Banco Santander, S.a. · BME:SAN
Banco Santander — H1 2024 Earnings Presentation
54 slides from Banco Santander's earnings presentation, Jul 24, 2024
Slide 1: Earnings Presentation H1'24
24 July 2024 Earnings Presentation H1’24
Slide 2: Important information
Important information Non-IFRS and alternative performance measures This presentation contains financial information prepared according to International Financial Reporting Standards (IFRS) and taken from our consolidated financial statements, as well as alternative performance measures (APMs) as de
Slide 3: Important information
Important information While these forward-looking statements represent our judgement and future expectations concerning our business developments, results may differ materially from those anticipated, expected, projected or assumed in forward-looking statements. In particular, forward looking statem
Slide 4: Index
Index 1 2 3 4 H1’24 Highlights Group Final remarks Appendix Progress on review our strategy 4
Slide 5: Record H1'24 results with all our global businesses contributing to our 2024 targets
Record H1’24 results with all our global businesses contributing to our 2024 targets Q2’24 H1’24 attributable profit attributable profit Another record quarterly profit, including €0.5bn net one-time charges; recurring Q2 profit of €3.7bn €3.2bn €6.1bn +20% +16% Efficiency RoTE Strong operating perf
Slide 6: Double-digit YoY profit increase driven by strong growth in net operating income
Double-digit YoY profit increase driven by strong growth in net operating income, supported by customer revenue and efficiency improvements ex. Argentina P&L Current Constant Current Constant € million H1'24 H1'23 % % % % NII 23,457 20,920 12 11 11 10 Net fee income 6,477 6,103 6 6 8 7 Excellent bus
Slide 7: A record H1'24 puts us on track to exceed our 2024 targets
A record H1’24 puts us on track to exceed our 2024 targets … Upgraded H1’24 2024 targets 2024 targets Mid-single High-single Revenue1 +9% digit growth digit growth UPGRADED Efficiency 41.6% <43% c.42% UPGRADED CoR 1.2% c.1.2% CONFIRMED FL CET1 12.5% >12.0% after Basel III implementation CONFIRMED 16
Slide 8: Backed by execution of ONE Transformation, improving both revenue and costs
… backed by execution of ONE Transformation, improving both revenue and costs … Global & Network Global Tech FY’22 ONE Transformation businesses capabilities & others H1’24 45.8% -266bps -87bps -71bps 41.6% • Product simplification: 6% fewer • Multi-Nationals: +3% YoY • Global approach to technology
Slide 9: Five global businesses leveraging our global scale to accelerate profitable growth
… and by our five global businesses, leveraging our global scale to accelerate profitable growth Revenue Contribution to 2025 RoTE C/I RoTE H1’24 (€bn) Group revenue target 16.3 39.5% 18.1% Retail +12% 52% -4.8pp +4.3pp c.17% 6.4 40.6% 13.0% Consumer 20% -2.7pp +0.4pp >14% +7% 4.2 43.4% 19.1% CIB 13
Slide 10: Retail: delivering 12% revenue growth with costs flat, by deploying global platforms
Retail: delivering 12% revenue growth with costs flat, by deploying global platforms Execution of the strategy H1’24 financials Driving growth and efficiency on the back of our new model Loans Deposits CoR and proprietary technology €619bn €637bn 1.03% Customer New digital onboarding and simplified
Slide 11: Consumer: strong improvement in operational leverage and better deposit cost-to-serve
Consumer: strong improvement in operational leverage and better deposit cost-to-serve Execution of the strategy H1’24 financials Transforming into a best-in-class, global business and Loans Deposits CoR operating model €213bn €122bn 2.17% Customer Fully-digital financing experience available for our
Slide 12: CIB: US investments drove 12% fee growth and strong RoTE of 19%
CIB: US investments drove 12% fee growth and strong RoTE of 19% Execution of the strategy H1’24 financials Playing to our strengths to better serve our corporate Loans Deposits CoR customers and institutions €144bn €130bn 0.15% Customer Significant progress broadening our product offering in the US
Slide 13: Wealth: network collaboration fees up 12% and profitability over 80%
Wealth: network collaboration fees up 12% and profitability over 80% Execution of the strategy H1’24 financials Accelerating our customers’ connectivity with our global Net new Net sales Gross written product platforms money (PB) (SAM) premiums €11.9bn €8.9bn €6.1bn Customer Improved customer relati
Slide 14: Payments: PagoNxt open market revenue above 22% and EBITDA margin over 20%
Payments: PagoNxt open market revenue above 22% and EBITDA margin over 20% Execution of the strategy H1’24 financials Seizing a growing opportunity by capturing scale through TPV Active customers Turnover global platforms Getnet Ebury Cards €108bn 23k €159bn Customer Invisible Payments providing the
Slide 15: EPS up 19% and 12% increase in TNAVps + Cash DPS
c.10% revenue growth and share buybacks drove EPS up 19% and a 12% increase in TNAVps + Cash DPS RoTE EPS TNAVps + Cash DPS % Annualizing the impact of the € cents € per share Cash DPS: €17.6 cents temporary levy +134bps +19% +12% 16.3 36.7 5.11 15.0 30.8 15.9 4.94 14.5 4.57 H1'23 H1'24 H1'23 H1'24
Slide 16: Index
Index 1 2 3 4 H1’24 Highlights Group Final remarks Appendix Progress of our strategy review 16
Slide 17: Double-digit YoY profit increase driven by net operating income growth
Double-digit YoY profit increase driven by strong growth in net operating income, supported by customer revenue and efficiency improvements P&L Current Constant Attributable profit € million H1'24 H1'23 % % € mn NII 23,457 20,920 12 11 +20% Net fee income 6,477 6,103 6 6 3,207 Other income 1,116 1,2
Slide 18: NII up 2% and costs flat QoQ when Argentina is excluded
NII up 2% and costs flat QoQ when Argentina is excluded Q2’24 vs. Q1’24 Group quarterly performance excluding Argentina Constant € mn +3% 14,767 15,263 Revenue Group Group excluding Argentina +2% Current Constant Current Constant 10,914 11,121 NII % % % % NII -4 -4 1 2 +3% Net fee income 0 1 2 3 3,0
Slide 19: High-single digit revenue growth backed by customer activity across our businesses
High-single digit revenue growth backed by customer activity across our businesses Total revenue Constant € mn +10% Total 16,273 revenue 14,489 15,323 15,727 with official 14,107 14,303 14,785 Argentine FX rate • >95% of total revenue is customer related which drove the vast majority of total revenu
Slide 20: Widening spreads drive NII and NIM expansion
Widening spreads drive NII and NIM expansion Net interest income and NIM 2.97% 3.07% with official Argentine FX NIM 2.73% 2.82% 2.76% 2.63% rate • >80% of the Group’s NII is from our Retail and Consumer businesses Quarterly 2.89% • Solid H1 NII increase YoY (+11%) across all businesses and regions −
Slide 21: Net fee income growth shows value added from our global businesses
Net fee income growth shows value added from our global businesses Net fee income Constant € mn • Good commercial dynamics, with generalized fee growth across the Group +7% Retail • Fees boosted by higher activity in account maintenance, funds 3,361 and FX, especially in Brazil, Poland, the US and M
Slide 22: ONE Transformation driving structural efficiency gains and positive jaws
ONE Transformation driving structural efficiency gains and positive jaws Efficiency and costs Efficiency • Strong quarterly trend. H1’24 efficiency ratio improved 3pp YoY to Quarterly 44.1% 44.3% 43.6% 44.4% 42.6% 41.6%, even when we are investing in our transformation 40.6% • Transformation investm
Slide 23: Stable credit quality in line with 2024 target
Stable credit quality in line with 2024 target LLPs and credit quality 1.05% 1.08% 1.13% 1.18% 1.20% 1.21% CoR • YTD CoR stood at 1.17%, despite increasing CHF mortgage 12 month portfolio coverage 3,234 3,391 Credit • Credit quality remains robust, backed by overall good economic 3,104 3,139 2,903 2
Slide 24: Enhanced capital strength: organic generation and record distributions
Enhanced capital strength: profitable organic generation, with new front book at 23% RoTE, and record distributions CET1 performance and capital productivity FL CET1 % Maximize capital productivity Jun-24 or estimates Front book pricing RoRWA of new book 2.9% +0.52 - 12.5 12.3 -0.25 -0.07 Asset rota
Slide 25: Index
Index 1 2 3 4 H1’24 Highlights Group Final remarks Appendix Progress of our strategy review 25
Slide 26: Making progress towards our Investor Day targets
Making progress towards our ID targets in our new phase of value creation for our shareholders H1’24 vs. 2025 ID targets Strength Disciplined capital allocation FL CET1 RWAs with RoRWA > CoE 12.5% TNAVps + DPS 84% >12% c.85% +12% Double-digit growth average through-the-cycle Shareholder remuneration
Slide 27: All-time high quarterly and half-year profit, driving an upgrade of our 2024 targets
All-time high quarterly and half-year profit, driving an upgrade of our 2024 targets Upgraded H1’24 2024 targets Record profit supported by an outstanding P&L from top to bottom High-single Excellent business dynamics: record NII, fees, revenue and net operating income Revenue1 +9% digit growth ONE
Slide 28: Index
Index 1 2 3 4 H1’24 Highlights Group Final remarks Appendix Progress of our strategy review 28
Slide 29: Appendix
Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary The other information in the Appendix regularly provided each quarter can be found in the document entitled "Supplementary Information", published to
Slide 30: ONE Transformation driving double-digit growth in value creation
ONE Transformation driving double-digit growth in value creation 2022 2023 H1'24 2025 targets RoTE (%) 13.4 15.1 15.9 15-17 Profitability Payout (Cash + SBB) (%) 1 40 50 50 50 EPS Growth (%) 23 21.5 19.2 Double-digit Total customers (mn) 160 165 168 c.200 Customer centric Active customers (mn)2 99 1
Slide 31: Appendix
Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary The other information in the Appendix regularly provided each quarter can be found in the document entitled "Supplementary Information", published to
Slide 32: Detail by global business
Detail by global business «> Santander
Slide 33: Retail & Commercial Banking
Retail & Commercial Banking Highlights Key data • Our transformation and disciplined capital allocation are reflected in a Loans Deposits Mutual Funds significant rise in total customers, efficiency improvements (-4.8pp to €619bn -1% €637bn +2% €92bn +22% 39.5%) and higher profitability (RoTE +4pp t
Slide 34: Digital Consumer Bank
Digital Consumer Bank Highlights Key data New lending Deposits Mutual Funds • We continue expanding our leadership in consumer finance across our footprint, converging towards a more digital global operating model and €46.7bn +8% €213bn +6% €122bn +14% implementing enhanced solutions through common
Slide 35: Corporate & Investment Banking
Corporate & Investment Banking Highlights Key data • We continue making our centres of expertise more sophisticated, Loans Deposits deepening client relationships, with focus on our Global Markets, the US €144bn +7% €130bn -6% Banking Build-Out strategy and actively managing capital Efficiency CoR R
Slide 36: Wealth Management & Insurance
Wealth Management & Insurance Highlights Key data AuMs Net new money (PB) Net sales (SAM) • We continue building the best Wealth and Insurance manager in Europe €480bn +13% €11.9bn 8% €8.9bn 8% of volumes2 of volumes2 and the Americas, supported by our leading global private banking Gross written pr
Slide 37: Payments and Cards
Payments Cards • TPV increased 12% YoY in Getnet, driven by Mexico, Chile and • The total number of cards managed in the Group rose to 104 Europe. Active customers growing strongly in Ebury (+23% YoY) million, continuing the positive trends in previous quarters • Revenue rose 12% due to an overall i
Slide 38: Corporate Centre
Corporate Centre Highlights P&L Underlying P&L* H1'24 H1'23 • NII fairly stable, as higher liquidity buffer remuneration was offset by NII -100 -94 higher interest expense related to more TLAC/MREL issuances Gains / losses on financial transactions -284 -189 • Higher losses on financial transactions
Slide 39: Detail by region and country
Detail by region and country 39
Slide 40: Europe
Europe Highlights Key data and P&L Loans Deposits Mutual Funds • We remain focused on growing our business while transforming our operating model to improve efficiency and customer experience €561bn -1% €611bn +1% €116bn +16% • Customers increased across the region (+525k YoY), mainly driven by Effi
Slide 41: Spain and UK
España and UK Spain UK • Customer growth YoY. Loans still affected by mortgage prepayments • Loans continued to decrease impacted by a strict pricing policy. YoY, but +3% QoQ driven by Retail and CIB. Migration to time deposits Migrations to time deposits and an increase in mutual funds continued an
Slide 42: Portugal and Poland
Portugal and Polonia Portugal Poland • Moderate decline in loans as customer deleveraging mitigated by new • Loans rose driven by Retail (record mortgage and personal loan business recovery. Double-digit increases in time deposits and mutual originations) and CIB. Significant deposit growth, both in
Slide 43: Digital Consumer Bank Europe
Digital Consumer Bank Europe Highlights Key data and P&L New lending Loans Customer Funds • We are focused on strengthening our leadership in auto and non-auto through strategic alliances and better service through new operational €26bn +2% €138bn +8% €81bn +23% leasing platforms and non-auto platfo
Slide 44: North America
North America Highlights Key data and P&L • Focus on transformation, leveraging the strengths of our businesses in Loans Deposits Mutual Funds the US and Mexico and enhancing our regional operating model in T&O €165bn +3% €134bn -4% €33bn +19% • Loans rose 3%, particularly in Mexico and CIB in the U
Slide 45: US and Mexico
US Mexico • Lending up 2%, driven by CIB activity and auto. Deposits declined in • Successful customer acquisition campaigns and new commercial line with our funding strategy in CIB agreements boosting loans (most global businesses) and deposits • Revenue rose 4% YoY, offset by higher costs (investm
Slide 46: South America
South America Highlights Key data and P&L Loans Deposits Mutual Funds • We are focused on being the primary bank for our 77 million customers (+4mn YoY), becoming the most profitable in each of our countries and €157bn +7% €129bn +8% €66bn +18% enhancing service quality Efficiency CoR RoTE • Loans g
Slide 47: Brazil and Chile
Brazil Chile • Double-digit growth YoY in loans (with increases across all global • Loans increased YoY across most global businesses. Double-digit businesses), time deposits and mutual funds growth YoY in time deposits and mutual funds • Greater profit and profitability YoY, driven by NII (volumes
Slide 48: Argentina and Uruguay, Peru and Colombia
Argentina Uruguay, Peru and Colombia • We are working to improve our customer service and adapt our • Loan growth in Uruguay (+16% YoY) mainly in Consumer and Retail. value offer to customer needs in a dynamic market Joint initiatives between CIB and Corporates in Peru and Colombia • Profit comparis
Slide 49: Appendix
Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary 49
Slide 50: Reconciliation of underlying results to statutory results
Reconciliation of underlying results to statutory results EUR mn January-June 2024 January-June 2023 Statutory Underlying Statutory Underlying Adjustments Adjustments results results results results Net interest income 23,457 — 23,457 20,920 — 20,920 Net fee income 6,477 — 6,477 6,103 — 6,103 Gains
Slide 51: Appendix
Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary 51
Slide 52: Glossary - Acronyms
Glossary - Acronyms • A2A: account to account • ESG: Environmental, social and governance • pp: Percentage points • ALCO: Assets and Liabilities Committee • EV: Electric Vehicle • Ps: Per share • AM: Asset management • FL: Fully-loaded • QoQ: Quarter-on-Quarter • AuMs: Assets under Management • FTE:
Slide 53: Glossary - Definitions
Glossary - Definitions PROFITABILITY AND EFFICIENCY • RoTE: Return on tangible capital: Group attributable profit / average of: net equity (excluding minority interests) – intangible assets (including goodwill) • RoRWA: Return on risk-weighted assets: consolidated profit / average risk-weighted asse
Slide 54: Thank You.
Thank You. Our purpose is to help people and businesses prosper. Our culture is based on believing that everything we do should be: