30 January Chile Earnings Presentation

Transcription

1 30 January 2019 Chile 2018 Earnings Presentation

2 Disclaimer Banco Santander, S.A. ("Santander") and Banco Santander Chile caution 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 Santander 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 Santander 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 or Santander Chile. 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 and Banco Santander Chile give no advice and make no recommendation to buy, sell or otherwise deal in shares in Santander or Banco Santander Chile 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 ( 2

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

4 Macroeconomic environment and financial system 01

5 Macroeconomic environment Positive GDP growth expectations for 2019 Annual GDP Growth (real, %) Central Bank Monetary Policy (year end, %) (e) 2019 (e) 2020 (e) (f) 2020 (f) Annual inflation rate (year end UF,%) Average exchange rate (CLP/EUR) (e) 2020 (e) (e) 2020 (e) (e) Santander Chile estimates Source: Banco Central de Chile 5

6 Macroeconomic environment Growth of domestic demand reflects higher investment in various sectors Domestic Demand (YoY growth, %) Growth by Sectors (YoY growth, %) (e) 2019 (e) 2020 (e) Agro/Fishing Mining (e) 2019 (f) 2020 (f) Investments (YoY growth, %) Manufacturing Construction Utilities Commerce Transportation Communications Services Public Admin (e) 2019 (f) 2020 (f) (e) Santander Chile estimates Source: Banco Central de Chile GDP

7 Financial system: Loan and customer fund evolution Loan growth picking up as the economy strengthens Total loans (Constant EUR bn 1 ) YoY (%) Lending continued to accelerate led by commercial loans as economic activity picks up Retail lending also accelerated in Q4 18 Stable asset quality Dec-17 Mar-18 Jun-18 Sep-18 Nov-18 Total customer funds² (Constant EUR bn 1 ) High liquidity in the system to fund business growth YoY (%) Deposits growth remained roughly in line with loan growth In the quarter, mutual fund growth was affected by the contraction of equity markets Dec-17 Mar-18 Jun-18 Sep-18 Nov-18 (1) End period exchange rate as at Nov-18 (2) Include demand deposits, time deposits and mutual funds 7

8 Strategy and business 02

9 Our Franchise Santander Chile is the nation s leading bank STRATEGIC PRIORITIES Accelerate commercial transformation via the new branch network model and digital banking Improve our quality of service and achieve greater loyalty from our customers Focus on mass market through Santander Life Consolidate our leadership in nonlending business in the corporate sector Strengthen our insurance and wealth management services KEY DATA 12M 18 YoY Var. 4 Gross loans 1 39, % Deposits 1 25, % Attributable profit % RoTE 18.4% +50 bps Efficiency ratio 41.2% +56 bps Loans market share % -5 bps Deposits market share % -14 bps Loyal customers % Digital customers 3 1, % Branches % Employees 12, % (1) EUR mn (2) As at Nov-2018 (last available) (3) Thousands (4) Constant euros 9

10 Commercial strategy and business transformation Continue to open innovative branches and develop digital platforms 10

11 Customers Customer loyalty continued to expand driven by better quality of service and digital offer Loyal individuals (k) % WorkCafés already opened across Chile New branch model pilot New Select/Private banking branch launched offering specialised services more focused on Wealth Management and insurance Dec-17 Dec-18 Loyal companies (k) 47 +6% 50 Dec-17 Dec-18 Digital customers (k) Fee income from SCIB grew 22% YoY Demand deposits increased 19% YoY in SCIB According to the latest market survey we are Top 2 for customer satisfaction among banks in Chile Best Bank in Chile 2018: The Banker, Euromoney and Latin Finance 1,012 +7% 1,086 Santander Wallet introduced Life program is steadily growing, with over 35,000 customers, of whom more than 70% are new Dec-17 Dec-18 11

12 Total loans performance Loan growth accelerated to 10% YoY with an increased pace of loan growth to individuals in the quarter Total gross loans (Constant EUR bn 1 ) Dec-18 YoY(%) QoQ(%) Total individual Mortgage Consumer credit Total corporates SMEs Middle-market SCIB Others³ Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Total loans (1) End period exchange rate as at Dec-18 (2) Loans to individuals include consumer, mortgage and commercial loans to individuals (3) Total loans amount includes non-segmented loans 12

13 Total customer funds performance Customer funds increased 8% YoY. Strong growth of demand deposits in the quarter, backed by the Select segment Total customer funds 1 (Constant EUR bn 2 ) Dec-18 YoY(%) QoQ(%) Demand Time Total deposits Mutual funds Total customers funds Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 (1) End period exchange rate as at Dec-18 (2) Include demand deposits, time deposits and mutual funds 13

14 Results 03

15 Net interest income 12M 18 NII grew 5% YoY. Rate rise increased funding costs in the quarter Net interest income (Constant EUR mn 1 ) Yield on loans (%) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 NIM 2 (%) 4.02% 3.85% 3.84% 3.79% 3.70% Central Bank ST rate 3 (%) 2.5% 2.5% 2.5% 2.5% 2.75% Inflation rate 4 (%) 0.5% 0.6% 0.7% 0.7% 0.8% Cost of deposits (%) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 (1) Average exchange rate as of 12M 18 (2) Group criteria (3) Quarter average (4) Unidad de Fometo quarterly variation 15

16 Fee income Fee income increased 12% YoY driven by higher customer loyalty Net fees (Constant EUR mn 1 ) 12M 18 12M 17 YoY(%) QoQ(%) Cards Bancassurance Cash Mgt Mutual funds Foreign trade Checking accts Others Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Total (1) Average exchange rate as of 12M 18 16

17 Gross income Gross operating income up due to higher customer revenues Gross income (Constant EUR mn 1 ) 12M 18 12M 17 YoY(%) QoQ(%) NII 1,944 1, Fee income Subtotal 2,367 2, Gains/losses on fin. transactions Other Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Gross income 2,535 2, (1) Average exchange rate as of 12M 18 17

18 Operating expenses Controlled cost growth while investing in technology and innovation Operating expenses (Constant EUR mn 1 ) 12M 18 12M 17 YoY(%) QoQ(%) General admin. expenses Depreciation and amortisation Operating expenses 1, Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Efficiency ratio 41.2% 40.6% Branches (#) Employees (#) 12,008 11,675 (1) Average exchange rate as of 12M 18 18

19 Net operating income after loan-losses provisions (LLPs) Healthy asset quality with improving NPL ratio and stable cost of credit LLPs and cost of credit (Constant EUR mn 1, %) Cost of credit M 18 12M 17 YoY(%) QoQ(%) Net operating income 1,491 1, LLPs (473) (446) Net LLPs Net op. income after LLPS 1,018 1, NPL ratio 4.7 % 5.0% Coverage ratio 61% 58% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 (1) Average exchange rate as of 12M 18 19

20 Attributable profit Solid performance: YoY profit growth driven by customer revenues Attributable profit (Constant EUR mn 1 ) 12M 18 12M 17 YoY(%) QoQ(%) PBT 1,121 1, Tax on profit (220) (193) Consolidated profit Attrib. profit Effective tax rate 19.6% 18.9% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 (1) Average exchange rate as of 12M 18 20

21 Concluding remarks Positive growth trends in 2018 Market Environment & Financial System Strategy & Business GDP estimated to grow 3.5% in 2019 driven by investments and consumption Inflation expectation dampened by lower oil prices especially in H1 19 The Central Bank increased the Short Term interest rate by 25 bps in Q4 18, but less rate hikes are expected in 2019 Loan growth continued to accelerate Important progress in various strategic initiatives Loyal customers base growing at a healthy pace driven by significant improvements in customer service and digital offer Loans increased 10% YoY. Corporate loans grew 7.5% and loans to individuals 12.5% YoY. Total customer funds increased 8% YoY boosted by demand deposits (+11% YoY) and mutual funds (+12% YoY). 8.5% YoY attributable profit growth driven by higher net interest income and fee income Results Controlled cost growth of 5% YoY with development of technology and innovation Healthy asset quality with improving NPL ratio and stable cost of credit YoY RoTE increased from 17.9% in 12M 17 to 18.4% in 12M 18 21

22 Appendix 04

23 Appendix Balance sheet Constant EUR million¹ Variation 31-Dec Dec-17 Amount % Loans and advances to customers 37,908 34,455 3, Cash, central banks and credit institutions 4,247 4, Debt securities 3,106 3,842 (736) (19.2) o/w: designated at fair value through equity 3,009 3,236 (227) (7.0) Other financial assets 3,164 2, Other assets 2,486 1, Total assets 50,911 46,698 4, Customer deposits 25,908 24,152 1, Central banks and credit institutions 5,867 5, Debt securities issued 9,806 8,316 1, Other financial liabilities 3,535 3, Other liabilities 919 1,133 (214) (18.9) Total liabilities 46,035 42,030 4, Total equity 4,876 4, Other managed and marketed customer funds 9,712 9, Mutual funds 7,419 6, Pension funds Managed portfolios 2,294 2,409 (115) (4.8) (1) End of period exchange rate as at Dec-18 23

24 Appendix Income statement Constant EUR million¹ Variation Amount % Net interest income 1,944 1, Net fees Gains (losses) on financial transactions (57) (27.7) Other operating income Gross income 2,535 2, Operating expenses (1,045) (991) (53) 5.4 General administrative expenses (937) (887) (50) 5.6 Personnel (573) (555) (18) 3.3 Other general administrative expenses (364) (332) (32) 9.6 Depreciation and amortisation (107) (104) (3) 3.1 Net operating income 1,491 1, Net loan-loss provisions (473) (446) (27) 6.0 Other income Underlying profit before taxes 1,121 1, Tax on profit (220) (193) (27) 13.7 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 Attributable profit to the Group (1) Average exchange rate as of 12M 18 24

25 Appendix Income statement Constant EUR million¹ Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Net interest income Net fees Gains (losses) on financial transactions Other operating income Gross income Operating expenses (243) (251) (253) (244) (252) (266) (262) (264) General administrative expenses (220) (226) (227) (215) (226) (240) (236) (235) Personnel (129) (142) (142) (142) (135) (149) (149) (140) Other general administrative expenses (90) (84) (85) (73) (91) (91) (86) (95) Depreciation and amortisation (24) (25) (26) (30) (26) (26) (26) (29) Net operating income Net loan-loss provisions (112) (118) (108) (108) (119) (112) (119) (123) Other income Underlying profit before taxes Tax on profit (44) (48) (45) (56) (58) (55) (57) (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 Attributable profit to the Group (1) Average exchange rate as of 12M 18 25

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