UPDATE 1-Chile banks' profit up 25.5 pct in October vs Sept

* Chilean banks' profits up on wider margins helped by CPI

* Strong system profits in October despite drop in loans

* Santander Chile profits rise 30.2 pct in Oct vs Sept

* Banco de Chile profits rise 22 pct in Oct vs Sept (Adds Reuters calculation on banks' monthly growth, details, byline)

By Antonio de la Jara

SANTIAGO, Nov 26 (Reuters) - Chile's banking system profits jumped 25.5 percent in October from September on wider margins helped by rising consumer prices despite a slight drop in loans, the country's bank regulator said on Thursday.

The financial system posted a profit of 996.61 billion pesos ($1.87 billion) in the January-to-October period, the regulator said, without providing an annual comparison figure.

In Chile, most bank loans are linked to UF or inflation-indexed Chilean peso currency units, which rise on the back of higher consumer prices.

The South American country's consumer price index was flat in October, but rose a bigger-than-expected 1 percent in September. In recent months, consumer prices have stopped a sharp fall and analysts see prices picking up as the Chilean economy recovers from the global slowdown.

Banco Santander Chile SAN.N STG.SN, the nation's largest private bank, posted net profit of 343.58 billion pesos ($646 million) in the January-to-October period, the regulator said without providing year-on-year comparison figures.

Santander Chile saw its profit increase 30.2 percent in October to 49.63 billion pesos ($93 million) compared with September, according to Reuters calculations using data from the regulator, but without factoring in inflation.

Banco de Chile CHI.SN, the country's No. 2 private bank, posted a profit of 225.7 billion pesos ($424 million) in the first 10 months of the year.

In October, the bank's profit rose 22 percent to 34.47 billion pesos ($64.8 million) from September, according to Reuters calculations. ($1=531.74 Chilean pesos by the end of October) (Editing by Maureen Bavdek) ((alonso.soto@thomsonreuters.com; +562-370-4250; Reuters Messaging: alonso.soto.reuters.com@reuters.net))