Banco Santander, S.a. · BME:SAN
Banco Santander — Investor Presentation (2022)
62 slides from Banco Santander's investor presentation, Dec 18, 2022
Slide 1: Institutional Presentation Q1'22
Strategic and Financial Analysis. Financial Division Institutional Presentation Q1’22
Slide 2: Index
Index 1 2 3 4 5 Our business Group structure Q1’22 results Financial targets and Links to model and and businesses & activity concluding remarks public materials strategy 2
Slide 3: Our business model and strategy
1. Our business model and strategy
Slide 4: Santander, a leading financial group
Santander, a Q1’22 Highlights leading financial Total assets (€ bn) 1,666 group Customer loans (€ bn excluding reverse repos) 998 Customer deposits + mutual funds (€ bn; excluding repos) 1,097 Branches 9,898 Q1'22 Net operating income (pre-provision profit) (€ mn) 6,770 Simple Personal Fair Q1'22 At
Slide 5: The Santander Way
The Santander Our purpose We create value for all Way To help people and businesses prosper. Our aim To be the best open financial services It is the bedrock on platform, by acting responsibly and earning which we are the lasting loyalty of our people, customers, shareholders and communities. buildi
Slide 6: Santander business model
1. Customer focus 2. Scale 3. Diversification1 Santander Deepening the relationships Local scale and global reach Our geographic and business business model with our customers through a simpler value proposition, diversification makes us more resilient under adverse superior customer experience circ
Slide 7: Customer focus: million customers
01. Customer focus 155 million customers Distribution by market, Mar-22 Our aim is to further enhance We have grown our our customers’ experience and satisfaction customer base over Digital Consumer Bank 12% the last seven years, with balanced Europe 30% Top 3 growth by region in NPS1 in 8 markets a
Slide 8: Loyal and digital customers
01. Customer focus 26.0 mn (+11%) 49.2 mn (+11%) Loyal customers Digital customers1 Tech investments to transform the business … We also increased €2 bn / year loyalty and helped a new generation of 23.8 mn (+12%) … help customers transact online Individuals customers with new ways to interact with
Slide 9: Customer focus
01. Traditional Digital Customer focus banking banking Internet, Branches, mobiles, ATMs, tablets, retail agents, … smartphones, smartwatches,… Traditional customer service and digital Customer support services: available anytime, anywhere, anyhow technology Collaborative spaces and increased digita
Slide 10: Scale: market shares
02. Market shares North America Scale 4% Auto lending 10% Loans 8% Europe Deposits Digital 2% Deposits Consumer Bank 18% 12% Loans Loans 14% 14% 11% Loans Deposits Deposits 13% South America #1 European Local scale and Deposit 17% Consumer Loans Bank 18% leadership based on 18% Loans 10% Loans Depos
Slide 11: Diversification
03. Well balanced profit and volume distribution Diversification Contribution to Q1’22 underlying attributable profit1 Mar-22 Group’s contribution2 by primary segments Customer loans Customer funds 9% 34% Our balanced profit and volume 12% 59% 5% diversification 65% 17% remains a source of 30% 15% g
Slide 12: Diversification by business
03. Diversification Customer loans by business, Mar-22 Customer funds by business, Mar-22 Home mortgages, Individuals demand Business 1 35% SCIB,1 17% deposits, 36% SCIB, 16% diversification among customer segments Corporates, 9% (individuals, SMEs, Corporates, 11% Other individuals, 9% Individuals
Slide 13: In summary: differential resilience
More resilience and lower volatility of results In summary Differential Pre-provision profit / loans and Cost of credit EPS volatility calculated using quarterly data from Jan-99 to Q4’212 1.90% 1.89% 1.80% 1.80% 1.80% 1.60% 1.61% 1.65% 1.65% 12% 1.25% Our strong model is 1.21% US 40% 0.62% NL 40% r
Slide 14: Environmental, Social and Governance: Environmental
Environmental Environmental, Social and Green finance1 AuM in sustainable funds2 Decarbonization targets Governance €69bn since 2019 €27bn Mar-22 0.23 tCO e/MWh in 2019 5 €3.6bn in Q1’22 2 €120bn by 2025 €100bn by 2025 0.18 by 2025 €220bn by 2030 0.11 by 2030 Supporting our Green products Renewable
Slide 15: Environmental, Social and Governance: Social and Governance
Environmental, Social Governance Social and Governance Microcredits ESG metrics 1.5 mn 8 countries 20% of long-term # entrepreneurs with microfinance incentives in top since 2019 proposals management scorecard …and addressing Community investment Financially empowered people Group Board social needs
Slide 16: ESG commitments
ESG commitments 2018 2019 2020 2021 Q1’22 Target Women in senior positions 20% 22.7% 23.7% 26.3% 30% by 2025 We achieved all our Equal Pay Gap 3% 2% 1.5% 1.0% ~0% by 2025 targets for 2021 People financially empowered (cumulative) 2.0mn 4.9mn 7.5mn 10mn by 2025 and set new Green Finance raised and fa
Slide 17: Group structure and businesses
2. Group structure and businesses
Slide 18: Group organizational structure
One Santander (Europe, North America and South America). New operating model leveraging our global scale to deliver a better customer experience, supported by common culture and higher degrees of commonality, technology being one Digital Consumer Bank: our vision is to become the largest digital
Slide 19: Primary segments
«Santander Primary segments 19
Slide 20: Europe
EUROPE 'Accelerating our business transformation in One Europe to achieve superior growth with a more efficient operating model' Q1’22 Highlights Strategic priorities Branches 3,217 Employees 60,943 ▪ Grow our business by better serving our customers through regional Total customers (mn) 46.1 simpli
Slide 21: Spain
Spain 'The commitment to and collaboration with our customers demonstrates the full potential of Santander España' Q1’22 Highlights Strategic priorities Branches 1,950 ▪ Grow the customer base through excellence service across all channels Employees 26,095 ▪ Simplify and automate products, processes
Slide 22: UK
UK 'Santander UK creates value by serving customers with tailored financial products and services' Q1’22 Highlights Strategic priorities Branches 450 Employees 18,689 ▪ Deliver growth through customer loyalty and outstanding customer experience Total customers (mn) 23.5 Digital customers (mn) 6.7 ▪
Slide 23: Portugal
Portugal 'A strategy focused on customer experience and digital solutions for sustained and profitable growth' Q1’22 Highlights Strategic priorities Branches 389 Employees 5,009 ▪ Consolidate the commercial and digital integration model Total customers (mn) 3.0 ▪ Grow organically in terms of profita
Slide 24: Poland
Poland 'One of the largest and most innovative financial institutions in Poland, whose goal is to maintain its position as the best traditional, private and investment bank in the country' Q1’22 Highlights Strategic priorities Branches 420 Employees 9,764 ▪ Improve customer satisfaction remaining at
Slide 25: North America
NORTH AMERICA 'We provide a full range of financial services with particular focus on Retail, Private and Corporate Banking' Q1’22 Highlights Strategic priorities Branches 1,859 Employees 43,874 ▪ Strengthen One Santander in North America by unifying a common and regional approach to forge future gr
Slide 26: United States
United States 'Santander US combines a strong depositary base in the Northeast with its nationwide auto finance, wealth management and corporate banking capabilities' Q1’22 Highlights Strategic priorities Branches 488 Employees 15,544 ▪ Positioned to deliver above cost of capital returns across core
Slide 27: Mexico
Mexico 'Santander México, one of the leading financial groups in the country, focused on commercial transformation and innovation' Q1’22 Highlights Strategic priorities Branches 1,371 Employees 27,794 ▪ To become the leading bank in terms of customer experience, leveraging new tools and improved pro
Slide 28: South America
SOUTH AMERICA 'We remain focused on expanding, sharing best practices from each country and delivering profitable growth' Q1’22 Highlights Strategic priorities Branches 4,451 ▪ Strengthen connectivity and share best practices across countries, capturing new Employees 75,784 business opportunities To
Slide 29: Brazil
Brazil 'The best way to grow in a profitable, recurring and sustainable manner is by providing high quality services' Q1’22 Highlights Strategic priorities Branches 3,606 ▪ Expand our customer base and profitability, with robust new customer Employees 53,865 acquisition dynamics and steady loyalty g
Slide 30: Chile
Chile 'We are the leading bank in the country and we always have the customer at the centre of our strategy' Q1’22 Highlights Strategic priorities Branches 314 ▪ Maintain our leadership position in NPS through the continuous improvement of Employees 10,235 our service quality Total customers (mn) 4.
Slide 31: Argentina
Argentina 'Working towards a more digital and agile model, with customer-centric decisions' Q1’22 Highlights Strategic priorities Branches 407 Employees 8,549 ▪ Increase our customer base and loyalty, and ensuring the best customer service through our multi-channel strategy Total customers (mn) 4.2
Slide 32: Uruguay, Peru, Colombia
Uruguay Peru Colombia 'Santander Uruguay is the country’s 'Activity focused on corporates, 'Focus on corporates and SCIB, leading privately-owned bank' the country’s large companies and and new alliances in auto finance' the Group’s global customers (SCIB)' Q1’22 Highlights Q1’22 Highlights Q1’22 Hi
Slide 33: Digital Consumer Bank
Digital Consumer Bank 'Europe’s consumer finance leader: solid business model, geographic diversification and leading market shares in auto/mobility finance and in personal finance/e-commerce' Q1’22 Highlights Strategic priorities Branches 371 ▪ To become the largest digital consumer bank leveraging
Slide 34: Secondary segments
«Santander Secondary segments 34
Slide 35: Corporate & Investment Banking
Corporate & Investment Banking 'Santander CIB supports corporate and institutional customers, offering tailored services and value-added wholesale products suited to their complexity and sophistication' Q1’22 Highlights Strategic priorities Total income (€ mn) 1,763 ▪ Continue the business transform
Slide 36: Wealth Management & Insurance
Wealth Management & Insurance 'We strive to become the best responsible wealth and insurance manager in Europe and the Americas' Q1’22 Highlights Strategic priorities Total assets under management1 (€ bn) 401 ▪ Continue to build our global platform Total fees generated as % of the Group’s total fees
Slide 37: PagoNxt: innovative payments solutions
'Innovative payments solutions for both Santander and non-Santander clients' Q1’22 Highlights PagoNxt revenue €162 mn; +122% We are a world leading payments fintech. Merchant Acquiring A one-stop shop providing payment solutions to merchants, SMEs & corporates Santander banks with Getnet 6 and consu
Slide 38: Group functions and Corporate Centre activities
Group functions and Corporate Centre activities • Global T&O strategy • HR strategy • Risk management and compliance • Corporate governance and internal control • Our brand 38
Slide 39: Technology and Operations (T&O)
Technology and Operations (T&O) ‘The T&O mission is to enable the Group strategy by building customer- oriented, secure, efficient and innovative technology working with the business units in a flexible and agile way’ Global T&O capabilities are key for our commercial and digital transformation Comp
Slide 40: HR strategy: employer of choice
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' The SPF culture is based on our 5 corporate behaviours Our corporate management evaluation model 198,204 Employees, Mar-22 98% 50% 40% workforce with a
Slide 41: Risk management and compliance
Risk management and compliance 'Our solid Risk & Compliance function is key to making sure we remain a robust, safe and sustainable bank that helps people and businesses prosper' We rely on: Advanced risk management tools to effectively manage and control all risks under a forward-looking approach C
Slide 42: Corporate governance and internal control
Corporate governance and internal control 'As a responsible bank, we have a clear and robust governance which is key for guaranteeing a sustainable business model over the long term' Composition of the board of directors, Mar-22 Board committees Executive Diversified and well-balanced shareholder ba
Slide 43: Corporate governance and internal control
Corporate governance and internal control 'Best practices on robust governance are channelled to all subsidiaries' Group-subsidiary governance model Group Subsidiary B The Group-subsidiary governance model enhances control and oversight through: Board of Directors Subsidiary A A Presence of the Grou
Slide 44: Santander brand
Santander brand 'Our brand embeds the essence of the Group's culture and identity' Santander is one of the most valued brands in the world 3 rd best global retail bank brand by Interbrand’s Best Global Brands ranking, 2021 As one of our most important strategic assets, our brand helps us connect wit
Slide 45: Q1'22 results & activity
@ Q1'22 results & activity «> Santander
Slide 46: Q1'22 highlights
Q1’22 highlights Growth • We increased our customer base (+7mn YoY), digital customers (+11% YoY) and digital sales (56% of total sales vs. 50% in Q1’21) • Commercial activity1 remained robust, up QoQ and YoY (loans +5%; deposits +5%; mutual funds +6%) • We continued to grow revenue1, achieving soli
Slide 47: Profit growth underpinned by geographic and business diversification
Profit growth underpinned by our geographic and business diversification Underlying Contribution att. profit2 to Group’s % change Q1’22 vs. Q1’21 (€ mn) underlying profit3 € million Q1'22 Q1'21 Euros Constant euros 1,018 NII 8,855 7,956 11 6 Europe 34% Net fee income 2,812 2,548 10 6 +30% Trading an
Slide 48: Positive profit trend backed by higher revenue, cost discipline and flat LLPs
Positive profit trend backed by higher revenue, cost discipline and flat LLPs Attributable profit Revenue Constant € mn Constant € mn 8,986 8,855 +6% 8,685 NII 8,335 8,551 YoY +47% YoY 2,766 2,812 +6% 2,543 Net fee 2,357 income 2,655 2,706 2,689 YoY 2,275 2,194 2,245 Other 928 858 638 474 375 income
Slide 49: Organic generation led to increase in FL CET1 ratio
Organic generation in Q1 led to an increase in the FL CET1 ratio to >12% Fully-loaded CET1 ratio quarterly evolution % +0.40 12.05 11.96 -0.23 -0.03 -0.05 Dec-21 Gross organic Shareholder Regulatory Markets Mar-22 Pro forma1 generation remuneration 2 & Models & others Pro forma 1 Phased-in CET1 rati
Slide 50: Committed to delivering shareholder value
Committed to delivering shareholder value Total capital distributed to shareholders against 2021 results1 ~€3.4bn 6% yield ~50% 2022 via cash dividend shareholder 40% payout remuneration split in equal parts policy2 ~50% via share buybacks (1) Nov-21 interim distribution of cash dividend of €4.85 ce
Slide 51: Outstanding QoQ and YoY profitability
Outstanding QoQ and YoY profitability. TNAVps + cash dividend: +13% YoY Underlying RoTE Underlying EPS TNAV per share €cents EUR cents EUR 14.2% 14.1 4.29 13.0% 12.7% 12.4 4.12 11.6 3.84 Q1'21 FY21 Q1'22 Q1'21 Q4'21 Q1'22 Mar-21 Dec-21 Mar-22 Statutory Statutory Note: including €4.85 cents from the
Slide 52: Business segments review
Santander Business segments review 52
Slide 53: Geographic and business diversification a key growth driver
Our geographic and business diversification continued to be a key growth driver Q1’22 Total Customer Customer Net operating Underlying vs. Q1’21 customers loans deposits income1 att. profit1 RoTE2 (mn) (€bn) (€bn) (€mn) (€mn) 46.1 584 604 2,245 1,018 13.5% Europe -- +4% +5% +12% +30% +3.0 pp North 2
Slide 54: Global businesses
Global businesses Corporate & Investment Banking Wealth Management & Insurance • Best quarter in SCIB’s history with record revenue, profit and • Double-digit growth on a like-for-like basis (+14%), thanks to RoRWA fueled by strong results from our core businesses and our diversified value-added pro
Slide 55: Cards
Cards • Merchant Acquiring: Total Payments Volume rose 40% backed • 95 million cards managed globally in Mar-22 with revenue of by Brazil (+26%), Europe (+56%) and Mexico (+45%) around €3bn in 2021 • International Trade: real time payments between Spain and • High profitability with an RoTE of c.30%
Slide 56: Financial Targets and Concluding remarks
4. Financial Targets and Concluding remarks
Slide 57: We reiterate our 2022 financial targets
We reiterate our 2022 financial targets Our strengths and management levers • In the current geopolitical situation, our starting point is very solid: we have excellent liquidity and capital positions and our direct exposure to Russia and Ukraine is negligible • Our capacity to attract customers and
Slide 58: Links to public materials
: la E «> Santander @ Links to public materials
Slide 59: Links to Grupo Santander public materials
Links to Grupo Santander public materials For additional information on the Group, please click on the images, icons or flags below Q1’22 financial results Other information Financial report Earnings presentation Series Shareholders report 2021 Digital Annual review (excel) (interactive) 2021 Annual
Slide 60: Important information
Important information Non-IFRS and alternative performance measures Forward-looking statements This presentation contains, in addition to the financial information prepared in accordance with Santander advises that this presentation contains “forward-looking statements” as per the meaning Internatio
Slide 61: Important information
Important information Numerous factors could affect our future results and could cause those results deviating from Historical performance is not indicative of future results those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to dif
Slide 62: Thank You.
Thank You. Our purpose is to help people and businesses prosper. Our culture is based on believing that everything we do should be: