Banco Itaú Chile : Itaú Chile anuncia Informe de Resultados del Tercer Trimestre de 2023

Management

Discussion &

Analysis and Complete Balance sheet & income statements

3Q23

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Itaú

Table of

Contents

Management Discussion & Analysis	5
Executive Summary	7
Income Statement and Balance Sheet Analysis	21

Managerial results - Breakdown by country

Managerial results - Breakdown for Chile Managerial results - Breakdown for Colombia Consolidated Balance Sheet

Risk and Capital Management

23

25

35

45

51

Additional Information	54
Report of Independent Auditors	62

Complete Balance sheet & income statements

Access here

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Management Discussion &

Analysis

Itaú

This report is based on Itaú's reviewed financial statements for 3Q23, 2Q23 and 3Q22 prepared in accordance with the Compendium of Accounting Standards issued by the Chilean Commission for the Financial Market (Comisión para el Mercado Financiero, or "CMF") pursuant to Chilean Generally Accepted Accounting Principles (Chilean GAAP), which conform with the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) to the extent that there are not specific instructions or regulations to the contrary issued by the CMF.

Solely for the convenience of the reader, U.S. dollar amounts (US$) in this report have been translated from Chilean nominal peso (Ch$) at our own exchange rate as of September 30 2023 of Ch$891.33 per U.S. dollar. Industry data contained herein has been obtained from the information provided either by the CMF or the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia, or "SF").

Certain figures included in this Quarterly Report for the three months ended September 30, 2023 and 2022, for the three months ended June 30, 2023 and for the twelve-month periods ended September 30, 2023 and 2022 have been rounded for ease of presentation. Percentage figures included in this Quarterly Report have in all cases not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements and our managerial information. Certain other amounts that appear in this Quarterly Report may similarly not sum due to rounding.

As used in this MD&A Report, the term "billion" means one thousand million (1,000,000,000) and the term "trillion" means one million million (1,000,000,000,000).

6

Management Discussion &

01 Analysis and Complete

Balance sheet & income

statements

Executive

Summary

Management Discussion & Analysis

Executive Summary

Competitive Environment

Itaú operates in the financial market registering its headquarters in Chile, complemented by its operations in Colombia and Panama, a branch in New York and a representative office in Lima, Peru. It seeks to offer its clients a complete set of financial solutions that include credit products, investment, insurance, among other financial services, complemented by a multichannel service model covering the provision of physical and digital branches, as well as mobile channels (APP and web).

Financial Industry1

Loan growth

Results	Commercial	Consumer
12.2%
	53.6%
PerformanceResults		Mortgage
	34.2%

Loans	+ 1.1%

Ch$ 228.8	(3Q23/2Q23)
trillion	+ 2.2%
	(3Q23/3Q22)

Liabilities growth

Deposits and	Time deposits
other demand
31.2%
liabilities
18.3%
Other financial
liabilities	Bonds
31.2%
19.3%
Liabilities	+ 0.8%
Ch$ 343.0	(3Q23/2Q23)
- 3.4%
trillion
	(3Q23/3Q22)

At the end of the third quarter of 2023, the financial system in Chile reached a total of Ch$228.8 billion (excluding Itaú's operations in Colom- bia and BCI's operations in Florida), representing a growth of 1.1% compared to the previous quarter, which considers a growth of 1.5% in Sheetcommercial portfolio and expansions of 0.6% in consumer and mortgage. Meanwhile, compared to the same period in 2022, the system

registered a growth of 2.2%, a variation that considers increases of 7.4% in housing and 5.0% in consumption and a decrease of 1.4% in Balancecommercial loans, accentuating the downward trend in the growth rate of the loan portfolio at the industry level.

With respect to the composition of the portfolio, 53.6% of the total is explained by commercial loans, mortgage accounts for 34.2% of the total portfolio and consumer represents 12.2%. On the other hand, in the 12-month comparison, the greater presence of the mortgage portfolio in the composition of the system's total placements stands out, which went from accounting for 32.5% of the total to 34.2% in 2023.

Regarding the liabilities portfolio, the industry totaled Ch$343.0 billion, representing an increase of 0.8% compared to the previous quarter and a decrease of 3.4% compared to 3Q22. In relation to the composition of the portfolio, there were no significant movements compared to the previous quarter, while in the 12-month comparison, the decrease in the volume of demand deposits and an increase in time deposits stand out.

Itaú Chile achieved a market share of 9.9% in its total loan portfolio, 11.1% in commercial loans, 8.7% in consumer loans and 8.4% in mort- gage, totaling a growth of 5bp in total share compared to what was observed at the end of the previous quarter. However, consumer credits showed a 7bp decrease compared to July 2023, while accumulating a 50bp gain in market share over the past 12 months.

In terms of performance in liabilities, Itaú showed a 3bp improvement in its market share (9.33%), mainly due by a higher share of demand deposits and term deposits. On the other hand, compared to the same quarter of 2022, Itaú's market share totaled an increase of 11bp, explained by a greater presence in bonds.

Itaú	8

Management Discussion & Analysis

Executive Summary

Competitive Environment

Macroeconomic scenario

CPI (12months)

13.70%	12.80%
	11.10%

7.60% 5.10%

TPM

10.75% 11.25% 11.25% 11.25%

9.50%

Sep-22

Dec-22

Mar-23

Jun-23

Sep-23

Sep-22

Dec-22

Mar-23

Jun-23

Sep-23

The monthly activity dynamics was volatile in 3Q23, reflecting occasional transitory shocks. However, the general trend broadly supports the view that the economy has bottomed out. While we expect falling inflation and lower interest rates to lead to a gradual improvement in the activity backdrop, the external environment has become increasingly challenging due to tightening global financial conditions and concerns about China's growth prospects, while the labor market is showing clearer signs of easing.

The disinflation process continues, but upward pressures are looming. Consumer prices rose 0.7% from August to September. The recent rise in global
Results
oil prices and the significant depreciation of the CLP should slow down price disinflation in the near term. Core inflation fell by 0.8 pps to 6.6%. Inflation
DuringPerformance	3Q23, the Central Bank of Chile kicked off the easing cycle with a surprise 100 basis point cut to 10.25% and followed it up with a 75 basis point
during 3Q23 was below the central bank's estimates. September's MPI showed an overall forecast of 5.8% in the quarter (5.6% effective) and 7.8% for
core inflation (7.5% effective).

cut to 9.5% in September. The odds of a larger 100 bps cut look low in the near term, while global events could lead to a smaller 50 bps cut.

In terms of the fiscal and political scenario, the 2024 budget will see higher-than-expected growth in expenditures. The 2024 budget calls for real spending growth of 3.5%, slightly above our forecast of 3% and above the 2.2% forecast for this year. The Ministry of Finance projects a larger deficit of 2.3% of GDP for this year (from 1.9% previously), with a slight consolidation in 2024 to a deficit of 1.9%. Gross public debt is expected to increase from about 38% of GDP in 2023 to 41.1% in 2024. Negotiations in Congress may adjust the composition of the budget, but they could not increase overall spending. Low growth and mounting pressures on social spending are likely to erode fiscal metrics over time and increase the odds of a sovereign rating downgrade in the medium term, as noted in Fitch's statements. Meanwhile, the vote on a new constitutional proposal has focused on ideological differences. The plenary of the Constitutional Council voted on the content of the charter, following the modifications made to the text prepared by experts. The conservative majority has managed to push through several proposals (including the right to choose between a private and public health system, an individually funded pension system). The approved content undergoes a peer review process before the final draft scheduled for 7 Novem- ber, with a referendum set for Dec. 17.

ExpectationsSheet

We expect GDP to contract by 0.3% this year, with a gradual and sequential improvement towards the end of the year, driven by lower interest rates, fallingBalance inflation, and a marginal improvement in consumer and business confidence. For next year, we expect GDP growth to be below potential of 1.5%, as the weakening global backdrop, tighter financial conditions and rising average inflation hamper domestic dynamics. The depreciation of the

Chilean peso and rising global oil prices will lead to higher inflationary pressures in the short term. Our forecast for the end of the year stands at 4.1%. Expectations of a slower disinflation path during 1H24 lead us to expect a rate of 3.1% by 2024. More aggressive interest rate guidance from the Fed, risk-off sentiment, and higher near-term inflationary pressures indicate a more moderate rate-cut path during 1H24, after which we continue to expect rates to end this year at 8.0%, reaching 5.0% in 2024.

Itaú	9

Management Discussion & Analysis

Executive Summary

Competitive Environment

Macroeconomic scenario

CPI (12months)

11.44%	13.12%	13.34%	12.13%	10.99%

TPM	12.00%	13.00%	13.25%	13.25%
10.00%

Sep-22

Dec-22

Mar-23

Jun-23

Sep-23

Sep-22

Dec-22

Mar-23

Jun-23

Sep-23

After weak growth in 2Q23, activity continued to weaken in 3Q23. The coincident activity indicator (ISE) fell 0.7% from June to July and indications point to a further correction in 3Q23. While the labor market continues to evolve favorably (generally responding with a lag to the business cycle), high inflation, rising trade interest rates, weakening exports, and deteriorating business confidence point to weaker activity dynamics to persist in the future.

Measures to address liquidity constraints in the financial system, coupled with a global risk-off sentiment, led to a weakening of the Colombian peso

3Q23Results	(ending July at COP 3,891). Annual inflation continues to fall slowly. Annual inflation fell 44 basis points from August to September, reaching
during the latter part of 3Q23 (closing the quarter at COP 4,078/dollar), reversing the appreciation recorded during the latter part of 2Q23 and early
Performance

10.99%, but is still not significantly lower than the peak of 13.34% recorded in March.

The Central Bank's board opted to keep rates at 13.25% in September, but two of the seven board members favored a 25basis point cut. The overall message from Governor Villar and Finance Minister Bonilla at the press conference was different. The former was in the more conservative camp, favoring the accumulation of more information confirming a downward trend in inflation to avoid a policy error (a position held by the majority of the board). For its part, the latter showed a preference for starting the cycle early, stating that the slower-than-expected decline in inflation is partly due to the reduction in the fuel subsidy, and that, in general, there are clear signs of a downward trend in inflation and growing signs of economic slow- down.

Political context: A Datexco opinion poll showed that President Petro's approval rating remained at 30% during the third week of September, while the disapproval rate rose slightly to 63%, the highest level since he took office. The president encouraged peaceful social demonstrations in Septem- ber, seeking to garner support for the government's reform agenda. All focus is on the regional elections at the month's end, in which polls show non- ruling-partycandidates leading in major cities. The results could determine the direction in which Congress progresses; either to work with the government on its reform agenda, or to adopt a hard opposition stance and take over the lawmaking agenda.

Expectations

Inflation and average interest rates lead us to expect GDP growth of 1.4% by 2024, closing at 1.0% this year. Considering a slower disinflation trajectory, given the pressures of indexed utility prices, increases in fuels, and food price pressures stemming from 'El Niño', we expect inflation of 9.5% by the end of 2023, while for 2024, the expected partial increase in diesel prices and higher indexation pressures led us to an estimate of 4.8%. The gradual convergence of inflation and the growing weakness of domestic demand suggest that the Central Bank Board will choose to gradually lower rates in the coming months. The timing of the start of the cycle remains unclear, however, the expectation is focused on a 25 basis point cut later this month or a 50 basis point cut in December. While the evolution of inflation expectations in the next central bank survey is likely to play a key role, for now we envision an interest rate of 12.75% by the end of 2023, reaching 7.5% next year (still well above the nominal neutral rate of around 5%).

Itaú	10