Banco Santander Santiago Announces Fourth Quarter and Year-end 2005 Earnings

SANTIAGO, Chile, Feb. 9 /PRNewswire-FirstCall/ -- Banco Santander Santiago announced today its unaudited results for the fourth quarter of 2005 and 2005 year-end results. These results are reported on a consolidated basis in accordance with Chilean GAAP(1)(2) in nominal Chilean pesos.

In the fourth quarter of 2005, net income totaled Ch$57,216 million (Ch$0.30 per share and US$0.61/ADR), increasing 6.1% compared to 4Q 2004 (from now on YoY). This quarter was characterized by a strong growth of retail banking activities which led to an important rise in core revenues (net financial income and fee income). Core revenues reached a record high level at Ch$190,666 million during 4Q 2005, increasing 16.4% YoY and 9.5% compared to 3Q 2005 (from now on QoQ).

Net financial income grew 17.9% YoY and 9.5% QoQ. This increase was mainly due to strong loan growth in retail banking. In 4Q 2005 the Bank's total loans increased 17.7% YoY and 4.0% QoQ. Total retail loans increased 26.4% YoY and 5.8% QoQ. Loan growth in this period was led by a record QoQ growth of 7.1% at Santander Banefe. Market share in consumer lending increased 80 basis points (bp.) since the beginning of the year. Residential mortgage loans grew 28.2% YoY and 6.2% on a sequential quarterly basis. Market share in this product increased 140 bp. in 12 months. The better earning mix also resulted in a higher net interest margin, which increased 19 bp. compared to 4Q 2004 and 22 bp. compared to 3Q 2005.

Net fee income grew 11.0% YoY and 9.9% between 3Q and 4Q 2005. In 2005 the Bank successfully increased its client base, cross-selling standards and product usage. The number of retail clients increased 11.9% to 2.2 million. The amount of retail clients with a checking account increased 18.9% YoY and the number of cross sold clients (a client that uses a checking account and 3 more products) increased 35.9% YoY. Market share in terms of total credit card accounts increased 100 bp. in 2005. Total market share in credit card invoicing increased 90 bp. in the same period. As a result fees from retail banking increased 24.8% in 4Q 2005 compared to 4Q 2004.

Asset quality continued to improve in the quarter. The ratio of required reserves over total loans ratio, which measures the expected loss of the loan portfolio, reached 1.42% as of December 2005 down from 1.51% in 3Q 2005 and 1.96% in 4Q 2005. Past due loans at year-end 2005 decreased 18.7% YoY and 6.7% QoQ. Coverage of past due loans reached 135.3% at year-end 2005 compared to 128.5% at year-end 2004.

In 4Q 2005 the Bank continued expanding its distribution network in order to sustain current commercial growth levels, especially in retail banking. In 2005 the Bank opened 41 new branches representing a YoY increase of 13.2%. Seventeen of these new branches were opened in 4Q 2005. In addition, a total of 232 new ATMs were installed during 2005 -- an increase of 19.5% -- of which 100 were installed in 4Q 2005. Operating expenses increased 8.2% YoY and 5.7% QoQ, mainly due to the continued expansion of the branch network.

Medium and long-term interest rates rose sharply in 4Q 2005. The yield on the Central Bank's 10-year bond went up 86 basis points in the quarter, following various quarters of continuous decline. This had a direct impact on the results from trading and mark-to-market of securities which totaled a one-time loss of Ch$16,597 million in 4Q 2005.

INSTITUTIONAL BACKGROUND

As per latest public records published by the Superintendency of Banks for December 2005, Banco Santander Santiago was the largest bank in Chile in terms of loans and deposits. The Bank has the highest credit ratings among all non- publicly owned Latin American companies with an A rating from Standard and Poor's, A by Fitch and a Baa1 rating from Moody's, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange and the Santiago Stock Exchange (SSE: Bsantander). The Bank's main shareholder is Banco Santander Central Hispano, S.A., which directly and indirectly owns 83.94% of Banco Santander Santiago.

BANCO SANTANDER CENTRAL HISPANO

Santander (SAN.MC, STD.N) is the largest bank in the Euro Zone by market capitalization and one of the largest worldwide. Founded in 1857, Santander has 809,000 million euros in assets and 961,000 million euros in managed funds, 66 million customers, 10,200 offices and a presence in 40 countries. It is the largest financial group in Spain and Latin America, and is a major player elsewhere in Europe, including the United Kingdom through its Abbey subsidiary and Portugal, where it is the third largest banking group. Through Santander Consumer, it also operates a leading consumer finance franchise in Germany, Italy, Spain and nine other European countries. As of December 2005, Santander recorded 6,220 million euros in net attributable profits, 72.5% more than in the previous year. In Latin America, Santander manages over US$190 billion in business volumes (loans, deposits, mutual funds and pension funds) through 4,100 offices. As of December 2005, Santander recorded in Latin America a net attributable income of US$2.2 billion, 21% higher than prior year.

CONTACT INFORMATION Robert Moreno Manager Investor Relations Department Banco Santander Santiago Bandera 140 Piso 19, Santiago, Chile Tel: [phone] Fax: [phone] Email: [e-mail]: http://www.santandersantiago.cl/

(1) Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by Banco Santander Santiago involve material risks and uncertainties and are subject to change based on various important factors which may be beyond the Bank's control. Accordingly, the Bank's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Bank's filings with the Securities and Exchange Commission. The Bank does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized.

(2) The Peso/US dollar exchange rate as of December 31, 2005 was Ch$514.21 per dollar. All figures presented are in nominal terms. Historical figures are not adjusted by inflation.

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