Banco Santander, S.a. · BME:SAN
Banco Santander — H1 2024 Earnings Presentation
57 slides from Banco Santander's earnings presentation, Jul 24, 2024
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 July, 2024 Commission File Number: 001-12518 Banco Santander, S.A. (Exact name of registrant as specified in its chart
Slide 2: Table of Contents
BANCO SANTANDER, S.A. ________________________ TABLE OF CONTENTS Item 1. January - June 2024 Earnings presentation
Slide 3: Earnings Presentation H1'24
Earnings Presentation H1’24 24 July 2024
Slide 4: Important information
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
3 Important information While these forward-looking statements represent our judgement and future expectations concerning our business developments, results may differ materially from those anticipated, expected, projected or assumed in forward-looking statements. In particular, forward looking stat
Slide 6: Index
4 Index 1 H1’24 Highlights Progress on our strategy Group review 2 Final remarks 3 Appendix 4
Slide 7: Another record quarterly profit; recurring Q2 profit of €3.7bn
5 Another record quarterly profit, including €0.5bn net one-time charges; recurring Q2 profit of €3.7bn Strong operating performance and increase in profitability supported by ONE Transformation Solid balance sheet and higher shareholder remuneration supporting sustained value creation FL CET1 TNAVp
Slide 8: Double-digit YoY profit increase driven by net operating income
6 Double-digit YoY profit increase driven by strong growth in net operating income, supported by customer revenue and efficiency improvements Excellent business and commercial dynamics continued in H1’24 • Record NII, fees, total revenue, net operating income and profit • C/I and RoTE improvement ex
Slide 9: A record H1'24 puts us on track to exceed 2024 targets
7 after Basel III implementation A record H1’24 puts us on track to exceed our 2024 targets … Note: targets market dependent. Based on macro assumptions aligned with international economic institutions. (1) YoY change in constant euros, except Argentina in current euros. Revenue1 Efficiency CoR FL C
Slide 10: Backed by execution of ONE Transformation
8 … backed by execution of ONE Transformation, improving both revenue and costs … H1’24FY’22 Note: H1’24 or latest available data. Efficiency execution 2022-H1’24 • Product simplification: 6% fewer products in Q2’24 (-23% vs. Dec-22) • 59% products / services digitally available (58% Mar-24; 56% Dec
Slide 11: Five global businesses leveraging global scale
9 … and by our five global businesses, leveraging our global scale to accelerate profitable growth 52% 20% 13% 6% 9% Revenue (€bn) Contribution to Group revenue C/I RoTE H1’24 2025 RoTE target c.17% >14% >20% c.60% >30% 15-17% Note: YoY changes and revenue in constant euros. Contribution to Group re
Slide 12: Retail: 12% revenue growth with costs flat
10 2,981 3,066 3,146 3,110 3,083 3,064 Q1'23 Q2 Q3 Q4 Q1'24 Q2 Retail: delivering 12% revenue growth with costs flat, by deploying global platforms # of products1 (k) # of non-commercial FTEs1 per mn total customers Active customers (mn) Execution of the strategy Key drivers Driving growth and effic
Slide 13: Consumer: improvement in operational leverage and deposit cost-to-serve
11 Consumer: strong improvement in operational leverage and better deposit cost-to-serve Fully-digital financing experience available for our auto partners Expanding partnerships across regions Customer experience Launched a new onboarding for pure digital players Double-digit deposit growth support
Slide 14: CIB: US investments drove 12% fee growth
12 82 84 2022 H1'24 Key drivers Playing to our strengths to better serve our corporate customers and institutions Fee growth (€ bn) % Total revenue / RWAs % customer related revenue 80% CIB: US investments drove 12% fee growth and strong RoTE of 19% Note: data and YoY changes in constant euros. RoTE
Slide 15: Wealth: network collaboration fees up 12%
13 Revenue (including ceded fees, € mn) Wealth: network collaboration fees up 12% and profitability over 80% Key drivers Accelerating our customers’ connectivity with our global product platforms Santander Asset Management Private Banking Note: data and YoY changes in constant euros. RoTE annualizin
Slide 16: Payments: PagoNxt open market revenue above 22%
14 +4% Key drivers Seizing a growing opportunity by capturing scale through global platforms Revenue (€ mn) PagoNxt Cards Note: data and YoY changes in constant euros. Transactions include merchant payments, cards and electronic A2A payments. (1) Revenue growth excluding a one-time positive fee reco
Slide 17: Revenue growth and buybacks drove EPS up 19%
15 Note: our shareholder remuneration policy is c.50% payout (split in approximately equal parts in cash and share buybacks). Implementation of shareholder remuneration policy is subject to future corporate and regulatory decisions and approvals. (1) TNAVps + Cash DPS includes the €8.10 cent cash di
Slide 18: Index
16 Index 1 H1’24 Highlights Progress of our strategy Group review 2 Final remarks 3 Appendix 4
Slide 19: Double-digit YoY profit increase
17 2,571 2,670 2,902 2,933 2,852 3,207 Q1'23 Q2 Q3 Q4 Q1'24 Q2 +12% Double-digit YoY profit increase driven by strong growth in net operating income, supported by customer revenue and efficiency improvements € mn Attributable profit (Constant € mn) QoQ P&L Current Constant € million H1'24 H1'23 % %
Slide 20: NII up 2% and costs flat QoQ excluding Argentina
18 NII up 2% and costs flat QoQ when Argentina is excluded Fees NII 3,094 3,179 760 963 Other income Costs Revenue 6,244 6,254 Q1'23 Q2 Q3 Q4 Q1'24 Q2 14,767 15,263 Group excluding ArgentinaGroup Current Constant Current Constant % % % % NII -4 -4 1 2 Net fee income 0 1 2 3 Other income 511 506 27 2
Slide 21: High-single digit revenue growth backed by customer activity
19 16,273 14,107 14,303 14,785 14,489 15,323 15,727 Q1'23 Q2 Q3 Q4 Q1'24 Q2 31,050 -8 28,410 +1,728 +418 +238 +194 +71 H1'23 Retail Consumer CIB Wealth Payments CC H1'24 +12% +7% +6% +12% +3% High-single digit revenue growth backed by customer activity across our businesses • >95% of total revenue i
Slide 22: Widening spreads drive NII and NIM expansion
20 2.63% 2.73% 2.82% 2.76% 2.97% 2.89% Margins 10,333 10,759 11,182 11,082 11,939 11,518 12,279 Q1'23 Q2 Q3 Q4 Q1'24 Q2 Widening spreads drive NII and NIM expansion Note: NIM = NII / Average earning assets. Data and YoY % changes in constant euros. GTB: Global Transaction Banking. GB: Global Banking
Slide 23: Net fee income growth shows value added from global businesses
21 • Good commercial dynamics, with generalized fee growth across the Group • Fees boosted by higher activity in account maintenance, funds and FX, especially in Brazil, Poland, the US and Mexico 3,076 3,047 3,089 2,816 3,225 3,252 3,361 Q1'23 Q2 Q3 Q4 Q1'24 Q2 Net fee income growth shows value adde
Slide 24: ONE Transformation driving efficiency gains and positive jaws
22 12,913 -15 12,543 +5 +8 +299 +30 +43 H1'23 Retail Consumer CIB Wealth Payments CC H1'24 ONE Transformation driving structural efficiency gains and positive jaws Note: data and YoY % changes in constant euros. (1) Costs in real terms exclude the impact from weighted average inflation. Costs -4% -3
Slide 25: Stable credit quality in line with 2024 target
23 Stable credit quality in line with 2024 target Note: CoR - provisions to cover losses due to impairment of loans in the last 12 months / average customer loans and advances of the last 12 months. Data in constant euros. Stages in current euros. Credit quality Detail by business CoR 12 month LLPs
Slide 26: Enhanced capital strength and capital productivity
24 Front book pricing RoRWA of new book Enhanced capital strength: profitable organic generation, with new front book at 23% RoTE, and record distributions % (1) Shareholder remuneration charged against profit earned in Q2 2024 in line with our c.50% payout target, divided approximately equally betw
Slide 27: Index
25 Index 1 H1’24 Highlights Progress of our strategy Group review 2 Final remarks 3 Appendix 4
Slide 28: Progress towards Investor Day targets
26 RoTE1 Profitability FL CET1 Strength RWAs with RoRWA > CoE Disciplined capital allocation Payout 50% Shareholder remuneration Note: target payout defined as c.50% of Group reported profit (excluding non-cash, non-capital ratios impact items), distributed approximately 50% in cash dividend and 50%
Slide 29: All-time high profit driving upgrade of 2024 targets
27 All-time high quarterly and half-year profit, driving an upgrade of our 2024 targets Note: targets market dependent. Based on macro assumptions aligned with international economic institutions. H1’24 RoTE annualizing the temporary levy impact. (1) YoY change in constant euros, except Argentina in
Slide 30: Index
28 Index 1 H1’24 Highlights Progress of our strategy Group review 2 Final remarks 3 Appendix 4
Slide 31: Appendix
29 Appendix Investor Day Targets summary Detail by global business, region and country 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 "Supplementary Information", published
Slide 32: Investor Day targets summary
30 (1) Target payout defined as c.50% of Group reported profit (excluding non-cash, non-capital ratios impact items), distributed approximately 50% in cash dividend and 50% in share buybacks. Execution of the shareholder remuneration policy is subject to future corporate and regulatory decisions and
Slide 33: Appendix
31 Appendix Investor Day Targets summary Detail by global business, region and country 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 "Supplementary Information", published
Slide 34: Detail by global business
Detail by global business @ Santander
Slide 35: Retail & Commercial Banking
33 Key data P&L Retail & Commercial Banking Highlights Loans Deposits Mutual Funds Efficiency CoR RoTE Note: Jun-24 data and YoY changes (loans, deposits and mutual funds in constant euros). RoTE annualizing the impact of the temporary levy. • Our transformation and disciplined capital allocation ar
Slide 36: Digital Consumer Bank
34 New lending Deposits Mutual Funds Efficiency CoR RoTE Digital Consumer Bank Highlights Key data • We continue expanding our leadership in consumer finance across our footprint, converging towards a more digital global operating model and implementing enhanced solutions through common platforms •
Slide 37: Corporate & Investment Banking
35 Corporate & Investment Banking Highlights Key data • We continue making our centres of expertise more sophisticated, deepening client relationships, with focus on our Global Markets, the US Banking Build-Out strategy and actively managing capital • Strong activity YoY, mainly supported by Global
Slide 38: Wealth Management & Insurance
36 Gross written premiums Efficiency RoTE AuMs Net new money (PB) Net sales (SAM) Wealth Management & Insurance Highlights Key data Note: Jun-24 data (AuMs); H1’24 data (net new money, net sales and GWPs). YoY changes in constant euros. RoTE annualizing the impact of the temporary levy. (2) Consider
Slide 39: Payments (PagoNxt and Cards)
37Note: Jun-24 data and YoY changes in constant euros. In PagoNxt, a negative growth rate in profit indicates a lower loss. Number of cards managed by Cards is 101 million, as it excludes those managed by Digital Consumer Bank including Openbank (3 million cards). 11.2% 20.1% H1'23 H1'24 • TPV incre
Slide 40: Corporate Centre
38 Corporate Centre • NII fairly stable, as higher liquidity buffer remuneration was offset by higher interest expense related to more TLAC/MREL issuances • Higher losses on financial transactions due to greater negative FX hedging impacts • Costs improved driven by ongoing simplification measures •
Slide 41: Detail by region and country
39 Detail by region and country
Slide 42: Europe highlights
40 Highlights Note: Jun-24 data and YoY changes (loans, deposits and mutual funds in constant euros). RoTE annualizing the impact of the temporary levy, 16.4% without annualizing it. Key data and P&L Loans Deposits Mutual Funds Efficiency CoR RoTE • We remain focused on growing our business while tr
Slide 43: Spain and UK
41 Spain UK España and UK Loans Deposits Mutual FundsLoans Deposits Mutual Funds Efficiency CoR RoTEEfficiency CoR RoTE • Customer growth YoY. Loans still affected by mortgage prepayments YoY, but +3% QoQ driven by Retail and CIB. Migration to time deposits continued and mutual funds grew double dig
Slide 44: Portugal and Poland
42 Portugal and Polonia Portugal Poland Loans Deposits Mutual Funds Loans Deposits Mutual Funds Efficiency CoR RoTE Efficiency CoR RoTE • Moderate decline in loans as customer deleveraging mitigated by new business recovery. Double-digit increases in time deposits and mutual funds • Profit +75% YoY,
Slide 45: Digital Consumer Bank Europe
43Note: Jun-24 data and YoY changes (new lending, loans and customer funds in constant euros). RoTE annualizing the impact of the temporary levy, 8.9% without annualizing it. Digital Consumer Bank Europe New lending Loans Customer Funds Highlights Key data and P&L Efficiency CoR RoTE €26bn +2% €138b
Slide 46: North America
44 • Focus on transformation, leveraging the strengths of our businesses in the US and Mexico and enhancing our regional operating model in T&O • Loans rose 3%, particularly in Mexico and CIB in the US. Deposits declined 4%, in line with our strategy to reduce the costs of excess corporate deposits
Slide 47: Mexico and US
45 • Successful customer acquisition campaigns and new commercial agreements boosting loans (most global businesses) and deposits • Profit up YoY with positive jaws as a double-digit rise in revenue (mainly NII and fees) outpaced cost growth. Expected LLP normalization • Profit +5% QoQ supported by
Slide 48: South America
46 South America Note: Jun-24 data and YoY changes (loans, deposits and mutual funds in constant euros). Loans Deposits Mutual Funds Efficiency CoR RoTE Highlights Key data and P&L • We are focused on being the primary bank for our 77 million customers (+4mn YoY), becoming the most profitable in eac
Slide 49: Brazil and Chile
47Note: Jun-24 data and YoY changes (loans, deposits and mutual funds in constant euros). Brazil Chile Loans Deposits Mutual Funds Loans Deposits Mutual Funds Efficiency CoR RoTEEfficiency CoR RoTE • Double-digit growth YoY in loans (with increases across all global businesses), time deposits and mu
Slide 50: Argentina, Uruguay, Peru and Colombia
48 106 H1'24 Note: Jun-24 data and YoY changes (profit, loans, deposits and mutual funds in constant euros). In Argentina, variations are in current euros. Argentina Uruguay, Peru and Colombia Loans Deposits Mutual Funds Uruguay Peru Colombia RoTEs € mn Attributable profit Efficiency CoR RoTE • We a
Slide 51: Appendix
49 Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary
Slide 52: Reconciliation of underlying results to statutory results
50 Reconciliation of underlying results to statutory results EUR mn (1) Includes exchange differences. Explanation of H1’24 adjustments: • Temporary levy on revenue earned in Spain in Q1’24, totalling EUR 335 million, which was moved from total income to other gains (losses) and provisions. • Provis
Slide 53: Appendix
51 Appendix Investor Day Targets summary Detail by global business, region and country Reconciliation of underlying results to statutory results Glossary
Slide 54: Glossary - Acronyms
52 Glossary - Acronyms • A2A: account to account • 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 f
Slide 55: Glossary - Definitions
53 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 56: 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 57: 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: 24 July 2024 By: /s/ José García Cantera Name: José García Cantera Title: Ch