Banco Santander, S.a. · BME:SAN
Banco Santander — FY2019 Earnings Presentation
119 slides from Banco Santander's earnings presentation, Jan 29, 2020
Slide 1: Underlying profit by country: Spain, SCF, UK, Portugal
∎ In Spain , underlying profit was €1,585 million, up 2%, thanks to an acceleration in cost reductions due to the integration of Banco Popular. In 2019, Santander successfully completed the migration of all Popular branches and customers to the Santander platform while maintaining the highest level
Slide 2: 2019 Earnings Presentation
29 January 2020 2019 Earnings Presentation Ana Botín Group Executive Chairman José Antonio Álvarez Group CEO
Slide 3: Important information: Non-IFRS and alternative performance measures
Important information Non-IFRS and alternative performance measures In addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, this presentation contains certain financial measures that constitu
Slide 4: Important information: forward-looking statements
Important information Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or r
Slide 5: Index
Index 1 2 3 4 Growth Group & Our business Key takeaways Profitability Business model delivers Strength: areas review profitable performance growth in 2019
Slide 6: Delivering Growth, Profitability and Strength in a responsible way
Delivering Growth, Profitability and Strength in a responsible way 2019 (vs. 2018) Growth Profitability Strength Loyal customers Underlying RoTE FL CET1 21.6 mn (+9%) 11.8 % (-29 bps) 11.65% (+35 bps) Customer revenues Underlying RoRWA NPL ratio €47.1 bn (+4%1) 1.61% (+5bps2) 3.3 % (-41 bps) Propose
Slide 7: Profitable growth and solid organic capital generation
Profitable growth and solid organic capital generation… Change vs. 2018 EUR mn 2019 % % constant € Net interest income 35,283 3 4 All-time record year in Net fee income 11,779 3 5 revenues Customer revenue 47,062 3 4 Trading and other income 2,432 -6 -8 Total income 49,494 2 3 Underlying profit grow
Slide 8: Disciplined execution against our strategic priorities
…supported by a disciplined execution against our strategic priorities Improve operating Optimise capital Accelerate digitalisation performance allocation through SGP Simplified regional Mexico minorities acquisition Santander Global Platform creation management structure Europe c.€200mn1 cost reduc
Slide 9: Strong operating performance across our regions
Strong operating performance across our regions… Growth Loyal Underlying 1 customers Loans profit RoTE 2019 (vs. 2018) (mn) (EUR bn) (EUR mn) (%) 9.9 651 4,878 10% Stable revenues and executing Europe +6% +2% -3% -86bps cost synergy opportunities North 3.5 131 1,667 13%2 Improving capabilities and A
Slide 10: Global Businesses driving network effects
…with Global Businesses driving network effects and contributing Growth 26% of Group’s earnings Corporate & Wealth Management Santander Global SCIB Investment Banking WM&I & Insurance SGP Platform International SMEs / GTS Underlying Underlying €1.0bn profit €1.8bn +10% profit +11% +40% 1 Revenues CA
Slide 11: Returns on digitalisation and growth of mobile channel
Returns on digitalisation and SGP supporting exponential growth of Growth mobile channel and fueling engagement and digital sales More digital …engaging and transacting …resulting digital in sales increased customers… more through mobile… +15% 5 +4p.p. 37 “Touchpoints” per digital 36 customer per we
Slide 12: Digital sales improve profitability through lower unit costs
Increasing digital sales improve profitability as a result of lower Growth unit costs Digital vs. branch channel: unit cost comparison examples …and delivering our products Serving our customers… more efficiently Cost of money—99% Cost of selling—50%1 transfer a mortgage Cost of bill—99% Cost of ope
Slide 13: Improved operating performance and optimised capital allocation
Improved operating performance and optimised capital allocation Profitability resulted in additional c.€20 bn RWAs above CoE in 2019… Underlying RoRWA 2018 2019 +5bps1 Europe1 1.59% 1.61% annual increase in Group RoRWA North America 1.74% 1.90% 10% Reduction in RWAs South America 3.37% 3.45% with re
Slide 14: Accretive capital rebalancing
…by continuing with an accretive capital rebalancing Profitability More capital allocated… …to regions with higher returns RWA YoY change in constant euros 2019 underlying RoTE >70% Europe -1% 10% of our capital delivered double digit returns North +4% 13%1 America >30% South +7% 21% of our capital
Slide 15: Record gross capital generation, offset by regulatory headwinds
2019 a record-high year in terms of gross capital generation, Strength partially offset by regulatory headwinds FL CET1 2019 2019 capital generation 2,3 €9.4bn +35bps pre-minorities +97 bps 12.27% CET1 €3.6bn accumulation 11.65% 11.30% -62 bps Dividends3 €4.3bn 2018 Gross capital 2019 (excluding Reg
Slide 16: CET1 expected to reach c.12% by end-2020
Expect our CET1 reach c.12% by end-2020 based on continued Strength profitability improvement FL CET1 Jan 2015-2020 c.+40 bps c.12% +200 bps 11.65% 5 Year 9.65% run-rate +40bps per annum Jan-15 5 Yr net capital accumulation 2019 2020 net capital 2020 accumulation 15
Slide 17: Increase in tangible book value and cash dividend per share
Delivery on our GPS1 targets has resulted in +8% increase in tangible book value and cash dividend on a per share basis… +8% €0.165 €4.52 €0.17 €4.36 €4.19 2018 TNAVps TNAVps 2019 TNAVps Cash DPS 2019 YoY growth declared in 20192 TNAVps + DPS (1) GPS: Growth, Profitability and Strength 16 (2) Divide
Slide 18: Doing business in a more responsible and sustainable way
…and we continue to do business in a more responsible and sustainable way Culture Sustainability Engagement Women 86% of employees 40% Group Board Leader €18bn €1bn proud to work for SAN mobilised in Green Santander first green (+5pp vs peers1) 22%Group leadership finance bond issuance (+2pp vs. 201
Slide 19: Index
Index 1 2 3 4 Growth Group & Our business Key takeaways Profitability Business model delivers Strength: areas review profitable performance growth in 2019
Slide 20: Sound operating performance driving solid results
Sound operating performance driving solid results in the year and vs Q4’18 % vs. 2018 Underlying attributable profit 2019 Constant EUR mn Euros euros Constant EUR mn Net interest income 35,283 3 4 +5% Net fee income 11,779 3 5 Customer revenue 47,062 3 4 2.155 2.084 2.005 2.072 2.105 Trading and oth
Slide 21: High quality customer revenue
High quality revenue: customer revenues delivers 95% of the total and grew 4% YoY driven by the Americas and Global Businesses NII +4% Customer Revenue Customer +4% (NII + Fees) Revenue Volumes and spreads management 95% with 8 markets growing or flat South America +11% Fees +5% North America +4% Ot
Slide 22: Productivity and efficiency gains from scale and global capabilities
We continue leveraging our scale and global capabilities to improve productivity and generate new efficiencies YoY change in constant euros Nominal costs Costs in real terms -8% Operating as Europe -1.3% -2.4% -3% “One Europe” -4% 2% Synergies as a region North America 5.1% 2.6% 4% and joint investm
Slide 23: Sound credit quality and low cost of credit
Sound credit quality underpinned by lower NPL and high coverage ratios. Cost of credit remains at very low levels Better credit quality ratios 2018 2019 Lower or stable cost of credit Cost of credit 1.0% 1.0% in 8 core markets NPL ratio 3.73% 3.32% NPL ratio fell YoY in most markets Coverage ratio 6
Slide 24: Business areas review
Business areas review 23
Slide 25: Overall profit growth by regions and markets
Overall profit growth by regions and markets 2019 Underlying attributable profit EUR mn and % change vs. 2018 in constant EUR 1.585 +2% 1.314 +2% 1.077 -16% 47% Europe 525 +10% Well balanced 349 +19% Group profit North 950 +19% 16% America 717 +24% by regions 2.939 +16% South America 630 +7% 37% 144
Slide 26: Volume growth driven by the Americas and consumer businesses
Volume growth driven by the Americas and our consumer businesses 2019 Loans and advances to customers 2019 Customer funds EUR bn and % change vs. 2018 in constant EUR EUR bn and % change vs. 2018 in constant EUR 191 -6% 309 +3% 105 +7% 40 +8% Europe 249 +4% Europe 219 +2% 36 -1% 42 +8% 31 +5% 38 +6%
Slide 27: Europe: Spain
Europe Spain main markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 32 +2 pp NII 934 -3.4 3,919 -4.3 -2% Digital customers (mn) 4.7 +10% Net fee income 620 0.9 2,481 -5.5 NPL (%) -38 bps Total income 1,811 -8.9 7,506 -1.4 ratio 6.94 -6% Operating expenses -977
Slide 28: Europe: SCF
SCF Europe SCF main markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Active customers (mn) 19.3 - NII 960 -1.3 3,848 3.9 Net fee income 195 -8.2 823 3.2 NPL ratio (%) 2.30 +1 bps Total income -1.3 2.6 1,185 4,710 Cost of credit (%) 0.48 +10 bps Operating expenses -499 -0.8 -2,038 2.9 LLPs
Slide 29: Europe: UK
Europe UK main markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 32 +2 pp NII 961 0.8 3,788 -7.9 Net fee income 226 -0.5 866 -5.9 Digital customers (mn) 5.8 +6% 3.8 -8.7 Total income 1,220 4,727 NPL ratio (%) 1.01 -7 bps Operating expenses -712 -0.5 -2,835 -0.9
Slide 30: North America: Mexico and USA
Mexico USA North America KEY DATA 2019 % 2018 KEY DATA 2019 % 2018 Loyal / active customers (%) 33 +4 pp Loyal / active customers (%) 19 -Digital customers (mn) 4.2 +45% Digital customers (ks) 1,010 +6% Efficiency ratio (%) 41.8 +15 bps Efficiency ratio (%) 43.3 -10 bps Underlying profit (EUR mn) 95
Slide 31: South America: Brazil
South America Brazil main market KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 22 - NII 2,534 2.3 10,072 6.0 Net fee income 974 3.7 3,798 11.5 Digital customers (mn) 13.5 +18% 4 Total income 3,565 4.5 13,951 7. NPL ratio (%) 5.32 +7 bps Operating expenses -1,242 12
Slide 32: Index
Index 1 2 3 4 Growth Group & Our business Key takeaways Profitability Business model delivers Strength: areas review profitable performance growth in 2019
Slide 33: Our aim as a bank
Our aim as a bank Our purpose To be the best open Our how financial services platform, To help people and by acting responsibly and Everything we do should be businesses prosper earning the lasting loyalty Simple, Personal and Fair of our people, customers, shareholders and communities 32
Slide 34: Business model based on Scale, Customer Focus and Diversification
Our business model based on Scale, Customer Focus and Diversification drives predictable and profitable growth Scale Customer Focus Diversification 2019 underlying attributable profit by region3 c.145 mn in NPS1 in 6 Top 3 countries South America North America total customers in Europe and the Ameri
Slide 35: Predictable and profitable growth since 2014
Disciplined execution has delivered predictable and profitable growth since 2014 …supported by Strong performance in the last 5 years… investments Growth Profitability Strength >€2bn Transformation EPS1 +22% RoTE +84 bps FL CET1 +€22 bn3 charges TNAVps2 +19% RoRWA +34 bps €5bn Investment in digital
Slide 36: Business model and track record support mid-term goals
Our business model and track record support delivery of our mid-term goals ’19 Investor Day 2019 Mid-term goals Loyal customers1 22mn c.26mn Digital customers2 37mn c.50mn Digital sales3 36% >50% High-single C/I 47% 42-45% digit EPS FL CET1 11.65% 11-12% 3Y-CAGR4 Underlying RoTE 11.8% 13-15% Underly
Slide 37: Three-pillar plan to drive profitable growth
Execution of our three-pillar plan to drive profitable growth in a responsible way Improve operating Optimise capital Accelerate performance allocation digitalisation through Santander Global Platform Continue building a more Responsible Bank 36
Slide 38: Improving operating performance leveraging One Santander
Improving operating performance leveraging One Santander Operating performance Europe North America South America 2019 Mid-term goal 2019 Mid-term goal 2019 Mid-term goal Underlying 10% 12-14% 13%1 14-16%2 21% 20-22% RoTE Efficiency 53% 47-49% 43% 39-41% 36% 33-35% Building one European Investing to
Slide 39: Ongoing capital allocation optimisation
Ongoing capital allocation optimisation to improve profitability Capital allocation Rebalancing to more Strong profitability improvement leading profitable regions and to higher capital generation capacity businesses 1.8-2.0% Improved pricing, processes and governance 1.6% 1.3% Active management and
Slide 40: Accelerating digitalisation and building Santander Global Platform
Accelerating digitalisation and building Santander Global Platform Digitalisation & SGP Accelerate the Provide faster transformation and better global of our ‘core payments and Banks’ solutions Moving towards ONE SANTANDER to build simpler, faster and better services 39
Slide 41: Global payments and digital banking solutions
Best-in-class Global payments and digital banking solutions to SMEs and Individuals Digitalisation & SGP 1 Digital payment services as a driver of customer Santander Global Platform engagement and loyalty SMEs Individuals Built with global platforms, leveraging our scale for 2 Focused on efficiency
Slide 42: Global payments solutions to SMEs
Bringing best-in-class Global payments solutions to SMEs Digitalisation Global Merchant Services Global Trade Services & SGP Leveraging Getnet to build Global Merchant Services One global platform to serve international SMEs High growth €42bn c.7% and large $200bn >200k Revenue pool for global Expec
Slide 43: Fully digital banking solutions to individuals
Offering fully digital banking solutions to individuals & SGP Financial inclusion platform to cost-effectively serve the bottom of the pyramid Our global, full-service digital bank High growth >300mn c.60mn and large 1bn 68% Underserved1 Middle class2 expansion addressable Population in the Of total
Slide 44: Index
Index 1 2 3 4 Growth Group & Our business Key takeaways Profitability Business model delivers Strength: areas review profitable performance growth in 2019
Slide 45: Key takeaways
Key takeaways In 2019 we have delivered Increase cash DPS to Growth: €20 cents (c.+3% YoY) • All-time record year in revenues of €49bn (+3%2) and total • High growth in customers: loyal (+9%) and digital (+15%) 2019 DPS of €23 cents1 Profitability: • Underlying RoTE at 11.8% and underlying RoRWA at
Slide 46: Appendix
Appendix 45
Slide 47: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 46
Slide 48: Net capital gains and provisions
Net capital gains and provisions Q1’19 Q4’19 Capital gains Prisma (Argentina) +150 Restructuring costs 78 Custody sale (net) +693 (-66 UK; -12 Poland)—Property sales (Corporate Centre) -180 Tax reform in Brazil +551 Group total -108 Real estate (net) -225 Restructuring costs -140 Q2’19 (-90 Brazil;
Slide 49: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 48
Slide 50: Europe
EUROPE KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 36 +3 pp NII 3,531 -1.2 14,201 -0.1 Net fee income 1,319 -0.2 5,260 -3.3 Digital customers (mn) 13.8 +9% Total income 5,292 -1.1 21,001 -1.3 NPL ratio (%) 3.25 -42 bps Operating expenses -2,733 -0.7 -11,044 -1.3
Slide 51: North America
NORTH AMERICA KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 31 +4 pp NII 2,265 -0.4 8,926 3.9 Digital customers (mn) 5.2 +35% Net fee income 427 -5.5 1,776 4.4 Total income 2,949 -1.9 11,604 5.1 NPL ratio (%) 2.20 -59 bps Operating expenses -1,314 3.0 -4,968 5.1 Co
Slide 52: South America
SOUTH AMERICA KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 26 - NII 3,356 3.2 13,316 9.3 Net fee income 1,228 3.2 4,787 14.6 Digital customers (mn) 17.3 +15% 4.8 10.7 Total income 4,714 18,425 NPL ratio (%) 4.86 +6 bps Operating expenses -1,762 11.1 -6,656 10.2 Co
Slide 53: Corporate Centre
Corporate Centre P&L* 2019 2018 NII -1,252 -987 Higher loss in NII due to higher stock of issuances and IFRS 16 impact Gains/Losses on FT -297 11 FX hedging cost reflected in results from financial Operating expenses -373 -426 transactions LLPs and other provisions -273 -216 Operating expenses refle
Slide 54: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 53
Slide 55: Retail Banking
Retail Banking P&L* Q4’19 % Q3’19 2019 % 2018 Activity NII 8,296 0.1 33,157 3.3 EUR bn and % change YoY in constant euros Net fee income 2,266 1.0 9,094 4.9 783 Total income 10,924 -1.1 43,523 3.8 712 Operating expenses -4,969 2.9 -19,481 2.6 LLPs -2,456 0.8 -9,154 7.4 +3% +6% PBT 3,042 -10.5 13,265
Slide 56: Corporate & Investment Banking
Corporate & Investment Banking: +17% YoY collaboration revenues P&L* Q4’19 % Q3’19 2019 % 2018 Total income NII 712 7.1 2,721 14.0 Constant EUR mn +7% 5.284 fee 4.920 Net income 380 -9.1 1,528 1.0 428 Capital & Other 491 -13% Total income 1,443 15.0 5,284 7.4 1.578 Global Markets 1.403 +12% Operatin
Slide 57: Wealth Management & Insurance
Wealth Management & Insurance: +20% YoY collaboration revenues3 P&L* Q4’19 % Q3’19 2019 % 2018 Activity NII 143 0.4 565 7.8 EUR bn and % change YoY in constant euros Net fee income 328 9.8 1,201 5.2 Total AUM 395 +13% Total income 588 6.4 2,223 6.3 Funds and investments2 240 +11% Operating expenses
Slide 58: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 57
Slide 59: Europe: Portugal
Europe Portugal other markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 46 +1 pp NII 213 -0.4 856 -0.2 Net fee income 98 2.3 390 3.6 Digital customers (ks) 775 +6% Total income 332 0.0 1,375 2.3 NPL ratio (%) 4.83 -111 bps Operating expenses -156 0.8 -623 -3.2
Slide 60: Europe: Poland
Europe Poland other markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 53 +1 pp NII 307 2.3 1,171 18.6 Net fee income 117 -2.1 467 4.0 Digital customers (ks) 2,510 +14% Total income 459 3.2 1,717 16.4 NPL ratio (%) 4.31 +3 bps Operating expenses -169 -3.7 -693 9
Slide 61: North America: Mexico
Mexico North America KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 33 +4 pp NII 816 0.9 3,157 8.5 Net fee income 197 -7.6 829 4.2 Digital customers (mn) 4.2 +45% 7 . Total income 1,054 3.5 3,998 7. NPL ratio (%) 2 19 -24 bps Operating expenses -445 4.7 -1,671 8.1 C
Slide 62: North America: USA
USA North America KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 19 - NII 1,449 -1.2 5,769 1.5 Net fee income 230 -3.6 947 4.6 Digital customers (ks) 1,010 +6% Total income 1,894 -4.6 7,605 3.8 NPL ratio (%) 2.20 -72 bps Operating expenses -869 2.2 -3,297 3.6 Cost o
Slide 63: South America: Chile
South America Chile other markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 46 - NII 464 6.4 1,867 -0.3 Net fee income 102 6.2 404 -0.9 Digital customers (ks) 1,247 +15% 4.6 ..0 Total income 638 2,539 4 NPL ratio (%) 4.64 -2 bps Operating expenses -246 0.7 -1,0
Slide 64: South America: Argentina
Argentina South America other markets KEY DATA 2019 % 2018 P&L* Q4’19 % Q3’19 2019 % 2018 Loyal / active customers (%) 47 - NII 250 6.9 940 126.7 Net fee income 118 4.8 446 84.3 Digital customers (ks) 2,196 +5% 12.8 101.6 Total income 359 1,316 NPL ratio (%) 3.39 +22 bps Operating expenses -209 19.6
Slide 65: South America: Uruguay and Andean Region
South America Uruguay and Andean Region other markets URUGUAY PERU COLOMBIA +24% +11% +81% 150 48 121 43 16 9 2018 2019 2018 2019 2018 2019 30% 21% 12% RoTE RoTE RoTE Increased volumes and activity reflected in profit growth (NII and fee income growth) and efficiency improvement Note: Underlying att
Slide 66: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 65
Slide 67: Capital levels exceed minimum regulatory requirements
Santander’s capital levels, both phased-in and fully loaded, exceed minimum regulatory requirements SREP capital requirements (phased-in) and MDA Dec-19 15.05% 13.18% +186 bps 1.91% T2 The minimum CET1 to be maintained by the Group is 9.68% T2 2.00% 1.49% AT1 AT1 1.50% +196 bps AT1 and T2 issuance t
Slide 68: Highly liquid balance sheet with customer deposits
Santander has a highly liquid balance sheet with a large contribution from customer deposits and diversified MLT wholesale debt instruments Liquidity Balance Sheet EUR bn, Dec-19 LCR NSFR LTD 1,231 1,231 Nov-19 Sep-19 Dec-19 Loans and 824 Customer 163% 112% 114% advances to 942 deposits customers Gr
Slide 69: MLT debt issuance and maturity profile
In the year, the Group issued EUR 33 bn1 of MLT debt and is able to cover its very manageable maturity profile Public market issuances in 2019 Maturity profile EUR bn, Dec-19 EUR bn, Dec-19 39.1 San S.A. 6.2 9.1 7.9 7.4 13.4 3.4 1.1 SCF 5.7 3.8 5.0 4.5 4.8 8.5 2.4 0.6 0.7 12.1 12.7 11.9 4.4 8.4 3.8
Slide 70: 2020-2021 issuance funding plan by main issuers
2020-2021 issuance funding plan by main issuers 2020 2021 Snr Preferred + Snr Non- Snr Preferred + Snr Non- Hybrids Total Hybrids Total EUR bn Covered Bonds Preferred Covered Bonds Preferred Santander S.A. 4-5 7-8 1-2 12-15 4-5 4-5 1-2 9-12 SCF 6-8 6-8 7-9 7-9 Santander UK 6-8 2-3 8-11 8-10 2-3 10-1
Slide 71: Interest rate risk and ALCO portfolios
We actively manage interest rate risk and our ALCO portfolios to optimise results while maintaining an appropriate risk profile Mostly positive interest rate sensitivity in Europe ALCO portfolios reflect our geographic diversification Net EUR interest mn, Nov income -19 sensitivity to a +100 bp para
Slide 72: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 71
Slide 73: Yield on loans (%)
Yield Y ld o on lo loans (%) % Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 EUROPE 2.79 2.78 2.78 2.78 2.78 2.76 2.71 2.68 Spain 2.00 2.00 2.03 2.05 2.06 2.08 2.02 2.01 Santander Consumer Finance 4.60 4.55 4.51 4.45 4.51 4.48 4.41 4.26 United Kingdom 2.82 2.79 2.80 2.80 2.72 2.68 2.64 2.59 Portug
Slide 74: Cost of deposits (%)
Cost C o ofde deposits (%) % Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 EUROPE 0.48 0.47 0.44 0.43 0.42 0.43 0.41 0.41 Spain 0.34 0.29 0.22 0.19 0.14 0.14 0.13 0.13 Santander Consumer Finance 0.65 0.61 0.60 0.59 0.60 0.60 0.60 0.58 United Kingdom 0.64 0.64 0.64 0.68 0.68 0.70 0.70 0.69 Portugal
Slide 75: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 74
Slide 76: Coverage ratio by stage
Coverage ratio by stage Exposure1 Coverage EUR bn Dec-19 Dec-19 Dec-18 Stage 1 898 0.5% 0.5% Stage 2 53 8.7% 9.2% Stage 3 34 41.7% 42.4% (1) Exposure subject to impairment. Additionally, there are EUR 31 bn in customer loans not subject to impairment recorded at mark to market with changes through P
Slide 77: NPL ratio (%)
NPL ra ratio (%) % Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 EUROPE 4.08 3.97 3.90 3.67 3.61 3.48 3.47 3.25 Spain 7.74 7.62 7.55 7.32 7.29 7.02 7.23 6.94 Santander Consumer Finance 2.48 2.44 2.45 2.29 2.33 2.24 2.25 2.30 United Kingdom 1.17 1.13 1.12 1.08 1.17 1.13 1.08 1.01 Portugal 8
Slide 78: Coverage ratio (%)
Coverage Co era ratio ratio (%) % Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 EUROPE 54.4 52.9 52.1 50.1 49.5 49.9 48.2 49.8 Spain 49.8 47.5 46.4 43.7 43.3 42.9 40.6 41.1 Santander Consumer Finance 107.2 107.7 106.4 106.4 105.3 105.9 104.2 106.1 United Kingdom 34.4 33.8 33.0 32.9 30.9 31
Slide 79: Non-performing loans and loan-loss allowances
Non-performing loans and loan-loss allowances. December 2019 Non-performing loans Loan-loss allowances 100%: EUR 33,799 mn 100%: EUR 22,965 mn Brazil, 14,0% Brazil, 20,8% Spain, 26,8% Chile, 5,8% Argentina, 0,5% Other South America, 0,4% Spain, 44,0% Chile, 4,8% Mexico, 2,5% Argentina, 0,9% USA, 6,9
Slide 80: Cost of credit (%)
Cost C o of credit credit (%) % Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 EUROPE 0.24 0.25 0.26 0.24 0.24 0.24 0.25 0.28 Spain 0.35 0.36 0.41 0.38 0.40 0.41 0.41 0.43 Santander Consumer Finance 0.36 0.37 0.40 0.38 0.38 0.36 0.38 0.48 United Kingdom 0.11 0.10 0.09 0.07 0.07 0.06 0.08 0.
Slide 81: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 80
Slide 82: Building a more responsible bank
From…To…. Santander Responsible banking Cumulative target We are building a more responsable bank aligned with our commitments (1) According to a well-known external source in each country (e.g. Great Place to Work, Merco); (2) Senior positions represent 1% of total workforce; (3) Compares employees
Slide 83: Appendix index
Appendix Net capital gains and provisions Primary segments Global businesses Other countries. Detail Balance sheet and capital management Yield on loans and cost of deposits NPL and coverage ratios and cost of credit Responsible Banking Quarterly income statements 82
Slide 84: Grupo Santander Group (EUR mn)
Santander GRUPO SANTANDER Group (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 8,454 8,477 8,349 9,061 8,682 8,954 8,806 8,841 34,341 35,283 Net fee income 2,955 2,934 2,640 2,956 2,931 2,932 2,955 2,961 11,485 11,779 Gains (losses) on financial transac
Slide 85: Grupo Santander Group (Constant EUR mn)
Santander GRUPO SANTANDER Group (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 8,205 8,356 8,631 8,894 8,548 8,854 8,920 8,960 34,086 35,283 Net fee income 2,809 2,849 2,762 2,837 2,869 2,894 3,004 3,012 11,258 11,779 Gains (losses) on
Slide 86: Europe (EUR mn)
Europe EUROPE (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 3,502 3,508 3,562 3,631 3,561 3,580 3,530 3,531 14,204 14,201 Net fee income 1,372 1,382 1,354 1,327 1,327 1,304 1,310 1,319 5,435 5,260 Gains (losses) on financial transactions and other 477
Slide 87: Europe (Constant EUR mn)
Europe EUROPE (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 3,500 3,501 3,577 3,639 3,555 3,574 3,559 3,514 14,216 14,201 Net fee income 1,372 1,382 1,358 1,330 1,326 1,303 1,317 1,314 5,442 5,260 Gains (losses) on financial transacti
Slide 88: Spain (EUR mn)
Spain Sp in (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 969 1,026 1,044 1,054 1,009 1,009 967 934 4,093 3,919 Net fee income 669 671 651 633 623 624 614 620 2,624 2,481 Gains (losses) on financial transactions and other 247 163 370 117 224 216 408 25
Slide 89: Santander Consumer Finance (EUR mn)
Santander nt Co Consumer Fi ance Finance (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 915 928 937 943 941 971 977 960 3,723 3,848 Net fee income 215 188 206 189 214 201 213 195 798 823 Gains (losses) on financial transactions and other 10 10 13 56 13
Slide 90: Santander Consumer Finance (Constant EUR mn)
Santander nt Co Consumer Fi ance Finance (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 910 923 933 940 940 968 977 964 3,706 3,848 Net fee income 214 188 206 189 214 201 213 195 797 823 Gains (losses) on financial transactions and oth
Slide 91: United Kingdom (EUR mn)
United nit d Kingdom (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 1,023 1,029 1,016 1,011 975 944 908 961 4,078 3,788 Net fee income 219 240 230 224 216 207 217 226 912 866 Gains (losses) on financial transactions and other 29 50 55 8 15 32 (5) 33 142
Slide 92: United Kingdom (GBP mn)
United nit d Kingdom (GBP mn) GBP mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 904 901 907 896 850 825 820 827 3,608 3,322 Net fee income 193 210 205 198 189 181 195 194 807 759 Gains (losses) on financial transactions and other 25 44 49 7 13 28 (4) 29 125 65 Tota
Slide 93: Portugal (EUR mn)
Portugal Portu l (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 222 213 211 211 216 213 214 213 858 856 Net fee income 98 91 92 96 98 99 96 98 377 390 Gains (losses) on financial transactions and other 22 42 20 26 44 42 22 21 110 129 Total income 341 34
Slide 94: Poland (EUR mn)
Poland Po d (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 247 240 243 265 281 284 298 307 996 1,171 Net fee income 112 114 111 115 113 117 119 117 453 467 Gains (losses) on financial transactions and other (26) 44 13 10 (18) 39 24 34 40 80 Total income
Slide 95: Poland (PLN mn)
Poland Po d (PLN mn) PLN mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 1,031 1,025 1,047 1,139 1,209 1,216 1,288 1,317 4,242 5,030 Net fee income 469 487 478 493 488 499 514 504 1,928 2,005 Gains (losses) on financial transactions and other (110) 183 54 41 (76) 168
Slide 96: Other Europe (EUR mn)
Otherer Europe rope (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 127 71 111 147 139 159 166 155 456 620 Net fee income 60 77 64 71 62 56 52 63 272 234 Gains (losses) on financial transactions and other 196 (27) 32 139 60 (7) (8) 68 340 112 Total incom
Slide 97: Other Europe (Constant EUR mn)
Otherer Europe rope (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 129 72 111 147 139 159 166 155 459 620 Net fee income 62 78 65 71 62 57 52 63 276 234 Gains (losses) on financial transactions and other 197 (26) 33 140 60 (7) (8) 67 3
Slide 98: North America (EUR mn)
North NORTH America MERICA (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 1,869 1,933 2,065 2,286 2,173 2,230 2,259 2,265 8,154 8,926 Net fee income 402 408 407 399 439 463 448 427 1,615 1,776 Gains (losses) on financial transactions and other 138 197 1
Slide 99: North America (Constant EUR mn)
North NORTH America MERICA (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 2,034 2,063 2,136 2,359 2,203 2,234 2,250 2,240 8,592 8,926 Net fee income 435 436 419 411 444 463 446 422 1,701 1,776 Gains (losses) on financial transactions a
Slide 100: United States (EUR mn)
United nit d States es (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 1,221 1,281 1,337 1,553 1,407 1,453 1,460 1,449 5,391 5,769 Net fee income 214 219 208 217 234 244 238 230 859 947 Gains (losses) on financial transactions and other 143 170 190 196 1
Slide 101: United States (USD mn)
United nit d States es (USD mn) USD mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 1,500 1,526 1,555 1,780 1,598 1,633 1,623 1,604 6,361 6,457 Net fee income 263 261 241 248 266 275 264 255 1,013 1,059 Gains (losses) on financial transactions and other 176 203 222 2
Slide 102: Mexico (EUR mn)
Mexico Mexico (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 649 653 728 733 766 777 798 816 2,763 3,157 Net fee income 187 188 199 181 204 218 210 197 756 829 Gains (losses) on financial transactions and other (5) 27 3 (18) (32) 4 (1) 42 8 13 Total inc
Slide 103: Mexico (MXN mn)
Mexico Mexico (MXN mn) MXN mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 14,945 15,080 16,086 16,573 16,703 16,694 17,231 17,393 62,685 68,021 Net fee income 4,312 4,355 4,390 4,098 4,455 4,695 4,535 4,188 17,153 17,873 Gains (losses) on financial transactions and
Slide 104: South America (EUR mn)
South SOUTH America MERICA (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 3,298 3,259 2,952 3,382 3,222 3,425 3,314 3,356 12,891 13,316 Net fee income 1,189 1,151 903 1,254 1,178 1,178 1,204 1,228 4,497 4,787 Gains (losses) on financial transactions and
Slide 105: South America (Constant EUR mn)
South SOUTH America MERICA (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 2,887 3,016 3,149 3,134 3,064 3,328 3,408 3,516 12,186 13,316 Net fee income 1,009 1,039 1,007 1,120 1,111 1,140 1,248 1,288 4,177 4,787 Gains (losses) on financ
Slide 106: Brazil (EUR mn)
Brazil Brazil (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 2,482 2,424 2,377 2,475 2,459 2,520 2,560 2,534 9,758 10,072 Net fee income 920 872 776 929 931 924 970 974 3,497 3,798 Gains (losses) on financial transactions and other 42 27 27 (8) 21 9 (7)
Slide 107: Brazil (BRL mn)
Brazil Brazil (BRL mn) BRL mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 9,898 10,383 10,874 10,747 10,516 11,095 11,272 11,534 41,903 44,416 Net fee income 3,670 3,738 3,577 4,032 3,980 4,070 4,271 4,429 15,017 16,750 Gains (losses) on financial transactions and o
Slide 108: Chile (EUR mn)
Chile hile (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 490 495 481 477 440 500 462 464 1,944 1,867 Net fee income 111 117 101 95 103 97 102 102 424 404 Gains (losses) on financial transactions and other 40 30 49 49 56 59 82 71 168 268 Total income 64
Slide 109: Chile (CLP mn)
Chile hile (CLP mn) CLP mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 362,502 366,847 370,827 370,410 333,439 383,545 363,195 386,260 1,470,585 1,466,440 Net fee income 81,758 86,556 78,318 73,959 78,010 74,473 80,052 85,052 320,592 317,587 Gains (losses) on financ
Slide 110: Argentina (EUR mn)
Argentina Argen (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 214 234 (6) 327 213 298 180 250 768 940 Net fee income 129 133 (6) 192 116 125 88 118 448 446 Gains (losses) on financial transactions and other 34 63 (58) (46) 2 (33) (31) (8) (7) (70) Tota
Slide 111: Argentina (ARS mn)
Argentina Argen (ARS mn) ARS mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 5,172 6,385 7,820 8,507 10,117 14,548 18,638 19,924 27,885 63,227 Net fee income 3,121 3,660 4,472 5,022 5,486 6,131 8,976 9,403 16,275 29,996 Gains (losses) on financial transactions and ot
Slide 112: Other South America (EUR mn)
Otherer SouthAm America a (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 112 106 100 103 109 108 112 108 421 437 Net fee income 29 29 31 38 29 32 44 34 128 138 Gains (losses) on financial transactions and other 7 11 9 8 8 9 16 10 36 43 Total income 148
Slide 113: Other South America (Constant EUR mn)
Otherer SouthAm America a (Constant EUR mn) Constant EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 104 99 94 99 105 107 113 113 397 437 Net fee income 27 27 30 37 27 31 44 36 121 138 Gains (losses) on financial transactions and other 7 10 9 8 8 9 16 10 34 43 To
Slide 114: Santander Global Platform (EUR mn)
Santander SANTANDER Global LOBAL Platform PLATFORM (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income 18 20 20 20 22 23 23 23 79 92 Net fee income 1 1 1 4 2 1 2 2 7 6 Gains (losses) on financial transactions and other (4) (3) (3) (2) (5) (4) (1) (7) (12) (1
Slide 115: Corporate Centre (EUR mn)
Corporate CORPORATE Centre CENTRE (EUR mn) EUR mn Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 2018 2019 Net interest income (234) (243) (251) (259) (296) (304) (319) (333) (987) (1,252) Net fee income (9) (9) (24) (28) (14) (13) (9) (15) (69) (50) Gains (losses) on financial transactions and oth
Slide 116: Glossary
Glossary 115
Slide 117: Glossary - Acronyms
Glossary—Acronyms AFS: Available for sale LLPs: Loan-loss provisions ROF: Gains on financial transactions AuM: Assets under Management M/LT: Medium- and long-term RoRWA: Return on risk-weighted assets bn: Billion mn: million RoTE: Return on tangible equity bp: basic point MDR: Merchant Discount Rate
Slide 118: 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 assets E
Slide 119: Thank you
Thank you Our purpose is to help people and business prosper Our culture is based on believing that everything we do should be 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, ther