Slide 1: Activity and Results January–September 2011
ACTIVITY AND RESULTS January — September 2011 27 October 2011 & Santander
Slide 2: Important information
Important information Banco Santander, S.A. (“Santander”) cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business developm
Slide 3: Agenda
Agenda Group highlights 9M’11 Results 9M’11: business Conclusions Appendix
Slide 4: Basic ideas
Basic ideas Worsening of macroeconomic scenario in Drop in expections Sovereign debt crisis Volatility in markets and currencies Stressed wholesale funding Grupo Santander Management drivers Q3’2011: 1 Solid basic revenues generation as the driver of profit Lower market revenues and larger provision
Slide 5: The Group maintains its capacity to generate profits in a very complex scenario
The Group maintains its capacity to generate profits in a very complex scenario. In Q3 impact from markets and larger provisions Quarterly attributable profit. Group Attributable profit. Group EPS of EUR 0.2030 in Q3’11 and 0.5981* in 9M’11 (*) Impact from PPI provision (EUR 620 mill. net of tax). B
Slide 6: Solid basic revenues as the driver of profits
1 Basic revenues 1 Solid basic revenues as the driver of profits Basic revenues: Basic revenues. Group + EUR 1,745 mill.; +6% EUR million 1.- Basic revenues: Net interest income + fees + insurance fee income
Slide 7: Different evolution of revenues versus our competitors
1 Total revenues Different evolution of revenues versus our competitors Gross income vs Peers Gross income. Group Var. 2011/2010* (*) Latest available information from each entity. characteristics and /or degree of direct competition are the reference ones to surpass: Banco Itaú, BBVA, BNP Paribas,
Slide 8: Expenses: differentiated management by units and businesses
1 Expenses Differentiated management by units and businesses Expenses. Group Expenses: + EUR 1,227 mill.; +9% Investments to capture growth in emerging countries Develop franchises and businesses in mature ones (Germany, UK, USA, GBM) Reduce retail units in Spain and Portugal (-1% / -2%)
Slide 9: Efficiency versus peers
1 Efficiency Revenues and expenses evolution enable us to make investments and continue as the “best in class” among our peers Efficiency ratio 1 vs Peers (%) Efficiency ratio vs Peers (%) (*) Latest available information from each entity. characteristics and /or degree of direct competition are the
Slide 10: Loan-loss provisions
1 Loan-loss provisions LLPs still high at the current Net loan-loss provisions 1 Specific provisions _____ .... with performance impacted by (1) Including country-risk
Slide 11: Credit quality: NPLs
1 Credit quality The Group’s NPLs continue sliding upwards, because of Spain. Downward trend in SCF, Sovereign and LatAm Ex-Brazil Group’s Total Continental Europe United Kingdom and USA Latin America (*) On a like-for-like basis, deducting the acquired GE portfolio in Mexico. Including it: 3.08% in
Slide 12: Credit quality: coverage ratio
1 Credit quality The Group’s coverage ratio is 66%. Stable in the last quarter in most units Group’s Total Continental Europe United Kingdom and USA Latin America (*) On a like-for-like basis, deducting the acquired GE portfolio in Mexico. Including it: 110% in June 2011 and 108% in September 2011.
Slide 13: Loan-loss provisions versus peers
1 Loan-loss provisions Santander is not taking advantage yet of the normalisation of the cost of credit as done by its peers Net provisions / loans Net provisions / loans vs. peers (%) (*) According to the latest available information from their size, characteristics and /or degree of direct competi
Slide 14: Grupo Santander Results
1 Grupo Santander Results Larger growth of net operating income after provisions, thanks to higher basic revenues and EUR Mill. 9M’11 Amount % and perimeter Net interest income 22,853 +957 +4.4 +2.8 Fees 8,017 +728 +10.0 +7.2 Trading gains and other 12,384 +133 +5.9 +3.5 Gross income 33,254 +1,818 +
Slide 15: Grupo Santander Results: not feeding through to profits
1 Grupo Santander Results ... not feeding through to profits and higher taxes Var. / 9M’10 % excl. forex EUR Mill. 9M’11 Amount % and perimeter Net interest income 22,853 +957 +4.4 +2.8 Fees 8,017 +728 +10.0 +7.2 Trading gains and other 12,384 +133 +5.9 +3.5 Gross income 33,254 +1,818 +5.8 +3.9 Oper
Slide 16: Liquidity
2 Liquidity Solid and sustained liquidity position, favoured by deleveraging of mature markets Group’s liquidity ratios Q3’11 Capacity to issue in the M/L term in a strongly stressed market 9M’11 = 117% 36 2011 maturities 31 Moreover, 20 bn in market 9M’11 issues Maturities securitisations Reduced r
Slide 17: Solvency ratio
2 Solvency ratio Capital ratios adequate to a diversified balance sheet and with a low risk profile _____ .... Core capital (%) and high organic capital generation Note: Dec’07
Slide 18: Preliminary estimate of impact from new EBA criteria
2 Preliminary estimate of the impact on Santander from the new EBA criteria ... which would In a simulation exercise with the recapitalisation after the hypothesis: core Tier I of 7.9% at generation (*) Including convertible capital instruments
Slide 19: Santander Projections
2 Santander Projections We estimate that under the new criteria, we can reach a core Tier I of 9.2% by June 2012 via internal generation of capital and optimisation of RWA
Slide 20: Capital gains and their application
3 Capital gains and their application Estimates at year-end 2011 Will be used at the end of the year to strengthen the balance sheet (1) Expected to be recorded in the fourth quarter
Slide 21: Agenda
Agenda Group highlights Results 9M’11: Conclusions Appendix
Slide 22: Profit distribution by geographic area
Profit distribution by geographic area Results are underpinned by the managing the different growth stages in each market (1) Over recurring operating areas 9M’11
Slide 23: Continental Europe
Continental # Europe L tual , a
Slide 24: Continental Europe (excl. BZ WBK) 9M'11
Continental Europe (excl. BZ WBK) 9M’11 Networks and wholesale business impacted by macroeconomic environment and market’s evolution. SCF growing strongly
Slide 25: Santander Branch Network 9M'11
Santander Branch Network 9M’11 Improved underlying business backed by higher spreads and gross income and lower costs. Larger loan-loss provisions because of depletion of generic ones
Slide 26: Banesto 9M'11
Banesto 9M’11 Banesto’s trends are similar to those of the Santander Branch Network
Slide 27: Spain. Customer lending and NPLs
Spain. Customer lending and NPLs
Slide 28: Loans with real estate purposes and foreclosed assets
Loans with real estate purposes and foreclosed assets
Slide 29: Portugal 9M'11
Portugal 9M’11 Managing-out” scenarioa “bail
Slide 30: Santander Consumer Finance
Santander Consumer Finance Sharp profit increase, fuelled by the main units and excellent credit management
Slide 31: Poland (BZ WBK)
Poland (BZ WBK) Data in local criteria. Constant EUR million Loans and deposits growth since its Results* show sharp growth incorporation to the Group over 2010 (*) 2010 proforma information.
Slide 32: United Kingdom
United Kingdom >
Slide 33: United Kingdom 9M'11
United Kingdom 9M’11 Results affected by sluggish activity environment, regulatory impacts and PPI 1 provision Attributable profit 1: £1,198 mill. (EUR 1,377 mill.) Activity (1) In Q2’11 before provision of sterling 538 million (net of tax) for possible claims related to payment protection insurance
Slide 34: Brazil
Brazil yy
Slide 35: Brazil 9M'11
Brazil 9M’11 Solid increase in basic revenues accelerated net operating income. In profit, impact from larger provisions, higher tax rate and minority interests Activity 1 Basic revenues Attributable profit: US$2,773 mill. (EUR 1,973 mill.) Net operating income / Provisions (1) Local currency (*) On
Slide 36: LatAm Ex-Brazil
x. LatAm % x t Ex-Brazil
Slide 37: Latin America Ex-Brazil 9M'11
Latin America Ex-Brazil 9M’11 Profit increase spurred by retail banking: faster growing basic revenues and lower cost of credit. Negative impact from trading gains in Q3’11 Activity 1 Basic revenues (1) Constant currency (2) Excluding minority interest: Mexico +25%; Total area: +6% (3) Including Per
Slide 38: Mexico 9M'11
Mexico 9M’11 Profit fuelled by strong basic revenues and lower provisions needs. Moreover, positive impact from minority interests Activity 1 Basic revenues Attributable profit: US$1,028 mill. Net operating income / provisions (EUR 731 million ) (1) Local currency (2) Excluding perimeter: +24%
Slide 39: Chile 9M'11
Chile 9M’11 Activity continued to grow strongly, in UF portfolio due to low inflation and one-time charge in provisions Activity 1 Basic revenues Attributable profit: US$655 mill. Net operating income / provisions (EUR 466 million ) (1) Local currency
Slide 40: Sovereign
Sovereign
Slide 41: Sovereign 9M'11
Sovereign 9M’11 Consolidating the franchise’s activity and enhanced credit quality Attributable profit: US$554 mill. (EUR 394 mill.) Activity and profitability 1 (1) Local currency Note: Loans data (excl. securitisations) and deposits under US GAAP
Slide 42: Corporate Activities
Corporate Activities
Slide 43: Corporate Activities
Corporate Activities Larger trading gains (fx hedging) offset the negative impact from funding cost and lower tax returns Attributable profit (Change 9M’11 vs. 9M’10) EUR mill. Main effects: Net interest income -308 Trading gains +596 Other results and tax -199 Total impact on profit: +89
Slide 44: Agenda
Agenda Group highlights Results 9M’11: Conclusions Appendix
Slide 45: Conclusions (I)
Conclusions (I) RESULTS: high generation underpinned by the top part of the P&L In the quarter solid profit for the Group amid a complex scenario improved underlying results (net operating income after In the provisions +7%) year-to-date due to sustained growth and increased revenues larger provisio
Slide 46: Conclusions (II)
Conclusions (II) BALANCE SHEET STRENGTH: Solid liquidity and capital position capacity to issue in the M/L term + deposit capturing low recourse to short term + discounting capacity in central Liquidity banks deleveraging in mature markets high quality balance sheet Capital continuous capacity of fr
Slide 47: Agenda
Agenda Group highlights Results 9M’11: Conclusions Appendix
Slide 48: Group Balance Sheet
Group Balance Sheet
Slide 49: Main trends of the Group's Retail balance sheet
Main trends of the Group’s Retail balance sheet, appropriate for the business nature of low risk, liquid and well capitalised Balance sheet at September 2011 1 Lending: 59% of balance sheet 2 Cash, Central Banks and credit institutions: 14% 3 Derivatives (with counterpart on the liabilities side): 9
Slide 50: Secondary segments results
Secondary segments results
Slide 51: Retail Banking
Retail Banking High one-digit growth in net operating income after provisions fuelled by recovered basic revenues and lower provisions Activity Basic revenues Attributable profit: EUR 5,330 mill. Net operating income / provisions (1) After PPI provision. Before it: +3%.
Slide 52: Global Wholesale Banking (GBM)
Global Wholesale Banking (GBM) Customer revenues resilient to the environment. Impact on revenues from markets and on costs from investments Gross income Gross income (1) Including Global Transaction Banking and Credit
Slide 53: Asset Management and Insurance
Asset Management and Insurance High contribution to the Group via revenues and profits: 10% of the operating areas total revenues (+15% Total revenues. Group Basic revenues
Slide 54: Main units spreads and NPL ratios
Main units spreads and NPL ratios
Slide 55: Continental Europe. Main units spreads
Continental Europe. Main units spreads (%) SAN Branch Network Banesto Retail Banking Santander Consumer Lending Portugal Retail Banking
Slide 56: United Kingdom. Spreads and NPL ratios
United Kingdom. Spreads and NPL ratios (%) Spreads Retail Banking NPL and coverage
Slide 57: Spreads main countries Latin America
Spreads main countries Latin America (%) Retail Banking Brazil Retail Banking Mexico Retail Banking Chile
Slide 58: Latin America. NPLs and coverage ratios
Latin America. NPLs and coverage ratios Brazil Mexico Chile (*) On a like-for-like basis, excluding the acquired GE portfolio. Including it, NPL ratio: June 2.45%, September 1.78%. Coverage ratio: June 165%, September 176%
Slide 59: Sovereign. Spreads and NPL and coverage ratios
Sovereign. Spreads and NPL and coverage ratios (%)
Slide 60: 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: October 28, 2011 By: /s/ José Antonio Álvarez Name: José Antonio Álvarez Tit