Banco Santander, S.a. · BME:SAN
Banco Santander — H1 2022 Earnings Presentation
61 slides from Banco Santander's earnings presentation, Dec 18, 2022
Slide 1: Institutional Presentation H1'22
Strategic and Financial Analysis. Financial Division Institutional Presentation H1’22
Slide 2: Index
Index 1 2 3 4 5 Our business Group structure H1’22 results Financial targets Links to model and and businesses & activity and final remarks public materials strategy 2
Slide 3: Our business model and strategy
1. Our business model and strategy
Slide 4: Santander, a leading financial group
Santander, a H1’22 Highlights leading financial Total assets (€ bn) 1,723 group Customer loans (€ bn excluding reverse repos) 1,015 Customer deposits + mutual funds (€ bn; excluding repos) 1,099 Branches 9,193 H1'22 Net operating income (pre-provision profit) (€ mn) 13,685 Simple Personal Fair H1'22
Slide 5: The Santander Way
The Santander Our purpose We create value for all Way To help people and businesses prosper. Our aim To be the best open financial services It is the bedrock on platform, by acting responsibly and earning which we are the lasting loyalty of our people, customers, shareholders and communities. buildi
Slide 6: Santander business model
1. Customer focus 2. Scale 3. Diversification1 Santander Deepening the relationships Local scale and global reach Our geographic and business business model with our customers through a simpler value proposition, diversification makes us more resilient under adverse superior customer experience circ
Slide 7: Customer focus
01. Customer focus 157 million customers Distribution by market, Jun-22 We have grown our Our aim is to further enhance our customers’ experience and satisfaction customer base over Digital Consumer Bank 12% the last seven years, Europe 30% Customer satisfaction in NPS1 with balanced growth by regio
Slide 8: Customer focus: loyal and digital customers
01. Customer focus 26.5 mn (+9%) 49.9 mn (+10%) Loyal customers Digital customers1 Tech investments to transform the business … We also increased €2 bn / year loyalty and helped a new generation of 24.4 mn (+10%) … help customers transact online Individuals customers with new ways to interact with t
Slide 9: Customer focus: traditional and digital banking
01. Traditional Digital Customer focus banking banking Internet, Branches, mobiles, ATMs, tablets, retail agents, … smartphones, smartwatches,… Traditional customer service and digital Customer support services: available anytime, anywhere, anyhow technology Collaborative spaces and increased digita
Slide 10: Scale
02. Market shares North America Scale 4% Auto lending 10% Loans 8% Europe Deposits Digital 2% Deposits Consumer Bank 18% 12% Loans Loans 14% 14% 11% Loans Deposits Deposits 12% South America #1 European Local scale and Deposit 18% Consumer Loans Bank 19% leadership based on 18% Loans 10% Loans Depos
Slide 11: Diversification
03. Well balanced profit and volume distribution Diversification Contribution to H1’22 underlying attributable profit1 Jun-22 Group’s contribution2 by primary segments Customer loans Customer funds 31% Our balanced profit 10% and volume 12% 58% 5% diversification 64% 17% remains a source of 33% 15%
Slide 12: Diversification by customer segment
03. Diversification Customer loans by business, Jun-22 Customer funds by business, Jun-22 Individual mortgages, 34% Individuals demand Business SCIB, 14% SCIB, 12% deposits, 36% diversification among customer segments Other individuals, Corporates1, 15% (individuals, SMEs, Corporates, 14% 1 6% Indiv
Slide 13: In summary: more resilience and lower volatility of results
More resilience and lower volatility of results In summary Differential Pre-provision profit / loans and Cost of credit EPS volatility calculated using quarterly data from Jan-99 to Q1’222 1.90% 1.89% 1.80% 1.80% 1.78% 1.60% 1.61% 1.65% 1.65% 1.25% Our strong model is 1.21% 0.62% reflected in the re
Slide 14: Environmental, Social and Governance
Environmental, Social and Decarbonization targets1 2030 (vs 2019) Key sustainability metrics Social & Governance Governance Power generation -46% Green finance3 Financially empowered people emissions intensity Thermal coal-related Phase-out €74bn 9mn power2 and mining since 2019 since 2019 NEW Energ
Slide 15: ESG commitments
ESG commitments 2018 2019 2020 2021 H1’22 2025 / 2030 target • Electricity from renewable sources 43% 50% 57% 75% 100% 120bn by 2025 • Green finance raised and facilitated (€) 19bn 33.8bn 65.7bn 74.4bn 220bn by 2030 • AuMs in Socially Responsible Investments (€) 27.0bn 30.1bn 100bn by 2025 We contin
Slide 16: Group structure and businesses
2. Group structure and businesses
Slide 17: Group organizational structure
One Santander (Europe, North America and South America). New operating model leveraging our global scale to deliver a better customer experience, supported by common culture and higher degrees of commonality, technology being one Digital Consumer Bank: our vision is to become the largest digital
Slide 18: Primary segments
@ Santander Primary segments 18
Slide 19: Europe
EUROPE 'Accelerating our business transformation in One Europe to achieve superior growth with a more efficient operating model' H1’22 Highlights Strategic priorities Branches 3,178 Employees 63,579 ▪ Grow our business by better serving our customers through regional Total customers (mn) 46.4 simpli
Slide 20: Spain
Spain 'The commitment to and collaboration with our customers demonstrates the full potential of Santander España' H1’22 Highlights Strategic priorities Branches 1,921 ▪ Grow our customer base providing the best customer experience across all channels Employees 26,272 ▪ Deliver an innovative and tai
Slide 21: UK
UK 'Santander UK creates value by serving customers with tailored financial products and services' H1’22 Highlights Strategic priorities Branches 450 Employees 20,320 ▪ Deliver growth through customer loyalty and outstanding customer experience Total customers (mn) 23.6 Digital customers (mn) 6.8 ▪
Slide 22: Portugal
Portugal 'A strategy focused on customer experience and digital solutions for sustained and profitable growth' H1’22 Highlights Strategic priorities Branches 386 Employees 4,977 ▪ Consolidate the commercial and digital integration model Total customers (mn) 3.0 ▪ Grow organically in terms of profita
Slide 23: Poland
Poland 'One of the largest and most innovative financial institutions in Poland' H1’22 Highlights Strategic priorities Branches 413 ▪ Improve customer satisfaction, remaining at least among the Top 3 in NPS Employees 10,468 ▪ Focus on employee experience in order to attract talents and reinforce inc
Slide 24: North America
NORTH AMERICA 'We provide a full range of financial services with particular focus on Retail, Private and Corporate Banking' H1’22 Highlights Strategic priorities Branches 1,859 Employees 43,779 ▪ Strengthen One Santander in North America by unifying a common and regional approach to forge future gr
Slide 25: United States
United States 'Santander US combines a strong depositary base in the Northeast with its nationwide auto finance, wealth management and corporate banking capabilities' H1’22 Highlights Strategic priorities Branches 486 Employees 14,943 ▪ Positioned to deliver above cost of capital returns across core
Slide 26: Mexico
Mexico 'Santander México, one of the leading financial groups in the country, focused on commercial transformation and innovation' H1’22 Highlights Strategic priorities Branches 1,373 Employees 28,236 ▪ To become the leading bank in terms of customer experience, leveraging new tools and improved pro
Slide 27: South America
SOUTH AMERICA 'We remain focused on expanding, sharing best practices from each country and delivering profitable growth' H1’22 Highlights Strategic priorities Branches 3,786 ▪ Strengthen connectivity and share best practices across countries, capturing new Employees 75,588 business opportunities To
Slide 28: Brazil
Brazil 'The best way to grow in a profitable, recurring and sustainable manner is by providing high quality services' H1’22 Highlights Strategic priorities Branches 2,936 ▪ Expand our customer base and profitability, with robust new customer Employees 53,743 acquisition dynamics and steady loyalty g
Slide 29: Chile
Chile 'We are the leading bank in the country and we always have the customer at the centre of our strategy' H1’22 Highlights Strategic priorities Branches 306 ▪ Maintain our leadership position in NPS through the continuous improvement of Employees 9,921 our service quality Total customers (mn) 4.0
Slide 30: Argentina
Argentina 'Working towards a more digital and agile model, with customer-centric decisions' H1’22 Highlights Strategic priorities Branches 407 Employees 8,514 ▪ Increase our customer base and loyalty, and ensuring the best customer service through our multi-channel strategy Total customers (mn) 4.4
Slide 31: Uruguay, Peru, Colombia
Uruguay Peru Colombia 'Santander Uruguay is the country’s 'Activity focused on corporates, 'Focus on corporates and SCIB, leading privately-owned bank' the country’s large companies and and new alliances in auto finance' the Group’s global customers (SCIB)' H1’22 Highlight Highlightss H1’22 Highligh
Slide 32: Digital Consumer Bank
Digital Consumer Bank 'Europe’s consumer finance leader: solid business model, geographic diversification and leading market shares in auto/mobility finance and in personal finance/e-commerce' H1’22 Highlights Strategic priorities Branches 370 ▪ To become the largest digital consumer bank leveraging
Slide 33: Secondary segments
@ Santander Secondary segments 33
Slide 34: Corporate & Investment Banking
Corporate & Investment Banking 'Santander CIB supports corporate and institutional customers, offering tailored services and value-added wholesale products suited to their complexity and sophistication' H1’22 Highlights Strategic priorities Total income (€ mn) 3,612 ▪ Continue the business transform
Slide 35: Wealth Management & Insurance
Wealth Management & Insurance 'We strive to become the best responsible wealth and insurance manager in Europe and the Americas' H1’22 Highlights Strategic priorities Total assets under management1 (€ bn) 395 ▪ Continue to build our global platform Total fees generated as % of the Group’s total fees
Slide 36: PagoNxt
'Innovative payments solutions for both Santander and non-Santander clients' H1’22 Highlights PagoNxt revenue (€ mn) 398; +87% YoY We are a one of a kind paytech business backed by Santander. Helping our customers prosper and accelerate their growth through a one-stop shop, Merchants providing solut
Slide 37: Group functions and Corporate Centre activities
Group functions and Corporate Centre activities • Global T&O strategy • HR strategy • Risk management and compliance • Corporate governance and internal control • Our brand 37
Slide 38: Technology and Operations (T&O)
Technology and Operations (T&O) ‘The T&O mission is to enable the Group strategy by building customer- oriented, secure, efficient and innovative technology working with the business units in a flexible and agile way’ Global T&O capabilities are key for our commercial and digital transformation Comp
Slide 39: HR strategy: employer of choice
HR strategy: Our aim is to be an employer of choice 'Focus on employee engagement, leveraging our SPF culture to retain and attract the best talent' The SPF culture is based on our 5 corporate behaviours Our corporate management evaluation model 200,651 Employees, Jun-22 98% 50% 40% workforce with a
Slide 40: Risk management and compliance
Risk management and compliance 'Our solid Risk & Compliance function is key to making sure we remain a robust, safe and sustainable bank that helps people and businesses prosper' We rely on: Advanced management tools to effectively manage and control all risks under a forward-looking approach 3 line
Slide 41: Corporate governance and internal control
Corporate governance and internal control 'As a responsible bank, we have a clear and robust governance which is key for guaranteeing a sustainable business model over the long term' Composition of the board of directors, Jun-22 Board committees Executive Diversified and well-balanced shareholder ba
Slide 42: Corporate governance and internal control
Corporate governance and internal control 'Best practices on robust governance are channelled to all subsidiaries' Group-subsidiary governance model Group Subsidiary B The Group-subsidiary governance model enhances control and oversight through: Board of Directors Subsidiary A A Presence of the Grou
Slide 43: Santander brand
Santander brand 'Our brand embeds the essence of the Group's culture and identity' Santander is one of the most valued brands in the world 3 rd best global retail bank brand by Interbrand’s Best Global Brands ranking, 2021 As one of our most important strategic assets, our brand helps us connect wit
Slide 44: H1'22 results & activity
@ H1'22 results & activity «> Santander
Slide 45: Executing our strategy: growth, profitability and strength
We are executing our strategy to drive greater growth, profitability and strength Growth Profitability Strength YoY percentage changes H1’22 data and YoY percentage change H1’22 data and YoY percentage change Total customers +5% Profit €4,894mn CoR 0.83% Digital customers +10% Digital sales / total
Slide 46: Customer growth and volumes increase in all products
Steady customer growth and commercial strategy reflected in volumes increases in all products and segments Customer loans: +6% YoY Customer deposits: +5% YoY €391bn +4% €344bn +7% €718bn +3% SCIB €280bn +6% 142 +20% +13% Other Private Bkg 26 +5% 14 Cards 17 +16% Non-Auto 74 +6% SMEs & Corporates 249
Slide 47: Continued profit momentum
Continued profit momentum, maintaining main P&L trends: top line growth, greater sustainable efficiencies and LLP normalization Contribution Underlying to Group’s attributable profit % change underlying profit2 (€ mn) € million H1'22 H1'21 Euros Constant euros 652 736 NII 18,409 16,196 14 7 31% Euro
Slide 48: Revenue up boosted by NII and fees
Revenue up boosted by NII and fees, partly offset by lower trading gains and other income Total revenue Revenue breakdown Constant € mn 12,546 12,574 Constant € bn 11,971 Revenue 24.1 25.1 9,384 9,025 0.9 8,722 Other income 1.4 NII 5.9 Fees 5.5 2,865 2,987 2,761 Fees Trading NII 17.2 18.4 256 393 35
Slide 49: Positive performance in key metrics
Positive performance in key metrics … Efficiency ratio 46.2% 45.5% • Best-in-class efficiency, supported by higher revenue and 45.0% ongoing cost management • Our transformation plan continues to progress towards a more integrated and digital operating model FY'21 H1'22 2022 target RoTE 13.7% >13.0%
Slide 50: Delivering shareholder value
… while delivering shareholder value EPS € cents • EPS +38% YoY (+19% vs H1’21 underlying EPS) 27.2 • Sustained earnings per share growth, driven by higher profit and 19.7 share buybacks • 546mn shares amortized this year through buybacks (3.2% of capital) H1'21 H1'22 TNAV per share € 4.24 3.98 • Pe
Slide 51: CET1 ratio above 12%
Continued organic generation, maintaining the CET1 ratio above 12% Q2 fully-loaded CET1 ratio performance % • Continued profit growth +0.26 +0.03 – RoTE 13.7% (12.0% in FY’21) 12.05 -0.08 12.05 -0.05 -0.16 • Disciplined capital allocation strategy with: – RWAs rising below loan growth +1% < +6% (exc
Slide 52: Business segments review
@ Santander Business segments review 52
Slide 53: Solid growth supported by all regions and businesses
The Group’s solid customer, volume and profit growth was supported by all our regions and businesses H1’22 Total Customer Customer Net operating Underlying vs. H1’21 customers loans deposits income att. profit RoTE1 (mn) (€bn) (€bn) (€mn) (€mn) 46.4 589 609 4,417 1,839 12.1% 8.8% Europe +1% +5% +5%
Slide 54: Global businesses, Payments and Cards
Global businesses Payments • SCIB: solid profit increase driven by double-digit growth in • PagoNxt: revenue grew 87% due to overall increase in all core businesses and strict efficiency management business activity and volumes across regions • WM&I: double-digit increase thanks to our diversified v
Slide 55: Financial Targets and Final remarks
4. Financial Targets and Final remarks
Slide 56: Final remarks
Final remarks • In an uncertain environment, we expect revenue to improve: Revenue • NII should increase in the coming quarters, benefitting from interest rate hikes and expected activity levels, accelerating in 2023 • Fee income supported by commercial activity and global business growth (SCIB, WM&
Slide 57: Links to public materials
: la E «> Santander @ Links to public materials
Slide 58: Links to Grupo Santander public materials
Links to Grupo Santander public materials For additional information on the Group, please click on the images, icons or flags below H1’22 financial results Other information Financial report Earnings presentation Series Shareholders report 2021 Digital Annual review (excel) (interactive) 2021 Annual
Slide 59: Important information
Important information Non-IFRS and alternative performance measures Forward-looking statements This presentation contains, in addition to the financial information prepared in accordance with Santander advises that this presentation contains “forward-looking statements” as per the meaning Internatio
Slide 60: Important information
Important information Numerous factors could affect our future results and could cause those results deviating from Historical performance is not indicative of future results those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to dif
Slide 61: 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: