Important information

Transcription

1 1 April 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, macroeconomic, 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 forwardlooking 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.

3 Agenda 3 Santander's business model Santander Q1 13 Performance Conclusions

4 Santander, a leading financial Group 4 Q1 13 Total Assets (EUR trillion) 1.28 Shareholders (million) 3.26 Headcount 189,858 Branches 14,689 Customers (1) (million) Q1 13 Attributable Profit (EUR million) 1,205 Eurozone largest banks by market capitalisation (2) (EUR bn.) Santander C1 C2 C3 C4 C5 C6 C7 C8 C (1) Customers data as of 31/12/2012 (2) Data as of March 31, Source: Bloomberg

5 Main elements of our business model 5 1 Diversification is key: good balance between emerging and mature economies with dominant local positions in large and attractive countries 2 Our banking model has two strong non negotiable pillars: low risk profile and costs austerity 3 Financial model of autonomous subsidiaries in funding and capital with strong centralised operational monitoring 4 AND STRONG BALANCE SHEET MANAGEMENT

6 1 High diversification by geographies 6 Ordinary attributable profit by principal segments in Q1'13 (1) Spain, 11% Portugal, 1% Poland, 4% SCF, 9% (Germany, 5%) Brazil, 26% UK, 12% USA, 12% Mexico, 13% Other Latam, 7% Chile, 5% (1) Over operating areas ordinary attributable profit excluding discontinued real estate activity in Spain

7 1 Critical mass in our core markets 7 USA Branches: 719 Customers: 1.7 mill. Mexico Mkt. Share 1 : 14% Branches: 1,193 Customers: 10.0 mill. Brazil Mkt. Share 6 : 11% Branches: 3,727 Customers: 27.3 mill. UK 4 Mkt. Share 5 : 12% Branches: 1,190 Customers: 26.2 mill. Spain 4 Mkt. Share 1 : 13% Branches: 4,683 Clientes: 15.0 mill. Poland 2,4 Mkt. Share: 9% Branches: 1,050 Clientes: 5.1 mill. Chile Mkt. Share 1 : 19% Branches: 495 Customers: 3.5 mill. Argentina Mkt. Share 1 : 9% Branches: 371 Customers: 2.4 mill. Germany Portugal 4 Mkt. Share 1 : 10% Mkt. Share 3 : 14% Branches: 662 Branches: 267 Customers: 2.3 mill. Customers: 6.5 mill. (1) Loans (2) Total business, including Kredyt Bank (3) Installment consumer loans (4) Including SCF business (5) Including total loans of mortgages, UPLs and SMEs (6) Unrestricted loans Note: data as of 31/03/2013 except customers data (31/12/2012)

8 2 Strong commitment to Santander's risk management culture 8 Global Credit / Markets /... Committees Global Risks Committee Daily meetings Meetings: twice a week 99 MEETINGS / YEAR Former CRO > 50 mill. Secretary of the Board Vice president Vice president Risks teams senior members Management corporate principles Independence + Collegiate decisions + Right of veto Former CRO > 150 mill. 5 Board Members Board s Executive Committee Meetings: once a week minimum

9 2 Efficiency as an essential goal 9 Efficiency ratio 1 vs Peers (%) Efficiency ratio vs Peers (%) Data Dec'12* Data Dec'12* 46.0 Grupo Santander (1) Expenses / Revenues Peers average European Peers average C1 Grupo SAN C2 C3 C4 C5 C6 C7 C8 C9 C10 C11 C12 C13 C14 C15 C (*) Peer Group are large banks that because of their size, characteristics and /or degree of direct competition are the reference ones to surpass: Banco Itaú, BBVA, BNP Paribas, Credit Suisse, HSBC, ING Group, Intesa Sanpaolo, JP Morgan, Mitsubishi, Nordea, Royal Bank of Canada, Societe Generale, Standard Chartered, UBS, Unicredito and Wells Fargo.

10 3 Financial model of autonomous subsidiaries in funding and capital with strong centralised operational monitoring 10 Centralised model Santander's model contagion from the crisis International branches depending on Parent bank for capital and liquidity Firewalls International subsidiaries self-sufficient in terms of capital and liquidity

11 4 STRONG BALANCE SHEET MANAGEMENT: CREDIT QUALITY 4.2 LIQUIDITY INTEREST RATE / FX RISK CAPITAL

12 4.1 Credit quality. NPL and coverage ratios (%) 12 The Group maintains high coverage ratios after the effort made in NPL ratio continues the previous quarters trend Group s NPL ratio Group s coverage ratio % % Mar'12 Jun'12 Sep'12 Dec'12 Mar'13 Mar'12 Jun'12 Sep'12 Dec'12 Mar'13

13 4.1 Credit quality. NPL ratio by unit (%)... although, in the first quarter... 2/3 of the Group s gross loans have a stable NPL ratio 13 Real estate Spain Portugal Poland Discont. real estate 2% SCF 8% Other Europe 1% HIGHER NPLs IN Q1 13 Spain 24% Customers 1 gross loans UK 33% Portugal 4% Poland 2% Brazil 11% Latam ex-brazil 9% USA 6% M'12 J'12 S'12 D'12 M'13 M'12 J'12 S'12 D'12 M'13 SCF UK M'12 J'12 S'12 D'12 M' M'12 J'12 S'12 D'12 M' Brazil M'12 J'12 S'12 D'12 M' KB entry ,4 M'12 J'12 S'12 D'12 M' M'12 J'12 S'12 D'12 M'13 STABLE NPLs IN Q1'13 USA M'12 J'12 S'12 D'12 M'13 Latam Ex-Brazil M'12 J'12 S'12 D'12 M'13 (1) % over operating areas.

14 Spain. NPL ratio and entries Higher NPL ratio, mainly due to companies and a lower denominator. Stable NPL entries from individuals and companies 1 in recent quarters 14 NPL ratio NPL Entradas entriesnpl+90d 2 >90 days % Base 100: H1'08 Non-real estate companies Mar'12 Jun'12 Sep'12 Dec'12 Mar'13 Rest of portfolio Total Household mortgages Mortgages to individual customers Greater stability in household mortgages and other individual customers Impact on NPL ratio from the lower denominator Other loans to individuals Consumer loans Cards H1'08 H2 H1'09 H2 H1'10 H2 H1'11 H2 H1'12 H2 Q1'13 (1) Companies without real estate purpose (2) Gross entries according to schedule (before recoveries)

15 4.2 Solid liquidity position High liquidity generation due to business dynamics... reducing the reliance on wholesale issuances 15 Reduction of the Group s commercial* gap Issuances made -EUR 30 bn. FY EUR 20 bn. Q1'13 Total EUR 16 bn. M/L term issuances 12 EUR 10 bn. 9 Securitisations Q1 12 Q1'13 With the highest reduction in Spain: In Q1'13: -EUR 11 billion Spain and the UK: needs well below maturities SCF: towards self-financing (securitisations) (*) Difference loans-deposits (including retail commercial paper) (1) Placed in the market and including structured financing

16 4.2 Solid liquidity position 16 Solid liquidity ratios with high liquidity* reserves 150% Net loan-to-deposit 1 ratio. Total Group 135% 117% 117% 113% 109% Dec EUR 217 bn. Group: liquidity reserves* Covers 100% of short term wholesale outstanding issuances (17 bn) and medium- and long-term (153 bn) M/L term envisaged maturities for the remainder of 2013: EUR 24 bn. D'08 D'09 D'10 D'11 D'12 M'13 Total Group Deposits 1 + M/L term financing / net loans 104% 106% 115% 113% 118% 119% Repayment to the ECB of EUR 31 bn. borrowed in LTROs LCR: 145% well above the level required for 2019 D'08 D'09 D'10 D'11 D'12 M'13 (*) cash + deposits in central banks + available public debt + discount available at central banks + other liquid assets (1) Including retail commercial paper

17 4.2 Solid liquidity position. Spain 1 17 Very comfortable liquidity position in Spain. Appropriate balance sheet structure and loan-to-deposit ratio EUR billion Mar'13 TOTAL Household mortgages Other loans to individuals Balance sheet structure TOTAL Retail commercial paper Time deposits / other Commercial gap Var. Mar'13/Dec'12 in EUR bn Net loans Deposits 2 Gap improvement: -EUR 11bn. Companies + suppliers financ. 103 Net loan-to-deposit ratio 1 88 Demand deposits 107% Other Public sector 13 90% 85% Gross loans Deposits Dec'11 Dec'12 Mar'13 (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 (2) Including retail commercial paper

18 4.2 Financing strategy: we manage our balance sheet in a very PRUDENT / CONSERVATIVE way 18 Santander s basic liquidity management principles Decentralised but coordinated action Diversification: market; maturity; currency; instrument Limited short term funding Limited intra-group funding (principle of autonomy in the context of the Living Wills ) Liquid assets available for discount in Central Banks in the event of a crisis

19 4.2 Financing strategy 19 Subsidiary model with diversified funding sources The Group has wide access to wholesale markets on a stand-alone basis; each subsidiary has its own ratings and issuance programs Main issuing units (2012) SAN UK Mexico USA Brazil Parent bank, Banesto and Portugal SCF Market diversification (2012 MT funding market issuance): 42% EUR area; 37% GBP area; 21% USD area Chile Argentina

20 4.2 Financing strategy: Banco Santander S.A. example Santander s capital markets funding is conducted through a diversified approach, by markets, tenor and instruments 20 Short Term ECP: EUR 25 billion programme USCP: USD 30 billion programme Asian market through certificates of deposit at the Hong Kong branch Spanish domestic commercial paper ( pagarés ): EUR 15 billion programme Medium and Long Term Euromarket: Senior and Subordinated transactions in all major currencies through a EUR 32 billion EMTN Programme Covered bonds and securitisations Senior Debt (under Rule 144A or registered with the SEC) In addition, capital instruments such as subordinated debt and preferred shares

21 4.2 Funding strategy 21 Group s medium and long term issues. Outstanding amount EUR Million December 2012 March 2013 Preferred Shares 4,765 4,788 Subordinated Debt 11,004 10,538 Senior Debt 69,916 70,999 Covered Bonds 67,468 66,202 Total M & LTerm Issues* 153, ,527 (*) Not including securitisations

22 4.2 Financing strategy Diversified funding by products, markets and maturities Issues maturity. EUR billion 22 Average maturity ~ 3.7 years Note: Data as of March 2013 Distribution by contractual maturity. Call date is used for the weighted average maturity calculation (except for perpetual debt)

23 4.3 Interest Rate / FX Risk 23 ALM used to mitigate business risks FX risk: Hedging used to stabilise the Group s core capital ratio and P&L (hedge excess capital, hedge next year profits) Interest rate risk: In markets with floating rate lending portfolios, ALM mitigates customer-related interest rate risk (e.g., hedging low-cost deposits)

24 4.4 Balance sheet strengthening: Capital ratio 24 Strong ordinary generation of capital is maintained BIS II Core capital ratio 8.61% 8.80% 10.02% 10.33% 10.67% +34 b.p. in the quarter 7.58% 5.91% 6.25% Dec'06 Dec'07 Dec'08 Dec'09 Dec'10 Dec'11 Dec'12 Mar'13 Note: Dec 06 and Dec 07 under BIS I

25 4.4 Balance sheet strengthening: Capital ratio BIS III Core capital: comfortable starting point (11.95% phase-in Dec 13) 25 Core capital ratio 10.67% +101 Organic 1 Generation % Other 2-40 phase-in % -55 IAS Intangibles + Minority interests DTAs % which will favour the natural business evolution Strong ordinary capital generation Environment of low growth in RWA Deleveraging of non-core assets Moreover, the reduction of intangibles and the absorption of DTAs is not included (period: 10 years) Basel 2.5 Basel 2.5 B III (phase-in) B III (Fully loaded 2019) Mar 13 Dec 13 (5) Total DTAs:-240 b.p. to be deducted in 10 years, (50% until 2019 and the other 50% as of 2024). Fully loaded estimate by 2024: 8% (1) Profit + Scrip dividend + RWAs evolution (2) Implementing in local markets internal models and other (3) Deductions below 10/15% limits, CVA and other (4) Intangibles:-50 b.p.; Minority interests:-50 b.p.

26 4.4 Rating agencies Spain's sovereign rating Santander s rating 26 S&P Moody s BBB- Baa3 Santander's rating (BBB) by S&P is the only one worldwide above the sovereign rating By Moody s, there are, together with SAN (Baa2), five other banks* with ratings above the sovereign Fitch BBB Santander (BBB+) Conclusion: we are more linked to the sovereign rating than to our own strengths (*) Banco Bradesco (Brasil), Itaú Unibanco Holding (Brasil), Banco de Bogotá (Colombia), Bank of Philippine Islands (Philippines), Privatbank (Ukrania) Data as of December 2012

27 Agenda 27 Santander's business model Santander Q1'13 Performance Conclusions Appendix: business areas Performance

28 Profit starts going back to normal 28 Sharp profit increase over previous quarters EUR million Accounting attributable profit 1,627 Q1'13 Highlights 1,205 Lower real estate provisions Expenses below inflation and with mergers underway Impact from low interest rates environment Q1'12 Q2 Q3 Q4 Q1'13

29 Gross income 29 Stable gross income, although pressure on net interest income (liquidity buffer, funding cost and low interest rates -euro and Brazil-) Constant EUR million Group's gross income Gross income Q1'13 / Q4'12: +EUR 46 mill.; +0.4% 10,724 10,828 10,353 10,244 10,290 Q1'13 / Q4'12 Continental Europe UK Latam -56 Q1'12 Q2 Q3 Q4 Q1'13 USA -2 Corporate Centre -111

30 Operating expenses 30 In Q1'13, reduction in Latin America (Brazil and Mexico) and increase in Poland (perimeter), the UK, and Corporate Centre Constant EUR million Group's Expenses Expenses Q1'13 / Q4'12: +EUR 95 mill.; +1.9% 4,836 4,821 4,910 4,901 4,996 Continental Europe UK Q1'13 / Q4' Q1'12 Q2 Q3 Q4 Q1'13 Latam USA Corporate Centre

31 Provisions 31 Lower provisions after 2012 effort Constant EUR million Group's provisions Loan-loss provisions Q1'13 / Q4'12: -EUR 224 mill.; -7.1% 2,780 2,230 1,130 Continental Europe Q1'13 / Q4' ,935 3,293 2,905 3,142 2,919 UK -29 Q1'12 Q2 Q3 Q4 Q1'13 Latam +19 Net loan-loss provisions Real estate provisions in Spain USA -34 Corporate Centre -25

32 Agenda 32 Santander's business model Santander Q1'13 Performance Conclusions Appendix: business areas Performance

33 Summary - Q1 13 Highlights Profit starts going back to normal Sharp increase in deposits Q1'13 attrib. profit: EUR 1,205 mill. Impact from low interest rates and priority for liquidity Reduction of commercial 1 gap in Q1 13: -EUR 20 bn. Group LDR 2 : 109% Group LCR 3 : 145% 3 4 Solid capital position Credit quality BIS II (Mar 13): 10.67% BIS III phase-in (Dec 13): 11.95% NPL ratio: 4.76% Coverage: 71% NPL entries below 2011 and 2012 quarterly average 5 Integrations underway in order to strengthen our position in core markets (1) Difference loans-deposits (including retail commercial paper) (2) Net loan-to-deposit ratio (3) Liquidity Coverage Ratio, December 2012

34 Outlook 34 Revenues Gradual recovery throughout the year Spain: end of mortgage repricing and improved deposits cost UK: already reflecting improved net interest income Brazil: gradual growth of volumes USA: growth in the companies segment Corporate Activities: reduced wholesale funding Costs Adjusted to the growth / investment moment of each unit Spain and Poland: synergies / restructuring costs will be reflected in coming quarters Stable in mature markets Investment effort in emerging countries (Mexico) Provisions Stable cost of risk in 2013 and envisaged improvement in 2014 Spain: toward credit cost of 150 bp in 2013 Brazil: cost of credit stabilising Gradual revenues improvement in the second half of the year and stable credit cost

35 Agenda 35 Santander's business model Santander Q1'13 Performance Conclusions Appendix: business areas Performance

36 Spain* Q1'13. Results In the quarter, focus on deposits and improved yield / cost in the new lending and deposits, that will gradually be reflected in gross income 36 Activity Gross income Volumes Var. Mar 13 / Mar % 1.57% NII / ATAs 1.44% 1.31% EUR million +3% 2,043 1,961 1,919 1,758 1,815-4% Loans Deposits Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 New loans and deposits Yield 1 on loans Cost of term deposits 2 Base 100: Q1 12 Base 100: Q1 12 Companies Mortgages Q1'12 Q2'12 Q3'12 Q4'12 Q1' Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Attributable profit EUR million % Q1'12 Q2 Q3 Q4 Q1'13 (*) 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 (1) Yield.- gross income / average balance (2) Cost of term deposits - cost / average balance

37 Spain* Q1'13. Volumes Excellent deposit evolution, and thus gain in market share. Loans decreasing at a slower pace in the quarter 37 EUR billion Deposits TOTAL Retail commercial paper Time deposits / other Highlights Y-o-Y increase in deposits market share: +230 b.p. Demand deposits TOTAL Household mortgages Other loans to individuals Mar'12 Dec'12 Mar'13 Gross loans Narrowing commercial gap in Q1'13: -EUR 11 bn. Lower demand in loans to individuals Stable loans to companies. Actions: In 2012: EUR 5,200 mill. via Crédito Activación and Plan Exporta In 2013: Plan launched in April Companies + suppliers financ Other Public sector Mar'12 Dec'12 Mar'13 (*) 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

38 Integration: Santander + Banesto + Banif merger 38 Merger plan "on target" 17 Dec 12 9 Jan Mar Mar 13 End of Apr 13 May 13 Board approved transaction Board approved merger project Banesto Santander AGM AGM Approvals Regulatory and administrative approval Legal merger Delivery of Santander shares Rebranding and operational integration Streamlining branches/workforce Dec 13 3 years Actions taken during integration process (Q1 13) New structure (retail network and central services) Agreement with trade unions Branches streamlining plan: overlappings identified Customers: operations free of charge among entities + Welcome Pack (May 13)

39 Integration: Santander + Banesto + Banif merger 39 Restructuring effort concentrated in 2013 and the beginning of 2014, which enables anticipation of the announced synergies Closure of branches (nº) Branches streamlining EUR mill. (before tax) Restructuring costs Accumulated cost synergies Dec 12 announcement May 13 EUR 206 mill. (Year 1) May 14 EUR 326 mill. (Year 2) May 15 EUR 420 mill. (Year 3) May 16 EUR mill. (before tax) Update as of April

40 Discontinued real estate activity in Spain Q1'13 In Q1'13, greater focus on reducing loans. Maintained high coverage ratios 40 Basic data Net loans EUR million 22,582 Total balance* (EUR mill.) 19,026 17,389 14,070 10,598 Coverage 51% 7,298 6,844 15,453 12,277 11,936 Mar'12 Jun'12 Sep'12 Dec'12 Mar'13 Net foreclosures EUR million Mar'12 Jun'12 Sep'12 Dec'12 Mar'13 Coverage 53% Attributable profit Q1'13: -EUR 175 mill. 4,445 4,220 4,177 3,676 3,656 (*) Including loans, foreclosures and equity stakes (Metrovacesa and SAREB) Mar'12 Jun'12 Sep'12 Dec'12 Mar'13

41 Portugal Q1'13 Results impacted by deleveraging, mortgage repricing (already completed), and high cost of funds (already on a downward trend) 41 Activity Gross income Volumes Var. Mar 13 / Mar 12 +2% Balances (EUR bn.) and LDR ratio 1 119% 108% EUR million % 231-8% Loans Deposits Loans Dep. Loans Dep. Mar12 Mar 13 Q1'12 Q2 Q3 Q4 Q1'13 Net interest income return Yield / Cost NII / ATAs EUR million Attributable profit 3.94% 3.68% Yield 3.40% 3.11% 2.91% 2.49% 2.37% 2.32% 2.25% 2.12% 1.34% 1.14% 1.11% % Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 (1) Net loan-to-deposit ratio Cost Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13

42 Poland Q1'13 Impact in the quarter from the first consolidation of Kredyt Bank and sharp drop in interest rates 42 Activity Gross income Volumes 1 Var. Mar 13 / Mar 12 Excl. perimeter +6% +11% +79% +79% Balance (constant EUR bn.) and LDR 2 ratio 91% 91% Constant EUR mill % 318 Loans Deposits Loans Dep. Loans Dep. Mar 12 Mar 13 Net interest income return Q1'12 Q2 Q3 Q4 Q1'13 Attributable profit Yield / Cost NII / ATAs Constant EUR mill. 7.11% 7.09% 7.20% 7.23% 6.77% -7% Yield 5.81% Cost 3.07% 3.05% 3.00% 3.19% 3.19% 2.90% 3.63% 3.80% 2.48% Net profit Minorit. int. Attrib. profit Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 (1) In local currency (2) Net loan-to-deposit ratio

43 Integration. BZ WBK + Kredyt Bank merger 43 Merger plan on target Jan 13 Q1'13 Q1'13 Q3 13 End of 2014 Measures to increase Legal merger New structure productivity Branch Rebranding (individuals, SMEs, etc.) Customer migration to BZ WBK. Integration completed Retail Division (ca. 900 branches) Corporate, SMEs Central Services Jan 13 Mar 13 Mar 13 Current synergies estimate Accumulated cost synergies PLN mill. (before tax) % of those envisaged in the merger announcement

44 Santander Consumer Finance Continental Europe Q1'13 44 Stable profit backed by recurring gross income and lower provisions. Increased market share in a low activity market (eurozone new car sales: -13%) 0% Volumes Var. Mar 13/Mar 12 Activity NII / Provisions (% /ATAs) Net interest income 3.35% 3.19% 3.21% EUR million Gross income +1% % 2,39 2,11 2,27 Loans Deposits Gross loans: EUR 59 bn. % / total Spain Other Poland 5 6 Italy Nordic countries Germany 52 Provisions 0.96% 1.08% 0.94% Q1'12 Q4'12 Q1'13 New loans: -5% Var. % Q1'13/Q1'12 Germany Nordic count. Poland Spain Italy Other -4% -15% -48% -11% +16% +34% EUR million Q1'12 Q2 Q3 Q4 Q1' Attributable profit* +9% Q1'12 Q2 Q3 Q4 Q1'13 * Excluding Santander Consumer UK's profit as it is recorded in Santander UK. Including it, Q1'13 attributable profit was EUR 207 mill.

45 United Kingdom Q1'13 45 Improved front book spreads start to reflect in net interest income. Sucessful retail transformation, reflected in the product range and SMEs Activity 1 Gross income Volumes Balances in bn. Var. Mar'13/Mar'12-7% +2% +1% Loans yield - deposits cost 1.47% 1.36% 1.34% 1.39% 1.53% mill. 1,088 1,006 +3% SMEs +15% 151 NII / average assets % 1.34% 1.27% 1.27% 1.45% Mortgages Companies Deposits 2 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 Results Attributable profit mill. Q1'13 % /Q1'12 % /Q4 12 mill. Gross income % +3% Costs % +7% Loan-loss prov % -15% Net profit cont. operat % +2% Attributable profit % -8% Attrib. profit Discontinued operations Continued operations Q1'12 Q2 Q3 Q4 Q1'13 (*) Positive impact of 65 mill. from net between capital gains and provisions (*) +2% (1) Local criteria. Balances in billion sterling (2) Excluding GBM balances and other deposits for 13 bn. at March 2013 Note.- SMEs do not include non-core balances

46 Brazil Q1'13 Pressure on gross income from lower spreads in a low interest rate scenario, partly offset by improved costs and provisions trend 46 Volumes Var. Mar 13 /Mar 12 Activity 1 NII / Provisions (% /ATAs) 8.30% 7.67% 7.28% Net interest income Constant US$ mill. Gross income -1% 5,050 5,348 5,261 5,040 5,007 +5% Loans +1% Deposits2 Provisions 3.67% 3.71% 3.82% Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 Results Attributable profit Constant US$ mill. Q1'13 % /Q1'12 % /Q4 12 Gross income 5,007-1% -1% Costs -1,803 +1% -7% Loan-loss prov. -1, % +4% Net income 863-9% 0% Attributable profit % -5% Constant US$ mill. Net profit Minority interest Attrib. profit % Q1'12 Q2 Q3 Q4 Q1'13 (1) Local currency (2) Excluding repos. Including «letras financieras»

47 Mexico Q1'13 47 Double-digit growth in activity and record net profit in the quarter. Higher gross income and lower costs and provisions over the fourth quarter Activity 1 Gross income Volumes Var. Mar 13 /Mar 12 NII / Provisions (% /ATAs) Constant US$ mill. +3% +13% +17% 3.91% 4.19% 3.97% Net interest income ,023 Loans Deposits 2 Provisions 1.26% 1.09% 0.64% Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 Results Attributable profit Constant US$ mill. Q1'13 % /Q1'12 % /Q4 12 Gross income 1, % +3% Costs % -9% Loan-loss prov % -11% Net profit % +31% Attributable profit % +33% (1) Local currency (2) Excluding repos Constant US$ mill Q1'12 Q2 Q3 Q4 Q1' % Net profit Minority interest Attrib. profit

48 Chile Q1'13 48 In activity, focus on customer deposits and selective growth in loans (high-income segment). Results highly impacted by reduced inflation (UF) Activity 1 Gross income Volumes Var. Mar 13 /Mar 12 +8% +6% NII / Provisions (% /ATAs) 4.24% 4.52% % Net interest income Constant US$ mill % % 1.50% 1.49% Provisions Loans Deposits 2 Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 Results Attributable profit Constant US$ mill. Q1'13 % /Q1'12 % /Q4 12 Gross income 731-4% -8% Costs % -3% Loan-loss prov % -1% Net profit % -22% Attributable profit % -22% Constant US$ mill. Net profit Minority interest Attrib. profit Q1'12 Q2 Q3 Q4 Q1' % (1) Local currency (2) Excluding repos

49 Other countries Latin America The remaining countries in the region registered growth. Of note was the good profit trend in Argentina and Puerto Rico 49 Attributable profit. Constant US$ million Argentina Puerto Rico Q1'12 Q2 Q3 Q4 Q1'13 Uruguay Q1'12 Q2 Q3 Q4 Q1'13 Peru Q1'12 Q2 Q3 Q4 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13

50 United States Q1'13 Profit of $307 mill. Increase in Q1'13 backed by strong growth in SCUSA. Impact on Sovereign Bank's NII (lower interest rates and reduction of non-core portfolios) 50 Sovereign Bank activity 1 Gross income USA Volumes NII / Provisions (% /ATAs) US$ mill. 0% Var. Mar 13 /Mar % 2.67% Net interest 2.48% income % Loans +0% Deposits Provisions 0.49% 0.41% 0.18% Q1'12 Q4'12 Q1'13 Q1'12 Q2 Q3 Q4 Q1'13 SCUSA activity Attributable profit USA Gross loans US$ bn. (avg. balances) +6% Mar'12 Mar'13 New loans US$ bn. +49% Q1'12 Q1'13 US$ mill. Total SCUSA contribution Sovereign Bank % Q1'12 Q2 Q3* Q4 Q1'13 (1) Local currency (*) Negative impact from Trust Piers: $127 mill.

51 51