institutional presentation q1'20 · 2020. 6. 5. · internet, mobiles, tablets, smartphones...
TRANSCRIPT
Q1’20
Strategic and Financial Analysis. Financial Division
Institutional Presentation
Index
Our business model and strategy1
2
3
4
5
Group structure and businesses
Q1’20 results and activity
COVID-19 and Key takeaways
Links to Grupo Santander public materials
Our business model and strategy
1.
Santander, a leading financial group
People Customers
Communities Shareholders
... resulting in higher investment in the community …
... which drives profitability and sustainable growth ...
… more motivated and engaged employees ...
... make our customers more satisfied and loyal ...
Total assets (EUR billion) 1,540
Customer loans (EUR billion excluding reverse repos) 909
Customer deposits + mutual funds (EUR billion excluding repos) 923
Branches 11,902
Q1’20 Attributable profit (EUR million) 331
Q1’20 Underlying attributable profit (EUR million) 1,977
Market capitalisation (EUR billion; 31-03-20) 37
People (headcount) 194,948
Customers (millions) 146
Shareholders (millions) 4.0
Communities in 2019 (million people financially empowered) 2.0
Q1’20 Highlights
Our strategy is built around a virtuous circle based on loyalty
Simple Personal Fair
5
OUR PURPOSE
OUR AIM AS A BANK
OUR HOW
To help people and businesses prosper
To be the best open financial services platform, by acting responsibly and earning the lasting loyalty of our people, customers, shareholders and communities
Simple Personal Fair
We continue to do business in a more responsible and sustainable way
Everything we do should be
The Santander Way
6
SCOPE
CUSTOMER FOCUS
DIVERSIFICATION
Local scale and global reach
Unique personal banking relationships strengthen customer loyalty
Our business model drives predictable and profitable growth
Santander business model
1
2
3 Our geographic and business diversification make us more resilient under adverse circumstances
Scope1
Market share data: as at Dec-19 and the US and SCF latest available. The UK: includes London Branch. Poland: including SCF business in Poland. The US: in all states where Santander Bank operates.Brazil: deposits including debenture, LCA (agribusiness notes), LCI (real estate credit notes), financial bills (letras financeiras) and COE (certificates of structured operations)
Local scale based on three geographic regionswith global reach backed by our global businesses
Global businesses (SCIB and WM&I)
Santander Global Platform
We maintain a leadership positionin our 10 core markets
Top 3auto
finance
17%Loans
19%Deposits
18%Loans
16%Deposits
10%Loans
8%Deposits
12%Loans
12%Deposits
Europe
3%Loans
3%Deposits
13%Loans
13%Deposits
Top 7 in retail auto lending
North America
10%Loans
10%Deposits
10%Loans
12%Deposits
18%Loans
17%Deposits
South America
Enabling greater collaboration across the Group to generate higher revenue and efficiencies
Market shares
SGP
7
Spain 9%
SCF 13%
UK 17%
Poland 4%Portugal 2%
US 4%Mexico 13%
Brazil 32%
Chile 2%
Argentina 2%Others 2%
8(1) NPS = Net Promoter Score. Customer Satisfaction internal benchmark of active customers audited by Stiga / Deloitte
(2) Active customer who receive most of their financial services from the Group according to the commercial segment to which they belong. Various engaged customer levels have been defined taking profitability into account
Customer focus2
146 million customers, in markets with a total population
of more than one billion
Customers by market, Mar-20
The trust and loyalty of our customers are the most important
assets for Santander
Top 3in NPS1 in 6 countries
+71%Loyal customers2
Dec-14 vs. Mar-20
Customer satisfaction is essential to build loyalty
Unique personal banking relationships with over 100,000 people talking to our customers every day in our branches and other customer support services
9
21.5 mn (+6%)
2 Customer focus
Loyal/activecustomers
31%
Note: data as of Mar-20 and year-on-year changes(1) Excluding Chinese banks and Sberbank of Russia
Individuals
19.6 mn (+6%)
Companies
1,808 (+6%)
Loyal customers Collaborative spaces and increased digital capabilities
Santander Smart and Ágil branches
The largest branch network in the international banking world1
Branches: c.12,000
Available anytime, anywhere, anyhow
Customer support services
10
38.3 mn (+13%)
2 Customer focus
Digital sales2
as % of total sales
43%
Note: data as of Mar-20 and year-on-year changes(1) Every physical or legal person, that, being part of a commercial bank, has logged in its personal area of internet banking or mobile phone or both in the last 30 days(2) Percentage of new contracts executed through digital channels during Mar-20(3) Private accesses. Logins of bank’s customers on Santander internet banking or apps. ATM accesses by mobile are not included(4) Customer interaction through mobile or internet banking which resulted in a change of balance. ATM transactions are not included
# Accesses3
(online & mobile)
Digital customers1
Digital customers are engaging and transacting more
Digital technologyboosting financial access
Traditional bankingBranches, ATMs, retail agents, …
Digital bankingInternet, mobiles, tablets,
smartphones and smartwatches…
Guaranteeing access for all segments
Sparsely populated communities
Most vulnerable groups
Low-income communities
University students
+23% YoY +22% YoY
# Transactions4
(monetary & voluntary)
Spain; 14%
SCF; 12%
UK; 8%
Portugal; 5%
Poland; 2%US; 11%Mexico; 10%
Other South America; 2%
Argentina; 2%
Chile; 5%
Brazil; 29%
(1) As a % of operating areas, excluding Corporate Centre and Santander Global Platform (2) Uruguay, Peru and Colombia (3) As a percentage of operating areasNote: customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
41%38%
21%
EuropeSouth America
North America
2
3 DiversificationGeographic diversification in three regions,
with a good balance between mature and developing markets
Contribution to Q1’20 underlying attributable profit1
Customer loans Customer funds
72%
14%
14%
Europe
South America
North America 70%
16%
13%
Europe
South America
North America
Higher exposure in Europe, greater opportunity to grow in the Americas
Well-balanced profit distribution between Europe and the Americas.
SCIB and WM&I contribution: 30%
Mar-20 Group’s contribution3 by regions
11
SGP 1%
Individuals demand deposits, 39%
Individuals time deposits, 10%
Individuals mutual funds, 12%
Consumer, 4%
SMEs, 10%
Corporates, 14%
SCIB, 11%
Customer funds
Customer funds by business, Mar-20
12
3 Diversification
Business diversification among customer segments (individuals, SMEs, corporates and large corporates)
Note: customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Other individuals, 10% Home mortgages, 36%
Consumer, 17%SMEs, 10%
Corporates, 13%
SCIB, 14%
Loans
Customer loans by business, Mar-20
13
Our strength and resilience of our model drives predictable and profitable growth
Pre-provision profit, EUR bn EPS volatility calculated using quarterly data from Jan-99 to 20191
Net profit increase 1999-2019
(1) Source: Bloomberg, with GAAP criteria. Standard deviation of the quarterly EPS starting from the first available data since Jan-99
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
18
23 24 24 24
2023 24 23
25 26 26
3.03% 3.28% 3.26% 3.25% 3.06% 2.94% 3.04% 2.90% 2.83% 2.97% 2.89% 2.80%
1.02% 1.36% 1.40% 1.65%2.44% 1.69%
1.43% 1.25%1.18% 1.07% 1.00% 1.00%
Cost of credit
Pre-provision profit / loans
Recurring pre-provision profit with the lowest earnings per share volatility
14
The Group’s medium-term strategy is based on three main pillars to drive profitable growth in a responsible way
Improve operating performance
Accelerate digitalisation through Santander Global Platform
Optimise capital allocation
Continue building a more Responsible Bank
15
Improving operational performance: Further leveraging our diversification and scale and adding value via our global businesses and shared capabilities
North America
South America
Europe
Accelerating growth with sustainable profitability
A region with structural growth and high and increasing profitability
Building the leading European bank in customer experience and profitability, leveraging our scale & digital
IT & Operations
Shared services & Others
Global capabilities to enhance operating efficiency across the Group
Medium-term efficiency expected, mainly in Europe:
16
Continuing to improve capital allocation: Ongoing capital allocation optimisation to improve profitability
Rebalancing to more profitable
regions and businesses
Active management and senior team
alignment
Improved pricing, processes and
governance
Strong profitability improvement leading to higher capital generation capacity
17
Accelerating our digitalisation by developing global payments and financial solutions for SMEs and individuals in high-growth and large addressable markets
SMEs Individuals
Santander Global Platform
Global Merchant Services
Global Trade
Services
Banking withouta bank
Focused on relevant
global markets…
… building on relevant
assets to accelerate
growth
Global Digital
Banking
Digital payment services as a driver of customer engagement and loyalty
1
Built with global platforms, leveraging our scale for efficiency and customer experience
2
Offered to both our banks (B2C) and to third parties (B2B2C)
3
Run autonomously, with a blend of tech and banking talent
4OneTrade
We continue doing business in a more responsible and sustainable way
Sustainability
Financial inclusionCommunities
Culture
2.0 mnpeople financially empowered
69 kscholarships granted
1.6 mnpeople helped through our community programmes
Women
40% Group Board
23% Group leadership
(+2pp vs. 2018)
EUR 277 mncredit to microentrepreneurs3
(+73% vs. 2018)
EUR 1 bnSantander first green bond issuance
Engagement
86% of employees
proud to work for Santander(+1pp vs 2018)
EUR 19 bnmobilised in Green finance
Dow Jones index2
Leader
18More information on Group’s Overview of our Corporate Governance presentation. See link to this presentation on page 70 Note: figures as of 2019 and changes on a YoY basis (2019 vs. 2018)(1) Dow Jones Sustainability index 2019(2) Microentrepreneurs are already included in the people financially empowered metric
Santander Responsible Banking goals
19
2018 2021 202520202019
Top 10 company to work for1
Women on the Board
Women in senior leadership positions2
Equal pay gap3
Financially empowered people4
Green finance raised and facilitated5 (euros)
Electricity used from renewable energy sources6
Scholarships, internships & entrepreneurs programmes7
People helped through our community programmes8
4
3%
43%
6
40%-60%
30%
~0%
100%
60% 100%
10 mn
120 bn
200 k
4 mn
0%
33
20
Becoming carbon neutral in our own operations
5
20%
2%
2.0 mn
19 bn
50%
69K
1.6 mn
75%
40%
23%20%
33%
Reduction of unnecessary single use plastic in corporate buildings and branches
From…To….
Cumulative target
We are building a more Responsible Bank aligned with our commitments
(1) According to relevant external indexes in each country (Great Place to Work, Top Employer, Merco, etc.)(2) Senior positions represent 1% of total workforce(3) Calculation of equal pay gap compares employees of the same job, level and function(4) People (unbanked, underbanked or financially vulnerable), who are given access to the financial system, receive tailored finance and increase their knowledge and resilience through financial education(5) Includes Santander overall contribution to green finance: project finance, syndicated loans, green bonds, capital finance, export finance, advisory, structuring and other products to help our clients in the
transition to a low carbon economy. Commitment from 2019 to 2030 is EUR 220 bn(6) In those countries where it is possible to certify renewable sourced electricity for the properties occupied by the Group(7) People supported through Santander Universities initiative (students who will receive a Santander scholarship, will achieve an internship in an SME or participate in entrepreneurship programmes
supported by the bank)(8) People helped through our community investment programmes (excluded Santander Universities and financial education initiatives)
Group structure and businesses2.
21
Santander Wealth Management & InsuranceRetail Banking
Communication, Corporate
Marketing and Research
UniversitiesComplianceAudit CostsTechnology
and Operations
General Secretariatand Human Resources
Financial Accounting & Control
FinanceStrategy,
Corporate Dev.& Financial Planning
Exec. Chairman´s Office & Responsible
Banking
Santander Global
PlatformSantander
Corporate & Investment Banking
Secondary segments – Global businesses
Group functions and Corporate Centre activities
10 core markets
Risk
Primary segments – Operating areas
North America
South America
Other Europe
Europe
Leveraging One Santander to accelerate the execution of our strategy
Three geographic regions (with 10 core markets) to improve operating performance
Global businesses to enhance our local scale with global reach and collaboration
Santander Global Platform to accelerate digital transformation
The Corporate Centre and other functions servicing the whole Group
Group organisational and management structure
22
North America
South America
Europe
Santander Wealth Management & Insurance
Santander Corporate & Investment
Banking
Santander Global Platform
Group functions and Corporate Centre activities
Three geographic regions(with 10 core markets)
Building one European banking platform to enhance profitability
Europe
Q1’20 Highlights
Branches 5,329
Employees 85,805
Loyal customers (mn) 9.9
Digital customers (mn) 14.2
Customer loans (EUR bn) 653
Customer funds (EUR bn) 644
Underlying attributable profit (EUR mn) 974
Underlying RoTE 8%
Contribution to Group’s profit 41%
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Other Europe
23
Given the current conjuncture, and in a lower for longer interest rate and low growth environment, we are working to simplify our European business model and structure:
Adaptation of our technological platforms and acceleration of the digital transformation to improve customer experience
Simplification of our business model, reducing the number of products to gain efficiency and agility, while maintaining a full value proposition
In addition, we are managing regulatory impacts on income and costs
Strategic priorities
Increase funding to companies in the short-term
Santander España remains committed to maintaining its leadership by supporting individual customers, SMEs and Corporates
Spain
Q1’20 Highlights
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 3,222
Employees 27,354
Loyal customers (mn) 2.5
Digital customers (mn) 4.9
Customer loans (EUR bn) 192
Customer funds (EUR bn) 294
Underlying attributable profit (EUR mn) 352
Underlying RoTE 9%
Contribution to Group’s profit 14%
24
for non-residents
Continue growing SMEs and corporate segments
Focus on optimising the commercial network. Acceleratethe digital transformation to improve customer experience
Develop a sustainable profit and profitability model (optimal capital allocation and focus on profitable segments & products)
Strategic priorities
e-commerce open platform
Q1’20 Highlights
SCF is the consumer finance leader in Europe, with advanced captive car finance and strong foothold in consumer with presence in 15 countries
Santander Consumer Finance
Austria
Belgium
Denmark
Finland
France
Germany
Italy
Norway
Poland
Portugal
Spain
Sweden
Switzerland
The Netherlands
The United Kingdom1
Countries:
(1) UK data included in Santander UK
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 417
Employees 13,859
Active customers (mn) 18.8
Point of sales (k) >130
Customer loans (EUR bn) 103
Customer funds (EUR bn) 38
Underlying attributable profit (EUR mn) 304
Underlying RoTE 14%
Contribution to Group’s profit 12%
25
Reinforce our position in consumer finance and e-commerce. Digital business model converging on-line and off-line payments and financing to support merchant partners
Provide best service to our auto partners, OEMs and car dealers, to support our dealers & brands with their transformation plans
Simplification, digitalisation & transformation projects to maximise efficiency and customerexperience
Strategic priorities
Uniquely placed as the leading UK scale challenger bank with an innovative value proposition for retail customers and small businesses
United Kingdom
Q1’20 Highlights
Online mortgage
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 615
Employees 24,500
Loyal customers (mn) 4.5
Digital customers (mn) 6.0
Customer loans (EUR bn) 244
Customer funds (EUR bn) 210
Underlying attributable profit (EUR mn) 188
Underlying RoTE 5%
Contribution to Group’s profit 8%
26
Invest in our people and ensure they have the skills and knowledge to thrive
Simplify and digitalise the business for improved efficiency and returns
Grow customer loyalty by providing an outstanding customer experience
Further embed sustainability across our business
Strategic priorities
Santander Totta is the largest privately-owned bank in Portugal by assets and loans
Portugal
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 529
Employees 6,512
Loyal customers (k) 782
Digital customers (k) 797
Customer loans (EUR bn) 37
Customer funds (EUR bn) 42
Underlying attributable profit (EUR mn) 120
Underlying RoTE 13%
Contribution to Group’s profit 5%
27
Q1’20 Highlights
Continue gaining profitable market share and leveraging our position in the corporate sector, especially in SMEs
Improve efficiency and maintain low cost of credit
Progress in our digital transformation and streamlining workflow
Maintain a solid capital position, managing it in line with the new regulatory requirements
Strategic priorities
Santander is the second largest bank in Poland, maintaining its position of the best traditional, private banking and investment bank in Poland
Poland
#1 in mobile banking
(1) RoTE adjusted for excess capital. Otherwise 5%
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 535
Employees 11,034
Loyal customers (mn) 2.0
Digital customers (mn) 2.6
Customer loans (EUR bn) 30
Customer funds (EUR bn) 35
Underlying attributable profit (EUR mn) 38
Underlying RoTE1 8%
Contribution to Group’s profit 2%
28
Q1’20 Highlights
Anticipate and respond to customers’ needs with tailored products, services and solutions, enhancing customer experience
Growth of profitable business, strengthening its position in the key market segments
Modernise banking services through digital transformationand improve the operating model
Strategic priorities
Investing together to improve commercial capabilities
North America
(1) RoTE adjusted for excess capital. Otherwise 10%Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 2,048
Employees 37,398
Loyal customers (mn) 3.6
Digital customers (mn) 5.5
Customer loans (EUR bn) 132
Customer funds (EUR bn) 120
Underlying attributable profit (EUR mn) 522
Underlying RoTE1 15%
Contribution to Group’s profit 21%
29
Q1’20 Highlights
The US and Mexico coordination between the countries has increased as we continue to pursue joint initiatives, such as:
Accelerate execution of regional strategy, increase profitability and contribute to efficiency objectives
Continued development of the USMX trade corridor (revenue growth: +38% SCIB; +23% Commercial)
Together with other payment alternatives, commission-free remittance service from US branches to any bank in Mexico
Joint technology programmes between the two countries
Strategic priorities
Santander US includes a Northeast US regional bank, a nationwide auto finance business, an international private banking operation and a broker-dealer
United States
(1) RoTE adjusted for excess capital. Otherwise 7%Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual fundsOn 21 October 2019, it was announced that Grupo Santander has agreed to sell its retail and commercial banking franchise in Puerto Rico to FirstBank Puerto Rico for approximately USD 1.1 bn.
The sale includes Santander’s 27 bank branches in Puerto Rico and total assets of USD 6.2 billion. The transaction is expected to close in the middle of 2020, subject to regulatory approvals.
Branches 619
Employees 17,277
Loyal customers (k) 328
Digital customers (k) 1,019
Customer loans (EUR bn) 101
Customer funds (EUR bn) 82
Underlying attributable profit (EUR mn) 273
Underlying RoTE1 12%
Contribution to Group’s profit 11%
30
Q1’20 Highlights
Optimise funding and capital to improve results
Improve margins through focus on integration of U.S. operations
Improve customer experience and loyalty across segments
Manage the COVID-19 crisis to support customers, employees and communities
Strategic priorities
Santander México, a leading financial group in the country, focused on commercial transformation and innovation
Mexico
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Santander Plus
Select Me
Branches 1,429
Employees 20,121
Loyal customers (mn) 3.3
Digital customers (mn) 4.4
Customer loans (EUR bn) 31
Customer funds (EUR bn) 38
Underlying attributable profit (EUR mn) 249
Underlying RoTE 18%
Contribution to Group’s profit 10%
31
Q1’20 Highlights
Strong growth rates in loyal and digital customers, whilst increasing revenue through greater volumes and lower cost of deposits
Improve customer experience by leveraging both the new tools and methodologies as well as improving operating processes
Strengthen our corporate businesses to continue to bethe reference in the market in value-added products
Strategic priorities
Natural reweighting and high profitable growth opportunity
South America
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 4,524
Employees 68,624
Loyal customers (mn) 7.8
Digital customers (mn) 17.8
Customer loans (EUR bn) 118
Customer funds (EUR bn) 148
Underlying attributable profit (EUR mn) 928
Underlying RoTE 21%
Contribution to Group’s profit 38%
32
Q1’20 Highlights
This region remains a growth engine and aims to generate profitable growth and export positive experiences to other countries in the region with focus on leveraging our products & services with strong expected medium-term growth, such as:
Auto financing using experience from the Group and Brazil to boost growth in other pe of business in Peru, and its profitability in n and strategic alliances).
export Uruguay’s successful model to other regions
to satisfy the demand for small businesses in Brazil,
largest card issuers & merchant acquirers in the es and instant transfers, and the roll-out of Getnet
countries (e.g. we are increasing this tyColombia through our digital propositio
In financing goods & services - plan to
Prospera, our micro-credit programmecontinued expand in Uruguay as well
Payments methods (we are one of theregion): exploring e-commerce strategito the rest of Latin America
Strategic priorities
Santander Brasil has a solid strategy, which benefits from being part of a large international Group
Brazil
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
SantanderWay
SMEs Agribusiness
Branches 3,617
Employees 45,807
Loyal customers (mn) 5.7
Digital customers (mn) 13.8
Customer loans (EUR bn) 69
Customer funds (EUR bn) 98
Underlying attributable profit (EUR mn) 694
Underlying RoTE 22%
Contribution to Group’s profit 29%
33
Q1’20 Highlights
Acceleration of digitalisation: Self-service, combined with increased product implementation and availability
Relentless quest for efficiency and profitability with another way of operating our business
Continuous evolution of the platform in the face of a new cycle
Committed to meeting our customers’ needs. Focus on helping society and our country
Strategic priorities
Santander Chile is the country’s leading bank
Chile
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 366
Employees 11,437
Loyal customers (k) 680
Digital customers (k) 1,316
Customer loans (EUR bn) 38
Customer funds (EUR bn) 34
Underlying attributable profit (EUR mn) 125
Underlying RoTE 15%
Contribution to Group’s profit 5%
34
Q1’20 Highlights
Focus on mass market through Santander Life, SuperDigital and Klare (open platform insurance broker)
Improve customer service quality and grow loyal and digital customer base
Accelerate the commercial transformation via the new branch network model and digital banking
Strategic priorities
Santander Argentina is the country's largest privately-owned bank by business volume
Argentina
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Branches 438
Employees 9,290
Loyal customers (mn) 1.3
Digital customers (mn) 2.2
Customer loans (EUR bn) 5
Customer funds (EUR bn) 10
Underlying attributable profit (EUR mn) 59
Underlying RoTE 30%
Contribution to Group’s profit 2%
35
Q1’20 Highlights
Progressing towards a simple and more efficient model, driven by digital transformation
Customer-centric decisions, helping people and businesses prosper
Strategic priorities
Profitable growth increasing revenue with efficient capital allocation
Santander Uruguay is the country’s leading privately-owned bank
Uruguay
36
Q1’20 Highlights
Underlying att. profit (EUR mn) 35
Underlying RoTE 28%
Activity focused on corporates, the country’s large companies and
the Group’s global customers (SCIB)
Q1’20 Highlights
Underlying att. profit (EUR mn) 12
Underlying RoTE 19%
Peru
Focus on corporate and SCIB, and new alliances in auto finance
Q1’20 Highlights
Underlying att. profit (EUR mn) 6
Underlying RoTE 19%
Colombia
Strategic priorities
Focus on improving efficiency and enhancing the quality of service, through digital transformation and commitment to the community
Strategic priorities
Digital transformation and expand our customer base, increasing customer loyaltyand maintaining credit quality
Strategic priorities
Digital transformation and results growth focused on most segments
North America
South America
Europe
Santander Wealth Management & Insurance
Santander Corporate & Investment
Banking
Santander Global Platform
Group functions and Corporate Centre activities
Global businesses and
Santander Global Platform
37
Santander Corporate Investment & Banking
SCIB is the global business division for corporate and institutional customers who require a tailored service and value-added wholesale products suited to their complexity and sophistication
Strategic priorities
Note.- Customer loans: Gross loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual fundsFor more information (awards, etc.) see https://www.santandercib.com
38
Q1’20 Highlights
34%
29%
29%
8%
Global Transaction Banking
Global Debt Financing
Global Markets
Capital & Other
Total revenue breakdown
Customer loans (EUR bn) 125
Customer funds (EUR bn) 101
Total revenue (EUR mn) 1,300
Collaboration revenue +20% YoY
Underlying RoRWA 2.0%
Underlying attributable profit (EUR mn) 491
Contribution to Group’s profit 20%
Fully leverage our customer-centric model, to drive greater penetration of our franchise and faster growth in retail banking business (collaboration revenue)
Strengthen the global value proposition, focusing on increasing our presence in the US, the UK and Continental Europe
ESG – support our customers along their transformation journey. Contribute to Group’s green finance public commitment
Accelerate capital rotation and the originate to share model
Continue the digital transformation to build the Digital Investment Bank
1
2
3
4
5
• One Global value proposition
• Develop a global Private Wealth proposition to c.1,700 clients with >EUR 20 mn4 growing +18%
• Execute the digital transformation
Santander Wealth Management & Insurance
Our aim: become the best and most responsible Wealth Manager in Europe and the Americas
Strategic priorities
• Become the best local supplier – strengthening leadership and commitment in our 10 core markets
• Implement the new IT platform
• Build a competitive edge on our global capabilities + develop institutional business
New funds: alternatives, private debt and infrastructure and Santander GO» product range
Best provider of savings and investments solutions
in Ibero-america
• Reach our full potential by completing our value proposition in our core markets
• E2E digital journeys and online open platforms
First choice of insurance for Santander customers
Motor Home Health
Accidents SME Term life
Savings
Pensions and Wealth Planning
Responsible Banking;
Environmental, Social and
Governance (ESG)
(1) Total assets marketed and/or managed. Private Banking + SAM excluding AUM of Private Banking customers (2) Including fees generated by asset management and insurance transferred to the commercial network (3) Profit after tax + net fee income generated by this business (4) Assets under management cut-off may differ in each country
For more information see http://www.santanderassetmanagement.com
Single truly global Private Banking platform
39
Q1’20 Highlights
Total assets under management1 EUR 345 bn; -2% YoY
Total fees generated as % of the Group’s total fees2 30%
Private Banking clients (k) c.200
Private banking collaboration volume +25% YoY
SAM market shares in most core markets Higher YoY
Underlying RoRWA 8.9%
Underlying attributable profit (EUR mn) 240
Contribution to Group’s profit 10%
Total contribution to Group’s profit3 (EUR mn) 596
Santander Global Platform (SGP)SGP
Note: GMS and GTS revenue include Retail Banking and excluding SCIB and WM&I
More information on Group’s financial report, pages 48 and 49. See link to this document on page 70
Ind
ivid
ua
ls
OneTrade
SM
Es
Global Merchant Services
Global Trade
Services
Banking withouta bank
Global Digital
Banking
Finalised the development of the platform with Getnet functionalities and new features (i.e. architecture cloud)
Rolled-out in Mexico. In addition, acquisition of Elavon Mexico (currently 100% Santander)
>1 mn active merchants. Q1’20 revenue of EUR 144 mn
1st services launched in April and new services will be extended throughout the year
Acquisition of a majority stake of Mercury TFS (software solutions for trade finance) announced
>200 k SME customers trading internationally. Q1’20 revenue of EUR 307 mn
Operates in Brazil, Mexico and Chile
Active customers grew c.60% YoY, whereas transactions are growing by c.70% YoY
Our goal is to scale the business to reach over 5 mn active customers across 7 markets in the medium term
Openbank is already in Spain, Germany, the Netherlands and Portugal
Loan growth +84% YoY and deposits +9%YoY
New customer growth +78% (Q1’20 vs. Q1’19) - average of 4.4 products per customer
We continued to make relevant progress on developing our platforms
40
North America
South America
Europe
Santander Wealth Management & Insurance
Santander Corporate & Investment
Banking
Santander Global Platform
Group functions and Corporate Centre activities
Global T&O strategy
HR strategy
Risk management and control
Corporate governance and internal control
Our brand
41
Group functions and Corporate Centre activities
T&O strategy is aligned with our two-pronged approach: digitalising our core banks and global businesses and building SGP focusing on better serving our customers’ needs
Global T&O capabilities are key for our commercial and digital transformation
Composed of four main domains that contribute to the digital transformation
Technology
Cybersecurity
Operations
Data
Focused on five technological pillarsto respond to the changing business needs
ATMs
Robust Santander T&O allowing us to continue running the Bank and serving our customers remotely with high standards during the COVID-19 crisis
RiskManagement
(incl. cybersecurity)
Agile Cloud Core systems
evolution
Deep technology
skills
Data
CommonArchitecture
Speed InnovationSecurity
by designCost
Servicequality
Open business
model
Business needs
Operating model oriented to develop global products and digital services,
guaranteeing their quality and security
c. 2,000 professionals
42
HR strategy: our aim is to be an employer of choice
Focus on employee engagement, leveraging our SPF culture to retain and attract the best talent
194,948
Employees with permanent contracts in 20191
98%Employees, Mar-20
Average length of employment in 20191
10.2 years
The SPF culture is based on our 8 corporate behaviours and 4 leadership commitments
Our corporate management evaluation model
50%what we
do 40%how
we do itShow respect Truly listen Talk straight Keep promises
Support people Embrace change Actively collaborate Bring passion
Encouraging the team to prosper
Leadingby example
Being openand inclusive
Inspiring and executing transformation
Employees proud to work for Santander2
Openness to change, good at sharing best practices and encouraging innovation2
86% 85%
Engagement among the best in the sector
(1) Last available(2) 2019 Global engagement survey
43
10%Risk
COVID-19. Our priority has been to protect the health and safety of our employees, we quickly moved to remote working (112 k people and over 50% of contact centres agents; rotation scheme in branches)
Risk management and control
More information on the Group’s Overview of our Corporate Governance presentation. See link to this document on page 70
3 lines of defence model with a robust structure of risk
rcommittees
A clear Risk Strategy with well defined priorities
Common Risk Principles which are mandatory and must be applied all times
Advanced risk management tools which a comprehensive and forward-looking approach to all risks
Clearly defined management and control processes
Risk Profile Assessment
Risk appetite &
structure of limits
Scenario Analysis
Risk Reporting Structure
The identification and assessment of the various risks that it is exposed to
The amounts and type of risks considered prudent to assume
Analysis of impacts triggered by different scenarios
Complete, precise and recurring information
This model relies on:
Santander’s risk management and control model, specially under the current circumstances, is key to ensure that we remain a robust, safe and sustainable bank that helps people and businesses
44
93%of employees claim that they are able to identify and feel responsible for the risk they face in their daily work
Climate change and risk management
Risk culture
Our risk management and control model is a key driver of Santander’s contribution to sustainable economic growth
91%of employees claim that cyber security is considered a critical priority
Anticipating changes in the risk profile & defining strategies to mitigate negative impacts is key to preserve our solid position, mainly in terms of capital and liquidity
COVID-19
45
As a responsible bank, we have clear and robust governance with well-defined accountability and prudent management of risks and opportunities
Corporate governance and internal control
Diversified and well-balanced shareholder base
Effective engagement with our shareholders
Focus on responsible business practices and attention to all
stakeholders’ interests
Effective board of directors
11%
33%40%
2011 2015 Mar-20
Non-executive directors (independent)
Executive directors
Non-executive directors (neither proprietary nor independent)
60%
13%
27%
Womenon the Board
Composition of the Board, Mar-20 Board committees
External advisory boardInternational advisory board
Executive
Responsible banking, sustainability and culture
Innovation and technology
Remuneration
Audit
Nominations
Risk supervision, regulation and compliance
More information on the Group’s Overview of our Corporate Governance presentation. See link to this document on page 70
46
Group-subsidiary governance model
Group
Board of Directors
Group Executive Chairman1
Group CEO2
Regional Heads3
Control, management and business functions
• Compliance
• Audit
• Risk
• Finance
• Financial Control / Accounting
• Others4
Subsidiary B
Control, management and business functions
CEO / Country Head
Board of Directors
Subsidiary A
A
B
C
(1) First executive (2) Second executive (3) Europe, North America and South America, reporting to Group CEO (4) IT & Operations, Human Resources, General Secretariat,Marketing, Communications, Strategy, Santander Corporate & Investment Banking, Wealth Management & Insurance, Digital & Innovation and Global Platforms
• Compliance
• Audit
• Risk
• Finance
• Financial Control / Accounting
• Others4
Best practices on robust governance are channelled to all subsidiaries
Presence of Grupo Santander in the subsidiaries' Boards of Directors establishing guidelines for board structure, dynamics and effectivenessA
Reporting of the CEO / Country Heads to the Group CEO / Regional Heads and Group Executive CommitteeB
Interaction between the Group’s and the subsidiaries’ control, management and business functionsC
The Group-subsidiary governance modelenhances control and oversight through:
Corporate governance and internal control
47
Our brand embeds the essence of the Group's culture and identity
best global bank brand by BrandZ ranking, 2019
best global banking brand by BGB 2019, Interbrand Ranking
Santander is one of the most valued brands in the world
As one of our most important strategic assets, our brand helps us connect with people and businesses, demonstrating our commitment to prosperity and determination to bring it to life in a positive and sustainable manner every day
5th
More information: https://brand.santander.com/en
3.Q1’20results and activity
49Note: Changes in constant euros
Q1’20 Highlights
Steady growth in volumes YoY (loans +7%, deposits +6%). Pick up in March: loans +EUR 26 bn and deposits +EUR 24 bn.
New lending exceeded typical monthly levels, driven by corporates and SCIB
Our digital products and services have been more important than ever: strong quarterly increase in our digital customer base
(+1.5 mn) and digital sales stood at 43% of the total sales in March. Accesses and transactions grew +23% and +22% YoY
The COVID-19 outbreak has caused an unprecedented worldwide health crisis. Today’s financial system is more resilient and
banks are part of the solution to the current economic situation
We have implemented specific measures for each of our stakeholders to help protect our employees, customers,
shareholders and investors, ensure business continuity and mitigate economic and social costs
Q1’20 underlying attributable profit of EUR 1,977 mn (+8% YoY), driven by increased revenue, cost control and stable cost of
credit. Delivered a solid underlying RoTE of 11.1%
Q1’20 attributable profit of EUR 331 mn, affected by a provisions overlay of EUR 1,600 mn related to COVID-19
Credit quality maintained in Q1’20: NPL ratio (3.25%), Coverage ratio (71%) and Cost of credit (1.00%)
Mar-20 CET1 ratio: 11.58%. Continued organic generation and dividend measures reinforced the ratio (+36 bps). However,
significantly affected by strong increase in volumes, together with regulatory, corporate transactions and markets impacts
COVID-19
Growth
Profitability
Strength
50
Q1’20 underlying results continued to grow, marginally affected by the crisis
Note: Contribution to the SRF (net of tax) recorded in Q2’19 (EUR -162 mn). Contribution to the DGF in Spain (net of tax) in Q4’19 (EUR -160 mn)
(1) In Q1’20: Provisions overlay EUR 1,600 mn related to COVID-19 and restructuring costs and others of EUR 46 mn.
EUR mnConstant
eurosEurosQ1’20
% vs. Q1’19
1,832
1,975 2,056 2,007 1,977
Q1'19 Q2 Q3 Q4 Q1'20
Constant EUR mn
Underlying attributable profit
Attributable profit
+8%Net interest income 8,487 -2 3
Net fee income 2,853 -3 3
Customer revenue 11,340 -2 3
Trading and other income 474 0 2
Total income 11,814 -2 3
Operating expenses -5,577 -3 1
Net operating income 6,237 -1 5
Loan-loss provisions -2,309 6 12
Other results -372 -21 -17
Underlying PBT 3,556 -3 3
Underlying attributable profit 1,977 1 8
Net capital gains and provisions1 -1,646 — —
Attributable profit 331 -82 -801,675 1,269 450 2,656 331
51
High quality revenue: customer revenue delivered 96% of the total and grew 3% YoY driven by the Americas and global businesses
Note: YoY change in constant euros(1) Including fees generated by asset management and insurance transferred to the commercial network
Other Revenue
4%
Customer Revenue(NII + Fees)
96%
South America +10%
North America +2%
Europe -3%
CIB +13%
WM&I1 +5%
+3%Customer Revenue
WM&I1: 30%; CIB: 14%
NII +3%
Fees
NII growing in 7 markets. Volumes growth and cost of deposits decreased
Improved trend from global businesses, amounting to 44%
of total fees
+3%
52
We are on track to meet our efficiency plan
(1) Excluding perimeter(2) Excluding Argentina due to high inflation. Including it, South America: +6.6% nominal costs and -3.3% costs in real terms
Europe
South America2
North America
-3.4%
3.4%
2.5%
Nominal costs
-8%
-4%
-6%
-1%
2%
-2%
3%
-4.6%
-0.3%
0.0%
Costs in real terms YoY change in constant euros
Group 0.8% -3.0%
Regional revenue
and cost management
Synergies as a region
and joint investments
Q1’20 efficiencies achieved:
> EUR 100 mn
-3%1
-4%
53
Credit quality maintained in Q1’20. COVID-19 impacts have not yet been reflected
Cost of credit
NPL ratio
0.97% 1.00%
3.62% 3.32%
Coverage ratio 68% 68%
Credit quality ratios
Mar-19 Dec-19
1.00%
3.25%
71%
Mar-20
Roughly stable cost of credit QoQ in most
markets
NPL ratio fell QoQ and YoY in most markets
High level of allowances to total loans
54
Non-recurring items significantly impacted CET1, offsetting continued organic generation and dividend measures
(1) New securitisations framework (-0.06), Brazil models (-0.05) and IFRS 9 phased-out (-0.04)
(2) Corporate transactions: Allianz (-0.09), Put Olé (-0.03) and Elavon & Other (-0.07)
Data applying the IFRS 9 transitional arrangements
Mar-20Organic generation
Market and others
Regulatory & models
(1)
Dec-19
CET1 ratio YTD evolution
Mar-20No complementarydividend 2019
Corporate transactions
(2)
12.01%
11.58%-0.09-0.15
-0.19
11.65% +0.07
+0.29
55
Resilient underlying profitability in Q1’20
Underlying RoTE1
11.3% 11.1%
Q1'19 Q1'20
1.56% 1.52%
Q1'19 Q1'20
Underlying RoRWA1
TNAV per share
EUR
4.304.21
Mar-19 Mar-20
Profitability ratios
TNAV per share + Dividend per share:
+1.8% YoY
Notes: The averages for the Q1 RoTE and RoRWA denominators are calculated on the basis of 4 months from December to March. For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the statutory RoTE is the annualised underlying attributable profit (excluding non-recurring results), to which are added non-recurring results without annualising them. For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the statutory RoRWA is the annualised underlying consolidated result (excluding non-recurring results), to which is added non-recurring results without annualising them.
(1) Statutory RoTE Q1’19 11.2% and Q1’20 8.8%. Statutory RoRWA Q1’19 1.54% and Q1’20 1.25%.
North America
South America
Europe
Santander Wealth Management & Insurance
Santander Corporate & Investment
Banking
Santander Global Platform
Group functions and Corporate Centre activities
56
Details by geographic regions
and global businesses
57
Resilient underlying performance supported by our geographic diversification…
Note: Changes in constant euros. Gross loans and advances to customers excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds. Underlying RoTE(1) Adjusted for excess of capital in the US. Otherwise 10%
Europe
South America
North America
9.9 653+4%
Loyal customers(mn)
Loans(EUR bn)
Underlying profit (EUR mn)
RoTE(%)
974-16%
8%-167 bps
3.6 132+13%
522+34%
15%1
+172 bps
7.8 118+16%
928+15%
21%+154 bps
Q1’20 (vs. Q1’19)
6440%
Customer funds(EUR bn)
120+15%
148+16%
+2%
+21%
+5%
58
…with Global Businesses driving network effects and contributing 30% of Group’s earnings
Note: variations on a YoY basis; in constant euros
Customer-centric providing
liquidity and transactional solutions
Corporate & Investment Banking
RoRWA
Underlying profit
SCIB
2.0% +13 bps
Wealth Management & Insurance
RoRWA
Underlying profit
WM&I
8.9% +1.4 pp
Connecting our banks via our global
value proposition and new products
EUR 240 mn +21%EUR 491 mn +21%
59
Delivered profit growth driven by the Americas and global businesses
Underlying profit weight excludes Corporate Centre (EUR -434 mn) and Santander Global PlatformSouth America’s weight includes Uruguay & Andean Region (EUR 53 mn)
41%
352
304
188
120
38
273
249
694
125
59
Q1’20 Underlying attributable profit
EUR mn and % change vs. Q1’19 in constant EUR
491240
Europe
South America
North America
Global businesses
21%
Well balanced Group profit
by regions
Enhancing our local scale with global reach
+21%
+21%
-1%
-5%
-27%
-11%
-38%
+46%
+22%
+10%
-2%
+745%
38%
60
Positive trend across regions and global businesses accelerating in March
Note: Gross loans and advances to customers excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual fundsEurope includes Rest of Europe (mainly SCIB) with loans: EUR 47 bn (+37% YoY)
Mar-20 Customer funds
294
38
210
42
35
82
38
98
34
10
EUR bn and % change in constant EUR
Europe
South America
North America
YoY
-4%
7%
4%
3%
4%
18%
10%
12%
21%
34%
Global businesses
Group Total 923 4%
101142
19%
-1%
Mar-20 Loans and advances to customers
192
103
244
37
30
101
31
69
38
5
EUR bn and % change in constant EUR
Group Total
Europe
South America
North America
YoY
-4%
7%
5%
2%
9%
12%
13%
18%
13%
16%
Global businesses
12517
29%
6%
909 7%
COVID-19 and Key takeaways4.
62
COVID-19. How Santander is contributing to tackle this outbreak
Since the beginning of the crisis we have been monitoring the situation
and activated all of the protocolsAs a responsible bank, we have
implemented specific measures to support our stakeholders
Strong Group Governance has been demonstrated with close coordination within corporate areas and across countries
We are also taking a number of steps toprotect and support our customers and the society as a whole
Robust Santander T&O allowing us to continue running the Bank and serving our customers remotely with high standards
Business activity indicators point towards the expected deterioration but it is too early to assess real impact
A
B
C
D
More measures implemented across the Group are available in the Group website www.santander.com
63
We have progressively adopted measures in all our markets across four dimensions
Large scale telecommuting & branch closure strategy
112 k employees working from home
c.70% of branches opened and employees working in a rotation scheme
Progress in contact centres home working (inbound and collections). Remote agents: >50%
95% of ATMs working
Implementing and adapting them to the real situation
Plans that we had for mainly operational issues, identifying critical services, people,
buildings and suppliers, etc.
Anticipating changes in the risk profile & defining strategies to mitigate negative impacts
is key to preserve our solid position, particularly in terms of capital and liquidity
We have published information in our internal and external channels
>500 communications since the beginning of the crisis
To keep our people, customers, shareholders and investors informed at all times
Health & Contagion Prevention
Business Preventive Plans
Communication Plans
Risk & Financial Preparedness
A
64
We are also taking care of society as a whole: EUR 100 mn has been dedicated in the fight against COVID-19
Resources come from senior management salary reductions & board compensation; direct donations from the Bank and employee donation funds
Santander has pulled together EUR 54 mn to provide essential equipment and materials to support the global effort to fight the pandemic
Donation channels and tools to facilitate the collaboration of customers and society in general. In collaboration with non-governmental organisations that work to help the most vulnerable groups
Some local units (US and the UK) have devoted EUR 16 mn to support vulnerable communities specifically impacted by COVID-19
Santander Universities: EUR 30 mn to support the response of universities to the COVID-19 crisis, whether in health, education or social issues; promote online education; and mobilise the entrepreneurial community to identify solutions to social challenges posed by COVID-19
“Overcome Together”, a resource centre which contains information and resources to help support the fight against coronavirus. (Live in )
Self-diagnosis app to manage the impact of the virus among the population. Working with the Mexican Government, supporting the Spanish Government with Telefonica’s solution and collaborating with
All Together Fund: support
the health crisis
Support vulnerable
communities
Santander universities
Digital solutions
B
65
Robust Santander technology, allowing us to continue running the Bank and serving our customers remotely
+23% YoY
# Accesses3
(online & mobile)
Digital customers138.3 mn (+13% YoY)
43% in March-20 (36% in 2019)
Digital sales2
as % of total sales
Supporting our remote working
>780 k video calls a day
>3 mn chats a day
127 k laptops
Technology & Operations (T&O) is keeping the business up and running
Improving ourT&O capacity
bandwidth /
VPN capacity
maximum users supported by VPN
C
Initial 51 k Today 247 k
Increased
Contact centresService volumes +21% on average
(154% highest)
4.9 mn digital customers (+139 k YTD). Accelerated launch of new products to serve our current customer needs
71% digital sales in Mar-20 (61% in Dec-19; 57% in Mar-19) and 1.7 k new mobile users per day
55% digital sales in Mar-20 (50% in Dec-19) and mobile transactions +65% YoY
+22% YoY
# Transactions4
(monetary & voluntary)
+1.5 mn in Q1’20
Digital customers
(1) Every physical or legal person, that, being part of a commercial bank, has logged in its personal area of internet banking or mobile phone or both in the last 30 days(2) Percentage of new contracts executed through digital channels during the period
(3) Private accesses. Logins of bank’s customers on Santander internet banking or apps. ATM accesses by mobile are not included(4) Customer interaction through mobile or internet banking which resulted in a change of balance. ATM transactions are not included
Note: data as of Mar-20 and year-on-year changes
66
We have taken a number of steps to protect and support customers: individuals and self-employed
Mortgage payment holidays Consumer payment holidays
# Operations requested
% ofportfolio
207 k 15%
45 k 8%
1.6 k 5%SC USA
# Operations requested
% ofportfolio
171 k 2%
46 k 9%
409 k 14%
SBNA 506 k 5%
Note: as of 22 April 2020
C
67
We have taken a number of steps supported by Government Guarantee Programmes
Example: Santander España
Government Guarantee Programmes
Country Guarantee
EUR 100 bn
GBP 330 bn
EUR 820 bn
EUR 750 bn
USD 950 bn
BRL 40 bn
CLP 24 bn
ICOfinancingfacilities
60 k transactions granted
EUR 9.6 bn
EUR 2.6 bnLarge corporates
Non-ICO financingfacilities1
EUR 7.0 bnSMEs and
self-employed
176 k transactions granted
EUR 12 bn
(1) From mid-March includes EUR 5 bn of commercial bills
C
68
Key takeaways
The best way to support our shareholders is to prioritise the health and safety of our employees, help our customers and communities, and ensure a profitable business continuity
We are confident about our strengths and business model to ease the COVID-19 impact on our business:
- Scale: we maintain a leadership position in our 10 core markets (Top 3 bank in 9 of our 10 core markets)
- Customer focus: 146 million of customers with a unique personal banking relationship
- Geographic and business diversification: makes us more resilient under adverse circumstances
- Digital transformation: continued execution of our plans to be the best open financial services platform is critical
While it is too early to be conclusive about the macro and financial effects of the current health crisis, the pillars of our strategy remain unchanged:
- Improving operating performance
- Optimising capital allocation to the regions and businesses that generate the highest returns
- Accelerating the Group’s digital transformation
Our strong pre-provision profit across the cycle, combined with our resilient balance sheet and capital position, are the key levers to manage the economic downturn. In addition, we are activating management actions in revenue and costs
Links to Grupo Santander public materials5.
For additional information on the Group, please click on the images, icons or flags below
Links to Grupo Santander public materials
www.santander.com Follow us on70
Financial report
Q1’20 Quarterly financial results
Earnings presentation
Country presentations
US
Mexico
ArgentinaChile
Portugal
Spain
UK
Poland
Brazil
Other information
Overview of our Corporate Governance presentation
Series(excel)
Press release CEO’s video (4 minutes)
2019 Annual report
Fixed income presentation
Shareholders report(interactive)
Strategic Overview& Executive Chairman
and CEO’s lettersAnnual report
Online report
71
Important information
Non-IFRS and alternative performance measures
In addition to the financial information prepared in accordance with International FinancialReporting Standards (“IFRS”) and derived from our financial statements, this presentation containscertain financial measures that constitute alternative performance measures (“APMs”) as definedin the Guidelines on Alternative Performance Measures issued by the European Securities andMarkets Authority (ESMA) on 5 October 2015 (ESMA/2015/1415en) and other non-IFRS measures(“Non-IFRS Measures”). The financial measures contained in this presentation that qualify asAPMs and non-IFRS measures have been calculated using the financial information fromSantander Group but are not defined or detailed in the applicable financial reporting frameworkand have neither been audited nor reviewed by our auditors. We use these APMs and non-IFRSmeasures when planning, monitoring and evaluating our performance. We consider these APMsand non-IFRS measures to be useful metrics for management and investors to facilitate operatingperformance comparisons from period to period. While we believe that these APMs and non-IFRSmeasures are useful in evaluating our business, this information should be considered assupplemental in nature and is not meant as a substitute of IFRS measures. In addition, othercompanies, including companies in our industry, may calculate or use such measures differently,which reduces their usefulness as comparative measures. For further details of the APMs andNon-IFRS Measures used, including its definition or a reconciliation between any applicablemanagement indicators and the financial data presented in the consolidated financial statementsprepared under IFRS, please see the 2019 Annual Financial Report, filed with the ComisiónNacional del Mercado de Valores of Spain (CNMV) on 28 February 2020, as well as the section“Alternative performance measures” of the annex to the Banco Santander, S.A. (“Santander”) 20201Q Financial Report, published as Relevant Fact on 28 April 2020. These documents are availableon Santander’s website (www.santander.com).
The businesses included in each of our geographic segments and the accounting principles underwhich their results are presented here may differ from the included businesses and localapplicable accounting principles of our public subsidiaries in such geographies. Accordingly, theresults of operations and trends shown for our geographic segments may differ materially fromthose of such subsidiaries.
Forward-looking statements
Santander cautions that this presentation contains statements that constitute “forward-lookingstatements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.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 arefound in various places throughout this presentation and include, without limitation, statementsconcerning our future business development and economic performance and our shareholderremuneration policy. While these forward-looking statements represent our judgment and futureexpectations concerning the development of our business, a number of risks, uncertainties andother important factors could cause actual developments and results to differ materially from ourexpectations. The following important factors, in addition to those discussed elsewhere in thispresentation, could affect our future results and could cause outcomes to differ materially fromthose anticipated in any forward-looking statement: (1) general economic or industry conditions inareas in which we have significant business activities or investments, including a worsening of theeconomic environment, increasing in the volatility of the capital markets, inflation or deflation,and changes in demographics, consumer spending, investment or saving habits; (2) exposure tovarious types of market risks, principally including interest rate risk, foreign exchange rate risk,equity price risk and risks associated with the replacement of benchmark indices; (3) potentiallosses associated with prepayment of our loan and investment portfolio, declines in the value ofcollateral securing our loan portfolio, and counterparty risk; (4) political stability in Spain, the UK,other European countries, Latin America and the US (5) changes in laws, regulations or taxes,including changes in regulatory capital and liquidity requirements, including as a result of the UKexiting the European Union and increased regulation in light of the global financial crisis; (6) ourability to integrate successfully our acquisitions and the challenges inherent in divertingmanagement’s focus and resources from other strategic opportunities and from operationalmatters while we integrate these acquisitions; and (7) changes in our ability to access liquidity andfunding on acceptable terms, including as a result of changes in our credit spreads or a downgradein our credit ratings or those of our more significant subsidiaries. Numerous factors could affectthe future results of Santander and could result in those results deviating materially from thoseanticipated in the forward-looking statements. Other unknown or unpredictable factors couldcause actual results to differ materially from those in the forward-looking statements.
72
Forward-looking statements speak only as of the date of this presentation and are based on theknowledge, information available and views taken on such date; such knowledge, informationand views may change at any time. Santander does not undertake any obligation to update orrevise any forward-looking statement, whether as a result of new information, future events orotherwise.
No offer
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 documentpublished by Santander. Any person at any time acquiring securities must do so only on the basisof such person’s own judgment as to the merits or the suitability of the securities for its purposeand only on such information as is contained in such public information having taken all suchprofessional or other advice as it considers necessary or appropriate in the circumstances and notin reliance on the information contained in this presentation. No investment activity should beundertaken on the basis of the information contained in this presentation. In making thispresentation available Santander gives no advice and makes no recommendation to buy, sell orotherwise 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 sellor the solicitation of an offer to buy any securities. No offering of securities shall be made in theUnited 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 aninvitation or inducement to engage in investment activity for the purposes of the prohibition onfinancial promotion in the U.K. Financial Services and Markets Act 2000.
Historical performance is not indicative of future results
Statements as to historical performance or financial accretion are not intended to mean thatfuture performance, share price or future earnings (including earnings per share) for any periodwill necessarily match or exceed those of any prior period. Nothing in this presentation should beconstrued as a profit forecast.
Third Party Information
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