25 th January 2017 SPAIN. January December 2016

Transcription

1 25 th January 2017 SPAIN January December 2016

2 Disclaimer Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements. 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, macroeconomic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors 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 forwardlooking statements. Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; 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. 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 my differ materially from those of such subsidiaries. 2

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

4 Macroeconomic environment Solid economic indicators backed by the adjustments and the structural reforms undertaken Annual GDP Growth (%, real) Interest rates (official rate, %) (e) 2017 (e) 2018 (e) (e) 2018 (e) Inflation (annual change, %) Unemployment rate (%) (e) 2017 (e) 2018 (e) (e) 2017 (e) 2018 (e) Source: Santander Research Department 4

5 Total banking system volumes Improvement in the system s LTD ratio due to a better evolution of deposits Loans to customers Savings EUR billion YTD EUR billion Mutual Funds YTD +5% 1, ,455 1, % 1,567 1,538 1, % 1,287 1,232 1,205-2% % Dec'14 Dec'15 Nov'16 Dec'14 Dec'15 Nov'16 Households & non-financial entities in Spain Non-monetary financial institutions EMU Public sector in Spain Other non-resident sector in Spain Source: ECB and Bank of Spain. Other Monetary Financial Institutions. 5

6 Agenda Macroeconomic environment and financial system Strategy and business Results Appendix

7 Our Franchise The financial group includes retail networks, global businesses and specialised entities Grupo Santander in Spain EUR million Dec 16 Year-on-year (%) Activity and results Gross loans (w/o repos) 150, Deposits (w/o repos) 175, Mutual funds 49, Underlying attributable profit 1, Capacity and customers Customers (million) Branches 2, ATMs 5, Market share* Loans Deposits Mutual funds (*) Data as of Nov 16 and variation over Dec 15. Data obtained from Bank of Spain s Statistical Bulletin (chapters 4, 8 and 19) referred to total Credit Institutions and Credit Financial Intermediaries and confidential reports M-21, UME-1 and UME-2. 7

8 Strategy strategy is showing strong results Better customer acquisition +500k 1 switchers with better customer profile +100k loyal SMEs (+48%) 2 Deepening customer loyalty +32% loyal customers 2, x1.7 more products and services 3 +81bps payroll market share 4 96% of transactional customers with 9.2 direct debits per account 5 Strong commercial results Representing >50% of new volume production 5 SMEs volumes starting to grow 6 Retail fee income +6.4% YoY 2 vs. competitors decline Increased customer experience Improving risk profile From 5 th position to TOP 3 (2016) 7 We have reached 1M mobile customers (+33%) driven by the 1l2l3 strategy Improved average credit score reflected in NPL and cost of credit (1) Data as of Dec 16 since Jun 15 (2) Data as of Dec 16 since Dec 15 (3) Data as of Sep 16 vs a non 123 customer (4) Data as of Nov 16 since May 15 (5) Sep 16 (6) Commercial portfolio production, and credit and loans as of Dec 16 vs Dec 15 (7) Stiga survey Sep 16 8

9 Total loans performance Strong growth in individuals and SMEs new lending, while stocks fell due to amortisations Total gross loans ( Bn 1 ) % var. / Dec 16 Dec 15 Sep % Public sector & institutions Individual customers of which: - Housing mortgages Companies (w/o repos) Corporate Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Gross loans (w/o repos) Repos Provisions (4) Net loans (1) Exc repos

10 Total customer funds performance Focus on growing through demand deposits Total deposits ( Bn) Repos & other Pension funds Mutual funds Demand + Time deposit +2.0% Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 % var. / Dec 16 Dec 15 Sep 16 Demand deposits Time deposits Deposits w/o Repos Mutual funds Subtotal Pension funds Repos Total savings

11 Agenda Macro-economic environment and financial system Strategy and business Results Appendix Note: the following slides provide data on the Spain unit, which includes the retail network of Santander, Global Corporate Banking, and the ALCO portfolio in Spain. Not included: Santander Consumer Finance unit in Spain nor Spain's Real Estate activity, as described in Santander Group's quarterly Financial Report (see Description of Segments in Information by principal segments chapter).

12 Net interest income and spreads Pressure on NII due to low interest rates and a competitive environment affected by lower volumes, mortgages repricing and ALCO portfolio sales Yield on loans (%) Net Interest Income ( MM) Cost of deposits (%) 4Q 15 1Q 16 2Q 3Q 4Q % var YoY QoQ Net interest income 3,077 3, Q 16 1Q 16 2Q 3Q 4Q 12

13 Net fee income Good performance of fee income (retail banking +6% YoY) Net fee income ( MM) % var YoY QoQ Fees from services Mutual and pension funds Insurance Securities Q 1Q 16 2Q 3Q 4Q Total fee income 1,781 1,

14 Gross income Other includes Gains (losses) on financial transactions and Other operating income *For comparison purposes with 2015, the SRF contribution in 4Q 16 was reallocated from non-recurring items to gross income Despite good performance in fee income, revenues affected by weaker NII and lower gains on financial transactions Gross income ( MM) % var YoY QoQ 1,238 1,543 1,489 1,398 1,179 Net interest income 3,077 3, Net fees 1,781 1, Subtotal 4,858 5, Gains (losses) on financial transactions Q 15 1Q 16 2Q 3Q 4Q Other n.s. Total 5,608 6, Q*: annual contribution to DGFs and resolution fund: 291 MM 14

15 Operating expenses The lower costs reflected the ongoing efficiency plan Operating expenses ( MM) % var YoY QoQ General expenses 3,156 3, Personnel 1,632 1, Other 1,524 1, Amortisations Total 3,297 3, Q 15 1Q 16 2Q 3Q 4Q Efficiency ratio (%) Branches 2,911 3,467 Employees 23,017 24, Calculation of efficiency ratio includes amortisations

16 Net operating income after loan-loss provisions (LLPs) (1) Including country risk (2) Cost of credit = 12 month loan-loss provisions / average lending. Sharp fall in LLPs and further improvement in NPLs and cost of credit LLPs and Cost of credit ( MM 1 ; %) % var Cost of credit YoY QoQ Provisions Net operating income 2,311 2, Loan-loss provisions Net operat. income after provisions 1,726 1, Q 1Q 16 2Q 3Q 4Q Coverage ratio (%) NPL ratio (%)

17 Attributable profit Positive trends in provisions, costs and fee income offset the pressure on NII and lower trading gains Attributable profit ( MM) % var YoY QoQ Underlying PBT 1,459 1, Tax on profit Minority interests Underlying att. profit 1, Attributable profit 1, Q 15 1Q 16 2Q 3Q 4Q Effective tax rate (%) Note: 4Q 15 includes contributions to SRF and DGF ; 2Q 16: contribution to SRF; 4Q 16: contribution to DGF 17

18 Conclusions Economic environment and financial system Solid economic indicators backed by the adjustments and the structural reforms undertaken. Efficient and solid financial sector, regaining profitability with high competitive pressures. Santander: Strategy and activity Strong foundations for profitable growth and opportunities to increase profitability and market share. 1l2l3 strategy is showing strong results Focus on digital transformation and customer experience Strong growth in individuals and SMEs new lending, while stocks fell due to amortisations Santander: Results Pressure on NII due to low interest rates and a competitive environment Positive trends in provisions, costs and fee income offset the pressure on NII and lower trading gains. 18

19 Agenda Macroeconomic environment and financial system Strategy and business Results Appendix Note: the following slides provide data on the Spain unit, which includes the retail network of Santander, Global Corporate Banking, and the ALCO portfolio in Spain. Not included: Santander Consumer Finance unit in Spain nor Spain's Real Estate activity, as described in Santander Group's quarterly Financial Report (see Description of Segments in Information by principal segments chapter).

20 Balance sheet EUR million Change Dic 16 Dic 15 Amount % Customer loans * 152, ,204 (2,354) (1.5) Financial assets held for trading (w/o loans) 51,470 57,401 (5,931) (10.3) Available-for-sale financial assets 39,267 44,057 (4,790) (10.9) Central banks and credit institutions * 42,701 53,582 (10,881) (20.3) Tangible and intangible assets 3,147 2, Other assets 22,919 13,920 8, Total assets/liabilities & shareholders' equity 312, ,039 (14,685) (4.5) Customer deposits * 176, ,828 1, Debt securities issued * 20,863 22,265 (1,402) (6.3) Liabilities under insurance contracts Central banks and credit institutions * 50,687 68,995 (18,308) (26.5) Other liabilities 50,690 47,502 3, Stockholders' equity ** 12,783 12,913 (129) (1.0) Off-balance-sheet funds 66,649 63,931 2, Mutual funds 49,357 46,563 2, Pension funds 10,359 10,455 (95) (0.9) Managed portfolios 6,932 6, Managed and marketed customer funds 264, ,024 3, * Including all on-balance sheet balances for this item ** Capital + reserves + retained profit + valuation adjustments 20

21 Income Statement EUR million Change Amount % Net interest income 3,077 3,430 (353) (10.3) Net fees 1,781 1, Gains (losses) on financial transactions (189) (24.1) Other operating income* (24) (13.2) Gross income 5,608 6,080 (472) (7.8) Operating expenses (3,297) (3,434) 137 (4.0) General administrative expenses (3,156) (3,244) 87 (2.7) Personnel (1,632) (1,670) 38 (2.3) Other general administrative expenses (1,524) (1,573) 49 (3.1) Depreciation and amortisation (140) (190) 50 (26.1) Net operating income 2,311 2,646 (335) (12.7) Net loan-loss provisions (585) (992) 406 (41.0) Other income (267) (263) (4) 1.7 Underlying profit before taxes 1,459 1, Tax on profit (416) (393) (23) 5.8 Underlying profit from continuing operations 1, Net profit from discontinued operations Underlying consolidated profit 1, Minority interests (1) (5.5) Underlying attributable profit to the Group 1, Net capital gains and provisions** Attributable profit to the Group 1, *Including dividends, income from equity-accounted method and other operating income/expenses; **Net capital gains and provisions including the charge arising from the change of the temporary criteria in the contribution to the Single Resolution Fund net of tax. 21

22 Quarterly Income statement EUR million 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 Net interest income Net fees Gains (losses) on financial transactions Other operating income* (165) (176) Gross income 1,749 1,522 1,571 1,238 1,543 1,489 1,398 1,179 Operating expenses (855) (856) (863) (860) (837) (834) (824) (802) General administrative expenses (810) (803) (806) (824) (801) (799) (791) (766) Personnel (419) (420) (415) (416) (415) (410) (401) (408) Other general administrative expenses (391) (383) (391) (408) (386) (389) (390) (358) Depreciation and amortisation (45) (53) (57) (36) (36) (35) (33) (36) Net operating income Net loan-loss provisions (366) (264) (205) (156) (231) (129) (140) (85) Other income (44) (71) (58) (89) (37) (82) (51) (97) Underlying profit before taxes Tax on profit (139) (93) (127) (34) (126) (130) (108) (52) 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** (100) 100 Attributable profit to the Group *Including dividends, income from equity-accounted method and other operating income/expenses; **Net capital gains and provisions including the charge arising from the change of the temporary criteria in the contribution to the Single Resolution Fund net of tax. 22

23 Activity: Customer market shares in Spain Nov'16 Change 11 m Change 12 m LOANS Public sector Other resident sectors Commercial loans Mortgages No Other residente loans SAVINGS Public sector Other resident sectors Demand No Time residente Mutual Funds Note. Data obtained from Bank of Spain s Statistical Bulletin (chapters 4, 8 and 19) referred to total Credit Institutions and Credit Financial Intermediaries and confidential reports M-21, UME-1 and UME-2. 23

24 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