Santander Consumer Bank. Q Investor Presentation

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1 Santander Consumer Bank Q Investor Presentation

2 Who we are Santander Consumer Bank is a Nordic bank with more than 1,200 colleagues in Sweden, Norway, Denmark and Finland, with a long history in the Nordics, and with global strength by being a part of Banco Santander. We are one of the largest Nordic banks providing loans and credits, credit cards, deposits and insurance to private customers. We work with the best people in an engaged, challenging and passionate organization that provides great opportunities for professional growth.

3 Regulated in Norway, owned by Banco Santander Santander Consumer Bank AS Fitch/Moody s A-/A3 SCB is regulated by the Norwegian FSA Banco Santander S.A. Fitch/Moody s/s&p A-/A3/A- Santander Consumer Finance S.A Fitch/Moody s/s&p A-/A3/BBB+ Santander Consumer Bank Denmark (Branch) Santander Consumer Finance Finland (Subsidiary) Santander Consumer Bank Sweden (Branch)

Q4 Key figures Gross Outstanding Loans 143.6 NOK Bn Core capital CET1 15.

0 NOK Bn People Customers Return on Partners 1,229 employees 1.35 million Asset 3.

4 Q4 Key figures Gross Outstanding Loans NOK Bn Core capital CET per cent Total deposits 50.6 NOK Bn Profit Before Tax 4.0 NOK Bn People Customers Return on Partners 1,229 employees 1.35 million Asset 3.0 per cent +4,100 merchants +4,200 car dealers Source: SCB Annual Report 2017 and Management Figures as per Q4 2017

5 History ELCON Finance A leading Norwegian company within equipment leasing, factoring and auto financing Bankia Bank acquired (credit cards) ELCON Finance becomes Santander Consumer Bank AS (SCB) GE Finland acquired (auto finance, consumer loans) Deposits launched in Denmark in / /13 Santander Consumer Finance (SCF) acquires ELCON Company demerges Auto finance retained in Norway and Sweden Launch consumer loans Norway Start up auto finance in Denmark and Finland Consumer loans in Sweden (2012) and Denmark (2013) Deposits launched in Norway and Sweden (2013) SCB merges with GE Money Bank SCB becomes leader within car finance and unsecured loans in the Nordic region

6 Main product areas Auto & Leisure Unsecured Deposits Insurance Loans and financial services provided to private customers and car dealers Loans, credit cards and sales finance services offered to private customers Saving products with high interest rates provided to private customers Insurance products related to payment protection, auto, health and travel, offered to private customers

7 Gross outstanding loans, distribution by product Total Auto and Total Unsecured Consumer Loan 19% Credit Card 5% Non Std. Auto 7% Total Unsecured 24% Total Auto 76% Auto Private Persons 59% Auto SME 10% Source: Annual Report 2017 and Management Figures as per Q4 2017

8 Our auto products Auto & Leisure Loans and financial services provided to private customers SMEs and car dealers Distribution Online Dealers Cross sale Auto Loans & Hire Purchase Customers Private Customers Business Customers Distribution Online direct distribution Indirect distribution with dealers and importers Auto Leasing Customers Private Customers Business Customers Distribution Dealers Direct SME Saving products with high interest rates provided to private customers Stock & Demo Financing Finance of dealer inventories Importer agreements (new) Direct to dealers (used)

9 Position within Auto Position and market share in the Nordics #1 Position 21% market share #1 Position 26% market share #4 Position 11% market share #1 Position 36% market share Partnerships with 21 brands dealers Source Norway: Internal calculations based on data from Finansieringsselskapenes Forening as per Q Source Finland: Internal calculations based on data from Finnish Transportation Safety Agency (Trafi) as per Q Source Denmark: Internal calculations based on data from Finans og Leasing as per Q Source Sweden: Internal calculations based on data from Finansbolagens Förening as per Q4 2017

Unsecured products Unsecured Loans, credit cards and sales finance services offered to private customers Direct loans Sales finance Credit cards

10 Unsecured products Unsecured Loans, credit cards and sales finance services offered to private customers Direct loans Sales finance Credit cards Distribution Online Agents Cross sale Distribution Online Stores Cross sale Distribution Online Stores Cross sale Portfolio Management GDPR PSD2

11 Partnerships a key success factor We started working with Santander as an exclusive partner two years ago. Since then, we have reached targets we didn t think were possible Paal Jahrmann, CEO Birger N. Haug +4,100 merchants +4,200 car dealers and 30 brokers I ve seen Santander work in a way that is not typical to a bank. You always take and run with our targets Stefan Andström, Sales Director, Nissan Nordic, Helsinki

12 Financials

13 Q Santander Group key figures Banco Santander S.A. Santander Consumer Finance S.A. Total assets 1,44 (trillion ) Loans 92 (billion ) Profit After Tax 6,619 (million ) Profit After Tax 1,373 (million ) Customers133 (million) Customers 20 (million) Headcount 202,251 Headcount 15,960 Branches globally13,697 (units) European countries15 Source: Banco Santander and SCF Q Institutional Presentation

14 Q SCB overview Nordic 2017 results Bn Gross Outstanding Loans % of Gross Outstanding Loans 39% Norway 17% Finland Norway 44.9 Bn 11.4 Bn 1,822 MM Auto Loans Unsecured Loans Profit Before Tax Finland 22.1 Bn 2.6 Bn 601 MM Auto Loans Unsecured Loans Profit Before Tax 4.0 Bn Profit Before Tax Denmark Sweden 20% Denmark 24% Sweden 23.4 Bn 5.8 Bn 871 MM Auto Loans Unsecured Loans Profit Before Tax 19.3 Bn 14.1 Bn 701 MM Auto Loans Unsecured Loans Profit Before Tax Source: SCB Annual Report 2017

15 Growing presence in the Nordics With a doubling of Gross Outstanding Loans in the past 5 years 21% 16% 40% 116, ,297 (mnok) mnok 7% 124, ,625 (mnok) mnok 15% 143, ,615 mnok (mnok) 59,575 59,575 (mnok) mnok 71,891 71,891 (mnok) mnok 83,322 83,321 (mnok) mnok Source: SCB Annual Reports ( )

16 Solid profitability Strong profitability, especially since the merger with GE Money Bank in 2015 PBT development NOK MM 23% CAGR ¹ +23% 3 995¹ Source: SCB Annual Reports ( ) 1) The Group reclassified issued AT1 capital of 2,25 Bn NOK from liabilities to equity in Interest expenses for 2017 of 169 MM NOK are consequently presented in equity instead of profit and loss, with related tax impact presented as part of other equity. Comparison figures are changed similarly. Please see principle 6) on page 40 in the 2017 Annual Report for further details.

17 Strong financial performance Evidencing well-managed growth Return on Assets Per cent Net Interest Income Ratio Per cent Cost / Income Ratio Per cent Source: SCB Annual Reports ( ) ROA = PBT / ANEA NII Ratio = Net Interest Income / ANEA Cost/Income Ratio = OPEX / Gross Margin (OPEX: Total Operating Costs)

18 Group Balance Sheet summary Robust balance sheet driven by growth in loans to customers NOK MM Q Q Δ 17/16 % Deposits with external institutions % Loans to customers (net) % Other financial assets % Other assets % Total assets % Debt to credit institutions % Deposits from customers % Debt established by issuing securities % Other liabilities % Subordinated loan capital % Total equity % Q Loans to customers: Continuous new business growth reflecting a high level of activity in all the Nordic countries Other financial assets: Reduced liquidity portfolio due to lower net liquidity flow at year end Other assets: Change mainly driven by increased consignment portfolio and a reclassification of the Danish Single Premium insurance portfolio Debt to credit institutions: Reduced levels of intragroup funding Deposits from customers: Increase in deposits in accordance with funding strategy Debt established by issuing securities: Increase issuance in unsecured bonds Total liabilities and equity % Source: 2017 Annual Report

19 Group Income Statement summary P&L showing steady growth with increasing profits NOK MM FY 2017 FY 2016 Δ 17/16 % Interest income and similar income % Interest expenses and similar expenses % Net interest income % Commissions and fees % Other product and funding related income and cost % Gross margin % Salaries and personnel expenses % Administrative expenses % Depreciations and amortisation % Net operating income % Other incomes and costs % Total losses on loans, guarantees etc % Profit before tax % Income tax % FY 2017 Net Interest Income: Net loans has increased more than net interest income due to the product mix in the portfolio Commissions and fees: Single premium insurance product closed in Norway Salaries personnel and administrative expenses: Increased according to budget. Closing of defined benefit plan in Norway - P&L impact 113 MM NOK Total losses: Significantly lower loan losses mainly driven by recoveries from bad debt sales in June (recoveries of approx. 600 MM NOK) and improved portfolio performance Reclassification of Additional Tier 1 Capital (Hybrid Capital) with related interest expense of 169 MM NOK reclassified to equity figures are changed similarly Profit after tax % Source: 2017 Annual Report

20 Self-funding is a strategic focus Three pillars approach provides funding flexibility Funding Composition 28% Self-funding pillars ¹ 38% 11% 23% Securitization Unsecured Deposits Parent funding Securitization Deposits Unsecured Bonds Self-funding ratio 70% 70% 77% 62% 50% 22% 28% 8 outstanding transactions across Nordics Represents a low-cost and stable funding source NOK 9.1 billion outstanding in the Norwegian bond market including NOK 900 MM in Commercial Paper SEK 4.45 billion outstanding in the Swedish bond market EUR 2.25 billion outstanding from four Benchmark transactions In Norway deposits are guaranteed up to NOK 2 MM In EU countries the guarantee is up to EUR 100,000 NOK 50.6 billion in total deposits across Norway, Sweden and Denmark Source: SCB 2017 Annual Report 1) Outstanding amounts/transactions as per Q4 2017

21 Deposits at a glance Consolidated total balance: NOK 50.6 Bn 42% of total balance Saving account Saving account Floating interest rates Full flexibility 28% of total balance Saving account Notification product Term deposits 30% of total balance Saving account Notification product Notification product Withdrawals 31 days notice Floating interest rates Term deposits Fixed interest rates Balance locked 24 months Fees for withdrawals within termed period Source: SCB 2017 Annual Report Deposit guarantees: Norway NOK 2 million Sweden SEK 950,000 Denmark EUR 100,000 equivalent

22 Unsecured Senior & Commercial Paper Funding 2016 and 2017 summary 2017 NOK SEK EUR New Issuances 4,050 million 2,000 million 500 million Repurchases 800 million - - Net New funding 3,250 million 2,000 million 500 million Maturities - 2,410 million - Total Outstanding¹ 9,101 million 4,450 million 2,250 million Preferred Format FRN FRN FXD Preferred Tenor 3 5 year 3 4 year 3 year 2016 NOK SEK EUR New Issuances 3,651 million 1,450 million 1,000 million Repurchases 401 million 90 million - Net New funding 3,250 million 1,360 million 1,000 million Maturities 1,104 million million Total Outstanding² 5,851 million 4,860 million 1,750 million Preferred Format FRN FRN FXD Preferred Tenor 2 3 year 3 year 3 year Source: Bloomberg 1) Outstanding amounts as per Q ) Outstanding amounts as per Q4 2016

23 Unsecured Funding Maturity profile for Senior Unsecured and Commercial Paper Total Maturity (EUR MM) SEK MM 1,000 1,450 1,000 1,000 EUR SEK ,000 NOK NOK MM 2,500 3,451 1,600 1, EUR MM , Source: Bloomberg as per Q4 FX: SEK/NOK EUR/NOK EUR/SEK

24 Strict capital requirements in Norway Ensuring strong capitalization of the bank CET1-ratio requirement for % Pillar 2 CET1-requirement Countercyclical buffer ~1.3% 1 Capital requirements in Norway Strict requirements in Norway with the inclusion of additional buffer requirements and a high countercyclical buffer requirement Pillar 2 requirement for SCB was set to 2.3% by the Norwegian FSA, applicable from January 2018 ~13.6% ~11.3% Pillar 1 CET1-requirement Systemic risk buffer 3% Conservation buffer 2.5% ~11.3% Countercyclical buffer requirement is calculated as a weighted average of the risk weighted assets in the countries where the bank operates Minimum CET1 requirement 4.5% For 2018 the countercyclical buffer for SCB will be 2% in Norway and Sweden and 0% in Denmark and Finland¹ 1) Portfolio allocation per , show a countercyclical buffer requirement for SCB Group of 1,14% and SCB AS of 1,47%

25 Delivering on capital requirements CET1 ratio of 15.5% Capital ratios evolution SCB Group Per cent CET 1 Tier 1 Tier 2 Leverage ratio High capital ratios attained through solid earnings Dividend of NOK 350 million included in December capital ratios, to be payed in Q CET1 ratio currently exceeds the requirement by about 2% Adoption of IRB approach in Dec 2015 provided capital relief of about NOK 1.3 Bn, with one-third of the portfolio under IRB With a current leverage ratio of 12%, the bank is positioned well above the leverage ratio requirement of 5% IFRS9 is expected to increase provisions by NOK million from January 2018 SCB will use the transitional rules for IFRS9 capital impact when calculating capital ratios going forward Source: 2017 Annual Report

Risk Management Recent developments Business strategy defined by risk appetite.

management) Answer to the BIS initiative on risk data aggregation and risk reporting Risk data captures all types of risks with appropriate accuracy and

related to improved client information IRB requires the bank to increase the accuracy of models, improve scoring, processes and routines and in general the

26 Risk Management Recent developments Business strategy defined by risk appetite. All risks to be managed Forward-looking approach Independent risk function Robust data management Risk culture (greater synergy and integration of IRB into management) Answer to the BIS initiative on risk data aggregation and risk reporting Risk data captures all types of risks with appropriate accuracy and timeliness Complete, precise and regular data for effective risk management SCB was approved an IRB bank in 2015 The operational benefits of IRB are related to improved client information IRB requires the bank to increase the accuracy of models, improve scoring, processes and routines and in general the risk management practice of the bank IFRS9 parameters are developed leveraging from the IRB system Strong governance in place including internal validation and audit Engine developed, tested, in use to face the new impairment requirements

27 Tight risk controls result in stable performance Risk ratio breakdown NPL Ratio Denmark 0.70% 0.71% 0.61% 0.98% 1.24% 1.17% Finland 1.38% 1.04% 0.89% 0.72% 0.71% 0.74% Norway 2.47% 2.47% 2.36% 3.40% 3.36% 3.50% Sweden 0.74% 0.48% 0.61% 1.53% 1.22% 1.12% Nordic 1.76% 1.61% 1.48% 2.05% 2.01% 1.96% NPL ratio 3 Per cent NPL Ratio Auto % 1.20% 1.09% 1.03% 1.10% 1.07% Unsecured % 5.32% 4.77% 4.95% 4.89% 4.92% Nordic 1.76% 1.61% 1.48% 2.05% 2.01% 1.96% Coverage ratio 4 Per cent Coverage Ratio Auto % 75.5% 89.4% 95.4% 90.4% 91.8% Unsecured % 136.4% 148.1% 111.8% 113.1% 100.6% Nordic 97.7% 98.6% 126.9% 107.7% 113.6% 96.9% Source: Management Figures 1) Auto includes Stock Finance 2) Unsecured includes Direct Loans, Credit Cards and Sales Finance ( Durables ) 3) NPL ratio = Non-performing loans / Gross outstanding loans 4) Coverage Ratio = Loan Loss Reserves (Write Downs) / NPL

28 Key takeaways Anchored by a global banking franchise Sustained market leader in auto Building out position in unsecured space Robust financial results Stable credit risk

29 January 2018 Banco Santander & Santander Consumer Finance

31 Subjects Banco Santander Santander Consumer Finance

32 Santander, a leading financial group Key Figures Dec 17 Total assets (trill. ) 1.44 Underlying Attrib. Profit 2017 (mill. ) 7,516 Attributable Profit 2017 (mill. ) 6,619 Headcount 202,251 Customers (millions) 133 Shareholders (millions) 4.03 Branches (units) 13,697 NOTE: Customers ex-popular

33 Purpose and business model Our purpose to help people and businesses prosper Our aim to be the best retail and commercial bank that earns the lasting loyalty of our people, customers, shareholders and communities Our way of doing things Predictable, stable profit throughout the cycle Sustainable, high profitability enabling growth opportunities to be exploited Cash dividend per share growth

34 Well diversified between Europe and the Americas (*) Excluding Corporate Centre and Real Estate Activity Spain. (1) Popular included (3%)

With leading positions in its core markets Large market share leads to high(-er) profitability SPAIN BRAZIL UK PORTUGAL CHILE POLAND ARGENTINA MEXICO US SCF (1) Spain & Portugal includes Popular, UK:

35 With leading positions in its core markets Large market share leads to high(-er) profitability SPAIN BRAZIL UK PORTUGAL CHILE POLAND ARGENTINA MEXICO US SCF (1) Spain & Portugal includes Popular, UK: Mortgages (excluding Social Housing), consumer credit and commercial loans (ex-financial Institutions), SBNA in the states where the bank operates and SCF in new car loans, including PSA operation & not considering brand s financial captive (2) Only private banks for Portugal, Brazil and Argentina (3) Spain public perimeter. SCUSA s RoTE: 15%, SBNA s RoTE: 3%. SCF ex-scuk (4) Peers average (UK Statutory). Source: Companies reports, analyst s reports and Bloomberg

36 2017 Key achievements (1) % change in constant euros

37 2017 P&L - Breakdown Excellent quality and strong top-line growth Underlying PBT +20% YoY and attributable profit +7% YoY Several one-offs, mainly related to integrations and goodwill

38 2017 Commitments Note: Customer metrics exclude Popular (1) % change (constant euros) (2) Total dividends charged to 2017 earnings are subject to the Board and AGM approval (3) Underlying

39 Subjects Banco Santander Santander Consumer Finance

Santander Consumer Finance, European leader in the consumer finance industry Key Figures Dec 17 Grupo Santander is the main and unique shareholder of SCF.

) 100 Deposits (bill. ) 35 Underlying Attrib. Profit 2017 (mill.

40 Santander Consumer Finance, European leader in the consumer finance industry Key Figures Dec 17 Grupo Santander is the main and unique shareholder of SCF... and at the same time, SCF acts as a holding for its subsidiaries through a banking license Operations are mainly done through point-ofsales (dealers and retailers) Loans (bill. ) 100 Deposits (bill. ) 35 Underlying Attrib. Profit 2017 (mill. ) 1,373 European countries 15 Market positions 1 Top 3 Customers (million) 21 PoS partnerts (thousand) >130 SCF: Management perimeter (i.e. including SCUK) Attributable profit without non-recurring (provisions or capital gains) (1) In its main geographies by market share in New Business car loans or durables

With recurrent profits through the cycle Underlying Attributable Profit Million 472 555 744 825 895 908 1 093 1 238 1 373 2009 2010 2011 2012 2013 2014 2015 2016

41 With recurrent profits through the cycle Underlying Attributable Profit Million All-time record profit result in 2017 SCF: Management perimeter (i.e. including SCUK) Attributable profit without non-recurring (provisions or capital gains)

A differential and proven business model based on five

B Advanced car financing platform and strong foothold in

leadership with proven integration capabilities

42 A differential and proven business model based on five key levers A High diversification and European leadership B Advanced car financing platform and strong foothold in consumer finance SCF s business model C D Efficiency leadership with proven integration capabilities Best-in-class risk and collections capabilities E Sound funding structure

43 A Well spread across Europe and well balanced between car and consumer loans High geographic diversification Product diversification Outstanding: 100 bn (Dec 17) Poland Italy UK 8% 8% 10% Others 4% 7% Loan Breakdown by Country (2017) 35% Germany Outstanding: 100 bn (Dec 17) Others Mortgages Cards Durables Direct (B2C) 4% 4% 12% 7% 5% Loan Breakdown by Product (2017) 35% Auto Consumer Other Auto-New France 14% Spain 15% Nordics Car Stock Finance 11% 22% Auto-Used Well spread across 15 European countries Important foothold in the largest economies 73% portfolio in AAA & AA countries Car financing represents the biggest share of the portfolio: 68% Consumer lending (durables financing, cash loans and credit cards): 20% SCF: Management perimeter (i.e. including SCUK)

B Advanced car financing platform and strong foothold in consumer finance Advanced car financing platform Strong foothold in consumer finance Presence in all main European markets TOP positions in

44 B Advanced car financing platform and strong foothold in consumer finance Advanced car financing platform Strong foothold in consumer finance Presence in all main European markets TOP positions in its geographies, including the 5 biggest European auto markets: Germany, France, UK, Italy and Spain > POS (captive and non-captive) The longest European captive agreements base: more than 100 agreements with 15 manufacturers TOP retail chain agreements throughout Europe >55,000 POS partners >4 MM consumer loans per year TOP 3 in core geographies Digital direct business platforms Consumer Finance: Durable financing, Personal loans and Credit Cards SCF: Management perimeter (i.e. including SCUK)

2011 2014 2014 2015/2016 Germany Benelux Spain France Germany Italy Spain Portugal Belgium Austria Netherlands Switzerland

45 C One of the best efficiency in the industry, with proven capabilities to make the most of integrations Cost-to-Income ratio 3Q16 YTD 3Q17 YTD 46,7 48,3 48,1 44,7 43,0 43,1 Integrations Germany Austria Finland Germany Norway Sweden Denmark /2016 Germany Benelux Spain France Germany Italy Spain Portugal Belgium Austria Netherlands Switzerland SCF: Management perimeter (i.e. including SCUK) Peers: Crédit Agricole Consumer Credit, BNP Personal Finance. Source: company websites.

46 D Sound risk metrics 6,26% NPL Ratio (%) 2,73% 2,34% jun.07 des.08 jun.10 des.11 jun.13 des.14 jun.16 des.17 LLPs over ANEAS (%) 2,53% 0,99% 0,31% 3% 2% 1% KPIs better than sector average Strong capacity to balance adverse economic cycles across geographies Low cost of risk, despite important increase in SCF s loan portfolio Coverage > 100% dec-07 dec-08 dec- 09 dec- 10 dec-11 dec- 12 dec-13 dec-14 dec-15 dec-16 dec-17 0% SCF: Management perimeter (i.e. including SCUK)

47 E Funding diversification SCF s funding structure (%) December 2017 High diversification of funding sources Capacity to do issuances in all countries Diversification of deposits in many countries Increasing long-term finance vs short term SCF: Management perimeter (i.e. including SCUK)

48 All in all, SCF is a significant contributor to Santander s results, representing 13% of the Group s profit* in 2017 SCF excluding SCUK. Including SCUK, SCF represents 14% of SAN profit* (*) Percentage over SAN underlying attributable profit in 2017, excluding Corporate Centre and Real Estate Activity Spain (1) Popular included (3%)

49 Contacts Anders Bruun-Olsen, Nordic CFO Mobile: Thomas Andrén-Johansen, Senior Manager Capital Markets Mobile: Priscilla Halverson, Director Capital Markets Mobile: Morten Christopher Freberg Holme, Capital Markets Manager Mobile: Anders Fuglsang, Senior Manager Capital Markets Mobile: Joachim Joveng Rogne, Capital Markets Analyst Mobile: :

50 To learn more about Santander visit Santanderconsumer.no Santanderconsumer.dk Santanderconsumer.se Santanderconsumer.fi Our purpose is to help people and businesses prosper. Our culture is based on the belief that everything we do should be

Helping people and businesses prosper

Santander Consumer Bank Helping people and businesses prosper Q4 2017 Investor Presentation 2 About us Who we are Santander Consumer Bank is a Nordic bank with more than 1,400 colleagues in Sweden, Norway,