SANTANDER CONSUMER FINANCE

Transcription

1 26 October 2017 SANTANDER CONSUMER FINANCE January - September 2017

2 Disclaimer Banco Santander, S.A. ("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 ( 2

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

4 Macro-economic environment The economic recovery in Europe is driving market activity Annual GDP Growth (%, real) New car sales (millions)* (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Unemployment rates (%) Interest rate (%, year-end) (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Source: Santander Research Department (Eurozone indicators). *New car sales forecast (SCF countries including SC UK). Source: MSI and market consensus 4

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

6 Our Franchise Leadership in Europe s consumer finance market STRATEGIC PRIORITIES KEY DATA 9M 17 Var. YoY* Maintain profitability Gross loans 1 89,003 Deposits 1 35,775 +5% +5% Gain market share Manage agreements with vehicle manufacturers proactively Underlying profit % ROTE % +171 bp Efficiency ratio 43.9% -38 bp Market share 3 Top 3 Countries 4 15 Speed up the digitalisation of the business Active Customers % (1) Million euros; (2) Underlying ROTE (3)Top 3 market share in main markets: New production of auto loans as of Dec 2016 (last available); (4) SCF countries including SC UK (5) Millions customers with an active contract (including PSA customers). (*) Constant euros 6

7 Commercial strategy and business transformation Solid business model: geographic diversification with leading positions, advanced captive car finance and strong foothold in consumer, a common risk system that enables SCF to maintain high credit quality and a sound funding structure Present in 15 European countries 130,000 point of sale partners More than 100 agreements with car and bike manufacturers in 15 countries Awards and recognitions 19.6 million active customers E-commerce open platform Digital interaction Helping partners to start, run and grow their businesses Optimising efficiency on Direct business Best automotive bank Independent automotive banks AUTOHAUS Banken Monitor Germany (2016) First position Financial Institutions Polish Market Poland (2016) Mobile payments Analytics & digital marketing Meeting customer & market payment demands while leveraging dominant position in stores Integrating and monitoring all touch-points to track, interpret data and react in real time 7

8 Activity Increasing new loans Total gross loans ( Bn, constant euros) Differential funding mix with a strong deposit base Total deposits ( Bn, constant euros) +5.1% % Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Geographical diversification Funding* ( Bn) Others* 30% Spain 15% Secured Unsecured -2.3% Nordics 16% Germany 39% (1) PSA Germany and Austria. (2) PSA Poland incorporation. (*) Austria, Belgium, France, Italy, Netherlands, Poland, Portugal, Switzerland Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 *Excluding interbank and central bank funding 8

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

10 Net interest income Growth in NII (+5%) driven by an overall increasing activity, specially in Italy, France and Nordics Net Interest Income ( MM, constant euros) Yield on loans (%) Q 16 4Q 1Q 17 2Q 3Q 3Q 16 4Q 1Q 17 2Q 3Q NIM 1 (%) Official interest rate 2 (%) (1) Net interest income annualised / Total assets average period (2) Official interest rates (repo). Quarter average. 10

11 Gross income Positive trend in revenues backed by geographic diversification and critical mass in key products Slight increase QoQ due to higher customers income in 3Q17 and contribution to the Single Resolution Fund in 2Q17 Gross income ( MM, constant euros) % var 9M 17 9M 16 YoY QoQ 1,108 1,058 1,114 1,100 1,137 Net interest income 2,665 2, Net fees Subtotal 3,339 3, Other n.s. n.s. Gross income 3,352 3, Q 16 4Q 1Q 17 2Q 3Q (1) Other includes Gains (losses) on financial transactions and Other operating income 11

12 Operating expenses Expenses under control. In real terms, slight decrease (-0.6%) Operating expenses ( MM, constant euros) % var 9M 17 9M 16 YoY QoQ General expenses 1,338 1, Personnel Other Amortisations Total 1,472 1, Q 16 4Q 1Q 17 2Q 3Q Efficiency ratio (%) (with amortisations) 12

13 Net operating income after loan-loss provisions (LLPs) NPLs and cost of credit at historically low levels Excellent loan portfolio quality and Coverage ratio above 100% Cost of credit 1 LLPs and Cost of credit ( MM constant euros; %) % var 9M 17 9M 16 YoY QoQ Net operating income 1,880 1, Net LLPs Loan-loss provisions Net operat. income after provisions 1,673 1, Q 16 4Q 1Q 17 2Q 3Q Coverage ratio (%) NPL ratio (%) (1) Cost of credit = 12 month loan-loss provisions / average lending. Calculated in current euros 13

14 Attributable profit Underlying profit up 14% YoY backed by solid performance in revenues and provisions 3Q affected by the recording of a non-recurring charge of 85 million in Germany, mainly due to the integration of commercial networks. Underlying att. profit ( MM constant euros) % var 9M 17 9M 16 YoY QoQ Underlying PBT 1,571 1, Tax on profit Net income 1, Underlying attrib. profit Q 16 4Q 1Q 17 2Q 3Q Attributable profit ( MM) Non-recurring (85) Attributable profit Effective tax rate (%)

15 Conclusions Strategy SCF is the leader in Europe s consumer finance market. Santander Consumer Finance continued to grow its profits year-on-year, underpinned by a solid business model: geographic diversification with leading positions, advanced captive car finance and strong foothold in consumer, a common risk system that enables SCF to maintain high credit quality and a sound funding structure. Activity 9% YoY increasing new loans. Auto loans (+11%). SCF has a differential funding mix backed by a strong deposit base. Positive trends in revenues backed by geographic diversification and critical mass in key products. Results Expenses under control allowing the efficiency ratio to improve YoY. NPLs and cost of credit at historically low levels. Underlying profit up 14% YoY backed by solid performance in revenues and provisions. 15

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

17 Balance sheet Constant euros* Change Sep 17 Sep 16 Amount % Customer loans 86,595 82,028 4, Cash, central banks and credit institutions 5,342 6,459 (1,117) (17.3) Debt securities 3,599 3,970 (371) (9.3) o/w: available for sale 3,542 3,864 (322) (8.3) Other financial assets (22) (48.9) Other assets 3,526 3, Total assets 99,087 96,018 3, Customer deposits 35,823 34,148 1, Central banks and credit institutions 21,920 21, Other financial liabilities Other liabilities 3,780 3, Total liabilities 89,652 87,278 2, Total equity 9,435 8, Other managed and marketed customer funds Mutual funds 2 2 (0) (11.4) Pension funds Managed portfolios (*) End of period exchange rate 09/30/17 17

18 Income statement Constant euros* Change 9M 17 9M 16 Amount % Net interest income 2,665 2, Net fees (4) (0.7) Gains (losses) on financial transactions (1) (12) 11 (95.6) Other operating income Gross income 3,352 3, Operating expenses (1,472) (1,423) (49) 3.4 General administrative expenses (1,338) (1,287) (51) 4.0 Personnel (627) (606) (22) 3.6 Other general administrative expenses (710) (681) (30) 4.3 Depreciation and amortisation (134) (136) 3 (1.9) Net operating income 1,880 1, Net loan-loss provisions (207) (302) 94 (31.3) Other income (102) (116) 14 (12.1) Underlying profit before taxes 1,571 1, Tax on profit (449) (407) (42) 10.4 Underlying profit from continuing operations 1, Net profit from discontinued operations Underlying consolidated profit 1, Minority interests Underlying attributable profit to the Group Net capital gains and provisions** (85) 26 (111) Attributable profit to the Group (*) Average exchange rate as of 9M 17. (**) Including capital gains from the sale of VISA Europe and integration costs mainly in Germany 18

19 Quarterly income statements Constant euros* 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 Net interest income Net fees Gains (losses) on financial transactions (1) (5) (6) (2) (2) 2 (1) Other operating income 5 (6) (1) (0) 15 Gross income 1,052 1,055 1,108 1,058 1,114 1,100 1,137 Operating expenses (486) (469) (468) (486) (501) (486) (485) General administrative expenses (438) (427) (422) (436) (457) (441) (440) Personnel (203) (201) (202) (206) (209) (213) (206) Other general administrative expenses (235) (225) (220) (231) (248) (228) (234) Depreciation and amortisation (48) (43) (45) (49) (44) (45) (45) Net operating income Net loan-loss provisions (115) (70) (116) (87) (61) (57) (90) Other income (39) (42) (36) (52) (37) (35) (30) Underlying profit before taxes Tax on profit (118) (148) (142) (115) (148) (141) (161) 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** 26 (0) (0) (85) Attributable profit to the Group (*) Average exchange rate as of 9M 17. (**) Including capital gains from the sale of VISA Europe and integration costs mainly in Germany 19

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