31 October Santander US. 9M'18 Earnings Presentation

Transcription

1 31 October 2018 Santander US 9M'18 Earnings Presentation

2 Disclaimer Banco Santander, S.A. and its affiliates ("Santander") cautions that this presentation contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RORAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. 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 and our shareholder remuneration policy. 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, industry, 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. Numerous factors, including those reflected in the Annual Report on Form 20-F filed with the Securities and Exchange Commission of the United States of America (the SEC ) under Key Information-Risk Factors - and in the Documento de Registro de Acciones filed with the Spanish Securities Market Commission (the CNMV ) under Factores de Riesgo - could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. 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 of this presentation and are based on the knowledge, information available and views taken on such date; 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. No investment activity should be undertaken on the basis of 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. 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. The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries. In addition to the financial information prepared under International Financial Reporting Standards ( IFRS ), this presentation includes certain alternative performance measures as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415es) as well as Non-IFRS measures. The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. Please refer to the quarterly financial Report for further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFR, see Section 26 of the Documento de Registro de Acciones for Banco Santander filed with the CNMV on July 4, 2017 (available on the Web page of the CNMV - and at Banco Santander - and Item 3A of the Annual Report on Form 20-F for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission on March 31, 2017 (the Form 20-F ). For a discussion of the accounting principles used in translation of foreign currency-denominated assets and liabilities to euros, see note 2(a) to our consolidated financial statements on Form 20-F and to our consolidated financial statements available on the CNMV s website ( and on Banco Santander s website ( Note: The information included in this presentation for Santander Holdings USA, Inc. ( SHUSA ) has been prepared according to Spanish accounting criteria and regulation in a manner applicable to all subsidiaries of the Santander Group and, as a result, it may differ from the information disclosed locally by SHUSA or Santander Bank. Any use of local (US GAAP) accounting will be noted where it occurs. IRS Circular 230 Disclosure: Santander and its employees are not in the business of providing, and do not provide, tax or legal advice to any taxpayer outside Santander. Any statements in this communication as to tax matters were not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. 2

3 Perimeter Data shown throughout this presentation refers to Santander Holdings USA, Inc. which includes Santander Bank NA (SBNA), Santander Consumer USA Holdings Inc. (SC), NY Branch and Santander Investment Securities, Banco Santander International (BSI Miami), and Puerto Rico (Santander Bancorp and Santander Financial Services) unless stated otherwise. 3

4 Index 1. Macroeconomic environment and financial system 2. Strategy and business 3. Results 4. Appendix 4

5 Macroeconomic environment and financial system 01

6 Macroeconomic Environment US growth projected to slow as interest rates rise GDP Growth (%, real) Interest Rate (%, period average) (e) 2019 (e) 2020 (e) (e) 2019 (e) 2020 (e) CPI Inflation Rate (%, period average) USD/EUR Exchange Rate (period average) (e) 2019 (e) 2020 (e) (e) 2019 (e) 2020 (e) Source: FRB, Knoema.com (U.S. IMF Forecasts), LongForecast.com, and estimates by Santander Research La Semana 10/26/ month LIBOR rate from Moody s ECCA 6

7 Macroeconomic Environment Unemployment rate continues to fall while home sales are stable Debt-to-GDP (%) 1 Unemployment Rate (%) Jun Aug-18 Household Debt to GDP Nonfinancial Bus. Debt to GDP Existing Home Sales (mn) 2 Value of Used Vehicles Aug-18 JD Power Used Vehicle Index Source: BLS. National Association of Realtors, FRB. 1. Household & Business debt data has been restated for previous periods by FRB data available one quarter in arrears. 2. Annual averages and monthly seasonally adjusted annual rates data available one month in arrears. Manheim Index 7

8 Financial System: Loan and Deposit Growth Industry Loan growth driven by increasing Commercial balances Total Loans (USD bn) 1 Total Deposits (USD bn) 9,460 9,556 9,723 9,755 9,859 13,105 13,216 13,399 13,529 13,469 YoY (%) 3.7% 3.5% 4.5% 4.9% 4.2% YoY (%) 4.6% 3.3% 3.9% 3.4% 2.8% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Quarter-over-Quarter Growth % 2 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 (est.) Total Loans (3.6) C&I (3.6) (2.4) Real Estate (2.8) 0.8 (1.2) Resi Mortgage Commercial Real Estate (0.4) (1.6) (2.0) 6.4 (4.0) Home Equity (10.4) (10.4) (16.0) (14.0) (11.2) Loan growth projected to slow in Q3 18, driven mainly by declines in C&I and CRE loans Deposit growth continues to decline in 2018 Deposits (3.2) 4.0 Loan / Deposit Ratio Source: FDIC Statistics on Depository Institutions; data available one quarter in arrears. 1. Gross Loans. 2. Annualized large banks ending QoQ growth rate based on Federal Reserve data. 8

9 Strategy and business 02

10 Our Franchise Santander US includes a Northeast US regional bank, a nationwide auto finance business, an international private banking operation and a broker-dealer Key Data 9M 18 Q3'18 YoY Var. Santander US Business & Results (USD) STRATEGIC PRIORITIES Loans 1 Deposits bn 3.2% 60.9bn (2.2%) Focus on Meeting Regulatory Expectations Attributable Profit Santander Bank - Network & Customers 2 549mn 46.5% Improve Customer Experience and Loyalty Across Segments Improve Margins through focus on integration of U.S. Operations Optimize Funding and Capital to Improve Results Clients Branches ATMs Santander Bank - Market Share 3 Loans 2.1 mn 1.1% 1.2% 630 (28) 2, % (6%) Deposits 2.6% (5%) Santander Consumer USA - Market Share 4 SC Market Share 4 (Retail Auto Lending) 4.0% (#9 in the US) 1. End of Period Balances, calculated using local US GAAP criteria. 2. Customer data is Aug-18 vs. Aug-17 for Clients, Sep-18 vs. Sep-17 for Branches and ATMs. 3. Market share as of 9/30/2018 from FDIC. Data available once a year (Considering all states where Santander Bank operates). Local criteria 4. Source: J.D. Power Market Share Report for Q3 18 (includes Santander Consumer USA and Chrysler Capital combined). Local criteria 10

11 Santander US Key Initiatives SHUSA Continue to focus on meeting regulatory expectations Focus on integration of US operations to improve efficiency Optimize support functions to generate efficiencies Optimize balance sheet and capital across U.S. businesses Santander Bank Continue to improve loyalty and the customer experience across digital & physical channels in Consumer Bank Invest in people, products and technology in CIB Santander Consumer USA Increase non-prime originations ensuring appropriate risk-return profile Leverage Santander Bank for prime originations Improve Dealer and Customer Experience 11

12 Santander Bank: Retail & Commercial Focus Checking Customers (000 s) 1 1,358 1,356 1,366 1,375 1,384 Checking customer growth remains strong Sep-17 Dec-17 Mar-18 Jun-18 Aug-18 Online Digital Customers (000 s) 778 Sep Sep-18 YoY growth driven by roll-out of enhancements and digital capabilities Funding Mix (USD bn) 2 Commercial Loan Portfolio (USD bn) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Core Deposits Borrowings Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 38% YoY decline in borrowing volume offset rise in deposit costs 2 consecutive quarters of loan growth from all business segments 1. Sep-18 data not yet available. 2. Core Deposits excludes Time, Brokered CDs, Government and Holding Company deposits. 12

13 SC: Optimize Profitability Balance Sheet Efficiency Managed Assets (USD bn) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Increase in Managed Assets due to strong originations in owned portfolio and $1 bn added in Serviced for Others in Q2 Owned and Serviced Serviced for Others Originate loans and leases with appropriate risk-return profile Originations Volume (USD bn) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Loans Leases Higher volume across all channels YoY Expenses (USD mn) 3 Disciplined Expense Management Expenses down YoY driven by lower headcount Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 1. Owned and Serviced portfolio excludes Personal Lending. 2. Includes Chrysler Capital originated retail loans and leases. 3. IFRS 13

14 Total Loans Performance YoY Loan growth driven by Commercial loans at SBNA and strong originations at SC Total Loans (USD bn) Sep-18 YoY (%) QoQ (%) Mortgages Auto Lending Other Consumer (1.3) Consumer CRE & Multifamily 16.0 (4.1) (0.7) C&I & Other Commercial 15.3 (2.1) 4.2 Commercial 31.2 (3.2) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 SBNA SBNA SCOther Other Entities Entities Private Banking (1.6) Total Loans SBNA SC Other Entities Total by Entity NOTE: Calculated using local US GAAP accounting criteria. 1. End of period balances. 2. Personal loans, securities lending, credit cards, R/V & Marine, equipment loans and HELOC. 3. Puerto Rico, BSI, SIS-NY, Holdco 14

15 Total Customer Deposits Performance SBNA deposits down YoY due to impact of CRA ratings on Government deposits. Lower QoQ due to competitive rate environment Total Deposits (USD bn) Sep-18 YoY (%) QoQ (%) Core Deposits 51.7 (1.1) (2.4) Time Deposits Gov t Deposits 2.7 (12.0) 8.4 Other Deposits (0.7) (0.5) Customer Deposits 60.6 (0.9) (1.4) Wholesale Deposits 0.3 (73.7) (41.6) Total Deposits (2.2) (1.7) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 SBNA Other Entities SBNA 55.8 (2.8) (3.4) Other Entities Total by Entity 60.9 (2.2) (1.7) NOTE: Calculated using Local US GAAP accounting criteria. 1. Customer repo and Eurodollar deposits. 2. End of period balances (NY Branch deposits not included). 3. BSI Miami, Puerto Rico. 15

16 SHUSA Funding Summary Santander US funding flat YoY as SC securitizations are offsetting lower wholesale borrowings at SBNA Sep-18 YoY (%) QoQ (%) Total Funding (USD bn) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 SBNA SC Holdco Other Entities HoldCo Debt (8.5) SBNA FHLB 3.2 (31.5) LTD Debt 0.3 (69.2) 0.0 SBNA Total 3.4 (37.7) SC Santander Funding Third Party Funding Amortizing Notes (37.3) (8.8) Public Securitizations SC Total Other Entities Total SHUSA Funding NOTE: Calculated using Local US GAAP accounting criteria. 1. Santander funding includes intercompany term debt from SHUSA. 2. Privately issued amortizing notes only. 3. Puerto Rico, BSI, NY. 16

17 Results 03

18 Net Interest Income NII quarterly growth in 2018 driven by higher loan volume and rates Net Interest Income (USD mn) 1,553 1,502 1,500 1,526 1, SBNA (%) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Loan Yield Deposit Cost SBNA SC Other Entities NIM (%) Total San US NIM (%) SBNA NIM (%) SC Federal Funds Rate (%) SC (%) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Loan Yield Cost of Debt NOTE: NIM = Net interest income annualized / Total average assets. Other Entities includes Holdco, Puerto Rico, BSI Miami, NY Branch & SIS. 1. Average Quarterly Rate. 18

19 Fee Income Fee Income down QoQ driven by lower Commercial loan fees at SBNA and lower fees generated on Santander Investment Securities products 9M'18 9M'17 YoY(%) QoQ(%) Fee Income (USD mn) Account Fees (13.6) 1.7 Debit and CC Fees Invest. & Insurance (16.9) Cont. Risk and Commit (4.7) 1.8 Other Fees (11.9) (11.6) SC Servicing Fees (13.2) (4.1) Others (11.5) (13.6) Total Fees by Category (8.0) (7.9) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SBNA SC Holdco Other Entities SBNA (13.0) (5.2) SC (19.7) 4.6 Holdco (50.8) Other Entities (15.6) Total by Entity (8.0) (7.9) 1. Insurance includes gross earned fees. 2. Puerto Rico, BSI Miami, NY Branch & SIS (Santander Investment Securities). 19

20 Gross Income Gross income quarterly increase in 2018 driven by NII Gross Income (USD mn) 1,893 1,884 1,940 1,990 2, ,181 1,126 1,143 1,181 1,217 9M'18 9M'17 YoY(%) QoQ(%) Net Interest Income 4,581 4,776 (4.1) 1.9 Fee Income (8.0) (7.9) Subtotal 5,346 5,608 (4.7) 0.5 Other Gross Income 5,947 5,962 (0.2) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SBNA SC Other Entities SBNA 1,925 1, (1.2) SC 3,541 3,672 (3.6) 3.0 Other Entities (0.2) Total by Entity 5,947 5,962 (0.2) Gains (losses) on financial transactions and Leasing Income. 2. Holdco, Puerto Rico, BSI Miami, NY Branch & SIS. 20

21 Operating Expenses Expenses decline for the third quarter running Operating Expenses (USD mn) General and admin. expenses Depreciation and amortization 9M'18 9M'17 YoY(%) QoQ(%) 2,441 2, (1.2) (23.0) 0.4 Operating expenses 2,650 2,696 (1.7) (1.1) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SBNA SC Holdco Other Entities SBNA 1,450 1, (2.8) SC (7.1) 2.8 Holdco (2.1) 3.4 Other Entities (4.1) (3.5) Total by Entity 2,650 2,696 (1.7) (1.1) Efficiency ratio (with amortizations) 44.6% 45.2% SBNA 75.3% 76.9% SC 18.1% 18.8% 1. Puerto Rico, BSI Miami, NY Branch & SIS. 21

22 Net Operating Income after Loan Loss Provisions YoY decline in provisions driven by better credit performance at SC. QoQ affected by higher LLPs vs. a seasonal lower Q2 9M'18 9M'17 YoY(%) QoQ(%) Net Loan-loss Provisions (USD mn) Net Operating Income 3,297 3, LLPs (1,998) (2,381) (16.1) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SBNA SC Other Entities 5 Net op. income after LLPs 1, (33.0) SBNA (86) (97) (11.5) (73.4) SC (1,889) (2,217) (14.8) 52.3 Other Entities 2 (23) (67) (66.2) (60.5) LLPs by Entity (1,998) (2,381) (16.1) 43.6 Cost of credit 1 (%) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 San US SBNA SC NPL Ratio 3.00% 2.56% SBNA 1.01% 1.00% SC 7.31% 5.48% Coverage ratio 146% 188% SBNA 111% 119% SC 161% 235% 1. Cost of credit = 12 month loan loss provisions / average lending. 2. Holdco, Puerto Rico, BSI Miami, NY Branch & SIS. 22

23 Underlying and Attributable Profit Attributable profit 47% favorable vs. prior year Underlying Profit (USD mn) (76) (79) (108) (107) (106) (14) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 SBNA SC Holdco Other Entities Attributable profit (USD mn) 111 (0) M'18 9M'17 YoY(%) QoQ(%) Profit before taxes 1, (40.9) Tax on profit (357) (234) 52.6 (34.9) Consolidated Profit (43.7) Minority interest (223) (211) 6.0 (45.5) Attributable profit (42.9) Effective tax rate 31.6% 28.6% SBNA SC (44.2) Holdco (322) (236) 36.5 (0.7) Other Entities Total by Entity (42.9) 1. Puerto Rico, BSI Miami, NY Branch & SIS. 23

24 Conclusions Market Environment & Financial System US growth projected to slow as rates rise Unemployment rate continues to fall while home sales are stable Industry Loan growth driven by increasing Commercial balances Strategic Priorities Focus on Meeting Regulatory Expectations. The Federal Reserve terminated the 2015 Written Agreement it signed with SHUSA demonstrating our continued improvement on regulatory issues Improve of our customer experience and loyalty across segments Improve margins through focus on integration of US operations Optimize funding and capital to improve results Results Checking customer growth remains strong Continued Improvement in profitability at SBNA with NIM increasing to 3.00% in Q3 18 NII QoQ growth driven by higher loan volume and rates Fee income down QoQ driven by lower Commercial loan fees at SBNA, and lower fees generated on Santander Investment Securities products Expenses decline for the third quarter running YoY decline in provisions driven by better credit performance at SC Attributable profit 47% favorable vs. prior year 24

25 Appendix 04

26 Appendix Balance Sheet Santander US USD million Variation 30-Sep Sep-17 Amount % Loans and advances to customers 92,489 86,470 6, Cash, central banks and credit institutions 16,552 15,458 1, Debt securities 15,341 19,281 (3,940) (20.4) o/w: designated at fair value through equity 11,372 16,927 (5,556) (32.8) Other financial assets 5,906 3,411 2, Other assets 16,952 14,617 2, Total assets 147, ,237 8, Customer deposits 68,194 62,427 5, Central banks and credit institutions 15,226 18,507 (3,281) (17.7) Debt securities issued 35,553 31,867 3, Other financial liabilities 5,109 3,211 1, Other liabilities 4,422 5,018 (595) (11.9) Total liabilities 128, ,030 7, Total equity 18,737 18, Other managed and marketed customer funds 19,419 20,230 (811) (4.0) Mutual funds 9,785 9,840 (55) (0.6) Pension funds Managed portfolios 9,634 10,391 (757) (7.3) 26

27 Appendix Balance Sheet Santander Bank USD million Variation 30-Sep Sep-17 Amount % Loans and advances to customers 53,143 51,971 1, Cash, central banks and credit institutions 3,271 3,690 (419) (11.4) Debt securities 13,333 17,633 (4,300) (24.4) o/w: designated at fair value through equity 10,011 15,709 (5,698) (36.3) Other financial assets 1,072 1, Other assets 1,736 2,416 (680) (28.1) Total assets 72,555 76,724 (4,168) (5.4) Customer deposits 52,672 53,183 (511) (1.0) Central banks and credit institutions 8,034 11,058 (3,024) (27.3) Debt securities issued (631) (80.5) Other financial liabilities Other liabilities 1, Total liabilities 62,220 66,165 (3,945) (6.0) Total equity 10,335 10,559 (224) (2.1) Other managed and marketed customer funds 0 20 (20) (99.9) Mutual funds 0 20 (20) (99.9) Pension funds Managed portfolios 27

28 Appendix Balance Sheet Santander Consumer USA USD million Variation 30-Sep Sep-17 Amount % Loans and advances to customers 26,350 25,084 1, Cash, central banks and credit institutions 2,312 3,047 (735) (24.1) Debt securities o/w: designated at fair value through equity Other financial assets Other assets 14,046 10,868 3, Total assets 42,904 39,137 3, Customer deposits 4 4 (1) (20.7) Central banks and credit institutions 8,704 7,005 1, Debt securities issued 24,895 23,547 1, Other financial liabilities Other liabilities 1,794 2,232 (439) (19.6) Total liabilities 35,699 33,000 2, Total equity 7,205 6,136 1, Other managed and marketed customer funds Mutual funds Pension funds Managed portfolios 28

29 Appendix Quarterly Income Statement Santander US USD million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Net interest income 1,586 1,636 1,553 1,502 1,500 1,526 1,555 Net fees Gains (losses) on financial transactions (6) 27 (23) Other operating income Gross income 2,001 2,068 1,893 1,884 1,940 1,990 2,018 Operating expenses (891) (929) (875) (909) (904) (878) (868) General administrative expenses (806) (834) (785) (816) (833) (809) (799) Personnel (474) (471) (465) (466) (488) (455) (462) Other general administrative expenses (333) (363) (319) (350) (346) (354) (337) Depreciation and amortisation (85) (95) (91) (93) (71) (69) (69) Net operating income 1,109 1,138 1, ,036 1,112 1,149 Net loan-loss provisions (863) (768) (749) (753) (712) (528) (758) Other income (34) (27) (4) (36) (28) (60) (81) Underlying profit before taxes Tax on profit (65) (86) (82) (54) (82) (167) (108) Underlying profit from continuing operations Net profit from discontinued operations Underlying consolidated profit Minority interests Underlying attributable profit to the Group Net capital gains and provisions (85) Attributable profit to the Group (0)

30 Appendix Quarterly Income Statement Santander Bank USD million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Net interest income Net fees Gains (losses) on financial transactions (2) (4) Other operating income 4 7 (23) (2) 3 (3) (12) Gross income Operating expenses (469) (492) (467) (500) (490) (487) (473) General administrative expenses (407) (425) (403) (438) (443) (440) (428) Personnel (234) (234) (235) (248) (255) (237) (241) Other general administrative expenses (173) (191) (168) (190) (188) (203) (188) Depreciation and amortisation (62) (67) (64) (62) (47) (46) (45) Net operating income Net loan-loss provisions (32) (35) (30) (33) (53) (26) (7) Other income (9) 6 20 (6) 15 (4) (25) Underlying profit before taxes Tax on profit (14) (30) (51) (28) (23) (27) (29) Underlying profit from continuing operations Net profit from discontinued operations Underlying consolidated profit Minority interests Underlying attributable profit to the Group Net capital gains and provisions (215) Attributable profit to the Group (158)

31 Appendix Quarterly Income Statement Santander Consumer USA USD million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Net interest income 1,009 1, Net fees Gains (losses) on financial transactions (10) (7) 3 7 (7) (3) 4 Other operating income Gross income 1,236 1,256 1,181 1,126 1,143 1,181 1,217 Operating expenses (234) (218) (237) (194) (217) (209) (215) General administrative expenses (227) (212) (230) (186) (210) (202) (207) Personnel (133) (126) (137) (112) (129) (125) (121) Other general administrative expenses (94) (86) (93) (74) (81) (77) (86) Depreciation and amortisation (6) (6) (7) (7) (7) (7) (8) Net operating income 1,002 1, ,002 Net loan-loss provisions (805) (706) (706) (703) (652) (490) (747) Other income (17) (23) (14) (19) (25) (31) (18) Underlying profit before taxes Tax on profit (63) (76) (51) (74) (51) (113) (50) Underlying profit from continuing operations Net profit from discontinued operations Underlying consolidated profit Minority interests Underlying attributable profit to the Group Net capital gains and provisions 342 Attributable profit to the Group

32 Thank you. Our purpose is to help people and business prosper. Our culture is based on believing that everything we do should be: