27 January 2016 SANTANDER US. January December 2015

Transcription

1 27 January 2016 SANTANDER US January December 2015

2 Disclaimer Banco Santander, S.A. and its affiliates ("Santander") caution that this presentation contains forward-looking statements within the meaning of the U.S. 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 creditworthiness of our customers, obligors and counterparties. These 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 Santander. The information in this presentation is not intended to constitute research as that term is defined by applicable regulations. Nothing in this presentation constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Recipients of this presentation should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisors before making an investment decision, and only make such decisions on the basis of the investor's own objectives, experience and resources. 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 None of this presentation, or its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior written permission of Santander. Note: Nothing in this presentation should be construed as a profit forecast. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding performance. Information, opinions and estimates contained in this presentation reflect judgments at the original date of publication of this presentation by Santander and are subject to change without notice. Santander has no obligation to update, modify or amend this presentation or to otherwise notify a recipient hereof in the event that any information, opinion or estimate set forth herein changes or subsequently becomes inaccurate. This presentation is provided for informational purposes only. 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] and Santander Consumer USA Holdings Inc. [SC] and Puerto Rico (Santander Bancorp and Santander Financial Services) unless stated otherwise. As of Q3 2015, Santander US financial information has been restated to include Banco Santander International in Miami [BSI], the New York Branch and Santander Investment Securities in New York. 3

4 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

5 Macro-economic environment As we enter period of increasing interest rates, we continue to foresee steady GDP growth GDP Growth (%, real) Interest Rate* (%, period average) (e) 2016 (e) 2017 (e) (e) 2016 (e) 2017 (e) CPI Inflation Rate (%, period average) USD: EUR Exchange Rate (period average) (e) 2016 (e) 2017 (e) (e) 2016 (e) 2017 (e) Source: BEA, FRB, Global-rates.com and estimates by Santander Research La semana 1/8/2016 *3 months LIBOR rate 5

6 Macro-economic environment Unemployment keeps declining while home sales increase Debt to GDP1 Unemployment Rate (%) 85.7% 82.7% 81.0% 80.0% 78.1% 66.1% 66.7% 67.8% 69.2% 69.9% Household Debt to GDP Nonfinancial Bus. Debt to GDP Existing Home Sales (Mn) 2 Value of Used Vehicles Source: BLS. National Association of Realtors, FRB 1. Household & Business debt data has been restated for previous periods by FRB; 2. Annual averages and monthly seasonally adjusted annual rates. 3. Manheim Index, Dec 15 6

7 Financial system: Loan and deposit growth USD Billion Steady growth for loans but flattening of deposits Total loans 1 8,162 8,312 8,364 8,549 8,644 YoY (%) 4.6% 5.3% 5.4% 5.4% 5.9% Modest acceleration of loan growth throughout 2015 across the market, with commercial loans leading the way. S'14 D'14 M'15 J'15 S'15 YoY (%) Total deposits 11,597 11,764 11,958 11,932 11, % 5.1% 5.7% 3.8% 3.4% Total deposits have effectively stabilized, with minimal fluctuations quarter to quarter. Loans to deposit ratio was 72.1% as of Q vs. 71.6% in Q S'14 D'14 M'15 J'15 S'15 1. Gross Loans Source: FDIC Statistics on Depository Institutions 7

8 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

9 Our Franchise Santander has well established retail banking franchises in the Northeast and Puerto Rico, a broker dealer in NYC, a nationwide auto finance business and a private banking business in Miami USD 2015 Var. YoY Santander Investment Securities Santander Bank Santander US Business and Results Loans 91.7 Bn 7.5% Deposits 65.4 Bn 5.2% Attributable Profit 752 Mn (34.2)% Santander Bank Network and Customers 1 Clients 2.1 Mn 0.48% Branches 675 (30) ATMs 2,081 (13) Santander Consumer USA Banco Santander International Santander Puerto Rico Santander Bank Market Share 2 Loans 3.0% 20% Deposits 2.4% 33% Santander Consumer USA Market Share 3 Retail Auto Lending 4.3% (#3 in the US) 1. Customer data are estimates for Dec 15 ; 2. Market share as of June 30, 2015 from FDIC. Data available once a year (Considering all states where Santander Bank operates) 3. Source: 3Q15 Experian State of the Automotive Finance Market (includes Santander Consumer USA and Chrysler Capital combined) 9

10 Santander US: Strategy/Priorities SHUSA Execute multi-year transformation program to strengthen risk, capital and liquidity management Invest in technology to further improve internal controls, risk management and capital planning systems Integrate New York, Miami, and PR operations as part of the Intermediate Holding Company (IHC) Santander Bank Build more and deeper customer relationships through a simplified and complete product offering Improve deposit mix and pricing to reduce funding costs Enhance digital capabilities by enabling convenient interfaces and improving transaction processes Santander Consumer USA Leverage efficient, scalable technology and risk infrastructure and data to underwrite, originate and service profitable assets while treating employees, customers and all stakeholders in a simple, personal and fair manner Emphasis on compliance and responsible practices Focus on optimizing the mix of retained assets vs. assets sold and serviced for others Continued presence in prime markets through Chrysler Capital Efficient funding through key third party relationships and Santander 10

11 Santander Bank: Retail and Commercial Focus Net Checking Customers Growth (in thousands) Growing customer base Net checking growth continues to improve 1Q15 2Q15 3Q15 4Q15 ~725 Online digital customers (000 s) % 617 Solid Y-o-Y growth for includes roll-out of enhancements and new developments Dec'14 Dec'15 Target '16 Core deposit growth Total Core Deposits ($ in billions) ~11% growth year-over-year 4Q14 1Q15 2Q15 3Q15 4Q15 Total C&I Loans ($ in billions) C& I lending growth ~15% year-over-year growth in C&I and Global Corporate Banking loans 4Q14 1Q15 2Q15 3Q15 4Q15 11

12 SC: Focus on growth of capital efficiency servicing model Optimize mix of retained assets vs assets sold and serviced for others Total Serviced Portfolio ($ in billions) Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Owned and serviced Serviced for others Continued growth in serviced portfolio Chrysler Volume 1 ($ in billions) Originate loans and leases through Chrysler relationship Q14 1Q15 2Q15 3Q15 4Q15 Chrysler relationship has additional growth potential Expense Ratio (%) Expenses & Expense Ratio $48.1 $51.0 $52.5 $42.7 $ % 2.2% 2.1% 2.3% 1.8% $0.2 $0.2 $0.3 $0.3 $0.2 Q Q Q Q Q Average Managed Assets Operating Expenses Expense Ratio Expense Ratio remains low relative to managed assets 12 1) Includes Chrysler Capital originated retail loans and leases as well as leases and loans originated for an affiliate until May 2015.

13 Total loans performance 1. End of period balances. Calculated using local US GAAP accounting criteria 2. Other includes personal lending, credit cards and HELOC USD Billion Loan growth driven by Santander Bank commercial activity and SC s auto lending Total loans 1 7.5% 1.2% Dec'15 YoY (%) QoQ (%) Consumer Mortgages 7.8 (7.1) (3.0) SC Other (2.4) (0.4) Commercial CRE & Multifamily C&I and Other Private Banking (1.1) D'14 M'14 J'15 S'15 D'15 Total Loans

14 Total customer funds performance Note: SC has no deposits. NY branch deposits not included. 1. End of period balances. Calculated using local US GAAP accounting criteria. 2. Core Deposits are comprised of Non-Interest DDAs, Int-bearing DDAs, MMAs & Savings. 3. Includes customer repo and Eurodollar deposits USD Billion Core deposits continue to grow QoQ and YoY, while government deposits incurred quarterly volatility Total deposits 1 5.2% -0.6% Dec'15 YoY (%) QoQ (%) Core Deposits Time Deposits 4.4 (23.0) (10.2) Gov t Deposits 5.3 (6.8) (14.2) Other Deposits (13.4) (6.7) Customer Deposits (1.3) Wholesale Deposits Total (0.6) D'14 M'15 J'15 S'15 D'15 14

15 SC Funding 1. Privately issued amortizing notes only; 2. Net bonds sold of $750 million 3. Net bonds sold of $1.12 billion; 4. Monthly retail loan flow programs ; 5. $4.8BN funding from Santander includes $0.3BN from SHUSA USD Billion SC continued to demonstrate consistent access to liquidity during the quarter Total committed funds % 1.1% Dec'15 YoY (%) QoQ (%) Santander Funding Third Party Funding 10.2 (13.6) (4.7) Amortizing Notes Public Securitizations (4.5) Total Committed funding D'14 M'15 J'15 S'15 D'15 Balance Sheet Transactions Sold and Serviced for Others CCART Platform - $751 million 2 SDART Platform - $1.1 billion 3 $1.0 billion of advances on new and existing private term amortizing facilities Flow Programs - $1.15 billion 4 15

16 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

17 Net interest income and spreads USD million Strong YoY growth of NII driven by increased volume at SC. The quarterly decrease is attributed to an uptick in non-performing loans and seasonality Loan spreads (%) SC Net Interest Income Retail Banking 1,566 1,646 1,711 1,723 1, Q14 1Q15 2Q15 3Q15 4Q15 Deposit spreads (%) 4Q14 1Q15 2Q15 3Q15 4Q Retail Banking Q14 1Q15 2Q15 3Q15 4Q15 17

18 Net fees 1. Insurance includes gross earned fees 2. Includes SC servicing & leasing fees USD million The increase in SC servicing platform drives YoY and QoQ growth Net fees YoY(%) QoQ(%) Account Fees (0.6) (1.7) Debit and CC Fees (0.4) (3.7) Invest. & Insurance (1.8) Cont. Risk and Commit Others Q14 1Q15 2Q15 3Q15 4Q15 Total 1,204 1,

19 Gross income USD million YoY increase of gross income driven by strong NII and fees, quarter impacted by NII reduction Gross income YoY(%) QoQ(%) 2,012 2,101 2,210 2,169 2,167 Net Interest Income 6,781 6, (1.3) Net Fees 1,204 1, Subtotal 7,984 7, (0.2) Other Gross income 8,647 7, (0.1) 4Q14 1Q15 2Q15 3Q15 4Q Other includes Gains (losses) on financial transactions, Other operating income and Leasing income

20 Operating expenses USD million Expense increase due to growth of servicing platform, regulatory requirements and one time restructuring charges in the fourth quarter Operating expenses YoY(%) QoQ(%) General and admin. expenses 3,061 2, Depreciation and amortization Operating expenses 2,447 3,354 2, Q14 1Q15 2Q15 3Q15 4Q15 Efficiency ratio (with amortizations) 38.8% 37.5% Number of branches Number of employees 18,123 16,687 20

21 Net operating income after loan-loss provisions (LLPs) QoQ growth driven by increase in provisions by Santander Bank as well as seasonally higher charge offs and portfolio mix shift at SC USD million LLPs and Cost of credit (%) YoY(%) QoQ(%) 1,053 Net loan-loss provisions Net Operating Income 5,293 4, (3.9) LLPs 3,440 2, Net op. income after LLPs 1,853 1,999 (7.3) (56.7) 4Q14 1Q15 2Q15 3Q15 4Q15 Cost of credit 1 (%) SAN Bank SC NPL Ratio SAN Bank 1.16% 1.41% SC 3.66% 3.97% NPL Coverage ratio SAN Bank 115% 109% Cost of credit = 12 month loan loss provisions / average lending

22 Attributable profit USD million Net income and attributable profit decline due to increase in operating expenses and LLPs Attributable profit YoY(%) QoQ(%) Profit before taxes 1,689 2,016 (16.2) (65.6) Tax on profit (572) (583) (1.8) (45.8) Net income 1,117 1,433 (22.1) (75.2) Attributable profit 752 1,142 (34.2) (91.7) 17 Effective tax rate 33.9% 28.9% 4Q14 1Q15 2Q15 3Q15 4Q15 22

23 Conclusions Market Environment & Financial System The economic outlook continues to improve and the Fed has raised rates The real estate market shows a stable trend, employment continues to improve GDP projected to grow moderately, inflation remains low Loan growth pace continues in 2015 driven by Commercial balances Deposit balances show signs of stabilizing Strategy & Business Steady growth in customer checking accounts Continued growth in core customer deposits Growth in C&I and GBM loans Continue to optimize retained vs. serviced assets mix at SC Net interest income grows YoY due to increase in volume at SC Fee Income has increased year-over-year as a result of the growing servicing platform at SC Results Operating expenses have increased due to seasonally higher servicing/collection activity, a growing servicing platform and one time charges in 4Q QoQ increase in provision driven by changing portfolio mix at SC Year-to-date attributable profit declined due to provisions and higher operating expenses 23

24 Agenda Macro-economic environment and financial system Strategy and business Results Appendix

25 Balance sheet (IFRS) USA US$ million Variation Amount % Loans and credits* 91,658 85,496 6, Trading portfolio (w/o loans) 2,503 6,122 (3,619) (59.1) Available-for-sale financial assets 20,843 15,464 5, Due from credit institutions* 4,247 4, Intangible assets and property and equipment 9,968 8,383 1, Other assets 12,947 11,497 1, Total assets/liabilities & shareholders' equity 142, ,164 11, Customer deposits* 65,447 62,288 3, Marketable debt securities* 25,040 19,425 5, Subordinated debt Insurance liabilities Due to credit institutions* 28,490 21,562 6, Other liabilities 9,878 12,800 (2,922) (22.8) Stockholders' equity** 12,326 14,122 (1,796) (12.7) Off-balance-sheet funds 21,206 19,096 2, Mutual funds 7,755 4,397 3, Pension funds Managed portfolios 13,451 14,699 (1,249) (8.5) Customer funds under management 112, ,776 10, * Includes all stock of concept classified in the balance sheet ** Capital + reserves + retained profit + valuation adjustments 25

26 Balance sheet (IFRS) Santander Bank US$ million Variation Amount % Loans and credits* 56,039 52,661 3, Trading portfolio (w/o loans) 288 1,099 (811) (73.8) Available-for-sale financial assets 20,555 15,237 5, Due from credit institutions* Intangible assets and property and equipment 2,641 2,648 (7) (0.3) Other assets 7,628 5,836 1, Total assets/liabilities & shareholders' equity 88,098 78,320 9, Customer deposits* 56,069 52,391 3, Marketable debt securities* Subordinated debt (108) (14.8) Insurance liabilities Due to credit institutions* 18,314 12,903 5, Other liabilities 1,399 2,582 (1,182) (45.8) Stockholders' equity** 10,698 9, Off-balance-sheet funds Mutual funds Pension funds Managed portfolios Customer funds under management 57,715 53,146 4, * Includes all stock of concept classified in the balance sheet ** Capital + reserves + retained profit + valuation adjustments 26

27 Balance sheet (IFRS) SCUSA US$ million Variation Amount % Loans and credits* 26,992 24,410 2, Trading portfolio (w/o loans) Available-for-sale financial assets Due from credit institutions* 2,339 2, Intangible assets and property and equipment 7,203 5,631 1, Other assets 711 1,082 (371) (34.3) Total assets/liabilities & shareholders' equity 37,265 33,215 4, Customer deposits* Marketable debt securities* 20,968 17,839 3, Subordinated debt Insurance liabilities Due to credit institutions* 9,235 9,966 (732) (7.3) Other liabilities 4,094 2,941 1, Stockholders' equity** 2,968 2, Off-balance-sheet funds Mutual funds Pension funds Managed portfolios Customer funds under management 20,968 17,839 3, * Includes all stock of concept classified in the balance sheet ** Capital + reserves + retained profit + valuation adjustments 27

28 Quarterly Income statement (IFRS) USA US$ million 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 Net interest income 1,557 1,610 1,618 1,566 1,646 1,711 1,723 1,701 Net fees Gains (losses) on financial transactions Other operating income** Gross income 1,907 1,972 2,038 2,012 2,101 2,210 2,169 2,167 Operating expenses (722) (719) (750) (779) (783) (806) (858) (907) General administrative expenses (647) (663) (681) (714) (715) (733) (787) (827) Personnel (359) (376) (378) (401) (408) (419) (431) (452) Other general administrative expenses (288) (287) (303) (312) (306) (314) (356) (375) Depreciation and amortisation (75) (56) (69) (65) (68) (73) (71) (80) Net operating income 1,186 1,253 1,287 1,233 1,318 1,404 1,311 1,260 Net loan-loss provisions (748) (684) (811) (718) (719) (834) (834) (1,053) Other income (3) (4) (19) 43 (21) (46) (41) (56) Profit before taxes Tax on profit (128) (189) (117) (149) (177) (174) (143) (78) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group ** Including dividends, income from equity-accounted method and other operating income/expenses 28

29 Quarterly Income statement (IFRS) Santander Bank US$ million 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 Net interest income Net fees Gains (losses) on financial transactions (2) Other operating income** (10) Gross income Operating expenses (430) (429) (439) (456) (459) (462) (478) (547) General administrative expenses (371) (379) (381) (404) (402) (403) (423) (481) Personnel (202) (213) (222) (233) (232) (235) (245) (290) Other general administrative expenses (169) (166) (158) (171) (170) (168) (178) (191) Depreciation and amortisation (59) (50) (58) (52) (57) (59) (56) (66) Net operating income Net loan-loss provisions 19 (35) 13 (31) (35) (20) 41 (57) Other income 2 9 (20) 53 1 (36) 1 (9) Profit before taxes Tax on profit (39) (40) (60) (9) (27) (17) (38) 4 Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group ** Including dividends, income from equity-accounted method and other operating income/expenses 29

30 Quarterly Income statement (IFRS) SCUSA US$ million 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 Net interest income 982 1,014 1,045 1,016 1,085 1,152 1,184 1,158 Net fees Gains (losses) on financial transactions Other operating income** Gross income 1,141 1,159 1,232 1,199 1,276 1,407 1,407 1,381 Operating expenses (158) (157) (154) (166) (175) (185) (194) (172) General administrative expenses (148) (156) (149) (160) (170) (179) (188) (165) Personnel (88) (95) (91) (101) (105) (113) (117) (95) Other general administrative expenses (60) (61) (58) (60) (65) (67) (71) (70) Depreciation and amortisation (10) (0) (5) (5) (5) (5) (6) (6) Net operating income 983 1,003 1,079 1,034 1,101 1,222 1,213 1,210 Net loan-loss provisions (747) (630) (806) (672) (661) (790) (852) (971) Other income (3) (7) (3) (10) (14) (7) (33) (21) Profit before taxes Tax on profit (83) (135) (91) (140) (140) (154) (117) (85) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group ** Including dividends, income from equity-accounted method and other operating income/expenses 30

31 Thank you Nuestra Our purpose misión to es help contribuir people al and progreso de las businesses personas prosper. y de las empresas. Nuestra Our culture cultura is based basa on the en la belief creencia that de que everything todo lo we que do hacemos should debe ser