN Women’s Empowerment Principles as a statement for actions we take to promote economic empowerment of women, whether they are natural persons, entrepreneurs or workers. Signing these principles seals our permanent work in the design of a range of financial and non-financial services intended to reduce the barriers that women must face for their economic and employment absorption.

CreceMujer: The objective of this program is promote and facilitate access to financial and non-financial services to micro and small entrepreneurs from all over the country, thus contribute to the development and growth of their businesses for a specific gender, that is, incorporate practices and tools that let women to meet the barriers of the financial system (and self-imposed) to achieve their economic empowerment. CreceMujer has the technical support of the Ministry of Women and Gender Equity.

CreceMujer Program now embraces 320,000 entrepreneurs (100% growth compared to prior year).

6,622 women customers in our Small Business segment, exceeding the goal of 6,470 customers for the same year.

The program’s platform and web community register over 2.1 million visits and have more than 1,500 articles and training videos on business management, employability, career development, empowerment, leadership, financial education, technology and legal / tax issues, in addition to display information about available state benefits and services.

IMPORTANT MATTER: Probity




ODSIMPACTED

Probity and transparency are reflected in our corporate values, understanding the responsibility we have as a public bank to our diverse interest groups, taking care of everyone’s assets and ensuring their sustainability and reputation.

We have an internal unit called Compliance Management that is responsible for implementing integrity and ethics. This ensures compliance, adaptation and integration into the institution of standards and protocols associated with these issues; and maintains confidential communication channels to receive queries, requirements and complaints of our employees or any external person related to the organization. We highlight the following essential documents related to managing probity and ethics:

• Organic Law of Banco del Estado de Chile

• Current legislation applicable to the entire financial industry

• Ethics Manual

• Procurement Policy

• Politic for the attention of Politically Exposed Persons

• Manual of Promotion of Free Competition • Manual of Norms and Procedures for the Prevention of Money Laundering and Financing of Terrorism

Training on probity and ethics matters completed in 2017:

Free competition: 100 people trained

Free competition: 8,673 people trained.

Money laundering: 797 people trained.

Crime Prevention Model (Law 20,393), Ethics and Compliance: 3,336 people trained

Crime Prevention Model (Law 20,393): 10,053 people trained

Ethics and Compliance: 8,271 trained people.

Internal and external fraud: 682 people trained.

IMPORTANT MATTER: Digital banking and transformation




ODSIMPACTED

We have set ourselves the goal to innovate to deepen financial inclusion by way of increasing our digital services and improve the quality standards required by customers

We have a structure committed to the digital domain allocated to accelerate the bank’s transformation process.

This new area is dedicated to strengthen our digital channels and become the best digital platform for financial and non-financial services.

Number of digital customers: 3.8 million.

Access through the bank’s website: 4.2 million customers

Access through web and mobile platform: 2.9 million.

Access through the mobile application: 1.5 million.

96% of the total transactions of the bank are automated transactions.No-in-person transactions: Our no-in-person channels, such as ATMs, web, mobile transactions and POS outlets exceed 190 million per month, which account for 40% of all transactions in the country’s financial system.

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IMPORTANT MATTER: Environmental support




ODSIMPACTED

Our market share and coverage in the financial sector, added to our social role, motivates us to be a player that contributes to the commitments that the country has signed on reducing carbon emissions. Given this scope, we can positively impact the environment by providing business opportunities and solutions to our stakeholders.

Indirect Contribution: Social and environmental risk policy; integration of social and environmental criteria that

complement our credit risk assessments.

Green financial products; Funding homes that have energy efficiency above the Chilean norm (Ecovivienda); funding

investment in non-conventional renewable energies and energy efficiency for small and medium-sized entrepreneurs.

Direct contribution; Measurement of carbon footprint and internal management associated with reduction of

energy consumption in our operation.

Indirect Contribution: Total number of green financial products: 2 Number of energy-efficient homes funded: 359 Number of green products for micro and small entrepreneurs: 40

Direct Contribution: Number of branches with solar panels: 30 Number of offices that make up the energy consumption monitoring plan: 48 Number of branches with led lighting: 115

IMPORTANT MATTER: Diversity and inclusion




ODSIMPACTED

As the bank of all people of the country, we integrate said diversity and its wealth within our organization, to respond to the needs of our customers from their own reality and condition. For this, we have a strategy of inclusion and diversity, linked to our new policy on the subject, which seeks to respond to the UN Gender Empowerment Principles that we have signed as well as new labor inclusion regulations for people with disabilities and the new country context as a result of the growing migration of foreigners.

On the other hand, we are actively concerned about the integration into the financial system of minority groups corresponding to people with disabilities, immigrants, senior citizens, indigenous peoples and the LGBTI sexual diversity collective, through tools and initiatives that seek to take over the barriers they face for their full integration into the economy.

• Publication of the Inclusion and Diversity Policy and associated strategy.

• Gender Equity Program.

• Program of labor integration of minority groups.

• Universal Customer Service Program.

Internal: Publication of the Inclusion and Diversity Policy.

Gender equality: Female participation of workers: 48% “Woman and Leadership” mentoring program: 22 mentors and 34 guides. Gender awareness program: 133 talks.

Income Tax Policy (implies that any person who occupies a position in our organization will receive the same salary, regardless of their origin or gender)

Program of job hiring of minority groups: Inclusion program for immigrants: 0.6% of workers are immigrants. Inclusion of people with disabilities: 0.2% of our workers are people with disabilities.

External: Universal Customer Service Program: Number of accessible offices: 164 (40% of total offices)

Universal service initiatives implemented: Accessible public site

Lazarillo audible mobile application for the autonomous circulation of blind people inside a branch (5 branches) and audible georeferencing for all branches of BancoEstado and ServiEstado.

Georeferencing of accessible branches through the BancoEstado website and mobile application

Totems webs accessible in branches

Call center for Haitian immigrants in their native language and for the Mapuche people in Mapudungun.

Brochures of bank emergencies and main products for Haitian immigrants in their language of origin.

Embossed card name CuentaRUT, checking account and savings book, with the name with which the person identifies, respecting their gender identity.

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MATERIAL SUBJECT: Financial education




ODSIMPACTED

As the only public bank in the country, we are part of the Advisory Commission for Financial Inclusion, led by the Ministry of Finance, which understands its objective seeks to promote a better understanding of financial products through financial education.

Given our numbers and national coverage, we tackle financial inclusion from a broad and inclusive perspective that favors economic empowerment, through informed financial decisions and responsible indebtedness.

The En Fácil y en Chileno program: Virtual financial education municipalities open to the entire population.

The Usa bien tu Plata Program: seeks to reduce the financial education gap in middle and high school students, teachers and parents by providing tools that allow them to be informed when making financial decisions.

Number of financial education programs: 2

Virtual community “En Facil y en Chileno” Number of virtual followers: 178,334 on Facebook fan page, 28,418 on Twitter.

Number of visits to the website of the virtual community: 1.9 million.

Program “Usa bien tu Plata” Number of schools that benefit from the Program since its roll out (2015-2017): 555

Number of student beneficiaries of the Program Usa bien tu Plata since its implementation (2015-2017): 17,813 students and more than 1,200 teachers

MATERIAL SUBJECT: Quality of life and labor relations




ODSIMPACTED

Our workers are an essential part of the effort required to achieve the ambitious goals and objectives that we set ourselves each year.

To this end, we work on their motivation and the chance for them to work in an environment with high standards of working life.

• Training programs.• Professional development model (internal mobility).• Performance evaluation.• Ranking Great Place to work.

Total beneficiaries of training programs: 7,121Total job openings occupied by own workers: 50%Percentage of workers subject to performance evaluation: 92%Ranking Great Place to work: Place 15th Chile

MATERIAL SUBJECT: Community support




ODSIMPACTED

As a public bank, we are instructed to fulfill a social role throughout the country. We have proposed to finance initiatives relevant to society, as well as react urgently to natural disasters and emergencies, avoiding breaking the country’s payment chain.

• Financial inclusion for Civil Society Organizations.

• Free fundraising portal for charitable organizations.

• Emergency plan that guarantees the operation and chain of payments for natural disasters and emergencies.

• Competitive fund to promote Chilean cinema

Number of customers belonging to Civil Society Organizations (OSC): 80,000 active and 150,000 registered customers.

Growth in active OSC customers: 8,600 (2017)

Number of institutions registered in the donation portal: 22

Number of State bonds for emergency payments paid through CuentaRUT: 76,803 (2016) / 38,611 (2017)

Total contribution to the fund to date for the promotion of Chilean cinema: MUS$810 (2015-2017)

Total contribution to Industry Cinema Award and Authors Cinema Award: MUS$490 and MUS$81 (2015-2017)

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A.2.3 Sustainability Standards

In order to identify gaps and improve our management, we made in 2015 a sustainability diagnosis based on ISO 26,000, where we defined our Sustainability Policy and the lines of work we have undertaken.

To develop this view, in 2017 we directly dealt with RobecoSAM to gauge our indexes under the Dow Jones Sustainability standards for the financial sector. This standard lets us monitor sustainability and performance of leading companies worldwide with the purpose of providing complementary information for decision making on investments.

In turn, and as a public company and committed to issues the State has defined as strategic to move forward on economic, social, environment and governance issues that involve society as a whole, we adhere to the Sustainable Development Goals promoted by the United Nations working to achieve the goals proposed in a series of objectives defined with concrete actions.

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bancoestado social impact...business name banco del estado de chile rut 97.030.000-7 constitution...

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