Mexico. February 3, 2015

Transcription

1 1 Mexico 2014 February 3, 2015

2 Disclaier 2 IMPORTANT INFORMATION Banco Santander, S.A. ( Santander ) Warns that this presentation contains forward-looking stateents within the eaning of the U.S. Private Securities Litigation Refor Act of These forward-looking stateents are found in various places throughout this presentation and include, without liitation, stateents concerning the developent of our business, and econoic perforance. While these forward-looking stateents represent our judgent and future expectations concerning the developent of our business, a nuber of risks, uncertainties and other iportant factors could cause actual developents and results to differ aterially fro our expectations. These factors include, but are not liited to: (1) general arket, acro-econoic, governental and regulatory trends; (2) oveents in local and international securities arkets, currency exchange rates and interest rates; (3) copetitive pressures; (4) technological developents; and (5) changes in the financial position or credit worthiness of our custoers, 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 Coission of the United States of Aerica (the SEC ), could adversely affect our business and financial perforance. Other unknown or unpredictable factors could cause actual results to differ aterially fro those in the forward-looking stateents. The inforation contained in this presentation is subject to, and ust be read in conjunction with, all other publicly available inforation, including where relevant any fuller disclosure docuent published by. Any person at any tie acquiring securities ust do so only on the basis of such person s own judgent as to the erits or the suitability of the securities for its purpose and only on such inforation as is contained in such public inforation having taken all such professional or other advice as it considers necessary or appropriate in the circustances and not in reliance on the inforation contained in this presentation. In aking this presentation available, Santander gives no advice and akes no recoendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investents whatsoever. No offering of Securities shall be ade in the United States except pursuant to registration under the U.S. Securities Act of 1933 as aended, of an exeption there fro. Nothing contained in this presentation is intended to constitute an invitation or induceent to engage in investent activity for the purposes of the prohibition on financial prootion in the U.K. Financial Services and Markets Act Note: stateents as to historical perforance, historical share price or financial accretion are not intended to ean that future perforance, historical share price or future earnings (including earnings per share) for any period will necessarily atch or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. Note: The results inforation contained in this presentation has been prepared according to Spanish accounting criteria and regulations in a anner applicable to all subsidiaries of the Santander group ad, as a result, it ay differ fro the ones discloses locally by Santander Mexico. Note: The Inforation contained in this presentation shall not be used or considered under any circustances as a petition for sale or buy in the ters of the Ley del Mercado de Valores. (Mexican Securities Market Law regulation).

3 Agenda 3 Macro-econoic environent and financial syste Strategy and business Results Appendix

4 Macro-econoic environent 4 Solid acro fundaentals with GDP growth expected to pick up in 2015 Annual GDP Growth (%, real) Interest Rates (%, end year) (e) 2015 (e) 2016 (e) (e) 2016 (e) Annual CPI Inflation Rate (%, annual average) Euro Exchange Rates (MxP/Eur annual average) (e) 2016 (e) (e) 2016 (e) Source: INEGI, BANXICO, Santander

5 j j j Macro-econoic environent 5 External deand and a recovery in the construction sector sustain econoy growth, with doestic deand keeping behind Non-oil Exports(%YoY) Autoobile Industry (%YoY) j s n 2013 j s n 2014 j s Non-oil exports U.S. econoy Other countries n 2012 s n 2013 j j j Production s n 2014 Exports s n Industrial Production (%YoY) Retail Sales (%YoY. Sae-store sales) M N S J M 2013 N S J M M 2014 S J M M Total Construction Manufacturing N s n 2013 Walart 2014 n s Antad s n Source: INEGI, ANTAD, AMIA, STPS, Santander

6 Financial syste: loan and deposit growth Constant EUR Bn Total loans show first signs of recovery in 4Q14; trend expected to continue in YoY (%) Total loans D'13 M'14 J'14 S'14 Nov'14 Total loan growth picked-up in 4Q14 Higher growth rates across all segents, excluding credit cards Positive trend in lending activity expected to continue in 2015 Total deposits Healthy YoY deposit growth YoY (%) Expansion ainly driven by deand deposits D'13 M'14 J'14 S'14 Nov'14 Source: CNBV Banks as of Noveber 30th, 2014.

7 Agenda 7 Macro-econoic environent and financial syste Strategy and business Results Appendix

8 Our franchise 8 Santander Mexico: one of the leading financial groups in the country Santander Mexico branches EUR 12M 14 Var. YoY Business and Results Loans 26.1 bn. 17.9% Deposits 25.7 bn. 13.6% Profit before tax 1,057 n. 8.9% Attributable profit 660 n. -3.5% Network and Custoers Clients % Branches 1, % ATMs 5, % Market Share 1 Loans 13.8% bps Deposits 13.7% bps (1) Market share as of Noveber 30th, 2014, source CNBV Banks

9 Coercial focus / strategy 9 Client centric odel drives retail banking loan growth Total loans Retail Banking loans Retail and total loans Dic'13 Sep'14 Dic'14 Loans up 17.9% YoY, doubling arket growth Leading player servicing the high-potential SME segent SMEs loans Dic'13 Sep'14 Dic'14 Wide product offering through specialized network Strong focus on id and high incoe ortgage kt Mortgage loans nd largest arket player and leader in origination Dic'13 Sep'14 Dic'14 (1) EUR Bn.

10 Coercial focus / strategy 10 Middle arket loans 1 Consolidating Middle arket position % YoY reflecting investent banking products and focus on trade financing and transactionality Dic'13 Sep'14 Dic'14 Gaining arket share in deand deposits Deand deposits Dic'13 Sep'14 Dic'14 New branches, SMEs and Select client deposits driving above growth arket rates Nuber of branches Branch expansion on track 1,258 1,299 1,347 On track to coplete branch expansion by 1Q15 Dic'13 Sep'14 Dic'14 Source: Santander data (1) EUR Bn

11 Loan perforance 11 Constant EUR billion Total loans up 17.9% YoY posting growth across all segents Total loans 17.9% 5.5% D'13 M'14 J'14 S'14 D'14 12M 14 YoY (%) QoQ (%) Individuals Mortgages Consuer Credit cards Copanies SMEs Middle arket Corporates Governent Total Source: Mexican GAAP criteria (excludes cross border loans)

12 Total custoer funds 12 Deposit base up 13.6%, aintaining healthy ix supporting lower cost of funding Constant EUR billion Total deposits 13.6% 4.9% D'13 M'14 J'14 S'14 D'14 12M 14 YoY (%) QoQ (%) Deand Tie Total custoer deposits Mutual funds distributed Total custoer funds Source: Mexican GAAP criteria (excludes derivatives positions)

13 Agenda 13 Macro-econoic environent and financial syste Strategy and business Results Appendix

14 Net interest incoe and spreads 14 Third consecutive quarter of net interest incoe growth despite historically low interest rates Constant EUR illion Loan spreads, % Net Interest Incoe Retail Banking Total Loans 4Q13 1Q14 2Q14 3Q14 4Q14 Deposit spreads, % Total Deposits 4Q13 1Q14 2Q14 3Q14 4Q TIIE (%) Retail Banking 4Q13 1Q14 2Q14 3Q14 4Q14 1 TIIE Quarter average

15 Net fees 15 Net fees for the quarter up 2.7% notwithstanding credit card placeent costs and lower investent banking transactions Constant EUR illion Net Fees Q13 1Q14 2Q14 3Q14 4Q14 12M 14 12M 13 YoY(%) QoQ(%) Credit cards Insurance Mutual funds Payents & collections Investent banking Financial Advisory Others Total

16 Gross incoe 16 Constant EUR illion 4Q14 gross incoe flat QoQ as lower trading gains offset NII and fee incoe growth, but up 9.7% 4Q14 vs. 4Q13 Gross incoe M 14 12M 13 YoY(%) QoQ(%) Net Interest Incoe 2,182 2, Net Fees Subtotal 2,953 2, Other Q13 1Q14 2Q14 3Q14 4Q14 Gross incoe 3,072 2, (1) Other includes Gains (losses) on financial transactions and Other operating incoe

17 Operating expenses 17 Effective expense anageent itigates the ipact fro investent in strategic businesses and branch expansion plan Constant EUR illion Operating expenses General and adin. expenses Depreciation and aortization Operating expenses 12M 14 12M 13 YoY(%) QoQ(%) 1,129 1, ,260 1, Q13 1Q14 2Q14 3Q14 4Q14 Efficiency ratio (with aortizations) pp -0.1pp Nuber of branches 1,345 1, % 3.5% Nuber of eployees 16,428 14, % 6.6%

18 Net operating incoe after loan-loss provisions (LLPs) 18 4Q14 LLPs decreased 16.3% QoQ resulting in a 28 bps iproveent in cost of credit; LLPs down 20.3% 4Q14 vs. 4Q13 Constant EUR illion Cost of credit LLPs and Cost of credit 3.5% 3.6% 3.6% 3.3% 3.0% Net Operating Incoe 12M 14 12M 13 YoY(%) QoQ(%) 1,812 1, LLPs Net op. incoe after LLPs 1, Net loan-loss provisions NPL Coverage ratio 86% 98% -11.4pp -4.0pp 4Q13 1Q14 2Q14 3Q14 4Q14 NPL ratio 3.84% 3.66% 0.2pp 0.1pp

19 Attributable profit 19 Constant EUR illion 4Q14 profit before taxes up 9.4% QoQ, while net incoe benefits fro lower effective tax rate; attributable profit up 21.3% 4Q14 vs. 4Q13 Attributable profit 12M 14 12M 13 YoY(%) QoQ(%) Profit before taxes 1, Tax on profit Net incoe Attributable profit Effective tax rate 19.5% 7.8% 4Q13 1Q14 2Q14 3Q14 4Q14

20 Conclusions 20 Market Environent & Financial Syste External deand and the recovery of the construction industry sustain econoic growth in 4Q14. Although this trend will continue in 2015, doestic deand will continue to gain oentu and iprove the growth outlook The global context affects financial variables. The ain ediu ter risk is the level of oil prices and the ipact on public finances. Syste loan growth picked up in 4Q14, the first sign of recovery following four quarter of declining growth rates. Positive perforance posted across all segents except credit cards Agreed to acquire a Ps.4,100 illion consuer loan portfolio fro Scotiabank Mexico Strategy & Business Focus on client service and innovation. Launched Delta cobranded credit card and opened 12 specialized SME offices Strengthened our national coverage through aliance with 7-Eleven offering basic banking services across its 1,800 stores Branch expansion progra on track expected to finalize by 1Q15 Coercial activity and deposits significantly above arket growth rates, while aintaining a stable cost of credit Results Solid perforance in net interest incoe despite historically low interest rates Established a controlled solid cost base to fully leverage the benefit of our strategic initiatives Profit before taxes up 9.4% QoQ, while net incoe benefits fro a lower effective tax rate; attributable profit up 21.3% 4Q14 vs. 4Q13

21 Agenda 21 Macro-econoic environent and financial syste Strategy and business Results Appendix

22 Balance sheet EUR illion. Constant currency* Variation Aount % Loans and credits* 25,873 22,525 3, Trading portfolio (w/o loans) 10,185 8,785 1, Available-for-sale financial assets 4,624 3,425 1, Due fro credit institutions* 7,058 8,066 (1,008) (12.5) Intangible assets and property and equipent Other assets 5,545 5,746 (201) (3.5) Total assets/liabilities & shareholders' equity 53,726 48,954 4, Custoer deposits* 28,627 24,946 3, Marketable debt securities* 3,266 2, Subordinated debt 1, Insurance liabilities Due to credit institutions* 6,152 5, Other liabilities 11,004 11,734 (730) (6.2) Shareholders' equity** 3,589 2, Off-balance-sheet funds 11,523 10,468 1, Mutual funds 11,523 10,468 1, Pension funds 0 (0) (100.0) Managed portfolios Custoer funds under anageent 44,504 39,284 5, * As of * Includes all stock of concept classified in the balance sheet ** Not including profit of the year

23 Incoe Stateent EUR illion. Constant currency* Variation Aount % 23 Net interest incoe 2,182 2, Net fees Gains (losses) on financial transactions Other operating incoe** (45) (22) (23) Gross incoe 3,072 2, Operating expenses (1,260) (1,175) (85) 7.2 General adinistrative expenses (1,129) (1,060) (68) 6.5 Personnel (607) (569) (38) 6.7 Other general adinistrative expenses (522) (491) (30) 6.2 Depreciation and aortisation (131) (115) (17) 14.6 Net operating incoe 1,812 1, Net loan-loss provisions (756) (768) 12 (1.6) Other incoe 2 17 (15) (89.4) Profit before taxes 1, Tax on profit (207) (76) (131) Profit fro continuing operations (44) (4.9) Net profit fro discontinued operations Consolidated profit (44) (4.9) Minority interests (21) (9.7) Attributable profit to the Group (24) (3.5) * As of exchange rate 2014 ** Including dividends, incoe fro equity-accounted ethod and other operating incoe/expenses

24 Quarterly stateents of incoe EUR illion. Constant currency* 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q Net interest incoe Net fees Gains (losses) on financial transactions (1) Other operating incoe** (8) 5 (9) (10) (13) (7) (15) (10) Gross incoe Operating expenses (283) (280) (297) (315) (315) (315) (314) (316) General adinistrative expenses (254) (250) (268) (288) (281) (284) (282) (283) Personnel (139) (139) (150) (141) (146) (149) (154) (159) Other general adinistrative expenses (115) (111) (118) (147) (135) (135) (128) (124) Depreciation and aortisation (29) (30) (29) (27) (34) (31) (33) (33) Net operating incoe Net loan-loss provisions (134) (170) (247) (218) (183) (193) (207) (173) Other incoe 24 (2) (3) (3) (2) (2) 6 (1) Profit before taxes Tax on profit (38) (39) (21) 22 (50) (57) (50) (50) Profit fro continuing operations Net profit fro discontinued operations Consolidated profit Minority interests Attributable profit to the Group * As of exchange rate 2014 ** Including dividends, incoe fro equity-accounted ethod and other operating incoe/expenses

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