Santander Consumer Bank. Q Investor Presentation

Transcription

1 Santander Consumer Bank Q Investor Presentation

2 Who we are Santander Consumer Bank is a Nordic bank with more than 1,500 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, which provides great opportunities for professional growth. 2

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-/A2/A Santander Consumer Finance S.A Fitch/Moody s/s&p A-/A2/A- Santander Consumer Bank Denmark (Branch) Santander Consumer Finance Finland (Subsidiary) Santander Consumer Bank Sweden (Branch) 3

4 H1 Key figures Gross Lending Core capital CET1 Total deposits Profit Before Tax NOK Bn 16.2 per cent 52.6 NOK Bn 2,046 NOK million People 1 Customers Return on Partners 1,552 employees 1.41 million Asset 2.8 per cent 4,785 merchants +5,600 car dealers Source: SCB Q Report and Management Figures as per Q ) Headcount includes FTE s and temporary employees 4

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 5

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 6

7 Gross outstanding loans, distribution by product Total Auto and Total Unsecured Consumer Loan 18% Credit Card 4% Non Std. Auto 7% Total Unsecured 22% Total Auto 78% Auto Private Persons 60% Auto SME 11% Source: SCB Q Report and Management Figures as per Q

8 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) 8

9 Position within Auto Position and market share in the Nordics #1 Position 25% market share #1 Position 25% market share #4 Position 8% market share #1 Position 39% market share Partnerships with 21 brands dealers 9 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 Q2 2018

10 Unsecured products and portfolio Distribution of Unsecured portfolio¹ Unsecured Loans, credit cards and sales finance services offered to private customers 35% 11.5 Bn 8% 2.6 Bn Direct loans Sales finance Credit cards Distribution Online Agents Cross sale Distribution Online Stores Cross sale Distribution Online Stores Cross sale Portfolio Management 17% 5.7 Bn 40% 13.4 Bn Source: SCB Q Report 1) Gross Outstanding (in NOK billion) 10

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 4,785 merchants +5,600 car dealers and 26 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 11

12 12 Financials

13 H Santander Group key figures Santander Group Santander Consumer Finance Subgroup Total assets 1.43 (trillion ) Loans 102 (billion ) Profit After Tax 3,752 (million ) Profit After Tax 727 (million ) Customers140 (million) Customers 20 (million) Headcount 200,961 Headcount 15,961 Branches globally13,482 (units) European countries15 Source: Banco Santander and SCF Q Institutional Presentation 13

14 H SCB overview Nordic H result % of Gross Outstanding Loans Norway 47.1 Bn Auto Loans Finland 27.0 Bn Auto Loans Bn Gross lending 41% Norway 16% Finland 11.3 Bn 974 MM Unsecured Loans Profit Before Tax 2.6 Bn 275 MM Unsecured Loans Profit Before Tax 2,046 MM Profit Before Tax 20% Denmark 23% Sweden Denmark 24.5 Bn 5.7 Bn 446 MM Auto Loans Unsecured Loans Profit Before Tax Sweden 20.3 Bn 13.2 Bn 352 MM Auto Loans Unsecured Loans Profit Before Tax Source: SCB Q Report 14

15 Growing presence in the Nordics Gross lending more than doubled in the past 5 years 1 21% 16% 39% 119,254 mnok 8% 116,297 (mnok) 128,299 mnok 15% 124,625 (mnok) 143, , ,597 mnok 2% (mnok) mnok 59,575 61,201 (mnok) mnok 74,107 mnok 71,891 (mnok) 85,953 mnok 83,322 (mnok) Q Source: SCB Annual Reports ( ) and Q Report 1) Gross Lending includes consignment and operational lease 15

16 Solid profitability Strong profitability, especially since the merger with GE Money Bank in 2015 PBT development NOK MM 3 995¹ 23% CAGR 3 250¹ H Source: SCB Annual Reports ( ) and Q Report 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. 16

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

18 Group Balance Sheet summary Robust balance sheet driven by growth in loans to customers NOK MM Q Q Δ 18/17 % 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 % Total liabilities and equity % Q Deposits with external institutions: Significant decrease due to repayment of EUR bond maturity in April. Loans to customers: Growth in gross loans are partially off-set by IFRS9 impact on LLR Other financial assets: Reduced liquidity portfolio due to bond maturities in YTD Q Other assets: Change mainly driven by decreased consignment Debt to credit institutions: Increased levels of intragroup funding due to large EUR bond maturity Deposits from customers: Increase in deposits in accordance with funding strategy Debt established by issuing securities: Net repayments of issued securities during first half of 2018 Source: SCB Q Report 18

19 Group Income Statement summary P&L showing steady growth with increasing profits NOK MM H H Δ 18/17 % 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 % Profit after tax % YTD Q Net Interest Income: Increased due to higher volumes and lower cost of funding Commissions and fees: Single premium insurance product shifted to monthly premium in Norway during 2017 Salaries personnel and administrative expenses: Increase in salaries and personnel expenses reflects a higher activity level throughout the Nordic region in Q compared to Q Total losses: Significant increase in loan losses mainly driven by the effect of the new methodology in IFRS9, which results in higher reserves coverage for the same credit risk levels. Impact of IFRS9 was partially off-set by bad debt sales in June 2018, resulting in recoveries of approx. 870 MM NOK, compared to approx. 600 MM NOK in June Source: SCB Q Report 19

20 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 as 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 20

21 Clear risk controls result in stable performance Risk ratio breakdown NPL Ratio Q Denmark 0.71% 0.61% 0.98% 1.24% 1.17% 1.22% Finland 1.04% 0.89% 0.72% 0.71% 0.74% 0.84% Norway 2.47% 2.36% 3.40% 3.36% 3.50% 3.85% Sweden 0.48% 0.61% 1.53% 1.22% 1.12% 1.09% Nordic 1.61% 1.48% 2.05% 2.01% 1.96% 2.13% NPL ratio 3 Per cent NPL Ratio Q Auto % 1.09% 1.03% 1.10% 1.07% 1.22% Unsecured % 4.77% 4.95% 4.89% 4.92% 5.32% Nordic 1.61% 1.48% 2.05% 2.01% 1.96% 2.13% Q Coverage ratio 4 Per cent Coverage Ratio Q Auto % 89.4% 95.4% 90.4% 91.8% 103.3% Unsecured % 148.1% 111.8% 113.1% 100.6% 118.3% Nordic 98.6% 126.9% 107.7% 113.6% 96.9% 111.6% Q Source: SCB Q Report and Management Figures as per Q ) Auto includes Stock Finance 2) Unsecured includes Direct Loans, Credit Cards and Sales Finance ( Durables ) 3) NPL ratio = Non-performing loans / Gross loans 4) Coverage Ratio = Loan Loss Reserves (Write Downs) / NPL

22 Self-funding is a strategic focus Three pillars approach provides funding flexibility Funding Composition 24% Self-funding pillars ¹ 40% 8% Securitization Unsecured Deposits 28% Q Parent funding Securitization Deposits Unsecured Bonds Self-funding ratio 70% 70% 77% 72% 62% 50% 22% 28% 6 outstanding transactions across Nordics Represents a low-cost and stable funding source NOK billion outstanding in the Norwegian bond market including NOK 850 MM in Commercial Paper SEK 4.95 billion outstanding in the Swedish bond market EUR 2.00 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 52.6 billion in total deposits across Norway, Sweden and Denmark Q Source: SCB Q Report 1) Outstanding amounts/transactions as per Q

23 Deposits at a glance Consolidated total balance: NOK 52.7 Bn 43% of total balance Saving account Saving account Floating interest rates Full flexibility 29% of total balance Saving account Notification product Term deposits 28% of total balance Saving account Notification product Notification product Withdrawals with 31 days notice Floating interest rates Term deposits Fixed interest rates Balance locked for 24 months Fees for withdrawals within term period Source: SCB Q Report Deposit guarantees: Norway NOK 2 million Sweden SEK 950,000 Denmark EUR 100,000 equivalent 23

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 1.49% 24

25 Strong Capital Position CET1 ratio of 16.2% Capital ratios evolution SCB Group Per cent Full IFRS9 impact Adjusted for IFRS9 transitional rules Net capital impact of implementation of IFRS9 was NOK 457 million for SCB Group SCB has notified the FSA that we will use the transitional rules for IFRS9 capital impact when calculating capital ratios SCB Group had a CET1-ratio of 16.2% per Q2 using transitional rules for IFRS9 impact Q Q SCB Group had a strong Leverage Ratio of 12.5% per Q2 CET 1 Tier 1 Tier 2 Leverage ratio Source: SCB Q Report 25

26 Unsecured Senior & Commercial Paper Funding 2017 and 2018 YTD summary NOK SEK EUR New Issuances 1,800 million 1,500 million 500 million Repurchases Maturities 2,500 million 1,000 million 750 million Total Outstanding¹ 8,401 million 4,950 million 2,000 million Preferred Format FRN/FXD FRN FXD Preferred Tenor 3 5 year 3 5 year 5 year NOK SEK EUR New Issuances 4,050 million 2,000 million 500 million Repurchases 800 million - - Maturities - 2,410 million - Total Outstanding² 9,101 million 4,450 million 2,250 million Preferred Format FRN/FXD FRN FXD Preferred Tenor 3 5 year 3 4 year 3 year 26 Source: Bloomberg 1) Outstanding amounts as per Q ) Outstanding amounts as per Q4 2017

27 Unsecured Funding Maturity profile for Senior Unsecured and Commercial Paper Total Maturity (EUR MM) EUR SEK EUR MM 1, NOK 2018¹ ,000 SEK MM 1,450 1,000 1, ¹ NOK MM 2018¹ ,451 1, Commercial Paper Senior 1, ¹ FX: SEK/NOK EUR/NOK EUR/SEK ) Remaining maturities as per Q

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 28

29 July 2018 Santander & Santander Consumer Finance

30 1. Santander Section divider 01

31 Santander, a leading financial group Key Figures Jun 18 Total assets (trill. ) 1.43 Attributable Profit H1 18 (mill. ) 3,752 Attributable Profit 2017 (mill. ) 6,619 Headcount 200,961 Customers (millions) 140 Shareholders (millions) 4.15 Branches (units) 13,482 31

32 Well diversified between Europe and the Americas (1) Excluding Corporate Centre and Spain Real Estate Activity. NOTE: SCF excluding SCUK 32

33 With leading positions in its core markets America Europe United States Brazil Argentina Portugal United Kingdom Mkt. share 1,4 : 3% Branches: 679 Mkt. share 1 : 9% Branches: 3,484 Mkt. share 1 : 10% Branches: 482 Mkt. share 1 : 18% Branches: 676 Mkt. share 2 : 10% Branches: 800 Mexico Chile Poland Spain Mkt. share 1 : 13% Branches: 1,401 Mkt. share 1 : 19% Branches: 429 Mkt. share 1,3 : 10% Branches: 565 Mkt. share 1 : 18% Branches: 4,481 SCF Nº of countries 5 : 15 Branches: 509 (1) Lending (2) UK mortgages (excl. Social Housing), Consumer credit and commercial lending (excl. Financial Institutions) (3) Including SCF business (SCF) (4) States where the Group operates (5) Including SCF UK Data: Mar-18 or latest available. Branches do not include Santander Consumer Finance business 33

34 Group performance H1 18 H1 18 Highlights (1) Charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 mn), C.C. (EUR -40 mn) and Portugal (EUR 20 mn) 34

35 35 Group performance H1 18 H1 18 performance driven by strong customer revenues and lower provisions

36 Group performance H1 18 On track to meet our 2018 targets (1)% change in constant euros (2) Underlying EPS: EUR (3) Total dividends charged to 2018 earnings are subject to the Board and AGM approval (4) Data calculated using the IFRS 9 transitional arrangements (5) Underlying RoTE % and H % 36

37 2. Santander Consumer Finance Section divider 02

38 Santander Consumer Finance, European leader in the consumer finance industry 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 points-ofsale (dealers and retailers) Key Figures Jun 18 Loans (bill. ) 102 Deposits (bill. ) 37 Underlying Attrib. Profit H1 18 (mill. ) 727 Underlying Attrib. Profit 2017 (mill. ) 1,373 European countries 15 Market positions 1 Top 3 Customers (million) 20 PoS partners (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 38

39 With recurrent profits through the cycle Underlying Attributable Profit Million H1 18 Underlying Attrib. Profit 727 million (+5% YoY) SCF: Management perimeter (i.e. including SCUK) Attributable profit without non-recurring (provisions or capital gains) 39

40 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 Efficiency leadership with proven integration capabilities D Best-in-class risk and collections capabilities E Sound funding structure 40

41 A Well spread across Europe and well balanced between car and consumer loans SCF Portfolio: 102 bn Jun 18 Well spread across 15 European countries Important foothold in the largest economies 74% portfolio in AAA & AA countries Car financing represents the biggest share of the portfolio: 71% Consumer lending (durables financing, cash loans and credit cards): 21% SCF: Management perimeter (i.e. including SCUK). NOTE: SCF s portfolio also includes mortgages (6%), corporate loans (1%) and other loans (1%). 41

42 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 42

43 C One of the best efficiency in the industry, with proven capabilities to make the most of integrations (%) Q1'17 Q1'18 51,9 53,0 Cost-to-Income ratio 44,0 44,0 45,5 47,4 Over 7,6 million new contracts being process per year almost new contracts acquired per day implies factory-like business with high automation. Efficiency at SCF ( 44% C/I) has been maintained through the years. Proven ability to integrate business in 15 European countries respecting business plans which maintains common performance and increases profitability. SCF: Management perimeter (including SCUK). Peers: Crédit Agricole Consumer Finance, BNP Personal Finance. Source: company websites. 43

44 D Sound risk metrics Delinquency rate (%) KPIs better than sector average Strong capacity to balance adverse economic cycles across geographies LLPs over ANEAS (%) Low cost of risk, despite important increase in SCF s loan portfolio Coverage > 100% SCF: Management perimeter (i.e. including SCUK) 44

45 E Funding diversification SCF s funding structure (%) Jun 18 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 45

46 SCF is a significant contributor to Santander s results, representing 13% of the Group s profit 1 in H SCF, 13% SCF excluding SCUK. Including SCUK, SCF represents 14% of SAN profit 1. (1) Percentage over SAN underlying attributable profit in H1 18, excluding Corporate Centre and Spain Real Estate Activity 46

47 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: :

48 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