Banco Santander, S.a. · BME:SAN
Banco Santander — Debt Investor Presentation (August 2024)
52 slides from Banco Santander's debt investor presentation, Aug 2, 2024
Slide 1: Banco Santander, S.A. Covered Bonds Investors Presentation H1 2024
H1 2024 BANCO SANTANDER, S.A. COVERED BONDS INVESTORS PRESENTATION Cédulas hipotecarias (Mortgage CB) Cédulas territoriales (Public Sector CB) Cédulas de internacionalización (ECA CB)
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 and results may differ materially from those anticipated, expected, projected or assumed in forward-looking statements. In particular, forward looking sta
Slide 4: Key highlights
Key highlights Expected annual GDP Growth in 20241 Economic growth is expected to be slow but steady in 2024, with the IMF’s +0.9% +0.7% Macroeconomic updated 2024 forecasts slightly stronger than in April in Europe. Spain, whose environment growth is expected to be above EMU growth, has started the
Slide 5: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 6: The global economy remains resilient with slow but steady GDP growth expected in 2024
Macroeconomic environment The global economy remains resilient with slow but steady GDP growth expected in 2024. The IMF’s growth forecasts slightly better than in April in Europe Estimated Annual GDP Growth (real, %) +8.7 +5.9 +4.3 +3.4 +1.6 +0.7 +1.6 +0.1 +0.5 +0.9 EMU UK -6.1 -10.4 2019 2020 2021
Slide 7: More positive start to the year than expected, driven by service exports
Macroeconomic environment More positive start to the year than expected, driven by service exports Annual GDP Growth (real, %) Interest rates (ECB deposit facility rate, %) +6.4 +5.8 4.00 3.75 +2.0 +2.5 +2.9 2.00 -11.2 -0.50 -0.50 -0.50 2019 2020 2021 2022 2023 Q2'24 2019 2020 2021 2022 2023 Q2'24 A
Slide 8: Loan contraction looks to have troughed, thanks to lower new business interest rates
Macroeconomic environment Loan contraction looks to have troughed, thanks to lower new business interest rates Total loans (€ bn) 1,206 1,183 1,181 1,173 1,175 Private sector loan contraction has moderated from -3.7% to -1.4% in the last seven months. YoY -1.4% In households, mortgages are recov
Slide 9: Stable NPL ratio, with little upside risk due to resilient labour markets
Macroeconomic environment Stable NPL ratio, with little upside risk due to resilient labour markets and good performance of business margins Spain Mortgage NPL ratio (%) European Banks Total NPL ratio by country (%) – Q1’24 7.0% 4.5% 6.0% 4.0% 5.0% 3.5% 3.0% 4.0% 2.5% 2.7% 3.0% 2.0% 1.5% 2.0% 1.0% 1
Slide 10: Housing demand is recovering, increasing demand-supply imbalances
Macroeconomic environment Housing demand is recovering, increasing demand-supply imbalances… Housing starts (thousand units)1 Total housing sales (thousand units)1 Apr-24 vs Apr-23: 3.9% Finished houses: 674 718 108 109 108 115 2017: 36 639 641 101 106 583 570 532 78 81 86 2018: 41 458 487 64 2019:
Slide 11: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 12: Our business model remains unchanged to continue to deliver for all our stakeholders
Grupo Santander: Business Model & Strategy Our business model remains unchanged to continue to deliver for all our stakeholders 1. Customer focus 2. Scale 3. Diversification Building a digital bank Global and in-market Business, geographical and with branches scale balance sheet Contribution to Grou
Slide 13: We maintain our geographic and business diversification both in assets and liabilities
Grupo Santander: Business Model & Strategy We maintain our geographic and business diversification both in assets and liabilities Loans and advances to customers Customer deposits (excluding reverse repos, Jun-24) (excluding repos, Jun-24) By product/business By product/business Other Other CIB 5% C
Slide 14: Double-digit YoY profit increase driven by strong growth in net operating income
Grupo Santander: Business Model & Strategy 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
Slide 15: Solid credit quality at Group, business and country level
Grupo Santander: Business Model & Strategy … while maintaining solid credit quality at the Group, business and country level NPL ratios Cost of risk1 Q2 2023 Q1 2024 Q2 2024 Q2 2023 Q1 2024 Q2 2024 % % Retail 3.22 3.24 3.15 Retail 0.92 1.03 1.03 Consumer 4.18 4.86 4.81 Consumer 1.86 2.12 2.17 CIB 1.
Slide 16: H1'24 results summary
Grupo Santander: Santander España H1’24 results summary H1’24 Key data Strategic priorities Customers Branches Employees ▪ Accelerate business transformation, in particular organizational, process and product simplification, leveraging global platforms and new 15mn +3% 1,833 -3% 24.2k -2% technologi
Slide 17: Banco Santander, S.A. ratings
Grupo Santander: Santander España Banco Santander, S.A. ratings Moody's S&P Fitch Date last Direction Direction Date last Direction Rating Rating Date last change Rating change last change last change change last change Covered Bonds Aa1 17/04/2018 ↑ - - - AAAu 16/11/2023 ↑ Senior Debt A2 11/01/2019
Slide 18: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 19: Well-funded, diversified, prudent and highly liquid balance sheet
Grupo Santander: Funding and Liquidity Well-funded, diversified, prudent and highly liquid balance sheet (large % contribution from customer deposits), reflected in solid liquidity ratios Liquidity Balance Sheet Liquidity Coverage Net Stable Funding Ratio (LCR) Ratio (NSFR) € bn, Jun-24 1,515 1,515
Slide 20: Conservative and decentralized liquidity and funding model
Grupo Santander: Funding and Liquidity Conservative and decentralized liquidity and funding model €29.0bn1 issued in public markets in H1’24 Very manageable maturity profile € bn, Jun-24 € bn, Jun-24 16.5 Covered 4.5 11.3 11.0 4.7 4.2 Bonds 12.1 0.5 0.7 0.2 21.4 2.3 8.1 14.9 0.3 0.4 Senior 4.5 11.5
Slide 21: 2024 issuances against funding plan
Grupo Santander: Funding and Liquidity 2024 issuances against funding plan YtD execution of 2024 funding plan € bn, Jun-24 AT1 + Tier 2 SNP + Senior Covered Bonds TOTAL Plan Issued Plan Issued Plan Issued Plan Issued 1 2 Banco Santander, S.A 4-5 5.2 16 - 18 18.4 0-1 0.5 20 - 24 24.1 UK - - 1-2 0.3 5
Slide 22: Stock of issuances is diversified across instruments and entities
Grupo Santander: Funding and Liquidity Stock of issuances is diversified across instruments and entities Group outstanding debt by type Banco Santander, S.A. outstanding debt by type € bn and %, Jun-24 € bn and %, Jun-24 AT1 / Preferred shares, €8.5bn, 4% AT1 / Preferred Tier 2 / shares, €8.3bn, 7%
Slide 23: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 24: Mortgage Covered Bonds are direct obligations of Banco Santander, S.A.
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” Mortgage Covered Bonds are direct obligations of Banco Santander, S.A. collateralized by a segregated mortgage portfolio Banco Santander, S.A.’s mortgage portfolio has a low risk profile, focused on residential and first home financing… … a
Slide 25: Cover pool and issuance description under Royal Decree-Law 24/2021
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” Cover pool and issuance description under Royal Decree-Law 24/2021 Segregated cover pool description Outstanding mortgage covered bonds description € mn € mn Substitute Liquid Assets, 0 Assets, 0 42,004 24,470 €60,828mn In the market Primar
Slide 26: High quality, low risk cover pool: low LTVs, focused on residential
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” High quality, low risk cover pool: low LTVs, focused on residential and first home financing… Segregated cover pool by LTV Segregated cover pool property type 2.6% Land + other com. 11% 1.8% Industrial Commercial 6.3% Retail 100 100 0.6% Se
Slide 27: Concentrated in urban areas with lower unemployment rates
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” ... concentrated in urban areas with lower unemployment rates % Castile-La Mancha, Regions Back-book Extremadura Asturias Canary Islands Madrid 26.55 Valencian Catalonia 18.19 Community Madrid Andalusia1 16.76 Valencian Community 7.12 65% C
Slide 28: Manageable maturity profile
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” Manageable maturity profile Maturity profile of segregated cover pool and Distribution of Mortgage CB by maturity Mortgage CB issuances % total outstanding € bn 51.7 ≥2033 2024 2025 6% 5% 5% 2026 26.3 12% 9.4 9% 2027 5.0 6.9 3.8 17.0 2.7 0.
Slide 29: Liquidity buffer (under Royal Decree-Law 24/2021)
Mortgage covered bonds “Cédulas Hipotecarias (Mortgage CB)” Liquidity buffer (under Royal Decree-Law 24/2021) Cash flow projection Royal Decree-Law 24/2021 establishes that the cover pool shall at all times include a liquidity buffer composed of HQLAs available to cover the maximum net cumulative ou
Slide 30: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 31: Cédulas territoriales are direct obligations of Banco Santander, S.A.
Public sector covered bonds “Cédulas Territoriales (CT)” Cédulas territoriales are direct obligations of Banco Santander, S.A. collateralized by its public sector portfolio Banco Santander, S.A.’s public sector portfolio is focused on autonomous regions and local governments… … and is well diversifi
Slide 32: Cover pool and issuance description under Royal Decree-Law 24/2021
Public sector covered bonds “Cédulas Territoriales (Public Sector CB)” Cover pool and issuance description under Royal Decree-Law 24/2021 Cover pool description Public sector covered bonds description € mn, Jun-24 Substitute Liquid Assets, 0 € mn, Jun-24 Assets, 0 1,500 In the market 0 €7,240mn 1,50
Slide 33: Regional distribution of cover pool
Public sector covered bonds “Cédulas Territoriales (Public Sector CB)” Regional distribution of cover pool % Back Castile-La Mancha Regions Book Balearic Islands Extremadura Madrid 26.5% Valencian Community, Murcia Aragon, Navarre, La Rioja Cantabria Castile and Leon 18.4% Basque Country Galicia, As
Slide 34: Type of exposure and borrower concentration of cover pool
Public sector covered bonds “Cédulas Territoriales (Public Sector CB)” Type of exposure and borrower concentration of cover pool Type of exposure Borrower concentration 100% Spain 90% 80% 70% Cover Pool Central Government 0.3% 60% 50% 40% 30% Regional/federal state1 Government 89.7% 20% 10% 0% Local
Slide 35: Comfortable maturity profile
Public sector covered bonds “Cédulas Territoriales (Public Sector CB)” Comfortable maturity profile Maturity profile of cover pool and Public Sector CB Distribution of Public Sector CB by maturity issuances % total outstanding € mn 3,299 2,509 2027 33% 1,000 441 500 313 293 384 0 0 0 0 67% 2028-2032
Slide 36: Liquidity buffer (under Royal Decree-Law 24/2021)
Public sector covered bonds “Cédulas Territoriales (Public Sector CB)” Liquidity buffer (under Royal Decree-Law 24/2021) Cash flow projection Royal Decree-Law 24/2021 establishes that the cover pool shall at all times include a liquidity buffer composed of HQLAs available to cover the maximum net cu
Slide 37: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 38: ECA covered Bonds are direct obligations of Banco Santander, S.A. collateralized by ECA Loans
ECA covered bonds “Cédulas de Internacionalización” ECA covered Bonds are direct obligations of Banco Santander, S.A. collateralized by ECA Loans1 Banco Santander, S.A.’s ECA loan portfolio has a very low risk profile, as all loans are guaranteed by ECAs who act on behalf of their respective soverei
Slide 39: Cover pool and issuance description under Royal Decree-Law 24/2021
ECA covered bonds “Cédulas de Internacionalización” Cover pool and issuance description under Royal Decree-Law 24/2021 Cover pool description1 ECA covered bonds description € mn € mn Liquid Assets, 0 Substitute 9,181 Assets, 0 In the market 992 €13,634mn Retained 8,190 Primary Assets, 2 13,634 Outst
Slide 40: 100% of eligible cover pool primary assets guaranteed by an ECA, a sovereign or Multilateral Institution
ECA covered bonds “Cédulas de Internacionalización” 100% of eligible cover pool primary assets guaranteed by an ECA, a sovereign or Multilateral Institution ECA1 country distribution by rating Cover pool distribution by ECA rating Italy 19.5% A+, 2.3% Spain 8.9% Denmark 8.8% France 7.7% Germany 4.6%
Slide 41: Highly diversified borrower base in terms of country and concentration
ECA covered bonds “Cédulas de Internacionalización” Highly diversified borrower base in terms of country and concentration Borrower country distribution Borrower concentration distribution UK 11.6% Poland 7.9% United Arab Emirates 7.3% United States 7.1% 100% Saudi Arabia 6.6% 90% Spain 4.1% Panama
Slide 42: Low risk and balanced composition in terms of maturity profile
ECA covered bonds “Cédulas de Internacionalización” Low risk and balanced composition in terms of maturity profile, … Distribution of ECA CBs by maturity Maturity profile of cover pool and ECA covered bonds % total outstanding € mn 2025 6,923 2028-32 12% 26% 2026 4,964 10% 4,747 2,400 992 1,100 934
Slide 43: Currency distribution
ECA covered bonds “Cédulas de Internacionalización” … currency distribution … Cover pool and ECA covered bond currency distribution € mn 6,944 5,881 5,084 3,300 946 660 0 0 Cover pool ECA covered bonds Note: data as of Jun-24. Cover pool refers to primary assets. 43 (1) Others includes CHF, COP, NOK
Slide 44: Interest rate profile with a high-quality book
ECA covered bonds “Cédulas de Internacionalización” … and interest rate profile with a high-quality book Interest rate profile ECA loan asset quality % balance sheet, Jun-24 # of loans 646 590 579 603 588 599 610 574 573 579 579 554 563 557 11% 533 546 18% 515 89% 82% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Slide 45: Liquidity buffer (under Royal Decree-Law 24/2021)
ECA covered bonds “Cédulas de Internacionalización” Liquidity buffer (under Royal Decree-Law 24/2021) Cash flow projection Royal Decree-Law 24/2021 establishes that the cover pool shall at all times include a liquidity buffer composed of HQLAs available to cover the maximum net cumulative outflow fr
Slide 46: Index
Index 1 2 3 4 5 6 7 Macroeconomic Grupo Grupo Mortgage Public Sector ECA Covered Appendix environment Santander Santander Covered Bonds Covered Bonds Bonds - Business Model funding and “Cédulas “Cédulas “Cédulas de & Strategy liquidity hipotecarias” territoriales” internacionalización” - Santander E
Slide 47: Mortgage Covered Bonds - outstanding issuances
Appendix – Banco Santander, S.A. issuances by ISIN Mortgage Covered Bonds - outstanding issuances Issuance Expected Extended Interest Type of Retained / ISIN Currency Outstanding Amount Coupon Date Maturity Maturity Rate Type Structure Market ES0413900129 EUR 1,500,000,000 06/02/2006 06/02/2026 N/A
Slide 48: Public Sector Covered Bonds - outstanding issuances
Appendix – Banco Santander, S.A. issuances by ISIN Public Sector Covered Bonds - outstanding issuances Issuance Expected Extended Interest Type of Retained / ISIN Currency Outstanding Amount Coupon Date Maturity Maturity Rate Type Structure Market ES0413900673 EUR 500,000,000 08/06/2020 08/06/2027 N
Slide 49: ECA Covered Bonds - outstanding issuances
Appendix – Banco Santander, S.A. issuances by ISIN ECA Covered Bonds - outstanding issuances Issuance Expected Extended Interest Type of Retained / ISIN Currency Outstanding Amount Coupon Date Maturity Maturity Rate Type Structure Market ES0413900632 EUR 1,100,000,000 17/04/2020 17/04/2025 N/A Float
Slide 50: Spanish system – outstanding covered bonds
Appendix – System volumes and issuances Spanish system – outstanding covered bonds Outstanding (in EUR million) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Covered Bonds Outstanding Public Sector 33,609 30,352 25,495 28,505 26,887 25,362 18,362 20,763 18,262 17,544 12,585 Mortgage 4
Slide 51: Spanish system – covered bond issuance
Appendix – System volumes and issuances Spanish system – covered bond issuance Issuance (in EUR million) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Covered Bonds Issuance Public Sector 6,407 5,895 1,853 10,400 7,250 350 800 800 2,900 1,000 2,000 Mortgage 98,846 22,919 23,038 31,375
Slide 52: 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:
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