KBRA Europe (KBRA) assigns deposit and senior unsecured debt ratings of A and short-term deposit and debt ratings of K1 to Banco Santander-Chile (“San Chile” or “the bank”), a subsidiary of Banco Santander S.A. (“Santander”). The Outlook for the long-term ratings is Stable.

The ratings are based on San Chile’s diversified business model, with strong retail and commercial franchises in Chile, combined with resilient through-the-cycle financial performance supported by the bank’s disciplined risk management, in line with the Santander Group’s prudent practices. The bank has demonstrated solid profitability and low earnings volatility over time, supported by its pricing power, revenue diversification, and peer leading cost efficiency. San Chile’s focus on the ongoing expansion of its digital banking capabilities in the recent years has boosted its historically low fee income and new client acquisition. San Chile’s asset quality is sound and in line with domestic peers, despite a higher exposure to consumer loans, supported by its conservative underwriting standards. Asset quality metrics have steadily improved since 2012, reflecting the shift toward lower risk segments in the retail portfolio. The bank’s capitalisation is reflective of its risk profile and benefits from strong internal capital generation. Conservative risk-weightings under Chilean regulations affect many international comparisons. San Chile has a large base of stable deposits and a healthy liquidity position. The bank's reliance on market funds is relatively high, which may expose it to some refinancing risks, but bonds are primarily used to finance long-term mortgage loans with strong daily liquidity and funding management. The ratings also incorporate San Chile’s status of strategically important subsidiary to its parent, Santander, and a high probability of government support, should it be needed, given San Chile’s systemic importance. The likelihood of external support provides further stability to San Chile’s ratings in the event that the standalone credit profile weakens

The ratings are based on KBRA’s Bank & Bank Holding Company Global Rating Methodology published on 8 November 2021 and KBRA’s ESG Global Rating Methodology published on 16 June 2021.

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

This credit rating is endorsed by Kroll Bond Rating Agency UK Limited for use in the UK. Information on a credit rating’s endorsement status is available on its rating page at KBRA.com.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

There are certain issuers, entities or transactions rated by KBRA Europe or KBRA UK that may be or have relationships with Shareholders and/or Shareholder-Related Companies, as that term is defined in KBRA’s Shareholder and Shareholder Related Companies for KBRA Europe and KBRA UK Policy and Procedure. Relevant disclosure information may be found here.

About KBRA Europe

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.

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