Banco Santander, S.a. · BME:SAN
Banco Santander — 9M 2022 Earnings Presentation
48 slides from Banco Santander's earnings presentation, Oct 26, 2022
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 October, 2022 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 - September 2022 Earnings presentation
Slide 3: Earnings Presentation 9M'22
Earnings Presentation — 9M’22 26 October 2022
Slide 4: Important information: Non-IFRS and alternative performance measures
2 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 (“AP
Slide 5: Important information: Forward looking statements
3 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 th
Slide 6: Index
4 Index 1 Appendix 3 Group and Business areas review Final remarks 2 4 9M'22 Highlights
Slide 7: Executing our strategy to drive greater growth, profitability and strength
5 Executing our strategy to drive greater growth, profitability and strength Note: YoY changes. EPS and RoTE as of 9M’22. (1) In constant euros. Activity remained robust supported by larger customer base (+8mn) Accelerating revenue growth. NII +5% QoQ Favourable FX impact. In euros, volumes +10%
Slide 8: Steady customer growth and volume increases in all regions
6 Steady customer growth and commercial strategy reflected in volume increases in all regions, segments and products … Europe South America North America DCB DepositsLoans Digital Consumer Bank SMEs & Corporates 154 254 77 152 18 15 25 €346bn €289bn €406bn Individual mortgages Consumer & others Comp
Slide 9: Double-digit profit growth and geographic diversification
7(1) 9M'21: restructuring costs (net of tax), corresponding mainly to the UK and Portugal. (2) Adjusted RoTEs: adjusted based on Group’s deployed capital calculated as contribution of RWAs at 12%. Using tangible equity, RoTE is 9.1% for Europe, 11.5% for North America, 20.0% for South America and 12
Slide 10: Our strategy is paying off in revenue, costs and LLPs
8 Our strategy is paying off in revenue, costs and LLPs CostsNII + Fees CoR •NII increase driven by greater volumes and higher rates across the board • Improved quarterly NII trend, which we expect to continue •Fee growth supported by CIB, payments and WM&I •Focus on efficiency with the aim of maint
Slide 11: Delivering shareholder value: profitability, TNAVps and dividend per share
9 11.8% 13.6% 9M'21 9M'22 3.99 4.31 Sep-21 Sep-22 Delivering shareholder value: enhanced profitability, TNAVps and dividend per share … (1) The board of directors has approved the payment of the first interim cash dividend against H1’22 results from 2 November and the repurchase programme is expecte
Slide 12: Continuing to generate capital organically
10 … while continuing to generate capital organically (1) Cash dividend accrual corresponding to 20% of Q3'22 profit. The implementation of the shareholder remuneration policy is subject to future corporate and regulatory decisions and approvals. 12.10-0.08 -0.06 -0.15 12.05 +0.34 Jun-22 Gross organ
Slide 13: Index
11 Index 1 Appendix 3 Group and Business areas review Final remarks 2 4 9M'22 Highlights
Slide 14: Main P&L trends leading to quarterly profit growth
12(1) 9M'21: restructuring costs (net of tax), corresponding mainly to the UK and Portugal. We maintained the main P&L trends leading to quarterly profit growth 1,608 2,067 2,174 2,275 2,543 2,351 2,422 2,138 Q1'21 Q2 Q3 Q4 Q1'22 Q2 Q3 Attributable profit (Constant € mn) € mn Attributable profit Und
Slide 15: Revenue improved QoQ, particularly NII
13 +10% +5% +3% +11% 0% -25% +68% 12,070 12,571 12,651 13,341 Revenue improved QoQ, particularly NII driven by higher interest rates and volume growth Fees NII Revenue breakdown Constant € mn 255 343 348 375Trading gains Other income Revenue 245 544 -125 34 Q1'21 Q2 Q3 Q4 Q1'22 Q2 Q3 2,779 2,754 2,9
Slide 16: Balance sheet structure benefitting from interest rate hikes
14 Our balance sheet structure positions us to continue benefitting from interest rate hikes Generally positive NII sensitivity… € mn High capacity to manage and administer both asset and liability customer rates to keep balance sheet asset sensitive Loan book mainly fixed but short duration consume
Slide 17: Focus on productivity and efficiency
15 Focus on productivity and efficiency with the aim of maintaining costs below inflation In real terms1YoY % changes in constant euros DCB Europe North America South America Digital Consumer Bank Group 9M'22 YoY change 45.5% -0.1pp 47.4% -4.1pp 47.0% +2.7pp 36.3% +1.6pp 47.7% +0.1ppDCB Europe North
Slide 18: Credit quality remains robust
16 Sep-21 Jun-22 Sep-22 CoR¹ 0.90% 0.83% 0.86% NPL ratio 3.18% 3.05% 3.08% Coverage ratio 74% 71% 70% Stage 1 €912bn €998bn €1,030bn Stage 2 €67bn €66bn €70bn Stage 3 €33.0bn €34.3bn €35.6bn 2.2 1.9 2.4 1.6 2.2 2.6 2.7 Q1'21 Q2 Q3 Q4 Q1'22 Q2 Q3 Constant € bn Credit quality remains robust. In 2022,
Slide 19: Highly-collateralized and diversified loan portfolio
17 Spain Highly-collateralized and diversified loan portfolio whose key macro drivers are expected to remain resilient • Average mortgage portfolio LTV of 62%. Average house prices 30% lower than 2008 (in real terms) • 75% of the mortgage portfolio at variable rate • Corporates improved avg. rating
Slide 20: Detail by country and business
18 Detail by country and business
Slide 21: España and UK
19 España and UK Spain UK Efficiency CoR RoTE1 P&L* Q3'22 % Q2'22 9M'22 % 9M'21 NII 1,119 10.0 3,134 -0.1 Net fee income 697 -4.6 2,172 5.6 Total revenue 2,121 10.7 6,058 2.5 Operating expenses -997 2.7 -2,941 -2.4 Net operating income 1,124 19.0 3,118 7.6 LLPs -421 1.4 -1,228 -27.2 Underlying att.
Slide 22: USA and Mexico
20 US Mexico • Loans (CIB, CRE and Auto) and deposits increased while maintaining deposit costs relatively stable • High profit (c.€1.5bn) favoured by improved NII trend, despite LLP normalization and lower end of lease income • Successful customer attraction strategy (+1.3mn total customers YoY) re
Slide 23: Brasil and DCB
21 €98bn +10% €80bn +6% €47bn -3% 31.1% +1.8pp 4.46% +86bps 26.8% -1.4pp Note: 9M'22 data and YoY changes (loans, customer funds and new lending in constant euros). (1) Adjusted RoTEs: adjusted based on Group’s deployed capital calculated as contribution of RWAs at 12%. Using tangible equity, RoTE i
Slide 24: Global businesses: CIB and Wealth Management & Insurance
22 Total fees Profit RoTE AuMs Total fees1 RoTE • Strong growth in contribution to Group profit on a like-for-like basis (+17%), thanks to our diversified value-added proposition • Private Banking customer base growth of +6% • SAM volumes impacted by market volatility but contribution to the Group p
Slide 25: PagoNxt and Cards
23Note: 9M'22 and YoY changes. Cards do not include Digital Consumer Bank and PagoNxt. PagoNxt quarterly revenue performance +75% 9M'22 vs 9M'21 Merchant Acquiring €117bn +29% International Trade 77 139 158 178 172 231 252 Q1'21 Q2 Q3 Q4 Q1'22 Q2 Q3 • Merchant Acquiring: Total Payments Volume rose b
Slide 26: Index
24 Index 1 Appendix 3 Group and Business areas review Final remarks 2 4 9M'22 Highlights
Slide 27: Final remarks
25 Final remarks We expect to achieve our full-year target as total revenue is set to continue growing strongly: – 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 globa
Slide 28: Santander Investor Day London
«> Santander INVESTOR | 22%" DAY LONDON
Slide 29: Index
27 Index 1 Appendix 3 Business areas review Final remarks 2 4 Highlights and Group performance
Slide 30: Appendix
28 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
Slide 31: NII performance by country
29 Group +8% +7% +6% 2.40% 2.51% Spain 0% +7% +13% 1.03% 0.97% UK +12% +4% -1% 1.31% 1.46% Portugal -6% +1% +3% 1.31% 1.18% Poland +104% +6% +6% 2.11% 3.95% USA +2% +8% +6% 4.06% 3.73% Mexico +12% +13% -4% 4.28% 4.55% Brazil -1% +10% +6% 5.70% 5.43% Chile +1% +11% -7% 3.50% 3.21% Argentina +142% +68
Slide 32: CoR performance by country
30 Group 0.77% 0.86% Spain 0.92% 0.71% UK -0.09% 0.02% Portugal 0.09% -0.12% Poland 0.67% 1.07% USA 0.43% 0.87% Mexico 2.44% 1.86% Brazil 3.73% 4.46% Chile 0.85% 0.87% Argentina 3.01% 2.88% DCB 0.46% 0.43% Cost of risk remained at low levels in most countries (1) Allowances for loan-loss provisions
Slide 33: Appendix
31 Appendix NII and CoR details by country Primary segments Responsible Banking Glossary
Slide 34: Europe
32 Europe Highlights Key data and P&L Loans Deposits Mutual Funds Efficiency CoR RoTE1 €590bn +5% €622bn +7% €93bn -12% 47.4% -4.1pp 0.36% -12bps 12.5% +2.9pp Note: 9M'22 data and YoY changes (loans, deposits and mutual funds in constant euros). (1) Adjusted RoTE: adjusted based on Group’s deployed
Slide 35: Portugal and Poland
33 Efficiency CoR RoTE1 Loans Deposits Mutual Funds Efficiency CoR RoTE1 Loans Deposits Mutual Funds €41bn +1% €43bn +3% €4bn -11% 40.3% -1.7pp -0.12% -46bps 26.7% +5.1pp €30bn +6% €37bn +6% €3bn -35% 28.6% -13.1pp 1.07% +26bps 15.1% +8.0pp Note: 9M'22 data and YoY changes (loans, deposits and mutua
Slide 36: North America
34 North America Note: 9M'22 data and YoY changes (loans, deposits and mutual funds in constant euros). (1) Adjusted RoTE: adjusted based on Group’s deployed capital calculated as contribution of RWAs at 12%. Using tangible equity, RoTE is 11.5%. (2) % change in current euros. Key data and P&L Loans
Slide 37: South America
35 South America Note: 9M'22 data and YoY changes (loans, deposits and mutual funds in constant euros). (1) Adjusted RoTE: adjusted based on Group’s deployed capital calculated as contribution of RWAs at 12%. Using tangible equity, RoTE is 20.0%. (2) % change in current euros. Highlights Key data an
Slide 38: Chile and Argentina
36 Efficiency CoR RoTE1 Loans Deposits Mutual Funds €7bn +68% €11bn +60% €4bn +121% 57.3% -2.6pp 2.88% -63bps 37.0% +6.1pp Note: 9M'22 data and YoY changes (underlying profit, loans and funds in constant euros). (1) Adjusted RoTEs: adjusted based on Group’s deployed capital calculated as contributio
Slide 39: Uruguay and Andean region
37Note: YoY changes in constant euros. (1) Adjusted RoTEs: adjusted based on Group’s deployed capital calculated as contribution of RWAs at 12%. Using tangible equity, RoTE is 21.2% for Uruguay, 22.2% for Peru and 17.3% for Colombia. Uruguay and Andean region 22 9M'22 52 9M'22 96 9M'22 • Strong cust
Slide 40: Corporate Centre
38 Corporate Centre Highlights Income statement • NII impacted by the rising interest rates and the higher liquidity buffer • Negative FX hedging results offset by the positive performance of exchange rates in the countries' results • Significant decrease in LLPs and other provisions P&L* 9M'22 9M'2
Slide 41: Appendix
39 Appendix NII and CoR details by country Primary segments Responsible Banking Glossary
Slide 42: Supporting the green transition and financial inclusion
40 Supporting the green transition of our customers and committed to financial inclusion ~€79bn since 2019 Target: €120bn by 2025 Socially responsible investment AuM3 9M’22 Microfinance 20% of long-term incentives in scorecard >€670mn >1.1mn microentrepreneurs 8 Latam Countries Top management ESG in
Slide 43: Progress on our ESG agenda
41 We continue to make progress on our ESG agenda 2025 / 2030 target2020 20% 3% 23% 23.7% 30% by 2025 ~0% by 2025 5mn 10mn by 20257mn 26.3% 2018 2019 2021 100bn by 202527bn 0.11 tCO2e / MWh in 2030 0 by 2030 0.21 7.0 bn 43% 100% 19bn 33.8bn 120bn by 2025 220bn by 203065.7bn From…to… Accumulated 9M’2
Slide 44: Appendix
42 Appendix NII and CoR details by country Primary segments Responsible Banking Glossary
Slide 45: Glossary - Acronyms
43 Glossary - Acronyms ▪ ALCO: Assets and Liabilities Committee ▪ AT1: Additional Tier 1 ▪ AuMs: Assets under Management ▪ BFG: Deposit Guarantee Fund in Poland ▪ bn: Billion ▪ Bps: basis points ▪ CET1: Common equity tier 1 ▪ CIB: Corporate & Investment Bank ▪ CoE: Cost of equity ▪ CoR: Cost of risk
Slide 46: Glossary - Definitions
44 Glossary - Definitions Notes: The averages for the RoTE and RoRWA denominators are calculated using 10 months from December to September. For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoE and RoTE is the annuali
Slide 47: 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 48: 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: 26 October 2022 By: /s/ José García Cantera Name: José García Cantera Title: