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(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-3-2(b): 82- ____.)

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BANCO DE CHILE
REPORT ON FORM 6-K

Attached is a press release published by Banco de Chile on August 8, 2005, regarding its results for the Second Quarter ended June 30, 2005.

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2005 Second Quarter Results

Santiago, Chile, August 08, 2005 Banco de Chile (NYSE: BCH), a Chilean full service financial institution, market leader in a wide variety of credit and non credit products and services across all segments of the Chilean financial market, today announced results for the second quarter ended June 30, 2005.		FINANCIAL HIGHLIGHTS
		Net income for 2Q05 reached Ch$ 52,258 million, above the previous record of Ch$45,687 million for 2Q04. The Bank again obtained a strong ROAE of 35.3% during 2Q05 which almost double the system’s average of 18.1%, while its 2.20% unconsolidated ROAA also exceeded the 1.32% recorded by the system. The Bank’s unconsolidated loan portfolio, net of interbank loans, increased by 4.0% during 2Q05, exceeding the 1.8% growth posted by the financial system.

 

Selected Financial Data		2Q04		1Q05		2Q05		% Change
								2Q05/2Q04
Income Statement (Millions, Chilean pesos)
Net Financial Income		94,351		79,078		97,571		3.4%
Income from Services		29,512		31,029		33,751		14.4%
Gains on Sales of Financial Instruments		1,110		1,309		4,674		321.1%
Operating Revenues		124,973		111,416		135,996		8.8%
Provisions for Loan Losses		(19,151)		(13,742)		(10,903)		(43.1)%
Operating Expenses		(57,037)		(62,126)		(68,804)		20.6%
Net Income		45,687		41,574		52,258		14.4%
Earnings per Share (Chilean pesos)
Net income per Share		0.69		0.63		0.79		14.5%
Book value per Share		9.27		8.57		9.33		0.6%
Balance Sheet (Millions, Chilean pesos)
Loan Portfolio		6,723,115		7,212,959		7,498,366		11.5%
Total Assets		9,824,801		10,168,523		10,544,864		7.3%
Shareholders ' Equity		615,551		568,892		619,600		0.7%
Profitability
ROAA		1.84%		1.69%		2.00%
ROAE		29.5%		24.4%		35.3%
Net Financial Margin		4.3%		3.6%		4.2%
Efficiency ratio		45.6%		55.8%		50.6%
Asset Quality
Past Due Loans / Total Loans		1.47%		1.23%		1.09%
Allowances / Total Loans		2.46%		2.10%		1.86%
Allowances / Past Due Loans		167.2%		170.6%		169.6%
Capital Adequacy
Total Capital / Risk Adjusted Assets		12.1%		11.9%		11.3%

	2005 Second Quarter Results

Second Quarter 2005 Highlights

The Bank

• Strong second quarter results. Banco de Chile posted a record quarter net income during 2Q05 reaching a ROAE of 35.3%. This figure largely exceeds the system’s average of 18.1% and confirms the Bank’s position as the leader in the Chilean financial system in terms of profitability.
  
  
• Market share increase. As of June 30, 2005, the Bank’s loan portfolio, net of interbank loans, totaled Ch$7,490,823 million, reflecting an annual and quarterly growth of 12.3% and 3.9%, respectively. The Bank reached a market share of 18.1% as of June 30, 2005, an increase of approximately 40 basis points from the 17.7% posted as of March 31, 2005.
  
  
• Banco de Chile successfully completed the offering of 2.5% of its shares in the local market. As a conclusion of the share repurchase program, the Bank completed the offering of 2.5% of its previously bought shares, (equivalent to 1.7 billion shares) worth US$104.7 million at a price of Ch$34.5 per share, at the Santiago Stock Exchange on August 2, 2005. The shares were sold to more than 3,000 investors. Retail investors bought 73.5% of the package while institutional investors purchased the remaining 26.5%. The process was highly successful within the framework of a deep, transparent and competitive market. Investors’ confidence was reflected by the considerable demand at a price of Ch$34.5 per share which resulted in purchase orders in excess of US$1.9 billion. In addition, it is important to note that this offering was the first of its kind to consider a segmentation of purchase orders by amount and type of investors. The proceeds will be used as working capital to finance the Bank’s expected growth in the retail and small business segments.
  
  
• Banco de Chile’s recognition and awards. Once again, the Bank was recognized for its outstanding performance on different tenets. This time, brand leadership, commitment to social responsibility, contribution to human resources development and the strengths shown in a growing industry such as leasing, were the evaluated aspects. As a result, Global Finance again named Banco de Chile as the “Best Bank in Chile” within their annual survey of “Best Emerging Market Banks”. The Bank also entered the “Marketing Hall of Fame” as the winner of the 2005 Great Brand in the Classic Category, initiative undertaken by the New York American Marketing Association. The Alta Group, specialized in equipment leasing and finance, has placed Banco de Chile’s leasing business among the five largest and most prominent equipment leasing companies in Latin America. In addition, Banchile Stock Brokerage subsidiary was distinguished by the Chilean Construction Chamber for its contribution to Human Resources Development, within a group of 1,200 companies, for its commitment to its employees.
  
  
• Banco de Chile increased the variety of investment alternatives. In order to continue expanding its product offering during favorable economic conditions, Banchile Administrator of Funds recently launched a real estate investment fund called “Fondo de Inversión Banchile Inmobiliario I” that is aimed at clients who want to invest in the real estate sector through access to a diversified portfolio of properties. In addition, the subsidiary also launched “Dollar 30”, a new mutual fund denominated in US dollars which complements existing medium/long-term savings options.
  
  
• Neos Plan Achievements. During the first half of 2005, the Bank concluded, as scheduled, the implementation of an Enterprise Resource Planning (ERP) system in its Human Resources modules, initiated the roll-out, in its branches, of the second phase of the Customer Relationship Management (CRM) system, including customer service platforms for the individual banking segment and, implemented the CRM at its call center.
  
  
  In the second half of 2005 various new Neos Plan components will be implemented such as the corporate loans unit and credit limits management within the core system, a new master client base, the loans approval tracking unit and the asset selling and post-selling unit which will be implemented within the third CRM stage.

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	2005 Second Quarter Results

Financial System Highlights

• The system’s loan portfolio, net of interbank loans, as of June 30, 2005 totaled US$69,555 million, increasing by 12.0% on an annual basis. The twelve- month loan growth was mainly driven by commercial, consumer and residential mortgage loans. On a quarter to quarter basis a slowdown on total loans growth was observed from 4.8% in 1Q05 to 1.8% in 2Q05, mainly as a result of lower growth in commercial and foreign trade loans. Past due loans continue to decline and consequently, the past due to total loans ratio dropped to 1.10% in 2Q05 from 1.49% in 2Q04.
  
  
• During 2Q05 net income for the financial system remained strong, amounting to Ch$204,715 million.
  This figure was similar to the net income for the previous quarter though it showed an important 26.4% increase relative to 2Q04. The increase was mainly a result of both higher operating revenues and lower provisions for loan losses, which more than offset the raise in operating expenses. As a result, the 2Q05 net income implied a system’s ROAE of 18.1%, up from the 15.2% in 2Q04 or 17.2% in 1Q05.

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	2005 Second Quarter Results

Banco de Chile 2005 Second-Quarter Consolidated Results

NET INCOME

The Bank’s total net income for 2Q05 reached a record amount of Ch$ 52,258 million, representing an increase of 14.4% compared to Ch$45,687 million reported in 2Q04. This increase was mainly driven by the continued growth in operating revenues, mostly fueled by the expansion of business volumes, and by improved asset quality, which more than offset the expansion in operating expenses.

The Bank’s profitability, as measured by annualized return on average assets (ROAA) and annualized return on average shareholders’ equity (ROAE), was 2.00% and 35.3%, respectively, in 2Q05, up from comparable figures of 1.84% and 29.5% registered in 2Q04.

The Bank’s subsidiaries contributed by 12.0% in both quarters with an overall result of Ch$6,296 million in 2Q05 compared to Ch$5,484 million in 2Q04. The 14.8% increase in the subsidiaries’ net income during the current quarter was principally driven by the Stock Brokerage’s outstanding results accounting for larger operating income due to higher trading volumes and higher gains from investment securities. To a lesser extent, higher income coming from Socofin, the collections subsidiary, also contributed to higher overall results in 2Q05.

Bank , Subsidiaries and Foreign Branches' Net Income
(in millions of Chilean pesos)		2Q04		1Q05		2Q05		% Change
								2Q05 / 2Q04
Bank		39,802		34,308		46,789		17.6%
Foreign Branches		401		433		(827)		-
Stock Brokerage		2,005		3,545		3,404		69.8%
Gral Adm. of Funds		2,185		1,786		2,114		(3.2)%
Insurance Brokerage		208		216		94		(54.8)%
Financial Advisory		450		209		9		(98.0)%
Factoring		507		1,200		296		(41.6)%
Securitization		27		(11)		23		(14.8)%
Promarket		16		24		16		0.0%
Socofin		86		(157)		291		238.4%
Trade Services		-		21		49		-
Total Net Income		45,687		41,574		52,258		14.4%

The Financial Advisory, the Insurance Brokerage and the Factoring subsidiaries posted weaker results during 2Q05 compared to the same period last year. The lower results of the Factoring company in 2Q05 compared to 2Q04 were mainly explained by the negative impact of an increase in the inflation rate as most of its assets, denominated in nominal Chilean pesos, were financed by interest bearing liabilities denominated in UF. On the contrary, the negative inflation rate for 1Q05 implied significant earnings during the period. The slight decrease in net income accounted by the General Administrator of Funds and by the Insurance Brokerage subsidiaries during 2Q05 relative to 2Q04, principally reflected a change in the service agreement for the usage of distribution channels between the Bank and these companies, which implied higher revenue for the Bank and higher fee expenses for the mentioned subsidiaries (without impacting at the consolidated bottom line). In addition, higher indemnities’ expenses recorded by the Insurance Brokerage Subsidiary during 2Q05, also explained its lower result relative to the previous quarter.

Net income for the 2Q05 increased by 25.7% compared to the previous quarter as a consequence of a 22.1% growth in operating revenues, 20.7% decrease in provisions for loan losses and 13.5% raise in recovery of loans previously charged-off, effects that absorbed the impact of higher operating expenses.

Net income for foreign branches was negative during 2Q05 mainly as a consequence of extraordinary expenses incurred by the New York branch during the quarter in connection with efforts undertaken to comply with the Consent Order agreed with the OCC.

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	2005 Second Quarter Results

NET FINANCIAL INCOME

Net financial income increased by 3.4% to Ch$97,571 million in 2Q05 up from the Ch$94,351 million posted in 2Q04, as a result of a 4.8% expansion in average interest earning assets which more than offset the slight decline of 5 basis points in net financial margin¹.

Net Financial Income
(in millions of Chilean pesos)		2Q04		1Q05		2Q05		% Change
								2Q05 / 2Q04
Interest revenue		167,208		115,989		190,688		14.0%
Interest expense		(66,004)		(31,246)		(93,682)		41.9%
Foreign Exchange
transactions, net		(6,853)		(5,665)		565		-
Net Financial Income		94,351		79,078		97,571		3.4%
Avg. Int. earning assets		8,848,898		8,836,619		9,275,495		4.8%
Net Financial Margin1		4.3%		3.6%		4.2%		-

The increase in average interest earning assets was principally driven by the 11.5% annual increase in total loans boosted by strong GDP growth and improved unemployment levels. Loan demand remained strong principally in commercial, consumer, contingent and residential mortgage loans, thus offsetting the decrease in average investments.

The slight decrease in net financial margin from 4.26% in 2Q04 to 4.21% in 2Q05 was principally attributable to a negative repricing effect resulting from the successive increases in the short-term interest rates during the current quarter, as the Bank’s liabilities reprice faster than its assets. During the 2Q05, the short term interest rate was raised by 50 basis points while in 2Q04 this rate was maintained stable. In addition, net financial margin was also impacted by a slight decrease in lending spreads, as a consequence of increased competition.

The negative factors affecting 2Q05 net financial margin were partially offset by a higher inflation rate, measured by the variation of the UF in 1.2% during 2Q04, compared to 1.7% in 2Q05. Thus, during the last quarter, the Bank earned higher interest income on the portion of UF denominated interest earning assets financed by nominal interest bearing liabilities and by non-interest bearing liabilities. To a lesser extent, the better funding mix reflected in the decline of the ratio of interest bearing liabilities to interest earning assets from 71.8% in 2Q04 to 71.5% in 2Q05 also moderated the aforementioned effects.

The 23.4% increase in the 2Q05 net financial income compared to the previous quarter, was mainly explained by both, a 63 basis points increase in the net financial margin as the inflation rate, measured by the variation of the UF, showed a negative figure of (0.7)% in 1Q05, compared to the positive 1.7% in 2Q05, and, by a 5.0% growth in average interest earning assets between both quarters.

NET INCOME FROM SERVICES

Total net income from services exhibited a robust rise of 14.4% in 2Q05 over the same period of 2004, reaching Ch$33,751 million, which in turn represented approximately 25% of the Bank’s consolidated operating revenues. Fee revenue growth was mainly related to the diverse business lines consisting of traditional and non-traditional banking activities as a result of the expansion of our customer base, increases in transaction volumes, and the strengthening of the products usage. In terms of non-traditional banking, stock brokerage-related fee income was up 67% as traded volumes increased by 58% during the last twelve months ending June 2005. Higher income revenue also resulted from the growth of mutual fund and insurance business lines which consequently implied an increase of 24% and 77%, respectively, in fee income. In addition, the continued and sustained growth in the segment of individual banking has permitted the Bank to record higher income from services mainly coming from traditional products such as credit cards, credit lines and ATMs, as the number of valid credit cards and of retail checking accounts increased by 17,450 and 21,714, respectively, and as a consequence of the expansion of 206 ATMs between the 2Q05 and 2Q04. The corporate segment also contributed to increased fees as collection and payment services fee income rose by 21% in the last twelve-month period. Finally, higher

¹ Net financial income divided by average interest earning assets.

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	2005 Second Quarter Results

income from forward contracts and from goods received in lieu of payment jointly with lower cobranding expenses accounted for in this item also enhanced the income from the services line.

The 8.8% increase in income from fees and other services during 2Q05 compared to the previous quarter was principally attributable to higher income from forward contracts and from the mutual fund business. To a lesser extent, lower cobranding expenses and higher fees related to collection services (Socofin), credit cards and insurance brokerage services also contributed to the mentioned increase. Fees coming from the stock brokerage subsidiary remained strong; however, the slight decline registered in 2Q05 relative to the previous quarter was mainly explained by extraordinary income generated in 1Q05 due to one specific deal.

Net Income from Services, by Company
(in millions of Chilean pesos)		2Q04		1Q05		2Q05		% Change
								2Q05 / 2Q04
Bank		17,862		17,777		19,945		11.7%
General Adm. of Funds		4,688		4,911		5,813		24.0%
Financial Advisory		698		300		90		(87.1)%
Insurance Brokerage		920		1,527		1,629		77.1%
Stock Brokerage		1,909		3,548		3,184		66.8%
Factoring		148		185		107		(27.7)%
Socofin		2,304		1,911		2,103		(8.7)%
Securization		75		25		74		(1.3)%
Promarket		3		1		0		(100.0)%
Foreign Branches		905		819		755		(16.6)%
Trade Services		-		25		51		-
Total Net Income from
Services		29,512		31,029		33,751		14.4%

NET GAINS ON SALES OF FINANCIAL INSTRUMENTS

Gains on sales of financial instruments for the second quarter of 2005 increased to Ch$4,674 million from Ch$1,110 million in 2Q04 and Ch$1,309 million in 1Q05 mainly as a consequence of higher earnings obtained from investment securities maintained by the stock brokerage subsidiary and, to a lesser extent, to higher mark to market income obtained by the Bank, as long term interest rates have been decreasing since the end of 2004.

PROVISIONS

Provisions amounted to Ch$10,903 million in 2Q05, down from the Ch$19,151 million in 2Q04 and from the Ch$13,742 million registered in the prior quarter of this year. The decline in provisions mainly reflects the improved asset quality of the overall loan portfolio in a context of better economic conditions. In particular, the decrease in provisions during the 2Q05 was mainly related to the recovery of certain bad loans mainly related to the construction, real state and retail sectors. As a consequence, the Bank’s provisions to average loans declined to 0.58% in 2Q05 from 1.13% in 2Q04, or 0.76% in 1Q05.

Allowances and Provisions
(in millions of Chilean pesos)		2Q04		1Q05		2Q05		% Cha nge
								2Q05 / 2Q04
Allowances
Allowances at the beginning of each period		184,906		155,279		151,614		(18.0)%
Price-level restatement		(2,267)		1,318		(2,706)		19.4%
Charge-off		(36,652)		(18,725)		(20,691)		(43.5)%
Provisions for loan losses established, net		19,151		13,742		10,903		(43.1)%
Allowances at the end of each period		165,138		151,614		139,120		(15.8)%
Provisions
Provisions		(19,151)		(13,742)		(10,903)		(43.1)%
Ratios
Allowances / Total loans		2.46%		2.10%		1.86%
Provisions, net /Avg.Loans		0.64%		0.31%		0.09%
Provisions / Avg. Loans		1.13%		0.76%		0.58%
Charge-offs / Avg. Loans		2.17%		1.04%		1.11%
Recoveries / Avg. Loans		0.49%		0.45%		0.49%

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	2005 Second Quarter Results

OTHER INCOME AND EXPENSES

Total Other Income and Expenses increased to Ch$8,008 million in 2Q05 from Ch$6,418 million in 2Q04 or Ch$6,732 million in the previous quarter, mainly as a consequence of higher recoveries of loans previously charged-off and, to a lesser extent, higher non-operating income coming from the sale of assets received in lieu of payments during 2Q05.

OPERATING EXPENSES

Total operating expenses reached Ch$68,804 million during the second quarter of 2005, an increase of 20.6% compared to 2Q04, mainly as a consequence of non-recurring expenses principally related to indemnities payments and advisories recorded in the New York branch during 2Q05.

Higher indemnity expenses responded mainly to the adjustments made by our management to the Bank’s organizational structure in line with the process of the incorporation of a new business model supported by the Neos project. As part of this process, the Bank is reformulating its commercial structure and transforming its full-service branches in business centers, in order to reinforce the service to small and medium size companies in this distribution channel. In addition, during 2Q05 the Bank incurred in higher expenses related to advertising and promotional campaigns, in order to increase its client base and strengthen the usage of its traditional products, as well as in higher performance variable compensations mainly related to the increased business volumes in some subsidiaries.

Concerning the efficiency ratio, it stands at 50.6% in 2Q05 compared to 45.6% in 2Q04 and 55.8% in 1Q05.

Operating Expenses
(in millions of Chilean pesos)		2Q04		1Q05		2Q05		% Change
								2Q05 / 2Q04
Personnel salaries and expenses		(32,707)		(34,687)		(39,678)		21.3%
Administrative and other expenses		(20,319)		(23,410)		(24,767)		21.9%
Depreciation and amortization		(4,011)		(4,029)		(4,359)		8.7%
Total operating expenses		(57,037)		(62,126)		(68,804)		20.6%
Efficiency Ratio*		45.6%		55.8%		50.6%		-
* Operating expenses/Operating revenues

LOSS FROM PRICE- LEVEL RESTATEMENT

Loss from price-level restatement amounted to Ch$5,955 million in 2Q05 compared to Ch$4,627 million during 2Q04, mainly as a consequence of higher inflation rate used for adjustment purposes from 1.3% in 2Q04 to 1.8% in 2Q05.

INCOME TAXES

The Bank’s income taxes totaled Ch$6,084 million in 2Q05 compared to Ch$4,889 million in 2Q04, representing effective income tax rates of 10.4% and 9.7%, respectively, lower than Chile’s 17% statutory corporate tax rate as, by law, the Bank is allowed to deduct the dividend payments to SAOS from its taxable income base.

LOAN PORTFOLIO

As of June 30, 2005, the Bank’s loan portfolio, net of interbank loans, totaled Ch$7,490,823 million, a 12.3% twelve-month growth and a 3.9% quarterly expansion (15.6% in annual terms). These figures reflect the Bank’s efforts to strengthen its loan market position, which has resulted in a market share increase to 18.1% in 2Q05 from 17.7% in 1Q05, exceeding the 2Q04 level of 18.0% .

Key drivers of loan portfolio expansion, in terms of volume, continued to be related to commercial loans, residential mortgage loans financed by the Bank’s general borrowings, consumer and contingent loans. However, the evolution of factoring and lease contracts have been also outstanding, growing by 74.7% and 25.6%, respectively, during the last twelve-months. Regarding foreign trade loans, they have also shown a significant

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	2005 Second Quarter Results

recovery during the last two quarters, despite the appreciation of the Chilean peso against the US dollar which impacted adversely the growth of loans denominated in foreign currency.

In terms of segments, the annual loan growth has been boosted mainly by the individual banking (15.8%) and large corporations (13.3%), influenced by the strong economic growth which has positively impacted the loan demand.

Although the financial system remains highly competitive, the Bank is working on improving service quality and further penetrating its customer base through the launching of new products fastening deeper relationships. Accordingly, during 2Q05 the Bank launched the new CrediChile credit card oriented to the low income individual segment and launched new promotions of product kits, which foster the cross-selling of the Bank’s and subsidiaries-related products.

Loan Portfolio
(in millions of Chilean pesos)		Jun-04		M ar-05		Jun-05		% Change		% Change
								12 - months		2Q05 / 1Q05
Commercial Loans		2,703,661		2,997,874		3,085,035		14.1%		2.9%
Mortgage Loans 1		1,058,937		765,994		713,446		(32.6)%		(6.9)%
Consumer Loans		654,440		752,570		754,875		15.3%		0.3%
Foreign trade Loans		722,308		633,152		701,164		(2.9)%		10.7%
Contingent Loans		505,589		567,777		632,241		25.1%		11.4%
Others Outstanding Loans 2		612,027		1,035,048		1,127,182		84.2%		8.9%
Leasing Contracts		314,394		368,905		394,871		25.6%		7.0%
Past-due Loans		98,745		88,867		82,009		(16.9)%		(7.7)%
Total Loans , net		6,670,101		7,210,187		7,490,823		12.3%		3.9%
Interbank Loans		53,014		2,772		7,543		(85.8)%		172.1%
Total Loans		6,723,115		7,212,959		7,498,366		11.5%		4.0%

1      Mortgage loans financed by mortgage bonds.

2      Includes mortgage loans financed by the Bank’s general borrowings and factoring contracts.

 

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	2005 Second Quarter Results

 

Past Due Loans
(in millions of Chilean pesos)		Jun-04		M ar-05		Jun-05		% Change		% Change
								12 - months		2Q05 / 1Q05
Commercial loans		81,020		71,201		65,937		(18.6)%		(7.4)%
Consumer loans		3,600		3,520		3,144		(12.7)%		(10.7)%
Residential mortgage loans		14,125		14,146		12,928		(8.5)%		(8.6)%
Total Past Due Loans		98,745		88,867		82,009		(16.9)%		(7.7)%

Past due loans fell by 16.9% and 7.7% in annual and quarterly terms, respectively, amounting to Ch$82,009 million as of June 30, 2005. The improved economic environment coupled with management effort devoted to maintain a healthy loan portfolio has allowed a positive evolution of the past due to loans ratio, which dropped to 1.09% in 2Q05 from 1.47% in 2Q04 and 1.23% in 1Q05. Even though past due loans continued to reflect the Bank’s conservative charge-off policy, its lower level also reflects the Bank’s enhanced collection procedures. In particular, the quarterly decrease in past due loans was mainly explained by the payment of a retail corporate loan denominated in foreign currency and the charge-off of a corporate loan related to the forestry sector. In terms of the coverage ratio, it stands at 170% compared to 167% in 2Q04 and 171% in the previous quarter. It is worth mentioning that both past due and coverage ratios reached by the Bank as of June 2005, in unconsolidated terms, were close to the average system’s figures of 1.1% and 165.2%, respectively.

FUNDING

Total liabilities increased by 3.4% during 2Q05 as a consequence of a 5.1% expansion in non interest bearing liabilities and a 2.5% increase in interest bearing liabilities.

The increase in interest bearing liabilities during 2Q05 relative to the previous quarter was mainly driven by a bond placement of UF5,000,000, as part of an issuance of a 5 year term bond denominated in UF with an annual interest rate of 2.93%, and by a significant increase in borrowings from domestic financial institution, which in turn more than offset the decrease in repurchase agreements. In addition, interest bearing liabilities were also fueled by the growth of time deposits denominated in local currency, partly as a result of the rise in short term interest rates, and of foreign borrowings as a consequence of the syndicated credit agreement signed by the Bank in April 2005 for an amount of US$200 million, in order to finance its foreign trade loans booked in Chile and expand the New York Branch working capital.

On the other hand, mortgage finance bonds decreased by 8.1%, in line with the 6.9% contraction in mortgage loans financed by these liabilities.

Non interest bearing liabilities increased during 2Q05 principally due to the expansion of contingent liabilities (accounted as other liabilities), which responded to the increase in contingent loans and, to a lesser extent, the 7.0% growth in bankers drafts. As current accounts balances are concerned, even though they decreased by 3.7% during the quarter, in terms of average balances, they increased by 1.6% .

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	2005 Second Quarter Results

 

Funding
(in millions of Chilean pesos)		Jun-04		M ar-05		Jun-05		% Change		% Change
								12 - months		2Q05 / 1Q05
Non-interest Bearing Liabilities
Current Accounts		1,388,302		1,557,430		1,499,862		8.0%		(3.7)%
Bankers drafts and other deposits		754,861		769,259		823,430		9.1%		7.0%
Other Liabilities		852,742		899,933		1,069,499		25.4%		18.8%
Total		2,995,905		3,226,622		3,392,791		13.2%		5.1%
Interest Bearing Liabilities
Savings & Time Deposits		3,749,137		3,991,181		4,041,010		7.8%		1.2%
Central Bank Borrowings		2,361		86,715		1,587		(32.8)%		(98.2)%
Repurchase agreements		484,272		337,594		298,145		(38.4)%		(11.7)%
Mortgage Finance Bonds		1,001,377		676,480		621,537		(37.9)%		(8.1)%
Subordinated Bonds		274,448		307,301		303,343		10.5%		(1.3)%
Other Bonds		2,823		181,081		270,436		9,479.7%		49.3%
Borrowings from Domestic Financ. Inst.		3,539		109,817		252,884		7,045.6%		130.3%
Foreign Borrowings		652,023		645,438		697,555		7.0%		8.1%
Other Obligations		43,364		37,401		45,975		6.0%		22.9%
Total		6,213,344		6,373,008		6,532,472		5.1%		2.5%
Total Liabilities		9,209,249		9,599,630		9,925,263		7.8%		3.4%

INVESTMENT PORTFOLIO

As of June 2005, the Bank’s investment portfolio totaled Ch$1,418,602 million, a decrease of 16.9% compared to March 2005 mainly explained by short-term Central Bank securities maintained in order to comply with technical reserve requirements². In terms of composition, in a context of expected increase in interest rates, the Bank continued reducing the duration of its investment portfolio.

At June 30, 2005, the investment portfolio was principally comprised of:

2	Technical reserve applies to demand deposits, checking accounts, or obligations payable on sight, other deposits unconditionally payable immediately or within a term of less than 30 days and time deposits payable within 10 days prior to maturity, to the extent their aggregate amount exceeds 2.5 times the amount of a bank’s capital and reserves.

SHAREHOLDERS’ EQUITY

As of June 30, 2005, the Bank’s Shareholder Equity totaled Ch$619,600 million (US$1,070 million), a 0.7% increase compared to 2Q04 mainly due to a 10.0% increase in net income during the last twelve-months. This increase was partially offset by a drop in the adjustment for conversion differences as a consequence of the 9.1% annual decline in the exchange rate.

At the end of June 2005, on a consolidated basis, Total Capital to Risk-Adjusted Assets (BIS ratio) was 11.3%, and Basic Capital to Total Assets was 5.0%, both well above the minimum requirements of 10% and 3%, respectively, applicable to Banco de Chile.

Shareholders' Equity
(in million of Chilean pesos)		Jun-04		M ar-05		Jun-05		% Change
								12 - months
Capital and Reserves		525,660		524,367		524,441		(0.2)%
Accumulated adjustment for translation differences 3		5,158		2,938		2,035		(60.5)%
Unrealized gain (loss) on permanent financial invest. 4		128		13		27		(78.9)%
Net Income		84,605		41,574		93,097		10.0%
Total Shareholders ' equity		615,551		568,892		619,600		0.7%

3	Represents the effect of the variation in the exchange rate on investments abroad that exceed the restatement of these investments according to the change in the consumer price index.
4	Financial investments traded on a secondary market are shown adjusted to market value, following specific instructions from the Superintendency of Banks and Financial Institutions. These instructions state that such adjustments should be recognized against income, except in the case of the permanent portfolio, when an equity account, “Unrealized gains (losses) on permanent financial investments”, may be directly charged or credited.

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	2005 Second Quarter Results

 

BANCO DE CHILE

CONSOLIDATED STATEMENTS OF INCOME (Under Chilean GAAP)

(Expressed in millions of constant Chilean pesos (MCh$) as of June 30, 2005 and millions of US dollars (MUS$))

		Quarters								% Change				Year ended								% Change
		2Q04		1Q05		2Q05		2Q05		2Q05		2Q05		Jun.04		Dec.04		Jun.05		Jun.05		Jun 05
		MCh$		MCh$		MCh$		MUS$		-2Q04		-1Q05		MCh$		MCh$		MCh$		MUS$		-Jun 04
Interest revenue and expense
Interest revenue		167,208		115,989		190,688		329.4		14.0 %		64.4 %		284,140		548,806		304,626		526.2		7.2 %
Interest expense		(66,004)		(31,246)		(93,682)		(161.8)		41.9 %		199.8 %		(97,751)		(217,049)		(124,376)		(214.8)		27.2 %
Net interest revenue		101,204		84,743		97,006		167.6		(4.1) %		14.5 %		186,389		331,757		180,250		311.4		(3.3) %
Income from services, net
Income from fees and other services		39,490		42,801		43,312		74.8		9.7 %		1.2 %		79,433		168,371		85,356		147.4		7.5 %
Other services expenses		(9,978)		(11,772)		(9,561)		(16.5)		(4.2) %		(18.8) %		(19,884)		(40,261)		(21,125)		(36.5)		6.2 %
Income from services, net		29,512		31,029		33,751		58.3		14.4 %		8.8 %		59,549		128,110		64,231		110.9		7.9 %
Other operating income, net
Gains on financial instruments, net		1,110		1,309		4,674		8.1		321.1 %		257.1 %		6,648		(3,183)		5,960		10.3		(10.3) %
Foreign exchange transactions, net		(6,853)		(5,665)		565		1.0		n/a		n/a		(18,240)		17,837		(5,000)		(8.6)		(72.6) %
Total other operating income, net		(5,743)		(4,356)		5,239		9.1		n/a		n/a		(11,592)		14,654		960		1.7		n/a
Operating Revenues		124,973		111,416		135,996		235.0		8.8 %		22.1 %		234,346		474,521		245,441		424.0		4.7 %
Provision for loan losses		(19,151)		(13,742)		(10,903)		(18.8)		(43.1) %		(20.7) %		(34,012)		(74,247)		(24,402)		(42.2)		(28.3) %
Other income and expenses
Recovery of loans previously charged-off		8,350		8,085		9,176		15.9		9.9 %		13.5 %		14,613		34,073		17,118		29.6		17.1 %
Non-operating income		1,138		1,161		2,143		3.6		88.3 %		84.6 %		2,553		4,870		3,285		5.7		28.7 %
Non-operating expenses		(3,300)		(2,717)		(3,534)		(6.2)		7.1 %		30.1 %		(7,468)		(16,070)		(6,202)		(10.7)		(17.0) %
Participation in earnings of equity investments		230		203		223		0.4		(3.0) %		9.9 %		178		440		422		0.7		137.1 %
Total other income and expenses		6,418		6,732		8,008		13.7		24.8 %		19.0 %		9,876		23,313		14,623		25.3		48.1 %
Operating expenses
Personnel salaries and expenses		(32,707)		(34,687)		(39,678)		(68.5)		21.3 %		14.4 %		(64,994)		(137,965)		(73,752)		(127.4)		13.5 %
Administrative and other expenses		(20,319)		(23,410)		(24,767)		(42.8)		21.9 %		5.8 %		(41,124)		(89,257)		(47,763)		(82.5)		16.1 %
Depreciation and amortization		(4,011)		(4,029)		(4,359)		(7.5)		8.7 %		8.2 %		(7,842)		(16,137)		(8,317)		(14.4)		6.1 %
Total operating expenses		(57,037)		(62,126)		(68,804)		(118.8)		20.6 %		10.7 %		(113,960)		(243,359)		(129,832)		(224.3)		13.9 %
Loss from price-level restatement		(4,627)		4,000		(5,955)		(10.3)		28.7 %		n/a		(1,961)		(7,541)		(2,026)		(3.5)		3.3 %
Minority interest in consolidated subsidiaries		0		0		0		0.0		n/a		n/a		(1)		(1)		0		0.0		n/a
Income before income taxes		50,576		46,280		58,342		100.8		15.4 %		26.1 %		94,288		172,686		103,804		179.3		10.1 %
Income taxes		(4,889)		(4,706)		(6,084)		(10.5)		24.4 %		29.3 %		(9,683)		(18,532)		(10,707)		(18.5)		10.6 %
Net income		45,687		41,574		52,258		90.3		14.4 %		25.7 %		84,605		154,154		93,097		160.8		10.0 %

The results have been prepared in accordance with Chilean GAAP on an unaudited, consolidated basis. All figures are expressed in constant Chilean pesos as of June 30, 2005, unless otherwise stated. Therefore, all growth rates are in real terms. All figures expressed in US dollars (except earnings per ADR) were converted using the exchange rate of Ch$578.92 for US$1.00 as of June 30, 2005. Earnings per ADR were calculated considering the nominal net income and, the exchange rate and the number of shares existing at the end of each period.

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	2005 Second Quarter Results

 

BANCO DE CHILE

CONSOLIDATED BALANCE SHEETS (Under Chilean GAAP)

(Expressed in millions of constant Chilean pesos (MCh$) as of June 30, 2005 and millions of US dollars (MUS$))

ASSETS		Dec 03		Jun 04		Dec 04		Mar 05		Jun 05		Jun 05				% Change
		MCh$		MCh$		MCh$		MCh$		MCh$		MUS$		Jun 05-Jun 04		Jun 05-Dec 04		Jun 05-Mar 05
Cash and due from banks
Noninterest bearing		666,782		609,762		545,033		657,181		773,588		1,336.3		26.9%		41.9%		17.7%
Interbank bearing		220,256		75,841		354,489		257,928		436,346		753.7		475.3%		23.1%		69.2%
Total cash and due from banks		887,038		685,603		899,522		915,109		1,209,934		2,090.0		76.5%		34.5%		32.2%
Financial investments
Government securities		1,045,860		1,140,675		922,793		1,074,664		812,278		1,403.1		(28.8% )		(12.0% )		(24.4% )
Investments purchase under agreements to resell		30,706		50,318		26,573		25,765		29,606		51.1		(41.2% )		11.4%		14.9%
Investment collateral under agreements to repurchase		432,665		477,039		350,654		319,510		292,110		504.6		(38.8% )		(16.7% )		(8.6% )
Other investments		474,643		385,837		323,326		286,732		284,608		491.6		(26.2% )		(12.0% )		(0.7% )
Total financial investments		1,983,874		2,053,869		1,623,346		1,706,671		1,418,602		2,450.4		(30.9%)		(12.6%)		(16.9%)
Loans, Net
Commercial loans		2,735,260		2,703,661		2,895,961		2,997,874		3,085,035		5,328.9		14.1%		6.5%		2.9%
Consumer loans		609,436		654,440		698,770		752,570		754,875		1,303.9		15.3%		8.0%		0.3%
Mortgage loans		1,167,793		1,058,937		828,081		765,994		713,446		1,232.4		(32.6% )		(13.8% )		(6.9% )
Foreign trade loans		681,484		722,308		605,042		633,152		701,164		1,211.2		(2.9% )		15.9%		10.7%
Interbank loans		13,689		53,014		15,350		2,772		7,543		13.0		(85.8% )		(50.9% )		172.1%
Lease contracts		278,437		314,394		347,292		368,905		394,871		682.1		25.6%		13.7%		7.0%
Other outstanding loans		456,538		612,027		945,564		1,035,048		1,127,182		1,947.0		84.2%		19.2%		8.9%
Past due loans		109,222		98,745		85,532		88,867		82,009		141.7		(16.9% )		(4.1% )		(7.7% )
Contingent loans		424,051		505,589		536,210		567,777		632,241		1,092.1		25.1%		17.9%		11.4%
Total loans		6,475,910		6,723,115		6,957,802		7,212,959		7,498,366		12,952.3		11.5%		7.8%		4.0%
Allow ances		(185,777)		(165,138)		(155,279)		(151,614)		(139,120)		(240.3)		(15.8% )		(10.4% )		(8.2% )
Total loans, net		6,290,133		6,557,977		6,802,523		7,061,345		7,359,246		12,712.0		12.2%		8.2%		4.2%
Other assets
Assets received in lieu of payment		16,178		16,996		16,291		15,980		14,841		25.6		(12.7% )		(8.9% )		(7.1% )
Bank premises and equipment		132,258		132,979		133,997		134,998		136,900		236.5		2.9%		2.2%		1.4%
Investments in other companies		5,483		4,982		5,466		5,528		7,042		12.2		41.3%		28.8%		27.4%
Other		260,997		372,395		264,551		328,892		398,299		688.0		7.0%		50.6%		21.1%
Total other assets		414,916		527,352		420,305		485,398		557,082		962.3		5.6%		32.5%		14.8%
Total assets		9,575,961		9,824,801		9,745,696		10,168,523		10,544,864		18,214.7		7.3%		8.2%		3.7%

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	2005 Second Quarter Results

 

BANCO DE CHILE

CONSOLIDAT ED BALANCE SHEETS (Under Chilean GAAP)

(Expressed in millions of constant Chilean pesos (MCh$) as of June 30, 2005 and millions of US dollars (MUS$))

LIABILITIES & SHAREHOLDERS' EQUITY		Dec 03		Jun 04		Dec 04		Mar 05		Jun 05		Jun 05				% Change
		MCh$		MCh$		MCh$		MCh$		MCh$		MUS$		Jun 05-Jun 04		Jun 05-Dec 04		Jun 05-Mar 05
Deposits
Current accounts		1,271,160		1,388,302		1,438,815		1,557,430		1,499,862		2,590.8		8.0%		4.2%		(3.7% )
Bankers drafts and other deposits		686,838		754,861		704,451		769,259		823,430		1,422.4		9.1%		16.9%		7.0%
Saving accounts and time deposits		3,543,179		3,749,137		3,700,319		3,991,181		4,041,010		6,980.3		7.8%		9.2%		1.2%
Total deposits		5,501,177		5,892,300		5,843,585		6,317,870		6,364,302		10,993.5		8.0%		8.9%		0.7%
Borrowings
Central Bank borrowings		28,864		2,361		110,668		86,715		1,587		2.7		(32.8% )		(98.6% )		(98.2% )
Securities sold under agreements to repurchase		441,784		484,272		352,577		337,594		298,145		515.0		(38.4% )		(15.4% )		(11.7% )
Mortgage finance bonds		1,050,211		1,001,377		796,777		676,480		621,537		1,073.6		(37.9% )		(22.0% )		(8.1% )
Other bonds		3,237		2,823		183,330		181,081		270,436		467.1		9479.7%		47.5%		49.3%
Subordinated bonds		280,757		274,448		268,967		307,301		303,343		524.0		10.5%		12.8%		(1.3% )
Borrowings from domestic financial institutions		51,640		3,539		26,663		109,817		252,884		436.8		7045.6%		848.4%		130.3%
Foreign borrowings		743,277		652,023		601,503		645,438		697,555		1,204.9		7.0%		16.0%		8.1%
Other obligations		61,701		43,364		45,295		37,401		45,975		79.4		6.0%		1.5%		22.9%
Total borrowings		2,661,471		2,464,207		2,385,780		2,381,827		2,491,462		4,303.5		1.1%		4.4%		4.6%
Other liabilities
Contingent liabilities		424,078		506,836		537,494		570,142		632,774		1,093.0		24.8%		17.7%		11.0%
Other		269,031		345,906		297,558		329,791		436,725		754.4		26.3%		46.8%		32.4%
Total other liabilities		693,109		852,742		835,052		899,933		1,069,499		1,847.4		25.4%		28.1%		18.8%
Minority interest in consolidated subsidiaries		5		1		1		1		1		0.0		0.0%		0.0%		0.0%
Shareholders' equity
Capital and Reserv es		585,044		530,946		527,124		527,318		526,503		909.5		(0.8% )		(0.1% )		(0.2% )
Net income for the year		135,155		84,605		154,154		41,574		93,097		160.8		10.0%		(39.6% )		123.9%
Total shareholders' equity		720,199		615,551		681,278		568,892		619,600		1,070.3		0.7%		(9.1%)		8.9%
Total liabilities & shareholders' equity		9,575,961		9,824,801		9,745,696		10,168,523		10,544,864		18,214.7		7.3%		8.2%		3.7%

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	2005 Second Quarter Results

 

BANCO DE CHILE

SELECTED CONSOLIDATED FINANCIAL INFORM ATION

		Quarters						Year ended
		2Q04		1Q05		2Q05		Jun.04		Dec.04		Jun.05
Earnings per Share
Net income per Share (Ch$) (1)		0.69		0.63		0.79		1.27		2.32		1.40
Net income per ADS (Ch$) (1)		412.98		375.79		472.37		764.77		1,393.43		841.52
Net income per ADS (US$) (2)		0.65		0.60		0.82		1.20		2.49		1.45
Book value per Share (Ch$) (1)		9.27		8.57		9.33		9.27		10.26		9.33
Shares outstanding (Millions)		66,378		66,378		66,378		66,378		66,378		66,378
Profitability Ratios (3)(4)
Net Interest Margin		4.57%		3.84%		4.18%		4.32%		3.84%		4.02%
Net Financial Margin		4.26%		3.58%		4.21%		3.89%		4.04%		3.90%
Fees / Avg. Interest Earnings Assets		1.33%		1.40%		1.46%		1.38%		1.48%		1.43%
Other Operating Revenues / Avg. Interest Earnings Assets		-0.26%		-0.20%		0.23%		-0.27%		0.17%		0.02%
Operating Revenues / Avg. Interest Earnings Assets		5.65%		5.04%		5.86%		5.43%		5.49%		5.47%
Return on Average Total Assets		1.84%		1.69%		2.00%		1.74%		1.59%		1.85%
Return on Average Shareholders' Equity		29.48%		24.43%		35.32%		25.40%		23.56%		29.55%
Capital Ratios
Shareholders Equity / Total Assets		6.27%		5.59%		5.88%		6.27%		6.99%		5.88%
Basic capital / total assets		5.36%		5.15%		4.96%		5.36%		5.37%		4.96%
Basic Capital / Risk-Adjusted Assets		8.05%		7.57%		7.26%		8.05%		7.81%		7.26%
Total Capital / Risk-Adjusted Assets		12.10%		11.94%		11.32%		12.10%		11.67%		11.32%
Credit Quality Ratios
Past Due Loans / Total Loans		1.47%		1.23%		1.09%		1.47%		1.23%		1.09%
Allowance for loan losses / past due loans		167.24%		170.61%		169.64%		167.24%		181.54%		169.64%
Allowance for Loans Losses / Total Loans		2.46%		2.10%		1.86%		2.46%		2.23%		1.86%
Provision for Loan Losses / Avg.Loans (4)		1.13%		0.76%		0.58%		1.03%		1.11%		0.67%
Operating and Productivity Ratios
Operating Expenses / Operating Revenue		45.64%		55.76%		50.59%		48.63%		51.29%		52.90%
Operating Expenses / Average Total Assets (3)		2.29%		2.52%		2.63%		2.34%		2.51%		2.58%
Loans per employee (million Ch$) (1)		732		769		786		732		743		786
Average Balance Sheet Data (1)(3)
Avg. Interest Earnings Assets (million Ch$)		8,848,898		8,836,619		9,275,495		8,636,527		8,646,347		8,977,933
Avg. Assets (million Ch$)		9,949,400		9,860,097		10,457,802		9,742,080		9,697,239		10,071,777
Avg. Shareholders Equity (million Ch$)		619,924		680,626		591,743		666,283		654,404		630,167
Avg. Loans		6,766,402		7,210,632		7,456,773		6,624,137		6,696,106		7,269,954
Avg. Interest Bearing Liabilities (million Ch$)		6,357,115		6,074,878		6,628,416		6,222,376		6,148,807		6,297,940
Other Data
Inflation Rate		1.33%		0.22%		1.59%		1.58%		2.43%		1.81%
Exchange rate (Ch$)		636.59		586.45		578.92		636.59		559.83		578.92
Employees		9,187		9,377		9,542		9,187		9,365		9,542

Notes

(1) These figures were expressed in constant Chilean pesos as of June 30, 2005.

(2) These figures were calculated considering the nominal net income, the shares outstanding and the exchange rates existing at the end of each period.

(3) The ratios were calculated as an average of daily balances.

(4) Annualized data.

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	2005 Second Quarter Results

 

CONTACTS:	Jacqueline Barrio
	(56-2) 653 2938
	jbarrio@bancochile.cl
	Rolando Arias
	(56-2) 653 3535
	rarias@bancochile.cl

 

 

FORWARD-LOOKING INFORMATION

The information contained herein incorporates by reference statements which constitute ‘‘forward-looking statements,’’ in that they include statements regarding the intent, belief or current expectations of our directors and officers with respect to our future operating performance. Such statements include any forecasts, projections and descriptions of anticipated cost savings or other synergies. You should be aware that any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, without limitations, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates, and operating and financial risks related to managing growth and integrating acquired businesses), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements.

Factors that could cause actual results to differ materially and adversely include, but are not limited to:

• changes in general economic, business or political or other conditions in Chile or changes in general economic or business conditions in Latin America;
• changes in capital markets in general that may affect policies or attitudes toward lending to Chile or Chilean companies;
• unexpected developments in certain existing litigation;
• increased costs;
• unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; and

You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent public accountants have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after completion of this offering to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

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