27 April 2016 MEXICO. January March 2016

Transcription

1 27 April 2016 MEXICO January March 2016

2 Disclaimer IMPORTANT INFORMATION Banco Santander, S.A. ( Santander ) Warns that this presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning the development of our business, 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, debtors or counterparties. The risk factors and other key 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. 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. 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 this 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. 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, of an exemption there from. 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, historical share price or financial accretion are not intended to mean that future performance, historical 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: The results information contained in this presentation has been prepared according to Spanish accounting criteria and regulations in a manner applicable to all subsidiaries of the Santander group ad, as a result, it may differ from the ones discloses locally by Santander Mexico. Note: The Information contained in this presentation shall not be used or considered under any circumstances as a petition for sale or buy in the terms of the Ley del Mercado de Valores. (Mexican Securities Market Law regulation). 2

3 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

4 Macro-economic environment Against a complex global backdrop, Mexico s economy is growing at a slower pace Annual GDP Growth (%, real) Central Bank monetary policy (%, end of year) (e) 2017 (e) (e) 2017 (e) Inflation (%, annual change) Average exchange (MxP/USD) (e) 2017 (e) (e) 2017 (e) Source: INEGI, BANXICO, Santander 4

5 Macro-economic environment External factors impacts volatility of the Mexican peso, though real indicators remain relatively strong Exchange rate and Oil Price) 07/04/ /03/ /03/ /02/ /02/ /01/ /01/ /01/ /12/ /12/ /12/ /11/ /11/ /10/ /10/ /09/ /09/ /08/ /08/ /08/ /07/ /07/ /06/ /06/ /06/ /05/ /05/ /04/ /04/ /04/2015 FX MxP/USD FX MX Oil Mix USD/barrel Private Consumption (YoY growth, %) 2016/ / / / / / /01r/ 2014/ / / / / / / / / / / / / / / / / /01 Domestic Car Sales (YoY growth, %) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 Apr-14 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Source: INEGI, SHCP, BANXICO p= preliminary; r= revised 5

6 Financial system: Loan and deposit growth System loan growth maintains momentum, deposit growth decelerates Total loans ( bn currency-neutral) YoY (%) % 12.3% 15.7% 14.4% 14.7% Stable evolution in system loan growth rates Consumer loans remain strong mainly driven by personal and payroll M'15 J'15 S'15 D'15 Feb'16 Total deposits ( bn currency-neutral) YoY (%) % 12.8% 15.8% 13.4% 10.0% System deposits continue to decline mainly driven by term deposits M'15 J'15 S'15 D'15 Feb'16 Source: CNBV Banks as of February 2016 (excluding Inbursa Bank) 6

7 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

8 Our Franchise Santander México: one of the leading financial groups in the country Business and Results currency-neutral Mar 16 Var. YoY Gross Loans ( bn) % Deposits ( bn) % Consolidated profit ( MM) % Attributable profit ( MM) % Network and Customers Total customers (MM) Mar % Branches (#) 1, % ATMs (#) 6, % Market Share 1 Feb 16 Loans 15.2% Deposits 13.9% Source: CNBV Banks (1) Market share as of February 2016 (excluding Inbursa Bank) 8

9 Strategy Focus on innovation and operational transformation Goals Be the market leader in profitability and growth Strategic priorities STRENGTHEN POSITION IN RETAIL Retain existing customers Become their primary bank Acquire new highpotential customers CONSOLIDATE KEY MARKETS SMEs and mid-market Corporate banking Mortgages Enablers OPERATING MODEL Technology and infrastructure Talent, quality and processes Marketing and branding 9

10 Customers: KPIs follow up Digital Customers (k) % 933 Improve on-boarding processes to new channels Implement new multichannel on-boarding strategy Add new functionality to digital platform Mar'15 Mar'16 Retail Payroll (k) 2,878 Mar'15 +9% 3,144 Mar'16 Improve on-boarding process to guarantee contactablility and focus on client needs Reduce processing time of loan applications and approval Plan to reduce attrition Credit Card Accounts (k) 2, % 2,598 Attract new clients and increase engagement efforts Mar'15 Mar'16 SMEs Loan Portfolio (1) (MXN MM) +12% 55,337 62,248 Further develop new SME II segment (from 50 to 200 million pesos of annual sales) Mar'15 Mar'16 10 (1) SMEs commercial loan portfolio

11 Total loans performance Total loans up 14.4% YoY driven by retail portfolio Total gross loans ( bn currency-neutral) Mar 16 YoY (%) QoQ (%) 14.4% -0.8% M'15 J'15 S 15 D'15 M'16 Total Individual Mortgage Consumer credit Credit Cards Total Corporates SMEs (1) Middle Market Corporates Government Total Loans (1) SMEs commercial loan portfolio 11

12 Total customer funds performance Deposit base up 13.0% YoY driven by demand deposits Total deposits ( bn currency-neutral) 13.0% 0.4% Mar 16 YoY (%) QoQ (%) Demand Time Total deposits M'15 J'15 S 15 D'15 M'16 Mutual funds distributed Total Customer funds

13 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

14 (1) At average exchange rate as of March 2016 (3M 16) (2) TIIE quarter average Net interest income and spreads NII up 17.6% YoY driven by loan portfolio, investment in securities and focus on capital returns Net Interest Income ( MM currency-neutral 1 ) Loan spreads (%) Retail Banking Total Loans 1Q15 2Q15 3Q15 4Q15 1Q16 Deposit spreads (%) Retail Banking 1Q'15 2Q'15 3Q'15 4Q'15 1Q' TIIE (%) Total Deposits 1Q15 2Q15 3Q15 4Q15 1Q16 14

15 Net fees Net fees up 5.7% YoY with contributions from most segments Net fees ( MM currency-neutral 1 ) 1Q 16 1Q 15 YoY(%) QoQ(%) Credit Cards Insurance Mutual funds Cash Management Capital Mkts & Securities Financial advisory Total Q'15 2Q'15 3Q'15 4Q'15 1Q'16 15 (1) At average exchange rate as of March 2016 (3M 16)

16 Gross income Gross operating income up 14.4% YoY supported by strong performance in core revenues Gross income ( MM currency-neutral 1 ) 1Q 16 1Q 15 YoY(%) QoQ(%) Net Interest Income Net Fees Subtotal Other Gross income Q'15 2Q'15 3Q'15 4Q'15 1Q'16 16 (1) At average exchange rate as of March 2016 (3M 16) (2) Other includes Gains (losses) on financial transactions and Other operating income

17 Operating expenses Efficiency ratio improves 272 bps YoY; higher expenses support business growth Operating expenses ( MM currency-neutral 1 ) 1Q 16 1Q 15 YoY(%) QoQ(%) General admin. expenses Depreciation and amortization Operating expenses Q'15 2Q'15 3Q'15 4Q'15 1Q'16 Efficiency ratio (with amortisations) 40.7% 43.4% Number of branches 1,386 1,368 Number of employees 17,203 16, (1) At average exchange rate as of March 2016 (3M 16)

18 Net operating income after loan-loss provisions (LLPs) Focus on asset quality results in stable cost of risk and lower NPLs LLPs and Cost of credit ( MM currency-neutral 1 ; %) Cost of credit 2.9% 2.9% 2.9% 2.9% 3.0% 1Q 16 1Q 15 YoY(%) QoQ(%) Net Operating Income LLPs Net LLPs Net op. income after LLPs Q'15 2Q'15 3Q'15 4Q'15 1Q'16 NPL ratio 3.1% 3.7% NPL Coverage ratio 98% 88% 18 (1) At average exchange rate as of March 2016 (3M 16)

19 Attributable profit Attributable profit up 10.3% YoY despite higher tax on profit Attributable profit ( MM currency-neutral 1 ) 1Q 16 1Q 15 YoY(%) QoQ(%) Profit before taxes Tax on profit Net income Attributable profit Q'15 2Q'15 3Q'15 4Q'15 1Q'16 Effective tax rate 22.8% 22.8% 19 (1) At average exchange rate as of March 2016 (3M 16)

20 Conclusions Market Environment & Financial System Economic growth was relatively stable during 1Q16, mainly based on private consumption. Nevertheless, global uncertainties continue to impact domestic financial variables like FX FX volatility caused the authorities to rise interest rates by 50bp and to implement a fiscal adjustment of 132 billion pesos in The weakness of oil prices and production remains the key short and medium term risk factor Inflation remains under control, with a 2.6% level at the end of 1Q16 Strategy & Business Implementing strategic initiatives across the company over the past two years to further consolidate our market leadership position and drive profitability Strengthening our position in retail banking and consolidating leadership position in key products and markets, while realizing the potential of our investment and corporate banking business Three-year strategic plan focuses on upgrading technology and infrastructure, talent, quality, processes and branding Results Total loans up 14.4% mainly driven by retail portfolio Solid core revenues performance drive 14.4% YoY increase in gross operating income Strong asset quality with stable cost of risk at 3.0 Improved efficiency despite higher costs to support business growth 20

21 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

22 Balance sheet EUR million. Currency-neutral* Variation 31-Mar Mar-15 Amount % Loans and credits* 28,702 24,538 4, Trading portfolio (w/o loans) 17,505 14,057 3, Available-for-sale financial assets 5,632 3,427 2, Due from credit institutions* 7,918 7, Intangible assets and property and equipment (36) (8.7) Other assets 5,498 5, Total assets/liabilities & shareholders' equity 65,636 54,887 10, Customer deposits* 28,214 26,100 2, Marketable debt securities* 4,306 3, Subordinated debt 1,146 1, Insurance liabilities Due to credit institutions* 11,516 8,419 3, Other liabilities 15,820 11,470 4, Stockholders' equity** 4,634 4, Off-balance-sheet funds 11,628 11, Mutual funds 11,628 11, Pension funds Managed portfolios Customer funds under management 45,294 42,044 3, * End of period exchange rate 31-mar-16 * Includes all stock of concept classified in the balance sheet ** Capital + reserves + retained profit + valuation adjustments 22

23 Income statement EUR million. Currency-neutral* Variation 1Q16 1Q15 Amount % Net interest income Net fees Gains (losses) on financial transactions (2) (5.4) Other operating income** (9) (13) 3 (25.2) Gross income Operating expenses (322) (301) (22) 7.2 General administrative expenses (293) (275) (18) 6.4 Personnel (152) (142) (11) 7.5 Other general administrative expenses (140) (133) (7) 5.3 Depreciation and amortisation (29) (25) (4) 15.6 Net operating income Net loan-loss provisions (221) (178) (43) 24.1 Other income (6) 7 (13) Profit before taxes Tax on profit (55) (50) (5) 9.8 Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * Average exchange rate 1Q16 ** Including dividends, income from equity-accounted method and other operating income/expenses 23

24 Quarterly income statements EUR million. Currency-neutral* 1Q15 2Q15 3Q15 4Q15 1Q16 Net interest income Net fees Gains (losses) on financial transactions Other operating income** (13) (12) (23) (17) (9) Gross income Operating expenses (301) (301) (301) (308) (322) General administrative expenses (275) (274) (277) (285) (293) Personnel (142) (148) (149) (146) (152) Other general administrative expenses (133) (126) (127) (139) (140) Depreciation and amortisation (25) (27) (24) (23) (29) Net operating income Net loan-loss provisions (178) (191) (208) (198) (221) Other income 7 (2) 1 (9) (6) Profit before taxes Tax on profit (50) (52) (44) (62) (55) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * Average exchange rate 1Q16 ** Including dividends, income from equity-accounted method and other operating income/expenses 24

25 Thank you Nuestra Our purpose misión to es help contribuir people al and progreso de las businesses personas prosper. y de las empresas. Nuestra Our culture cultura is based basa on the en la belief creencia that de que everything todo lo we que do hacemos should debe ser