Banco Santander Mortgage Covered Bonds Investor presentation ( Cédulas Hipotecarias )

Transcription

1 1 Banco Santander Mortgage Covered Bonds Investor presentation ( Cédulas Hipotecarias ) Data at September 2013

2 Important information 2 Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the SEC ) could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. Note: From June 2013 Banco Santander S.A. data record the result of the merger with Banesto and Banif (absorption from Banco Santander completed in May 2013) which accounts for the consolidation of corresponding amounts and homogenization of classification criteria.

3 3 Agenda Banco Santander Mortgage Covered Bonds Highlights Collateral description Mortgage covered bonds information Appendix: loans and real estate portfolio in Spain Additional information

4 Banco Santander Mortgage Covered Bonds. Summary 4 SAN mortgages, high quality collateral Key commercial product Strict risk policy (approval, monitoring ) Low-risk profile (high residential %, geographical diversified ) Balanced funding strategy Covered bonds: 43% of total Rest: 57% (of which, securitisations 11%) Mortgage funding (Sep. 2013) 100% = EUR 90.0 bn. Securitisations 11% 46% 43% Mortgage covered bonds Deposits & others Over collateralisation - ratio Santander mortgage covered bonds Adequate maturity distribution High collateralisation level Strict eligibility cover pool criteria (higher than legal) Of total portfolio w/o securitisations 190% Dec'12 207% 131% of eligible portfolio Sep'13

5 Banco Santander Mortgage Covered Bonds. Main figures (Sep 13) 5 Collateral description Total mortgage loans 1 ( mill.) 79,963 Eligible portfolio ( mill.) 50,677 Number of loans 666,244 Average loan size ( thousand) Mortgage covered bond description Total Covered Bonds 2 (mill. ) 38,612 Over Collateralisation rate (%) 207 OC (eligible) rate (%) 131 Average maturity (months) 38 Loan seasoning (months) 72 Maturity profile Remaining loan maturity (months) 192 Average LTV (%) 64 Average eligible pool LTV (%) 47 > % 12% 22% 57% Eligible pool NPL ratio volume (%) Rating of Banco Santander mortgage covered bonds Downgraded from Aaa/AAA throughout 2012 mainly linked to sovereign decisions Moody s Fitch A3 A (1) Excluding securitisations (2) Nominal outstanding

6 6 Agenda Banco Santander Mortgage Covered Bonds Highlights Collateral description Mortgage covered bonds information Appendix: loans and real estate portfolio in Spain Additional information

7 (1) Total service debt (mortgage + other loans) over total net income (40% maximum, as standard rule) (2) Only mortgages managed under scoring systems (approx. 60% total volume). (3) Mortgages to individuals. (4) Expected losses in 12 months for new household mortgages under eligible criteria (LTV up to 80%; max term up to 30 years). Mortgages: a key product for Banco Santander 7 A key COMMERCIAL product Anchor product to build long term relationships with retail customers Linked customers: with mortgage, > 7 products vs. w/o mortgage, 4-5 products Capturing new mortgages mainly in branches : one by one, 80% total Reduced role from developers (15% in ) Plain vanilla loans in almost 100% of cases In euros (99.7%); no interest-only; variable reference rate (94.8%) Pricing adapted to loan s characteristics: LTV / term / affordability under a strict RISK POLICY Demanding ORIGINATION criteria LTV (max. 80%) / term (max. 30 years) Affordability 1 (current stock 2 : 27%) Individuals-mortgages (Santander+Banesto proforma): NPL gross entries >90d past due (before recoveries) Close MONITORING to collect 5 days to act after first unpaid instalment 90 days to pre-legal action (recovery) Highly effective RECOVERY : >80% past-due operations were normalised before NPL+90d period Expected loss after recovery 4 : 0.5% = 100 base M

8 (1) Mortgage loans and credits excluding securitisations (EUR 10,018 mill.). Total mortgage portfolio: EUR 89,981 mill. (2) Developer mortgage product (3) Estimate from mortgages to individuals (4) Finished and under construction buildings with residential purposes In fact, Banco Santander has a low risk mortgage portfolio 8 A low risk portfolio highly focused on residential mortgages and first home financing September 2013 Mortgage portfolio 1 : EUR 80.0 billion Segments Guarantees Developer activities 2 Other business activities 100% 10% 28% Second home 3 3% 100% 4% 21% Land Other Households 62% First home 3 97% 75% Residential 4

9 In fact, Banco Santander has a low risk mortgage portfolio 9... concentrated in urban areas with lower unemployment rates September 2013 Valencia Andalucía Galicia Castilla-LM, Extremadura Canarias Baleares Cantabria, Asturias Murcia 61% 39% Aragón, Nav., La Rioja Madrid Castilla-León País Vasco Regions with unemployment rates < Spain s average Regions with unemployment rates > Spain s average Cataluña Regions % Back-book Madrid 24.7 Andalucía 17.3 Cataluña 17.0 Valencia 8.8 Canarias 5.8 Castilla-León 4.0 País Vasco 3.4 Castilla-La Mancha 3.2 Galicia 3.1 Baleares 2.5 Aragón 2.4 Murcia 2.0 Cantabria 1.9 Extremadura 1.6 Asturias 1.3 Navarra 0.5 La Rioja 0.5 Spain Data from total mortgage portfolio (credits and loans) excluding securitisations

10 In fact, Banco Santander has a low risk mortgage portfolio with adequate maturities... Distribution by maturity* Maturity profile** September 2013 EUR million < 10 years 4,500 > 30 years 8% 32% 4,000 3,500 3, years 31% 29% years 2,500 2,000 1,500 1, Average remaining loan maturity: Average loan seasoning: 16.0 years 6.0 years (*) The first bucket (< 10 years) includes lines of credit and non-performing loans under legal action (**) Excluding lines of credit and non-performing loans under legal action

11 In fact, Banco Santander has a low risk mortgage portfolio with adequate LTV in the total mortgage portfolio (as average of the combined exposure of individuals and companies) that reduces the risk exposure Total mortgage portfolio 1 Eligible portfolio 2 September 2013 September % = LTV* (weighted average) % = LTV* (weighted average) Cumulative (%) Outstanding by LTV interval (%) Cumulative (%) Outstanding by LTV interval (%) % 20-40% 40-60% 60-80% >80% % 20-40% 40-60% 60-80% >80% 0 (1) Excluding securitisations (2) Excluding high LTV loans (residential >80% and commercial >60%, without additional guarantees); loans w/o appraised value and non-euro loans; litigious and pre-litigious loans; and 100% developer activities (stricter than legal). (*) LTV is calculated at the latest available collateral appraisal, according to Bank of Spain and 2012 annual report criteria.

12 12 Agenda Banco Santander Mortgage Covered Bonds Highlights Collateral description Mortgage covered bonds information Appendix: loans and real estate portfolio in Spain Additional information

13 Banco Santander Mortgage Covered Bonds 13 MATURITY PROFILE: sooner than mortgage maturity Total outstanding (September 2013): EUR 38,612 million 12,000 10,000 8,000 Average maturity: 3.2 years 6,000 4,000 2, * > % issued in euros (*) 2014 maturities are concentrated in the first half of the year: EUR 4,925 mill. in 1Q; EUR 1,842 mill. in 2Q.

14 Banco Santander Mortgage Covered Bonds 14 HIGH COLLATERALISATION LEVEL based on strict eligibility criteria September EUR million 89,981 Collateralisation rate: 207% 79,963-10,018 50,677-29,286 38, % Eligible portfolio Total mortgage portfolio Securitised Total Cover pool Non eligible Eligible Cover pool Outstanding mortgage covered bonds

15 15 Agenda Banco Santander Mortgage Covered Bonds Highlights Collateral description Mortgage covered bonds information Appendix: loans and real estate portfolio in Spain Additional information

16 Spain 1. Loans to customers 16 Lending evolution reflects the deleveraging trends of the private sector Gross loans EUR billion TOTAL Household mortgages Other loans to individuals Companies repos Public sector Sep'12 Jun'13 Sep'13 Greater stability in retail in 3Q'13. Company lending reflect deleveraging and greater access to markets. Actions to boost investment: Plan , EIB and ICO. (1) Including retail networks of Santander, Banesto and Banif, Global Banking & Markets Spain, Asset Management Spain, Insurance Spain and ALCO Spain. Excluding SCF Spain and the discontinued real estate activity in Spain

17 Spain. NPLs and coverage ratios 17 NPL and coverage ratios (%) NPL entries 1 > 90 days Base 100: 2008 Companies w/o real estate purpose Coverage ratio NPL ratio Mortgages to individuals Sep'12 Dec'12 Mar'13 Jun'13 Sep'13 (2) Individuals Cards + Consumer loans NPL ratio impacted by deleveraging and companies. Stable credit quality in mortgages M13 (1) Gross NPL entries by date (before recoveries), based on > 90 days of arrears. (2) Including reclassification of substandard operations.

18 Spain's run-off real estate 1 18 Total Balance Sheet assets Coverage ratios EUR billion 15.5 Net loans Net foreclosures Equity stakes % 54% Buildings: 41% Land: 62% Sep'12 Dec'12 Mar'13 Jun'13 Sep'13 Loans Foreclosures Total real estate exposure dropped 26% in the last twelve months. Coverage ratios remain above 50%. 9M'13 attributable profit: -EUR 493 million (-156 million in 3Q). (1) Including foreclosed real state and equity stakes (Metrovacesa and Sareb)

19 Spain's run-off real estate. Exposure and coverage ratios 19 Coverage by borrowers' situation (September 2013) Total coverage (problematic assets + performing loans) EUR Million provisions / exposure (%) Gross risk Coverage Net risk Fund Non-performing 8,545 4,669 3,876 Total real estate exposure 52% Substandard 1 1, ,104 Foreclosed real estate 8,020 4,293 3,727 Total problematic assets 18,392 9,685 8,707 Performing loans 2 2, ,267 Real estate exposure 20,643 10,669 9,974 Sep'13 Non-performing 55% Substandard 1 40% Foreclosed real estate 54% Total problematic assets 53% Performing loans 2 44% (1) 100% up-to-date with payments (2) Performing loans: loans up-to-date with payments

20 Spain's run-off real estate. Loans and foreclosures 20 LOANS with real estate purpose EUR Million EUR Million Foreclosed REAL ESTATE Sep 13 Dec 12 Var. Gross amount Coverage Net amount Finished buildings 5,377 6, Buildings under constr , Developed land 3,613 3, Building and other land 1,392 1, Non mortgage guarantee 1,783 2, Total 12,623 14,650-2,027 Finished buildings 2,498 39% 1,537 Buildings under constr % 320 Developed land 3,532 62% 1,360 Building land 1,192 62% 456 Other land % 54 Total 8,020 54% 3,727

21 21 Agenda Banco Santander Mortgage Covered Bonds Highlights Collateral description Mortgage covered bonds information Appendix: loans and real estate portfolio in Spain Additional information

22 Additional information 22 About: Grupo Santander Business and Financing Model Relations/Presentations/Fixed-Income-Presentations.html Grupo Santander Jan-Sep 13 performance Relations/Presentations/Results-Presentations-.html Grupo Santander Jan-Sep 13 performance in Spain Relations/Presentations/Results-Presentations-.html

23 23