Banco Santander, S.a. · BME:SAN
Banco Santander — Q3 2022 Earnings Presentation
45 slides from Banco Santander's earnings presentation, Oct 26, 2022
Slide 1: Earnings Presentation 9M'22
26 October 2022 Earnings Presentation — 9M’22
Slide 2: Important information
Important information Non-IFRS and alternative performance measures This presentation contains, in addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, alternative performance measures (“APMs
Slide 3: Important information
Important information Forward looking statements are based on current expectations and future estimates about Santander’s and third-parties’ operations and businesses and address matters that are uncertain to varying degrees, including, but not limited to developing standards that may change in the
Slide 4: Index
Index 1 2 3 4 9M'22 Highlights Group and Business Final Appendix areas review remarks 4
Slide 5: Executing our strategy to drive greater growth, profitability and strength
Executing our strategy to drive greater growth, profitability and strength Activity remained robust supported by larger customer base (+8mn) Steady growth Volumes1 +6% in customers, Accelerating revenue growth. NII +5% QoQ volumes and revenue NII + Fee income1 +8% Favourable FX impact. In euros,
Slide 6: Steady customer growth and volume increases in all regions, segments and products
Steady customer growth and commercial strategy reflected in volume increases in all regions, segments and products … Customers Loans Deposits Loan breakdown Mn customers and € bn volumes YoY % changes in constant euros YoY % changes in constant euros Europe 46.8 590 622 €406bn +6% +1% +5% +7% €346bn
Slide 7: Driving double-digit profit growth, reflecting geographic and business diversification
… driving double-digit profit growth, and reflecting our geographic and business diversification and connectivity across the Group % change Contribution Underlying Constant RoTE2 € million 9M'22 9M'21 Euros to Group’s attributable profit euros underlying profit (€ mn) NII 28,460 24,654 15 8 Net fee
Slide 8: Our strategy is paying off in revenue, costs and LLPs
Our strategy is paying off in revenue, costs and LLPs NII + Fees Costs CoR North America Europe + North America Europe + North America Europe + Digital Consumer Bank Digital Consumer Bank Digital Consumer Bank +5% +5% 1.1% +9% +1% 0.4% +9% +17% 3.1% South America* YoY % changes in constant euros Sou
Slide 9: Delivering shareholder value: profitability, TNAVps and dividend per share
Delivering shareholder value: enhanced profitability, TNAVps and dividend per share … € cents EPS Interim distribution1 in Nov-22 40.9 31.3 Cash dividend per share: €5.83 cents (+20%2) Total value c.€2.0bn 40% of H1’22 underlying profit Share buyback programme: 9M'21 9M'22 €979mn RoTE TNAV per share
Slide 10: Continuing to generate capital organically: CET1 ratio performance
… while continuing to generate capital organically Q3 fully-loaded CET1 ratio performance % +0.34 • Continued profit growth 12.10 – RoTE 13.6% (12.0% in FY’21) 12.05 -0.08 -0.06 -0.15 • Disciplined capital allocation strategy with: – RWAs rising below loan growth +1% < +7% (excluding FX impact) – 9M
Slide 11: Index
Index 1 2 3 4 9M'22 Highlights Group and Business Final Appendix areas review remarks 11
Slide 12: Main P&L trends leading to quarterly profit growth
We maintained the main P&L trends leading to quarterly profit growth % change Constant Attributable profit € million 9M'22 9M'21 Euros euros € mn NII 28,460 24,654 15 8 Net fee income 8,867 7,810 14 7 2,543 2,422 2,275 2,351 Trading and other income 1,302 2,162 -40 -45 2,138 2,067 2,174 Total revenu
Slide 13: Revenue improved QoQ, particularly NII
Revenue improved QoQ, particularly NII driven by higher interest rates and volume growth Revenue breakdown Constant € mn Net interest income QoQ 13,341 Changes in constant euros 12,571 12,651 12,070 Revenue +10% +5% Europe +7% 9,943 +3% +11% 9,429 Increased pace of growth 8,791 8,929 supported by in
Slide 14: Balance sheet structure positions us to benefit from interest rate hikes
Our balance sheet structure positions us to continue benefitting from interest rate hikes Generally positive NII sensitivity… € mn Year 1 1 Loan portfolios mainly floating and funded by non-maturity deposits (NMDs) with low +2,000 rate sensitivity and fixed-rate wholesale funding 2 High capacity to
Slide 15: Focus on productivity and efficiency, keeping costs below inflation
Focus on productivity and efficiency with the aim of maintaining costs below inflation Costs Efficiency ratio YoY % changes in constant euros In real terms1 9M'22 YoY change Group +6% -5% Group 45.5% -0.1pp Europe +1% -7% Europe 47.4% -4.1pp North North America +5% -3% America 47.0% +2.7pp South Sou
Slide 16: Credit quality remains robust
Credit quality remains robust. In 2022, additional LLPs due to updated macro assumptions Credit quality Loan-loss provisions Constant € bn Sep-21 Jun-22 Sep-22 CoR¹ 0.90% 0.83% 0.86% 2.6 2.7 2.4 NPL ratio 3.18% 3.05% 3.08% 2.2 2.2 1.9 Coverage ratio 74% 71% 70% 1.6 Stage 1 €912bn €998bn €1,030bn Sta
Slide 17: Highly-collateralized and diversified loan portfolio
Highly-collateralized and diversified loan portfolio whose key macro drivers are expected to remain resilient Low-mid credit risk profile in all countries Loan portfolio breakdown Sep-22 • Average mortgage portfolio LTV of 62%. Average house prices 30% lower than 2008 (in real terms) • 75% of the mo
Slide 18: Detail by country and business
Detail by country and business 18
Slide 19: Spain and UK
España and UK Spain UK • Grew customer base every month YTD, reflected in • Strong net mortgage lending (£10bn YTD) individuals (loans, deposits and insurance up) • Profit grew YoY fueled by CoR improvement and cost control. • Further improvement in NII and efficiency. Higher LLPs NII up 10% QoQ sup
Slide 20: USA and Mexico
USA and Mexico US Mexico • Loans (CIB, CRE and Auto) and deposits increased while • Successful customer attraction strategy (+1.3mn total maintaining deposit costs relatively stable customers YoY) reflected in loan volumes • High profit (c.€1.5bn) favoured by improved NII trend, • Outstanding result
Slide 21: Brazil and DCB
Brasil and DCB Brazil DCB • Recovery of activity levels with margin compression • Significant market share gains as new lending (+10% YoY) outpaced a shrinking market • Revenue increased YoY, offset by higher costs and LLPs. In Q3, improved trend in NII and decreased LLPs • Profit up: lease income g
Slide 22: Global businesses
Global businesses Corporate & Investment Banking Wealth Management & Insurance • Strong operating performance driven by double-digit growth • Strong growth in contribution to Group profit on a like-for-like in all core businesses, especially GTB and GDF basis (+17%), thanks to our diversified value-
Slide 23: Cards
Cards PagoNxt • Merchant Acquiring: Total Payments Volume rose backed • 97 million cards managed globally by Brazil (+18%), Europe (+42%) and Mexico (+35%) • Revenue grew 36% YoY (+25% in constant in euros) backed by all three regions • Revenue increased 96% YoY (+75% in constant euros) due to overa
Slide 24: Index
Index 1 2 3 4 9M'22 Highlights Group and Business Final Appendix areas review remarks 24
Slide 25: Final remarks
Final remarks We expect to achieve our full-year target as total revenue is set to continue growing strongly: Revenue – Additional NII growth, benefitting from interest rate hikes and expected activity levels, accelerating in 2023 – Net fee income supported by commercial activity and growth in our
Slide 26: Santander Investor Day London February 2023
«> Santander | NVESTOR 28 February 2023 DAY LONDON
Slide 27: Index
Index 1 2 3 4 Highlights and Business Final Appendix Group performance areas review remarks 27
Slide 28: Appendix
Appendix NII and CoR details by country Primary segments Responsible Banking Glossary The other information in the Appendix regularly provided each quarter can be found in the document entitled "Supplementary Information", published together with this presentation on the Group's corporate website. 2
Slide 29: NII YoY growth with improvements in both volumes and NIM
NII YoY growth with improvements in both volumes and NIM NII performance by country NII Loans Deposits NIM1 YoY changes in constant euros 9M'21 9M'22 Group +8% +7% +6% 2.40% 2.51% • Spain: pressure on yields and lower TLTRO and ALCO contribution Spain 0% +7% +13% 1.03% 0.97% • UK: higher interest ra
Slide 30: Cost of risk remained at low levels in most countries
Cost of risk remained at low levels in most countries CoR1 performance by country Dec-21 Sep-22 Group 0.77% 0.86% Spain 0.92% 0.71% • Spain: lower LLPs with improved credit quality • UK: gradual normalization after releases in Q2 and Q4’21 UK -0.09% 0.02% • Portugal: LLP releases in Q4’21 and low co
Slide 31: Appendix
Appendix NII and CoR details by country Primary segments Responsible Banking Glossary 31
Slide 32: Europe
Europe Highlights Key data and P&L • Accelerating our business transformation to deliver Loans Deposits Mutual Funds profitable growth, resulting in an RoTE increase €590bn +5% €622bn +7% €93bn -12% • Overall volumes growth both in loans and deposits reflecting high customer growth and loyalty Effic
Slide 33: Portugal and Poland
Portugal and Polonia Portugal Poland • Strengthened customer loyalty (#1 in NPS) and increased • Strong operating performance, NII doubled supported by activity in mortgages and protection insurance higher rates, while costs grew well below inflation • NII improved trend, growth in fees, further eff
Slide 34: North America
North America Highlights Key data and P&L • Greater customer base and enhanced customer experience Loans Deposits Mutual Funds through tailored products and services €165bn +9% €134bn +3% €30bn -2% Efficiency CoR RoTE1 • Overall volumes growth QoQ and YoY, driven by most segments in Mexico and in CI
Slide 35: South America
South America Highlights Key data and P&L • Strengthening the connection and sharing best practices among units, capturing new business opportunities Loans Deposits Mutual Funds €159bn +13% €130bn +6% €61bn +4% • Overall YoY customer base growth. We are #1 or #2 in NPS Efficiency CoR RoTE1 in all ma
Slide 36: Chile and Argentina
Chile y Argentina Chile Argentina • Focus on Getnet, Superdigital, Life and Prospera, boosting • Loan growth boosted by the local currency portfolio and banking penetration. #1 in NPS auto, SME and corporate loans • Profit up YoY due to improved revenue, efficiency and CoR • Profit up YoY driven by
Slide 37: Uruguay and Andean region
Uruguay and Andean region Uruguay & Andean region • Strong customer loyalty reflected in double-digit loan growth • Higher net interest income drove the rise in profit and high profitability Uruguay Peru Colombia Underlying Underlying Underlying RoTE1 RoTE1 RoTE1 att. profit att. profit att. profit
Slide 38: Corporate Centre
Corporate Centre Highlights Income statement P&L* 9M'22 9M'21 • NII impacted by the rising interest rates and the higher liquidity buffer NII -510 -459 Gains/Losses on Financial -624 -145 Transactions • Negative FX hedging results offset by the positive Operating expenses -272 -249 performance of ex
Slide 39: Appendix
Appendix NII and CoR details by country Primary segments Responsible Banking Glossary 39
Slide 40: Supporting the green transition and financial inclusion
Supporting the green transition of our customers and committed to financial inclusion Key green and sustainability metrics Social & Governance Mobilized Green1 9M’22 Green loans 9M’22 Microfinance ~€79bn >€3bn >€670mn since 2019 from SCF >1.1mn microentrepreneurs Target: €120bn by 2025 >100k electri
Slide 41: Progress on our ESG agenda
We continue to make progress on our ESG agenda 2018 2019 2020 2021 9M’22 2025 / 2030 target 43% 50% 57% 75% 100% 120bn by 2025 19bn 33.8bn 65.7bn 78.7bn 220bn by 2030 27bn 54bn 100bn by 2025 7.0 bn 0 by 2030 0.21 0.17 0.11 tCO2e / MWh in 2030 23.84 16.98 mtCO2e in 2030 New 92.47 61.71 grCO2e / RPK i
Slide 42: Appendix
Appendix NII and CoR details by country Primary segments Responsible Banking Glossary 42
Slide 43: Glossary - Acronyms
Glossary - Acronyms ▪ ALCO: Assets and Liabilities Committee ▪ ESG: Environmental, social and governance ▪ Repos: Repurchase agreements ▪ AT1: Additional Tier 1 ▪ FY: Full year ▪ RoE: Return on equity ▪ AuMs: Assets under Management ▪ HTC&S: Held to collect and sell ▪ RoRWA: Return on risk-weighted
Slide 44: Glossary - Definitions
Glossary - Definitions PROFITABILITY AND EFFICIENCY ✓ RoTE: Return on tangible capital: Group attributable profit / average of: net equity (excluding minority interests) – intangible assets (including goodwill) ✓ RoRWA: Return on risk-weighted assets: consolidated profit / average risk-weighted asse
Slide 45: 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: