Performance Report Subsidiary Companies Subsidiary Companies The group of companies belonging to the Bci Financial Services and Solutions Corporation, consisting of seven companies that complement the banking business and two business support companies, obtained an aggregate net income of Ch$16,258.2 million in 2004, 25.3% more than in 2003. This represents 18.3% of the net income of the Bci Corporation and 3% of its assets, the assets of these subsidiaries totaling Ch$549,425.7 million at the end of the year. 62 Bci Corredor de Bolsa S.A. General Manager: Rodrigo Amézaga Cuevas Business Manager: Finance Manager: Stock Market Manager: Aldo Bersezio Berardi Luis Díaz Luy Felipe Stone Escanilla With high market shares in its different businesses, especially in stock broking, Bci Corredor de Bolsa recorded commercial assets of Ch$345,227.4 million at the end of December 2004, an increase of 85.8% over the level at December 2003, with growth also in its number of clients. The subsidiary performed well in the fixed-income and financial intermediation businesses in a scenario of falling interest rates and consumer price index trends below initial expectations. The volume of foreign exchange trading also increased. Among the company's most notable activities was the growth in its portfolio management service, specialized in managing the financial investments of a wide range of clients comprising public and private entities, corporations, foundations, persons and family groups. Funds managed at the end of the year were around US$150 million. In a joint operation between Bci's Miami Branch and Bear Stearns, Bci Corredor de Bolsa issued and placed new certificates of deposit and structured notes, securities that have a guaranteed capital and a return linked to the Nikkei 225 and Titans 50 stock price indices. It also took an active part in the stock market opening of Cencosud S.A., the controller of the Jumbo retail stores, and in the sale of shares in Sociedad Química y Minera de Chile, SQM. Bci Corredor de Bolsa produced a net income of Ch$4,511.0 million in 2004, representing an increase of 40.7% over the year before. Its equity is Ch$13,826.0 million. RODRIGO AMÉZAGA CUEVAS GENERAL MANAGER Bci CORREDOR DE BOLSA S.A. JORGE FARAH TARÉ GENERAL MANAGER Bci ADMINISTRADORA DE FONDOS MUTUOS S.A. 63 Performance Report Subsidiary Companies Bci Administradora de Fondos Mutuos S.A. General Manager: Jorge Farah Taré Finance Manager: Processes Manager: Commercial Manager: Roberto De la Carrera Prett Ricardo Guzmán Sanza Pedro Rojas Sepúlveda For the fifth consecutive year, the company was distinguished with the Salmón Prize given by the Diario Financiero in recognition of the most profitable mutual funds in each of the categories of managed funds. Among the award-winning funds in the competition, which covered some two hundred in all, the following funds managed by Bci Administradora de Fondos Mutuos won prizes: • Bci Depósito Efectivo Serie Alfa, national, in the category of short-term (90 days) fixed-income instruments. • Bci Competitivo Serie Alfa, international, in the category of short-term (90 days) fixed-income instruments. • Bci Depósito Mensual de Ahorro Serie Alfa, international, in the category of medium and long-term fixed-income instruments. • Bci Tecnología Global Serie Alfa, international, in the mixed funds category. The company created three new funds during 2004 to reach a total of 20 managed funds. Thee new funds are: • Bci Negocios, for managing companies' surplus cash, with a portfolio of fixed-income instruments with maturities not exceeding one year, thus enabling it to obtain a higher return than portfolios with shorter maturities. 64 • Bci Deuda Emergente, in foreign currency, in medium and long-term fixed-income instruments of emerging countries directed to the savings of individuals. • Bci Capital Trust 100, the first guaranteed mutual fund the company has placed in the market. An important feature of this fund is that it guarantees the initial capital to those remaining in the fund the whole three years of the investment while adding 70% of gains from increases in the US S & P 500 index during that period. This fund was sold within thirty days and attracted investments of over Ch$20,000 million. The company continued to increase the volume of funds managed, from Ch$679,000 million in December 2003 to Ch$806,000 million in December 2004, an increase of 18.7%, and achieved a market share of 11.6%. The number of subscribers increased 26.9% to 81,350. Bci Administradora de Fondos Mutuos produced a net income of Ch$5,007.5 million for the year, an increase of 31.6% over 2003. Its equity amounts to Ch$8,718.7 million. Bci Factoring S.A. General Manager: Germán Acevedo Campos Commercial Manager: Operations Manager: Administration & Finance Manager: Rodrigo Alegría Cruz Claudia Goycoolea Brücher Andrés Maturana Alvarado The net income for the year amounted to Ch$3,401.0 million, an increase of 5.1%, and its equity amounts to Ch$9,147.9 million. The company in early 2004 was declared a Full Member of the Factors Chain International (FCI), the largest worldwide factoring chain, the highest distinction granted to an associated entity. Only three companies in Latin America have received this distinction which is granted as a function of the volume of business, experience and recommendations made by other members of the chain. Bci Factoring made a great effort during the year to offer new products to its customers and simplify the carrying out of its operations, mainly through the web page. As a result, the web page of Bci factoring was modified and adapted to meet the needs of customers in the most friendly way, adapting information toward sales, educating and guiding the use of this channel as a means of communication and speeding up the operations process. The result was a success, achieving assets of Ch$22,600 million at the end of 2004, transforming the E-Factoring product into a secure and fast tool for suppliers of goods and services to obtain the prompt liquidation of their accounts receivable. The volume of assets of Bci Factoring increased to Ch$134,062.2 million at 31 December 2004, a rise of 37.5% over the year before, while its market share reached 18.4% to maintain its leading position in this business. Under the chairmanship of the general manager of Bci Factoring, the Chilean Factoring Companies Association, ACHEF, took an active part in the preparation of the law regulating the transfer of invoices and granting enforceability in their collection through a more agile legal procedure offering legal certainty and lower costs. GERMÁN ACEVEDO CAMPOS GENERAL MANAGER Bci FACTORING S.A. 65 Performance Report Subsidiary Companies Bci Securitizadora S.A. Executive Director: Gerardo Spoerer Hurtado Sub Manager: Juan Pablo Donoso Coqc The company was the principal issuer among securitization companies of bonds issued against the separate portfolios it manages, mainly comprising consumer loans granted by the large departmental stores. In 2004, precisely, bond issues were structured against loan portfolios originated by the finance companies of two large stores. In practice, the loans acquired which are duly selected translate into rights to the payment flows of the users of credit cards issued by those stores. The preferential series of both bond issues were granted a first category credit rating. The first, for around Ch$25,000 million, was backed by loans originated by COFISA S.A., the holder of the rights of the payment flows of credit-card users of the DIN store. The second amounted to Ch$16,500 million with the backing of loans originated by Inversiones S.C.G. S.A., the holder of the rights to the payment flows from users of the “Club Dorado” credit card of the La Polar store. At the end of 2004, Bci Securitizadora was managing six separated portfolios with assets of Ch$207,688.2 million and bonds in circulation for Ch$197,575.2 million. The item “Inventories” in the subsidiary's balance sheet also shows assets for securitization amounting to Ch$39,571.8 million which make up the separated portfolios numbers 7 and 8. The company produced a net income of Ch$240.2 million with an equity of Ch$374.3 million after distributing dividends for Ch$400 million. 66 GERARDO SPOERER HURTADO EXECUTIVE DIRECTOR Bci SECURITIZADORA S.A. Bci Corredores de Seguros S.A. General Manager: Lily Justiniano Berardi Commercial Manager Companies: Jaime Court Larenas Bci Corredores de Seguros continued to strengthen its market position and to reaffirm its commercial objectives based on a function of integral analysis and advice in risk protection. The subsidiary's effectiveness in the insurance sector has enabled it to achieve sustained growth in its operations, offering a wide range of services to its clients with fully differentiating and practical benefits. At the level of companies, where it offers cover for large risks, an integral advice service was introduced in bankinsurance, achieving an operating growth of 18% over 2003 and selling insurance company policies that generated annual premiums of around Ch$6,300 million. In the individuals sector, Bci Corredores de Seguros strengthened its position among bank subsidiary companies in this business, especially in the placing of automobile risk insurance cover, a product in which competition is fierce, brokering policies that generated annual premiums of Ch$12,500 million, an operating growth of 23% compared to 2003. Bci Corredores de Seguros overall brokered transactions that generated premiums of Ch$34,600 million during 2004, an increase of 30% over 2003. With the promulgation of the law modifying the pensions system, the subsidiary determinedly embarked on offering the new policies with staff trained to give pensions advice and sell annuities, providing ease of mind and security to clients in meeting their needs with respect to pensions. The net income of Bci Corredores de Seguros amounted to Ch$921.7 million, 45.3% higher than in 2003, with an equity of Ch$156.6 million after distributing dividends for Ch$624.7 million. LILY JUSTINIANO BERARDI GENERAL MANAGER Bci CORREDORES DE SEGUROS S.A. 67 Performance Report Subsidiary Companies Bci Asesoría Financiera S.A. General Manager: Benjamín Vargas Amunátegui Business Managers: Jorge Ballerino Astorga Andrés Irarrázaval Ureta Eduardo Nazal Saca Jorge Ramírez Alegre With a volume of operations of over US$700 million, this subsidiary has consolidated its position to become a true local investment bank. It concentrated its services in the direction of syndicated loans, company debt restructuring, mergers and acquisitions and the search for strategic partners for certain companies. Notable in 2004 was the strong penetration of the subsidiary's services in the salmon industry. The many consultancy services provided to companies in this sector enabled the company to act as financial adviser in most of the negotiations carried out by these entities during 2004, contributing to the companies' acquiring a greater strength in their financial positions and reinforcing their ownership and size. A special mention is warranted of the syndicated loan led and structured by Bci Asesoría Financiera for Coca Cola Embonor S.A. This amounted to US$180 million and has a five-year term, is unsecured and was disbursed abroad. With its international nature, this transaction attracted participations from eleven banks and is surely the most important financing coordinated in Chile by a local adviser, making Bci Asesoría Financiera a valid consultancy firm for investment banking services. With further growth of 14.4% compared to the previous year, the company's net income amounted to Ch$761.9 million. Revenues amounted to Ch$1,643.2 million, a 16.7% increase over 2003. The company's equity is Ch$699.0 million after distributing dividends for Ch$500 million. 68 BENJAMÍN VARGAS AMUNÁTEGUI GENERAL MANAGER Bci ASESORÍA FINANCIERA S.A. Compañía de Normalización de Créditos, Normaliza S.A. General Manager: Galo Bertrán Rubira In its sixth year in business, Normaliza continued to perform an active role as a business-support subsidiary of Bci, dedicated to the collection and recovery of overdue, pastdue and written-off loans of the Retail Banking Area. Its revenues derive 95% from performance fees charged when debtors pay the overdue obligations. The remaining income relates to other services that the company provides to the parent company. In carrying out its collection functions throughout the country, the subsidiary applies different strategies including telephonic and postal communications, visits to domiciles, attending to debtors wishing to restructure their obligations and judicial requirements. As a result, more than 750,000 telephone calls and 60,000 visits to domicile were made in 2004, and 15,500 debtors were attended to at the payment negotiation and agreement modules. Judicial proceedings in the individuals sector were handled by its own legal team in the Metropolitan Region and by external lawyers in the rest of the country. Extending its functions, Normaliza signed a contract with the professional institute DUOC, of the Pontificia Universidad Católica, for providing a receivables collection and recovery service, thus starting a collection service to entities other than Bci The net income of Normaliza amounted to Ch$1,393.3 million in 2004, an increase of 5.4% over 2003. It distributed dividends for Ch$902 million against the profit for 2004. GALO BERTRÁN RUBIRA GENERAL MANAGER COMPAÑÍA DE NORMALIZACIÓN DE CRÉDITOS, NORMALIZA S.A. 69 Performance Report Subsidiary Companies Análisis y Servicios S.A., Proservice General Manager: Pietro Krumpoek Rojas Commercial Manager Regions: Gastón Pinochet Galindo Since its creation in 1995, the services that Análisis y Servicios, Proservice, provides to Bci have contributed to the attraction of 185,000 customers to the Bank, through its financial information collection and pre-evaluation function of persons that Bci asks it to contact and analyze. Last year, the efforts of the subsidiary were directed to strengthening this function through the training of the evaluators who make the preliminary analysis of persons the Bank is interested in attracting, in order to provide fast responses and a good service for attending market requirements. Following changes in the company's organizational structure for improving efficiency, it has obtained important synergies with Bci head office. With a staff of 280 evaluators throughout the country, Proservice's efforts in 2004 facilitated the opening of 51% of Bci's new checking accounts and the granting of 19% of new consumer and mortgage loans. Despite being a subsidiary exclusively supporting the operating performance of Bci, Proservice produced a net income of Ch$20.8 million in 2004, reversing the loss of Ch$17.5 million in 2003. Its equity amounts to Ch$22.6 million. 70 PIETRO KRUMPOEK ROJAS GENERAL MANAGER ANÁLISIS Y SERVICIOS S.A. Bci Servicios de Personal S.A. Sub Manager: Antonio Castañón Fuentes Following five years in business, this company has managed to maintain an effective business support function, both for Bci and its subsidiaries, by providing its own staff to meet their administrative and operating needs on a part-time basis. Working in the offices of Bci and its subsidiaries, this staff mainly attends the extraordinary demand for banking services by customers and the public that occurs on certain days and times of the month, for which the staff are selected, recruited and prepared by the subsidiary, giving them suitable instructions on banking regulations, action procedures and the quality of service they should provide. The subsidiary employs 463 staff of which 87% are university and technical school students, who are able to finance their studies with the remuneration they receive for this work, and 63% are women. 55% of these people work in the Metropolitan Region and 45% in the other regions. As this is a business support company, its results are not commercial. However, it managed to cover its operating costs in 2004 with a surplus of Ch$893,531, maintaining an equity of Ch$46.9 million following the distribution of a dividend for Ch$27.4 million. ANTONIO CASTAÑÓN FUENTES SUB MANAGER Bci SERVICIOS DE PERSONAL S.A. 71