Slide 1: Form 6-K Report of Foreign Issuer
FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of January, 2024 Commission File Number: 001-12518 Banco Santander, S.A. (Exact name of registrant as specified in its ch
Slide 2: Table of Contents
BANCO SANTANDER, S.A. ________________________ TABLE OF CONTENTS Item 1. January - December 2023 Earnings presentation
Slide 3: Earnings Presentation 2023
Earnings Presentation — 2023 31 January 2024
Slide 4: Important information: Non-IFRS and alternative performance measures
2 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
Slide 5: Important information: forward-looking statements
3 Important information While these forward-looking statements represent our judgement and future expectations concerning our business developments and results may differ materially from those anticipated, expected, projected or assumed in forward-looking statements. In particular, forward looking s
Slide 6: Index
4 Index 2023 Highlights Progress of our strategy 1 2 Group review 3 Final remarks 2024 Guidance 4 Appendix
Slide 7: Record results in 2023
5 +15% FY’23 Revenue Record results with 5mn new customers YoY contributing to double-digit revenue growth First year of ONE Transformation is driving profitable growth and structural efficiency improvement Delivering double-digit value creation and higher shareholder remuneration Achieved a record
Slide 8: All time high attributable profit
6 All time high attributable profit boosted by double-digit net operating income growth Note: underlying P&L. (*) Including the temporary levy in Spain (-€224mn) in Q1’23. P&L Constant € million 2023 2022 % NII 43,261 38,619 12 Net fee income 12,057 11,790 2 Other income 2,329 1,745 33 Total revenue
Slide 9: Shareholder remuneration and TNAVps + cash DPS growth
7 12.5 12.3 -0.80 12.0 +1.19 +0.09 Dec-22 Organic generation Shareholder remuneration Regulatory & others Dec-23 pre-EBA SBB Dec-23 21 Strong performance drove higher gross organic capital generation and TNAVps + Cash DPS growth of 15%, while improving our payout to 50% TNAVps + Cash DPS € per share
Slide 10: Sustained earnings and shareholder remuneration history
8 1.1 2.3 2.5 3.0 3.3 1.7 0.5 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3.5 3.8 5.5 (1) Underlying. (2) Total shareholder remuneration charged against the results corresponding to the calendar year: cash dividend + share buybacks, excluding scrip dividends. Our shareholder remuneration polic
Slide 11: A strong first year in our new phase of value creation
9 TNAVps + DPS RoTE Profitability FL CET1 Strength RWAs with RoRWA > CoE Disciplined capital allocation Payout 50% Shareholder remuneration Note: Execution of the shareholder remuneration policy is subject to future corporate and regulatory decisions and approvals. >12% c.85% 15-17% Double-digit gro
Slide 12: Business model strengths: diversification, customer focus, scale
10 …leveraging our business model strengths: diversification, customer focus and global and in-market scale Global network businesses Leadership position in local markets Higher growth in customer revenue and profitability from network effects Our two key strategic and operating advantages… …are dri
Slide 13: ONE Santander
11 ONE Santander With our last step towards ONE Santander, we have laid the foundation to capture the full potential of our in-market and global value Tangible progress on our transformation Serve our customers better Be more efficient Grow more and faster More resilient balance sheet Our model capi
Slide 14: Retail
12 657 647 Jun-23 Dec-23 Retail Driving growth and efficiency on the back of our new model and proprietary technology c.17% Common operating model globally leveraging process automation Proprietary back-end (Gravity) and our cloud based front-end (ODS) technologies Product simplification and digital
Slide 15: Consumer
13 Consumer Transforming into a best-in-class, global business and operating model Key drivers Global relationship management (OEMs, Importers, Retailers) From multiple country- specific platforms to global platforms (e.g. Leasing, BNPL) Operational & commercial benchmark to maximize profitability a
Slide 16: CIB
14 CIB Playing to our strengths to better serve our corporate customers and institutions Key drivers Optimize capital returns on the back of origination and global distribution capabilities Continue growing fee and transactional business through our global centres of expertise and tech Trusted advis
Slide 17: Wealth
15 Wealth Accelerating our customers connectivity with our global product platforms Key drivers Providing our customers specialized products & services proposition in all countries Global platforms and infrastructure to improve efficiency and time-to-market Leverage our global operations and factori
Slide 18: Payments
16 Payments Seizing a growing opportunity by capturing scale through global platforms Key drivers Deliver best-in-class payment solutions levering our global and local scales Reduce cost per transaction through capex optimization and operational efficiency Migrate volumes to common global platforms
Slide 19: Clear plan to accelerate performance in the US by 2025
17 Clear plan to accelerate performance in the US by 2025 by business line Consumer • Launch of new digital platform in summer of 2024 • Deposit-funded consumer banking solution • Leverage global OEM relationships to support profitable growth Market-leading, full-spectrum auto lender 11% Mid- high t
Slide 20: Global platforms deliver operational leverage and profitable growth
18 30 +12% 12 +1% 8 +17% 3 +22% 5 +12% 58 +13% Note: YoY change in constant euros. New global business definitions as published on 20 December 2023. In summary, our global platforms will deliver operational leverage and profitable growth to become the most profitable bank in every market 51% 21% 13%
Slide 21: Index
19 Index 2023 Highlights Progress of our strategy 1 2 Group review 3 Final remarks 2024 Guidance 4 Appendix
Slide 22: All time high attributable profit
20 All time high attributable profit boosted by double-digit net operating income growth 2,543 2,351 2,422 2,289 2,571 2,670 2,902 2,933 Q1'22 Q2 Q3 Q4 Q1'23 Q2 Q3 Q4 € mn Attributable profit Attributable profit (Constant € mn) Note: underlying P&L. (*) Including the temporary levy in Spain (-€224mn
Slide 23: Double-digit revenue growth backed by customer activity
21 57,647 50,954 +3,299 +135 +1,089 +569 +552 +1,048 2022 Retail Consumer CIB Wealth Payments CC 2023 Total revenue Double-digit revenue growth backed by customer activity across businesses Revenue trends • >95% of total revenue is customer related which drives the vast majority of total revenue gro
Slide 24: NII and NIM up YoY
22 2.74% -1.32 -0.08 2.53% +1.46 +0.16 2022 Asset yields Asset volumes Liability costs Liability volumes 2023 8,930 9,150 9,435 9,855 9,916 10,351 10,891 12,103 Q1'22 Q2 Q3 Q4 Q1'23 Q2 Q3 Q4 2.45% 2.52% 2.56% 2.56% 2.63% 2.74% 2.82% 2.76% NII and NIM up YoY, supported by volumes and margin improveme
Slide 25: Net fee income growth
23 2,830 2,923 2,856 2,875 2,982 2,964 3,028 3,083 Q1'22 Q2 Q3 Q4 Q1'23 Q2 Q3 Q4 Net fee income growth, demonstrating the value added from our business diversification YoY % changes in constant euros Net fee income drivers Constant € mn Net fee income Retail CIB Wealth • Active customers increased Y
Slide 26: ONE Transformation driving efficiency and positive jaws
24 5,516 5,667 5,820 6,189 6,018 6,163 6,344 6,900 Q1'22 Q2 Q3 Q4 Q1'23 Q2 Q3 Q4 25,425 23,193 +544 +480 +992 +196 +19 2022 Europe North America South America DCB Europe CC 2023 ONE Transformation driving efficiency and positive jaws Costs and efficiency driversCosts Constant € mn Costs YoY growth i
Slide 27: 2023 execution: efficiency
25 2023 execution Efficiency Reminder from Investor Day Efficiency Consistent execution of ONE Transformation and value added from our Global and Network businesses accelerating the achievement of our ID targets • Multi-Latin/Multi-European: +40% revenue growth in 2023 • Wealth: collaboration with C
Slide 28: Credit quality remains robust
26 2,181 2,599 2,692 2,991 2,883 2,868 3,223 3,484 Q1'22 Q2 Q3 Q4 Q1'23 Q2 Q3 Q4 Credit quality remains robust with CoR within our target for 2023 Credit quality drivers Group credit quality • Credit quality remains robust, despite substantial impacts from one-offs, supported by record low unemploym
Slide 29: Diversified commercial banking model funded with stable retail deposits
27 Diversified commercial banking model funded with stable retail deposits Loan portfolio and customer funds Dec-23 Dec-23 Time 32% Insured >80% Total deposits1 Deposits from individuals Total deposits by product Transactional c.75% Deposit structure Note: management breakdown. YoY % changes in cons
Slide 30: CET1 well above target
28 CET1 well above our target of >12%, driven by strong capital generation, with profitable front-book growth >15% RoTE % % RWAs with RoRWA > CoE Asset rotation and risk transfer activities RWAs mobilized vs. total RWAs 12% FL CET1 quarterly performance Maximize capital productivity Front book prici
Slide 31: Index
29 Index 2023 Highlights Progress of our strategy 1 2 Group review 3 Final remarks 2024 Guidance 4 Appendix
Slide 32: Excellent progress in the execution of our strategy
30 Excellent progress in the execution of our strategy Efficiency and profitability improvement Strong first year in our new phase of value creation and growth Supported by our winning combination of local leadership with global scale and network Resilient balance sheet with a stronger capital ratio
Slide 33: Delivering on all our 2023 targets
31 Double-digit growth 44-45% <1.2% >12% >15% +13% 44.1% 1.18% 12.3% 15.1% Revenue1 Efficiency ratio CoR FL CET1 RoTE Our 2023 achievement 2023 targets In summary, a great set of results delivering on all our 2023 targets (1) YoY change in constant euros.
Slide 34: 2024 targets
32Note: targets market dependent. Based on macro assumptions aligned with international economic institutions. (1) YoY revenue growth in constant euros, but Argentina in current euros. Looking ahead, we are well positioned to continue driving additional profitable growth in 2024 Revenue1 Mid-single
Slide 35: Index
33 Index 2023 Highlights Progress of our strategy 1 2 Group review 3 2024 Guidance Final remarks 4 Appendix
Slide 36: Appendix
34 Appendix Investor Day Targets summary Detail by region, country and global business Credit quality in Brazil and the US 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 "S
Slide 37: Investor Day targets summary
35 (1) Target payout defined as c.50% of group reported profit (excluding non-cash, non-capital ratios impact items), distributed in approximately 50% in cash dividend and 50% in share buybacks. Execution of the shareholder remuneration policy is subject to future corporate and regulatory decisions
Slide 38: Appendix
36 Appendix Investor Day Targets summary Detail by region, country and global business Credit quality in Brazil and the US 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 "S
Slide 39: Detail by region and country
37 Detail by region and country
Slide 40: Europe highlights
38 Highlights Note: 2023 data and YoY changes (loans, deposits and mutual funds in constant euros). Key data and P&L Loans Deposits Mutual Funds Efficiency CoR RoTE €552bn -6% €620bn -2% €105bn +12% 42.1% -5.2pp 0.44% +4bps 14.5% +5.2pp Underlying P&L* Q4'23 % Q3'23 2023 % 2022 % 2022¹ NII 4,123 -2.
Slide 41: Spain and UK
39 Spain UK España and UK Note: 2023 data and YoY changes (loans, deposits and mutual funds in constant euros). Loans Deposits Mutual Funds €235bn -6% €224bn -1% €7bn 0% 49.7% +0.1pp 0.10% -2bps 13.0% +2.3pp Loans Deposits Mutual Funds €230bn -8% €309bn -4% €78bn +8% 41.7% -6.8pp 0.62% +1bp 14.2% +6
Slide 42: Portugal and Poland
40 Portugal and Polonia Portugal PolandPoland Note: 2023 data and YoY changes (loans, deposits and mutual funds in constant euros). €35bn +5% €44bn +5% €5bn +48% 27.1% -0.9pp 2.08% +65bps 17.7% +5.8pp Loans Deposits Mutual Funds Loans Deposits Mutual Funds Underlying P&L* Q4'23 % Q3'23 2023 % 2022 N
Slide 43: North America
41 • Accelerate the transformation of our businesses simplifying our product portfolio, streamlining operations and delivering an excellent customer experience while further building out CIB and Wealth franchises • Solid performance in loans and deposits in both countries • Revenue up YoY driven by
Slide 44: United States and Mexico
42 • Strong customer growth, driving volume increase, and profitable market share gains • Excellent profit and profitability supported by double-digit revenue growth and improved efficiency. CoR up, but remains at manageable levels •Positive revenue trends continued in Q4 with lower LLPs offset by c
Slide 45: South America
43 South America Note: 2023 data and YoY changes (loans, deposits and mutual funds in constant euros). • We are focusing on increasing the value added to the Group and promoting synergies across our global and regional businesses • Customer growth and higher transactionality • Solid performance in l
Slide 46: Brazil and Chile
44Note: 2023 data and YoY changes (loans, deposits and mutual funds in constant euros). Brazil • Growth in loans (individuals, corporates and SMEs) and deposits (time) • Profit down YoY affected by weak NII due to negative sensitivity, lower gains on financial transactions (market activity), inflati
Slide 47: Argentina and Uruguay, Peru, Colombia
45Note: 2023 data and YoY changes (profit, loans, deposits and mutual funds in constant euros). Argentina • #1 NPS, with one of the best rated apps among local banks • Profit up YoY driven by strong revenue growth and efficiency improvement • Q4 results in euros impacted by peso devaluation. In cons
Slide 48: Digital Consumer Bank Europe
46 • We continue to reinforce our leadership in mobility though new strategic alliances and our leasing & subscription businesses • Leasing contracts rose +15% YoY, driven by SCF. New lending up 3% (+6% in auto) • Revenue up 6% YoY and 2% QoQ, driven by NII as we actively repriced loans and grew cus
Slide 49: Corporate Centre
47 Corporate Centre • Lower attributable loss as NII improved significantly driven by higher liquidity buffer remuneration as a result of the higher interest rates • Lower negative FX hedging impact resulted in greater gains on financial transactions • Slight decrease in LLPs and other provisions Un
Slide 50: Detail by global business
48 Detail by global business Reflecting the new operating model announced in September. Note: for more information, see also the presentation published on 20 December 2023 that explains the new operating model and adapted financial disclosures.
Slide 51: Retail and Consumer
49 Note: - New global business definitions as published on 20 December 2023. - 2023 data and YoY changes in constant euros. Loans Efficiency RoTE • We continued to drive the digitalization and simplification of our products and services through ONE Transformation • Loans down 3% mainly due to prepay
Slide 52: CIB and Wealth
50 • Strong revenue performance of the CIB US franchise with relentless focus on the execution of our growth strategy • Profit +16% YoY, with revenue growth across regions and businesses with fees increasing and strong network collaboration revenue • CIB maintains best-in-class efficiency and capita
Slide 53: Payments: PagoNxt and Cards
51 3,775 4,158 2022 2023 9.1% 24.8% 2022 2023 970 1,140 2022 2023 Note: - New global businesses definitions as published on 20 December 2023. - 2023 and YoY changes in constant euros. Cards does not include Digital Consumer Bank or PagoNxt; not including payments business in the US, except for # of
Slide 54: Appendix
52 Appendix Investor Day Targets summary Detail by region, country and global business Credit quality in Brazil and the US Reconciliation of underlying results to statutory results Glossary
Slide 55: Brazil and US credit quality
53 6.7% 3.7% 1.7% 3.6% 4.3% 5.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2019 2020 2021 2022 2023 2024(e) NCO rate (annual) NCO rate (quarterly) US Brazil and US credit quality Auto loan distribution by FICO Segment2 5% 5% 3% 3% 4% 3% 3% 17% 17% 17% 16% 17% 16% 16% 13% 16% 21% 21% 20% 21% 22% 2
Slide 56: Appendix
54 Appendix Investor Day Targets summary Detail by region, country and global business Credit quality in Brazil and the US Reconciliation of underlying results to statutory results Glossary
Slide 57: Reconciliation of underlying results to statutory results
55 Reconciliation of underlying results to statutory results (1) Includes exchange differences. Explanation of 2023 adjustments: • Temporary levy on revenue in Spain in the first quarter, totalling EUR 224 million, which was moved from total income to other gains (losses) and provisions. • Provision
Slide 58: Appendix
56 Appendix Investor Day Targets summary and our last step towards ONE SANTANDER Detail by region, country and global business Credit quality in Brazil and the US Reconciliation of underlying results to statutory results Glossary
Slide 59: Glossary - Acronyms
57 Glossary - Acronyms • ALCO: Assets and Liabilities Committee • AM: Asset management • AuMs: Assets under Management • bn: Billion • BNPL: Buy now, pay later • bps: Basis points • c.: Circa • CAL: Customer assets and liabilities • CET1: Common equity tier 1 • CHF: Swiss franc • CIB: Corporate & In
Slide 60: Glossary - Definitions
58 Glossary - Definitions Notes: The averages for the RoTE and RoRWA denominators are calculated using the monthly average over the period, which we believe should not differ materially from using daily balances. The risk-weighted assets included in the denominator of the RoRWA metric are calculated
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:
Slide 62: Signature
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 undersigned, thereunto duly authorized. Banco Santander, S.A. Date: 31 January 2024 By: /s/ José García Cantera Name: José García Cantera Title: