Banco Santander, S.a. · BME:SAN
Banco Santander — Investor Day (October 2017)
38 slides from Banco Santander's investor day presentation, Oct 10, 2017
Slide 1: Helping people and businesses prosper
Helping people and businesses prosper Ana Botín Group Executive Chairman Opening presentation
Slide 2: Forward-looking statements disclaimer
1 Banco Santander, S . A . ("Santander") cautions that this presentation contains statements that constitute “forward - looking statements” within the meaning of the U . S . Private Securities Litigation Reform Act of 1995 . Forward - looking statements may be identified by words such as “expect”, “
Slide 3: Contents
2 Contents 2 K ey takeaways 4 Delivering on our strategic targets ahead of plan 1 Our model delivers profitable growth and predictable earnings 3 Transforming into digital banks whilst building Global Platforms
Slide 4: Delivering on our strategic targets ahead of plan
3 Delivering on our strategic targets ahead of plan 1
Slide 5: Reminder: Santander strategy and priorities
4 The best bank to work for Earn the loyalty of our retail and corporate customers Achieve operational and digital excellence People Customers Shareholders Communities Santander Universities Support people in our local communities Reinforced capital and risk management EPS, DPS,TNAVPS and RoTE growt
Slide 6: Delivering since the 2015 capital increase
5 Delivering since the 2015 capital increase… 2018 • Committed to deliver all 2018 Investor Day targets • Definition of 2021 targets and digital transformation roadmap 2016 • Delivery on 2016 targets • New IT model 2015 • Laying the foundations for our transformation 2017 • Delivery ahead of plan on
Slide 7: Ahead of plan on our commitments
6 (1) % change (constant euros) (2) Total dividends charged to 2017 earnings are subject to the Board and AGM approval (3) Und erlying (4) Group ex - Popular …ahead of plan on our commitments 2017 1H'17 2016 Loyal customers (MM) 17 16.3 15.2 13.8 Digital customers (MM) 25 23.0 20.9 16.6 Fee income I
Slide 8: Now working hard on integration of Popular
7 …and now, w orking hard on integration • Loyalty bonds: >50 % take up in two weeks • + € 10Bn (+ 19%) in deposits since announcement. Loans recovering • Popular teams are highly engaged Commercial action 2 • + € 7Bn with 13 - 14% RoI C • Narrowest TERP discount in a European bank rights issue sinc
Slide 9: Loyal customers are ~3x more profitable
8 Loyal customers are ∼ 3x more profitable 1 1H´16 1H'17 14.4 16.3 +13% 1H'16 1H'17 4,946 5,729 Fee income ( € MM) Loyal customers (MM) Increased customer loyalty is accelerating fee income growth Note: Fee income in current euros, otherwise +11% (1 ) Gross margin of loyal customers vs. non - loyal
Slide 10: Improving profitability with a higher capital base
9 2015 1H'17 Improving profitability with a higher capital base… ~ 48 ~68 CET1 ( € Bn) 1.30% 1.47% RoRWA 8.27% 10.72% FL CET1 RoTE ( 1) As of 01/01/2015 Data (2) Including 2017 capital increase (3) Group ex - Popular 11.0% 11.7% 1 1 3 2 +42% +17bps +245bps TOP 3 vs. peers (8 % avg .)
Slide 11: Sustainable growth in shareholder value since 2015 capital increase
10 0.16 0.08 0.09 +9% 4.07 4.13 4.18 1H Cash DPS ( € ) EPS ( € ) 0.40 0.19 0.24 TNAV/share ( € ) 0.41 4.22 +4% +1% +8% +1% +24% TNAVPS + Cash DPS ( € ) 1H’17 2016 4.23 4.21 4.28 4.39 +4% +1% (1) 1H'17 includes Popular and capital increase (2 ) TNAV 1H’17 plus 2017E half year cash dividend per share.
Slide 12: New way of measuring employee performance
11 New way of measuring employee performance …being Simple | Personal | Fair 60% What? 40% How? Building a strong culture around Simple | Personal | Fair Corporate behaviours and …
Slide 13: A sustainable and responsible bank, largest supporter of higher education
12 A sustainable and responsible bank, largest supporter of higher education People supported (Cum., MM) 2016 2017E 2018E 1.7 3.4 5.0 Universities Community support 1,183 Agreements 36,684 Scholarships in 2016 Leading European Bank in sustainability Sustainability
Slide 14: Our model delivers profitable growth and predictable earnings
13 Our model delivers profitable growth and predictable earnings 2
Slide 15: 131MM customers. Top player in markets with ~1Bn people
14 131MM customers. Top player in 10 markets with ~1Bn people Critical mass Predictability and growth in earnings = less capital or capital at a lower cost Geographic diversification Scalable digital transformation A unique model of profitable growth Working as a Group within our subsidiary model cr
Slide 16: Leadership in 9 markets representing 95% of Group earnings
15 x Ranking in loans market share #1 #3 #3 #1 #5 #3 #1 3% #1 #1 As of Jun'17 or latest available Leadership in 9 markets representing 95% of the Group’s earnings… 3 1 2 SCF 131MM customers in 10 markets with ~ 1Bn people 3 Note: Group earnings exclude Corporate Centre. Santander’s market share for
Slide 17: Top and recurrent profitability versus peers
16 …contributing to our top and recurrent profitability Source: Company data and Bloomberg Note : Peers included are Wells Fargo, JP Morgan, Bank of America, UBS, BBVA, ING, BNP Paribas, HSBC, Unicredit, Lloyds, Citibank, In tesa Sanpaolo, Société Générale, Standard Chartered, Deutsche Bank and Barc
Slide 18: Geographic diversification = stable and predictable earnings growth
17 -200 -100 0 100 200 300 Geographic diversification = stable and predictable earnings growth… …increases earnings predictability vs. peers Profit growth (%; 2006 banking profit = 100 base) Only 5 banks have reported yearly profits since 2006 Well balanced diversification… Revenues split per countr
Slide 19: Enabling cash DPS and business growth whilst accumulating capital
18 (1) Constant euros, NII + fees …enabling cash DPS and business growth whilst accumulating capital Accumulate capital Pay dividends Fund Business growth +9% Cash dividend per share (2017E over 2016) +8% Customer revenues (1H’17 vs. 1H’16 ) +40bps per year 10.72% FL CET1 1H’17 Room for higher divid
Slide 20: Working as a Group creates strong value and synergies
19 Working as a Group creates strong value and synergies… Collaboration between countries Global projects led by Group New IT architecture 25 - 30% ~ 500 +38% International business Examples Pre - scored population, % Application of artificial intelligence Companies jointly targeted Avg. revenues in
Slide 21: Improving customer experience
20 1H´15 1H´17 3 6 Improving customer experience… >70% of PBT amongst Top 3 in customer experience 86% 78% 75% 71% 70% 68% 67% 63% 63% 62% 59% 59% 58% 55% 50% 49% 46% …with best in class cost - to - income …allowing us to improve both customer experience and efficiency 18pp better than peer avg. (1)
Slide 22: Transforming into digital banks whilst building Global Platforms
21 Transforming into digital banks whilst building Global Platforms 3
Slide 23: Supertankers and Speedboats
22 Start - up model + Group support Our 10 Local banks ‘ Supertankers ’ and our Global Platforms ‘ Speedboats ’ are well connected Supertankers Profitable growth Our Supertankers are being transformed into digital banks Speedboats Independent Global Platforms. Led by independent CEOs but sponsored b
Slide 24: Transforming Supertankers: three impacts
23 Excellent customer experience Efficiency A B Examples C Supertankers | Transformation delivering positive impact in three ways Top 3 customer experience in 6 countries (vs. 3 in 2015) Best - in - class efficiency (46.3% C/I in 1H'17) Anytime, anyhow, anywhere Resilient, fast and flexible IT Trans
Slide 25: Santander Brazil digital transformation
24 Cost - to - income 2015 1H'17 2015 1H'17 35% 14% 16% RoTE 40% Digital sales (k ) 1H'15 1H'17 +250% Tellers and call centre transactions (% of total) 1H'15 1H'17 8% - 5pp 13% Supertankers | Santander Brazil digital transformation Delivering for customers and shareholders A Highest rating in Brazil
Slide 26: Santander Cash Nexus example
25 Supertankers | Santander Cash Nexus example A world class and disruptive global cash management product A Available in 15 countries ~3k potential customers, ~175 already on board Improving our customers businesses… …while capturing customer value (1) Impact is not necessarily representative of co
Slide 27: Santander UK example: roadmap to a fully digital bank
26 Supertankers | Santander UK example A clear roadmap to become a fully digital bank B Lower IT running costs Enhancing our performance Faster IT developments From ~ 1 year… …to weekly releases Improving delivery for our customers - 40% API: Application Programming Interface Santander UK becoming a
Slide 28: Collaborative innovation: best of Fintech for customers
27 Fully automated and paperless credit line application for SMEs Cloud - based platform enabling supply chain solutions in one place • SAN UK customers draw on average 4 loans per year • Pre - approved in 14 minutes Draw down in <24 hours vs. 2 - 12 weeks in the UK • Platform with: +1.5MM businesse
Slide 29: Global Platforms led by independent CEOs
28 Speedboats | Global Platforms led by independent CEOs sponsored by Country Heads Launching speedboats to… Grow Earn the right to deliver adjacent businesses Build open platforms Address a broader set of customer needs Disrupt Deploy breakthrough technologies Digital account for the unbanked Digit
Slide 30: Super Digital example
29 …tomorrow +160MM unbanked population in our Latam footprint Speedboats | Super Digital example Digital account for the unbanked in Latam to simplify the use of money 2018 (1) Cost of regular account opening process vs. Santander Brazil (2 ) Source: World Bank, 2014 ~ 70 % cheaper costs per accoun
Slide 31: Openbank example
30 …tomorrow Speedboats | Openbank example Our very own digital challenger and blueprint for a new IT architecture (1) Deposits + off - balance sheet. Growth rate since 2015 (2) Excluding Call Centre (3) Increase in monthly run rate of new customers since September 2015 vs. the previous 20 months 2
Slide 32: Executing with discipline at multiple levels
31 Executing with discipline at multiple levels to maximise success To be the first, always present and most convenient choice when and where customers make financial decisions… …with competitive and open products and services x Customers x Scale x Trust x Agile x Disruptive x Leverage the best of G
Slide 33: Key takeaways
32 Key takeaways 4
Slide 34: Santander ambition
33 The best bank to work for Earn the loyalty of our retail and corporate customers Achieve operational and digital excellence People Customers Shareholders Communities Santander Universities Support people in our local communities Reinforced capital and risk management EPS, DPS,TNAVPS and RoTE grow
Slide 35: 2018 targets: increasing RoTE target to >11.5%
34 • Cost - to - income ratio 45 - 47% • 2015 - 18 average cost of credit risk 1.2% • FL CET1 >11% • Increasing EPS, reaching double digit EPS growth by 2018 • 30 - 40% cash dividend pay - out : Yearly DPS increase • RoTE: >11.5% People Customers Shareholders Communities • Top 3 bank to work for in
Slide 36: Our vision, purpose and aim
35 Our vision To help people and businesses prosper To be the best open digital financial services platform , earning the lasting loyalty of our people, customers, shareholders and communities Our purpose A bank that is… SIMPLE | PERSONAL | FAIR Our aim
Slide 37: Closing summary of commitments and transformation
36 • We are delivering ahead of plan on our 3 - year commitments and increased our 2018 RoTE target to >11.5 % • We are driving a cultural and digital transformation: Attracting the best talent, delivering customer value whilst achieving best in class efficiency and growing EPS, TNAVPS and cash DPS
Slide 38: Thank you
37 Thank you Our purpose is to help people and businesses prosper. Our culture is based on the belief that everything we do should be SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigne