26 th April 2017 ARGENTINA. January - March 2017

Transcription

1 26 th April 2017 ARGENTINA January - March 2017

2 Disclaimer IMPORTANT INFORMATION Banco Santander, S.A. ("Santander") and Banco Santander Río S.A. caution that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 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, 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, obligors and 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 Banco Santander S.A. or Banco Santander Río S.A. 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 Banco Santander S.A. or Banco Santander Río S.A. 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, 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, 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 regulation in a manner applicable to all subsidiaries of the Santander Group and as a result it may differ from the one disclosed locally by Banco Santander Río S.A. 2

3 Content Macroeconomic environment and financial system Strategy and business Results Appendix

4 Macro-economic environment GDP growth expected from 2017, with declining inflation and lower interest rates. Annual GDP Growth (%, real) Interest Rates (%, end year) (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Inflation (%, annual change) Peso / euro exchange rates ( average) (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Source: Central Bank of Argentina, National Institute of Statics and Census (INDEC) and estimates by Santander Research *Based on update of GDP series published by INDEC on 3Q16. 4

5 Macro-economic environment Fiscal deficit reduction for 2017 while consumption continues growing at high real rates Fiscal surplus / deficit * (% of GDP) External sector* (US$ bn) -1.9% -3.1% -3.9% -4.5% (e) 2018 (e) 2019 (e) 10,0 8,0 6,0 4,0 2,0 0,0-2,0-4,0-6, (e) 2018 (e) 2019 (e) 76,0 66,0 56,0 46,0 36,0 26,0 16,0 6,0-4,0 Exports Imports Trade balance Consumer spending* (%,YoY) Employment 9,0% 8.5% 7.9% 29% 8,0% 7.6% 7.4% 24% 7,0% 24% % 18% ,0% % 5,0% 14% 4,0% 7% (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Shoppings Malls Groceries Stores Employment (millions) Unemployment rate, % 10,0 Source: Central Bank of Argentina, National Institute of Statics and Census (INDEC) and estimates by Santander Research. *Based on update of GDP series published by INDEC on 3Q16. 5

6 Financial system: Loan and deposit evolution Transactional and low risk financial system: profitable, with low scale of businesses, good asset quality, and funded domestically. High growth potential in financial intermediation Total loans ( bn constant euros) Loans / GDP*: 11.8% Deposits / GDP*: 15.9% YoY (%) % 32% 31% 31% 35% 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 140% 120% 100% 80% 60% 40% 20% 0% March 17 : Term deposits grow 14.8% YoY while sight deposits 63.9%. Loans are driven by commercial loans (36.1% YoY) and personal loans (growing at 46.6% YoY). Liquid assets / Deposits: 40% Total deposits ( bn constant euros) Loans durations : 34.7% less than 1 month; 66.7% less than 1 year BIS ratio: 16.8% YoY (%) % 37% 37% 43% 47% 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 140% 120% 100% 80% 60% 40% 20% 0% Private sector NPLs remain at low levels of 1.93% (coverage: 134,4%) Financial system net income trend: Net Income** ROE % % % % 2M % * Measure under new GDP series with 2004 base. Loans and deposits to private sector. ** In constant EUR billion 6

7 Content Macroeconomic environment and financial system Strategy and business Results Appendix

8 Our Franchise Santander Río: The leading franchise in Argentina STRATEGIC PRIORITIES KEY DATA 1Q 17 Var. YoY* Gross loans 1 8, % Continue the transformation toward a digital bank Customer funds 1 11, % Attributable profit % Complete the integration of Citibank s retail business RoTE Efficiency ratio Loans market share % 749 bps 54.5% -435 bps 11.1% 130 bps Boost lending to companies and households that have a low level of debt Deposits market share % 90 bps Loyal customers 3 1, % Digital customers 3 1, % Grow in customer funds, particularly mutual funds Branches % Employees 7, % (1) Million euros; Includes Citibank s retail portfolio integrated on 31 of March of 2017 (2) As of Mar Includes Citi reteail portfolio integrated on 31 of March of 2017 (3) Thousands (*) Constant euros 8

9 Commercial strategy and business transformation Growth based on a customer centered strategy. Transformation and digitalization focused on efficiency and customer service New Reward program Miles fidelity program cobranded with AAdvantage. Strengthen the Bank positioning in high income segments. Online y Mobile Banking 63% of our customers use Online Banking 24% of our customers use Mobile Banking Mortgages This new product launched in 2016, is an inflation indexed mortgage. Well positioned to capture market growth potential. 30% market share (*) Citibank retail bussiness acquisition + 70 branches thousand customers thousand high income customers + 1.3% market share Building a digital bank New digital platform to support entirely digital processes. Biometrics technology to identify customers. New version of digital channels. + CHE 95% transactions through digital channels. 62% of branch network under new model. New CRM: Enables to offer the most appropiate products and services, in the best moment, through the most accurate channels. 5% additional increase of branches sales. American Airlines" and "AAdvantage" are trademarks of American Airlines, Inc. American Airlines is not responsible for products or services offered by other participating companies (*) of UVA Mortgages since launched in Source: Central Bank of Argemtina 9

10 Customers Santander Rio aims to broaden its leadership in profitability, market share and client s satisfaction, through customer service improvements, and digital transformation Loyal individuals (thousands) 7.1% More customized products and services. 79% of our Select customer base is loyal. mar-16 mar-17 Loyal companies (thousands) % 105 Transactionality improvements 42% of our companies customer base is loyal. mar-16 mar-17 Digital customers (thousands) 16.9% Focus in automatisation and customer service High penetration in Online Banking. Focus on mobile app usage. mar-16 mar-17 10

11 Total loans performance Loans increased 39%* YoY, driven mainly by commercial loans. New inflation-indexed mortgages had good market reception Total gross loans ( bn constant euros) 3M'17 YoY (%) QoQ (%) 8,103 7,073 6,447 5,296 5,819 1Q16 2Q16 3Q16 4Q16 1Q17 Individuals 3,206 35% 8% Mortgage % 23% Consumer Credit 3,013 34% 7% Companies 4,898 68% 19% SMEs 1,061 42% 9% Corporates 1,607 41% 9% Large Corporates 2, % 34% Total 7,381 39% 4% Ex Citi loans Total loans 8,103 53% 15% 11 *Excludes Citi s retail portfolio acquisition.

12 Total funds performance Total deposits grew 36%* YoY driven by time deposits and dollar denominated deposits affected by tax amnesty Total deposits ( bn constant euros) 3M'17 YoY (%) QoQ (%) 11,610 9,776 7,482 7,484 7,640 1Q16 2Q16 3Q16 4Q16 1Q17 Demand 2,506 33% 4% Savings 4, % -1% Time 2,821-20% 14% Total 10,200 36% 4% Ex Citi Deposits 1, Total deposits 11,610 55% 19% FUM 2, % 45% Total customer funds 14,117 69% 23% 12 *Excludes Citi s retail portfolio acquisition.

13 Content Macroeconomic environment and financial system Strategy and business Results Appendix

14 Net interest income NII increased 48% YoY mainly due to volume growth. Yield compression and lower cost of deposits Net Interest Income ( MM constant euros 1 ) Yield on loans (%) Q 16 2Q 16 3Q 16 4Q 16 1Q 17 1Q16 2Q16 3Q16 4Q16 1Q17 Cost of deposits (%) NIM 2 (%) Official interest rate 3 (%) Q 16 2Q 16 3Q 16 4Q 16 1Q 17 (1) Average exchange rate as of 3M 17 (2) Net interest income annualised / Total assets average period (3) Quarter average. 14

15 Net fees Net fees increased 49%, driven by credit cards, account management and fx Net fees ( MM constant euors 1 ) M'17 3M'16 YoY (%) QoQ (%) Credit cards % 6% Account managment % 22% Insurance % 9% Checks % 0% Other % 45% Total % 19% 1Q16 2Q16 3Q16 4Q16 1Q17 (1) Average exchange rate as of 3M 17 15

16 Gross income Gross income increased 39% YoY, due to net interest income and fees. Gains on financial transactions declined mainly due to trading activities Gross income ( MM constant euros 1 ) Q16 2Q16 3Q16 4Q16 1Q17 3M'17 3M'16 YoY (%) QoQ (%) Net interest income % 5% Net fees % 19% Subtotal % 10% Gain/losses on financial transacti % -9% Other Op. Income % -162% Total % 8% (1) Average exchange rate as of 3M 17 16

17 Operating expenses Cost reduction in real terms, offsetting the expansion plan. Improvements in efficiency ratio YoY Operating expenses ( MM constant euros 1 ) 3M'17 3M'16 YoY (%) QoQ (%) General and admin. expenses % 15% Personal % 18% Other % 12% Depreciation and amortization % 12% Operating expenses % 15% 1Q16 2Q16 3Q16 4Q16 1Q17 Efficiency ratio (with amortisations) 54.5% 58.9% -435 p.p p.p. Number of employees (2) 7,990 8,152-2% 1% Number of branches (2) % (1) Average exchange rate as of 3M 17 (2) Excludes Citi retail acquisition 17

18 Net operating income after loan-loss provisions (LLPs) Lower cost of credit. Comfortable NPL and coverage ratio (134%) LLPs and Cost of credit ( MM constant euros 1 ; %) Cost of credit Net LLPs 2.0% 2.0% 1.9% 1.7% 1.7% M'17 3M'16 YoY (%) QoQ (%) Net Operating Income % 0% LLP's % -7% Net op. income after LLPs % 1% NPL Coverage ratio 134% 194% NPL ratio 1.82% 1.21% 1Q16 2Q16 3Q16 4Q16 1Q17 (1) Average exchange rate as of 3M 17 18

19 Attributable profit Attributable profit grew 69% YoY, driven by increase in all core revenues lines, and cost control Attributable profit ( MM constant euros 1 ) 3M'17 3M'16 YoY (%) QoQ (%) Profit before taxes % 7% Tax on profit % 33% Consolidated profit % -1% Underlying att. Profit % -1% Non-recurring Attributable profit % -1% Effective tax rate 30.7% 32.5% 1Q16 2Q16 3Q16 4Q16 1Q17 (1) Average exchange rate as of 3M 17 19

20 Final remarks Market Environment & Financial System Financial System remains transactional, solid, liquid, well capitalized, and profitable. High growth potential of financial intermediation. Improvements in economic variables expected for 2017 and incoming years, with GDP recovery. Consolidation opportunities in the Financial System. Strategy & Business Proven transactional business model focused on customer, with low risk. Customer service improvements and digital transformation to broaden leadership in profitability, market share and client s satisfaction. Well positioned to capture the benefits of bancarisation in Argentina. Citibank Retail Banking acquisition: On March 31 st Focus on integration process. Central Bank authorized the acquisition. Loans volumes increase in 1Q17 driven by Commercial and Retail Loans. Deposits in 4Q16 are driven by sight deposits and dollar nominated deposits due to tax amnesty of Results Attributable profit reaches EUR 108M in first quarter of 2017, growing 69%YoY, driven by the increase of all revenues lines, cost reduction in real terms and moderated growth of LLPs. 20

21 Content Macroeconomic environment and financial system Strategy and business Results Appendix

22 Balance sheet Constant EUR million* Variation 31-Mar Mar-16 Amount % Customer loans 8,103 5,296 2, Cash, central banks and credit institutions 5,555 3,092 2, Debt securities 450 1,790 (1,340) (74.9) o/w: available for sale 340 1,589 (1,249) (78.6) Other financial assets (3) (23.0) Other assets Total assets 14,996 10,722 4, Customer deposits 11,610 7,482 4, Central banks and credit institutions 315 1,224 (908) (74.2) Debt securities issued Other financial liabilities Other liabilities Total liabilities 13,653 9,735 3, Total equity 1, Other managed and marketed customer funds 2, , Mutual funds 2, , Pension funds Managed portfolios (*) End of period exchange rate, as of 03/31/

23 Income statement Constant EUR million* Variation 1Q17 1Q16 Amount % Net interest income Net fees Gains (losses) on financial transactions (14) (29.8) Other operating income (1) (7) 6 (83.4) Gross income Operating expenses (221) (172) (49) 28.7 General administrative expenses (204) (161) (43) 26.4 Personnel (104) (85) (19) 22.4 Other general administrative expenses (100) (76) (24) 30.8 Depreciation and amortisation (17) (11) (7) 64.6 Net operating income Net loan-loss provisions (29) (22) (7) 34.7 Other income 1 (3) 5 Underlying profit before taxes Tax on profit (48) (31) (17) 55.8 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 (*) Average exchange rate as of 3M 17 23

24 Quarterly statements of income Constant EUR million* 1Q16 2Q16 3Q16 4Q16 1Q17 Net interest income Net fees Gains (losses) on financial transactions Other operating income (7) (1) Gross income Operating expenses (172) (177) (184) (192) (221) General administrative expenses (161) (164) (172) (177) (204) Personnel (85) (86) (87) (88) (104) Other general administrative expenses (76) (78) (84) (89) (100) Depreciation and amortisation (11) (13) (13) (16) (17) Net operating income Net loan-loss provisions (22) (24) (27) (31) (29) Other income (3) (10) (4) (8) 1 Underlying profit before taxes Tax on profit (31) (32) (39) (36) (48) 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 (*) Average exchange rate as of 3M 17 24

25 Thank you Our purpose is to help people and businesses prosper. Our culture is based on the belief that everything we do should be