Banco Santander, S.a. · BME:SAN
Banco Santander — FY2018 Earnings Presentation
104 slides from Banco Santander's earnings presentation, Jan 30, 2019
Slide 1: 2018 Earnings Presentation
30 January 2019 2018 Earnings Presentation Ana Botín Group Executive Chairman José Antonio Álvarez Group CEO
Slide 2: Important Information
Important Information In addition to the financial information prepared under International Financial Reporting Standards (“IFRS”), this presentation certain alternative performance measures (“APMs”) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities a
Slide 3: Important Information
Important Information Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or r
Slide 4: 2018 performance ahead of plan
1 2 2018 performance Group & Business areas ahead of plan as we review continued to invest for our customers 3 4 Accelerating the Key takeaways & implementation of our mid-term targets commercial & digital transformation for our 0 144 Mn customers 0 4
Slide 5: 2018 was an excellent year…
2018 was an excellent year… Change vs.2017 EUR mn 2018 % % constant € Net interest income 34,341 0 9 Fee income 11,485 -1 9 Customer revenues 45,826 0 9 ROF and other 2,598 4 14 Gross income 48,424 0 9 Operating expenses -22,779 -1 7 Net operating income 25,645 1 11 Net loan-loss provisions -8,873 -
Slide 6: …we delivered strong results in a sustainable way…
…we delivered strong results in a sustainable way… 2018 (vs. 2017) Growth Profitability Strength Loyal customers Underlying RoTE FL CET1 19.9 Mn (+15%) 12.1 % (+26 bps) 11.30 % (+46 bps) Customer revenues Cost-to-income NPL ratio €45.8 Bn (+9% ) 1 47 % (-40 bps) 3.73 % (-35 bps) (1) Constant euros 6
Slide 7: …and we have successfully completed our 3 year plan
…and we have successfully completed our 3 year plan 2015 2018 Loyal customers (Mn) 13.8 19.9 Digital customers (Mn) 16.6 32.0 Fee income1 - ~10% Cost of credit 1.25% 1.12%2 Cost-to-income 48% 47% EPS growth - 11.2% DPS (€) 0.20 0.233 FL CET1 10.05% 11.30% RoTE4 10.0% 11.7% (1) % change (constant eur
Slide 8: Our loyalty strategy is built around a virtuous cycle
3 year plan achievements Our loyalty strategy is built around a virtuous cycle in which a committed team generates customer loyalty leading to strong financial results Team engagement Loyal customers (Mn) Fee income RoTE1 (Constant €Bn) +7pp +44% +31% +171bps 82% 19.9 11.5 11.7% 8.7 13.8 75% 10.0% 2
Slide 9: Increasing loyal and digital customers…
3 year plan achievements Growth Increasing loyal and digital customers… Loyal customers Digital activity Digital customers Higher x2 32.0Mn returns x 3.4 16.6Mn Revenue per 2015 2018 customer 1 (€) Digital sales over total sales Lower 32% x2 churn - 66 % 15% Attrition rate (%) 2015 2018 (1) Individu
Slide 10: …allows us to generate superior profitable growth
3 year plan achievements Growth …allows us to generate superior profitable growth Group customer revenues In 2 countries representing 25% of Group’s increased by 24% TNAV, RoTE increased to 20% NII + Fees (Constant €Bn) RoTE +24% 20% 20% 45.8 14% 13% 37.0 2015 2018 2015 2018 Digital customers x2.6 x
Slide 11: We have reached double digit EPS growth in 2018
3 year plan achievements Profitability We have reached double digit EPS growth in 2018 as committed RoTE +171bps 11.7% Earnings per share 10.0% Double digit growth 11.2% (2018 vs.2017) 2015 2018 RoRWA +35bps 1.55% Cash dividend per share 1.20% +31% Increase since 2015 2015 2018 Note: 2015 metrics ha
Slide 12: Improvement across most geographies with focus on capital allocation
3 year plan achievements Profitability Improvement across most of our geographies with strong focus on capital allocation RoRWAs 2015 2018 0.93% 1.32% In 2015 In 2018 2.01% 2.28% Only SBNA1 (c.10% 2.40% 2.10% c.60% of TNAV with of Group´s TNAV) RoTE < CoE with adjusted RoTE2 1.79% 2.19% of 7.1% < Co
Slide 13: More resilient, growing business and dividends, generating €25.3Bn of capital
3 year plan achievements Strength We’ve become even more resilient, while growing our business and increasing dividends, generating €25.3Bn of capital organically Capital generation 2015-2018 (bps) +435 -35 -214 +118 +304 +186 Organic capital Organic capital Perimeter Dividends generation 2015 capit
Slide 14: Delivering our plan through digital transformation while building a responsible bank
Delivering our plan through our digital transformation while building a responsible bank Digital Responsible transformation bank 14
Slide 15: Digital transformation of our core banks (Supertankers)
The digital transformation of our core banks (Supertankers) is customer focused with two key priorities… 1 2 Two key priorities for All our products & Deliver all products & services digital transformation services through in a fast and efficient way of the core banks… E2E digital channels More digi
Slide 16: Re-engineering our core banks (Supertankers)
…hence we are re-engineering our core banks (Supertankers) leveraging Group scale and innovation… Transforming the FRONT All products and services to be available in digital channels (end-to-end) Transforming the BACK 15% Cloud adoption 1,200 robots allow Re-engineering, digitizing and automatizing
Slide 17: Positive evolution of our digital metrics
…and the positive evolution of our digital metrics proves that our transformation is paying off x2 digital more …and x2 engaged… x2 transactions… increase sales customers… 2015 vs. 2018 16.6Mn vs 14 vs 18 X 2 15% vs 32% monthly more transactions in digital 32Mn accesses per customer channels since 2
Slide 18: Autonomous ventures (Speedboats) serving our core banks
We have launched autonomous ventures (Speedboats) that serve our core banks with new solutions while competing in the open market Largest fully digital bank 1st Blockchain-based retail Financial solution for the by balance sheet with full payments solution unbanked suite of products & services Launc
Slide 19: Our teams are proud to work for a responsible bank
Our teams are proud to work for a responsible bank with a Simple, Personal and Fair culture… Embedding a common culture that is truly changing the way we do things 1 Team engagement 69% 63% 82% >6pp than the avg. 74% Top 3 bank financial industry 63% to work for 75% in 7 of our 10 geographies 75% 79
Slide 20: Delivering profits in a responsible way
…while delivering profits in a responsible way, supporting inclusive and sustainable growth Supporting our …promoting financial …and sustainable communities… inclusion… growth +12% ahead target 3 rd in the world 5.6Mn1 people supported vs.1.2Mn in 2015 st 1 in Europe +5% ahead target 136k1 scholarsh
Slide 21: Reaching double digit EPS growth in 2018
Growing TNAVPS + Cash DPS by 21% in plan period (€) 4.19 +4.8% TNAVps 4.00 Reaching double 2015 2018 digit EPS growth +31% 0.20 1 in 2018 (vs. 2017) 0.15 Cash DPS 2015 2018 Statutory 0.397 0.449 EPS (1) Total dividend charged to 2018 earnings is subject to the Board and 2019 AGM approval 21 Note: 20
Slide 22: 2018 performance ahead of plan
1 2 2018 performance Group & Business ahead of plan as we areas review continued to invest for our customers 3 4 Accelerating the Key takeaways & implementation of our mid-term targets commercial & digital transformation for our 0 144 Mn customers 0 22
Slide 23: In 2018 a more committed team did better for our customers
In 2018 a more committed team did better for our customers which in turn led to higher revenues and improved profitability Team engagement Loyal customers (Mn) Fee income RoTE1 (EUR Bn constant) 82% +15% 19.9 +9% 11.5 11.7% 10.6 +5 pp +129 bps 17.3 77% 10.4% 2017 2018 2017 2018 2017 2018 2017 2018 G
Slide 24: Double digit profit growth with sustainable quarterly performance
Double digit profit growth with sustainable quarterly performance % vs. 2017 Underlying attributable profit Constant Constant EUR mn EUR mn 2018 Euros euros Net interest income 34,341 0 9 +12% Q4’18 vs Q4’17 Fee income 11,485 -1 9 2,084 Customer revenues 45,826 0 9 2,016 1,986 1,978 ROF and other 2,
Slide 25: Revenues: growth driven by strong recurring customer revenues
Revenues: for yet another year, growth driven by strong recurring customer revenues YoY growth due to greater volumes and management of spreads, with improvement in 9 of our 10 core markets 8,969 Sustained QoQ evolution Net interest 8,179 Q4 favoured by TDR reclassification in the US (c. EUR 180mn)
Slide 26: Costs: best-in-class cost-to-income ratio
Costs: best-in-class cost-to-income ratio while enhancing customer experience Cost evolution 2018 vs. 2017, % Nominal1 In real terms2 Group costs in real terms 5.4 1.2 -0.5% in 2018 10.9 -5.5 +0.3% in 2017 5.7 1.9 0.9 -0.9 Group cost-to-income 12.8 7.0 47.0% in 2018 47.4% in 2017 5.4 2.0 -1.3 -3.9 T
Slide 27: Continued credit quality enhancement
Continued credit quality enhancement: YoY improvement in all metrics % -7 bps 1.07 Cost of credit 1.00 Cost of credit ratio improved or maintained low levels in 2018 -35 bps 4.08 NPL ratio 3.73 Lower NPL ratio in most units +2 pp 67 65 Coverage ratio 2017 2018 Note: Exposure and coverage ratio by st
Slide 28: Capital: we surpassed our goal of 11% in 2018
Capital: we surpassed our goal of 11% in 2018 Fully loaded CET1 % High organic capital generation in 2018 +0.11 +0.10 -0.02 11.30 +64 bps 11.11 10.84 FL Total Capital ratio Dec-18 14.78% Leverage ratio Dec-18 5.1% Our positive results over the Dec-17 Sep-181 Organic Perimeter2 Other Dec-181 7 stress
Slide 29: Banco Santander S.A. funding plan
Banco Santander S.A. funding plan Santander S.A. meets current MREL requirement1 and Group capital 2017 2018 2019 buffers (AT1: 1.5%; T2: 2%) EUR bn issued issued issuance plan2 Covered bonds 0.4 1.0 3-5 Senior preferred 0.7 0.2 3-5 During the last 2 years Santander Senior non-preferred 9.9 6.3 -- S
Slide 30: Breakdown by geographies
Breakdown by geographies @ Santander 30
Slide 31: Group profit growth driven by most markets
Group profit growth driven by most markets 2018 Underlying attributable profit1 2018 Underlying attributable profit in core markets EUR mn and % change vs. 2017 in constant euros Americas Europe 48% 2,605 +22% 52% 1,738 +21% Other Latam; Other 2% Europe; 1,362 -8% Argentina; 1% 1% Chile; 6% UK; 13%
Slide 32: Brazil
Brazil: transformation focused on customers and sustainable profitable growth. YoY double-digit profit growth, higher RoTE and improvement in customer service and satisfaction P&L* Q4'18 % Q3'18 2018 % 2017 NII 2,475 -1.2 9,758 15.7 +25% +33% Fee income 929 12.7 3,497 14.8 Loyal Digital customers cu
Slide 33: Spain
Spain: commercial dynamism achieved. Double-digit profit growth YoY boosted by NII and cost synergies. Q4'18 profit affected by DGF contribution P&L* Q4'18 % Q3'18 2018 % 2017 NII 1,150 3.0 4,360 15.2 Fee income 634 -3.0 2,631 12.8 +40% +51% Gross income¹ 1,880 -11.1 7,894 15.1 Loyal Digital custome
Slide 34: UK
UK: our results reflect competitive revenue pressures and higher regulatory and strategic project costs in the current uncertain environment. Q4’18 impacted by other provisions1 P&L* Q4'18 % Q3'18 2018 % 2017 NII 1,033 -0.6 4,136 -4.3 +4% +9% Fee income 257 -0.9 1,023 2.9 Loyal Digital customers cus
Slide 35: SCF
SCF: Leadership in Europe with best-in-class profitability (RoRWA: 2.3%) and efficiency. Historically low NPL ratio and cost of credit. Q4’18 profit impacted by non-recurring items1 P&L* Q4'18 % Q3'18 2018 % 2017 NII 943 0.7 3,723 4.9 Fee income 189 -8.5 798 -9.0 19.4 mn 43.1% Active Efficiency Gros
Slide 36: Units' performance: larger customer base, higher profits
Units’ performance: larger customer base, higher profits and better credit quality Attributable profit RoTE Continued to strengthen our distribution model, reflected in an increase in customer base, volumes and profitability EUR 760 mn 20% +14% Double-digit profit growth due to improving customer re
Slide 37: Units' performance: larger customer base and integration processes
Units’ performance: larger customer base and integration processes Attributable profit RoTE Integration of Banco Popular completed in Q4’18 EUR 480 mn1 12% Strong profit growth thanks to better efficiency and a very low cost of credit +10% (significant improvement in credit quality). Gaining market
Slide 38: Corporate Centre
Corporate Centre P&L* 2018 2017 NII -947 -851 Higher loss in NII due to increased volume of issuances (TLAC) Gains/Losses on FT 11 -227 Better FX hedging results reflected in gains on financial transactions Operating expenses -495 -476 Operating expenses remained virtually unchanged as a result of s
Slide 39: 2018 performance ahead of plan
1 2 2018 performance Group & Business areas ahead of plan as we review continued to invest for our customers 3 4 Accelerating the Key takeaways & implementation of our mid-term targets commercial & digital transformation for our 0 144 Mn customers 0 39
Slide 40: Our purpose, our aim as a bank, our how
Our purpose Our aim as a bank Our how To help To be the best open Everything people and financial services we do should businesses platform, by acting be Simple, prosper responsibly and Personal earning the lasting and Fair loyalty of our people, customers, shareholders and communities 40
Slide 41: Our vision, strategy and progress will allow us to accelerate execution
Our vision, strategy and progress since 2015 plus our core strengths will allow us to accelerate execution Scale + Business + Diversification = Predictable & profitable model growth Accelerate Execution 41
Slide 42: Scale
Scale Our scale benefits our leading local banks Leadership position by market …while accelerating collaboration share1 in our local markets… across the Group • €200Mn savings by centralising the 2 Top bank in 6 out of our 10 Markets global negotiations with T&O providers Top #3 3 Top #5 4 • 25-35%
Slide 43: Business model: #1 branch network
Business model Unique personal relationships strengthens customer loyalty People talking to our 100,000 customers everyday 13,000 #1 Branch Branches across all network 1 our geographies (1) Excluding Chinese banks and Sberbank 43
Slide 44: Business model & geographical diversification make us more resilient
3 Diversification Our business model & geographical diversification make us more resilient than our peers… Balanced diversification1 Best performer under stress test Underlying attributable profit 2018 Capital depletion EBA adverse scenario Santander -1.4% vs. -1.99% in 2016 BBVA -1.9% Intesa SP. -2
Slide 45: …resulting in higher earnings predictability
Predictability …resulting in higher earnings predictability Quarterly reported EPS volatility1, 1999-Q3’18 703% 348% 125% 110% 89% 77% 57% 45% 43% 33% 9% -2x 3x -1x -1x 6x 3x 4x 3x 1x 10x 4x Net income increase 1999-2017 (1) Source: Bloomberg, with GAAP Criteria. Note: Standard deviation of the quar
Slide 46: Accelerate the digital transformation through collaboration across the Group
Accelerate 3 execution Accelerate the digital transformation through increased collaboration across the Group - creating a model with improved profitability Digital Capital light transformation model Delivering excellent products and services to our customers, leveraging and accelerating collaborati
Slide 47: Digitalising our core banks at a faster pace
Digitalising our core banks (Supertankers) at a faster pace and building global processes… Complete digitalisation of the core… …leveraging Group capabilities 100%... Common… For example …products and services available …Reference architecture, through digital channels leveraging cloud, Contact Cent
Slide 48: Launching new initiatives to build loyalty and attract customers
…while launching new initiatives to build loyalty and attract new customers Operating at full speed Expansion of a single platform, cloud-based model All Santander countries More new connected to new markets in Europe ventures to and LatAm #1 NPS vs alternative come… ~20Mn€ set up cost in new Millio
Slide 49: Accelerating execution: mid-term targets
Accelerating the execution to continue delivering growth, profitability and strength Mid-term targets RoTE CET1 FL 13-15% 11-12% 49
Slide 50: April 2019 London
3 April 2019 LONDON
Slide 51: 2018 performance ahead of plan
1 2 2018 performance Group & Business areas ahead of plan as we review continued to invest for our customers 3 4 Accelerating the Key takeaways & implementation of our mid-term targets commercial & digital transformation for our 0 144 Mn customers 0 51
Slide 52: Key takeaways & mid-term targets
2015-18 plan completed: exceeding Focus on customer our targets while building the foundations for loyalty and digital continued success excellence to continue Continue building on our strengths delivering profitable growth with a clear strategy to fulfil our aim and purpose Accelerating in building
Slide 53: Appendix
«> Santander 7 Appendix 53
Slide 54: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 54
Slide 55: Net capital gains and provisions detail
Net capital gains and provisions detail 2017 2018 EUR million net of tax EUR million net of tax -1,267 -897 Equity stakes and -130 intangible assets -85 Germany integration costs -300 Popular integration costs -149 USA (hurricanes and other) 370 -254 USA tax -320 Corporate Centre reform 73 -603 Good
Slide 56: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 56
Slide 57: Overall increase in loans and customer funds
Overall increase in loans and customer funds, boosted by developing markets Loan portfolio Customer funds MATURE MARKETS DEVELOPING MARKETS MATURE MARKETS DEVELOPING MARKETS Dec-18 EUR bn YoY Chg. Dec-18 EUR bn YoY Chg. Dec-18 EUR bn YoY Chg. Dec-18 EUR bn YoY Chg. Spain 210 -4% Poland 29 30% Spain
Slide 58: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 58
Slide 59: Mexico
Mexico:continued to strengthen our distribution model, reflected in the increase of customer base, volumes and profitability. Double-digit profit growth due to customer revenues and cost of credit P&L* Q4'18 % Q3'18 2018 % 2017 NII 733 3.0 2,763 13.2 +26% +48% Fee income 181 -6.6 756 7.5 Loyal Digit
Slide 60: Chile
Chile: business volumes grew at a faster pace in core segments. Higher profitability, lower NPL ratio and stable cost of credit. Profit up driven by customer revenues P&L* Q4'18 % Q3'18 2018 % 2017 NII 477 -0.1 1,944 5.4 +7% +7% Fee income 95 -5.6 424 12.0 Loyal Digital customers customers Gross inc
Slide 61: USA
USA: very positive year for Santander US (achieved significant regulatory milestones, strengthened business performance and turned around profits). In Q4, reclassification of TDRs3 and LLPs up due to seasonality and strong originations P&L* Q4'18 % Q3'18 2018 % 2017 NII 1,553 14.5 5,391 1.3 Fee inco
Slide 62: Portugal
Portugal: integration of Popular completed. Strong profit growth thanks to better efficiency and a very low cost of credit (significant improvement in credit quality). Market share gains P&L* Q4'18 % Q3'18 2018 % 2017 NII 211 0.1 858 8.9 Fee income 96 4.5 377 4.7 +9% +32% Loyal Digital Gross income
Slide 63: Poland
Poland: volume growth across all key products, increase in customer revenues, rebranding costs and lower NPL ratio. In Q4 DBP1 integration P&L* Q4'18 % Q3'18 2018 % 2017 NII 265 8.8 996 7.4 Fee income 115 3.2 453 2.3 +30% +5% Gross income 390 6.0 1,488 4.9 Loyal Digital customers customers Operating
Slide 64: Argentina
Argentina: good evolution of revenues not reflected in profit as it was hit by high inflation adjustments in Q4 and Q3 and regulatory changes P&L* Q4'18 % Q3'18 2018 % 2017 NII 327 8.8 768 52.5 +6% +7% Fee income 192 12.3 448 47.0 Loyal Digital customers customers Gross income 472 0.6 1,209 35.4 Ope
Slide 65: Other Latin American countries
Other Latin American countries URUGUAY PERU Constant EUR mn Constant EUR mn +43% +8% 132 41 38 22% 92 27% RoTE RoTE 2017 2018 2017 2018 Focusing on loyalty, transactions and target segments Uruguay’s profit driven by higher NII and fee income, with improved C/I Peru’s higher revenue more than offset
Slide 66: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 66
Slide 67: Retail Banking
Appendix Retail Banking: continued to focus on customer loyalty and digital transformation with new products and services that cover the current need of our customers. Strong growth in loyal and digital customers P&L* Q4'18 % Q3'18 2018 % 2017 NII 8,500 2.4 32,522 8.8 Fee income 2,334 3.1 8,946 6.0
Slide 68: Corporate & Investment Banking
Appendix Corporate & Investment Banking: Profit growth underpinned by higher revenues and significantly lower provisions in Spain, the UK, Brazil and the US P&L* Q4'18 % Q3'18 2018 % 2017 NII 713 12.2 2,378 7.6 Fee income 379 7.1 1,512 0.3 Gross income 1,343 0.3 5,087 1.7 +21% Operating expenses -55
Slide 69: Wealth Management
Appendix Wealth Management: In our first year we launched the following strategic initiatives: development of Private Wealth (UHNW) proposition, Private Banking digital platform, strengthening of SAM value proposition P&L* ACTIVITY Q4'18 % Q3'18 2018 % 2017 Constant EUR bn and % change vs 2017 NII 1
Slide 70: Spain Real Estate activity
Appendix Spain Real Estate activity: Management continued to be aimed at reducing these assets, particularly loans and foreclosed assets Real estate exposure1 Net value EUR bn EUR bn Dec-18 Real estate assets 3.8 9.3 4.6 Foreclosed assets 2.6 4.7 Rental assets 1.2 RE non-performing loans (NPLs) 0.9
Slide 71: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 71
Slide 72: Funding plan and key liquidity ratios
Appendix In 2018 we made good headway in our funding plan to enhance the Group’s TLAC position Key liquidity ratios Funding plan - issuances Dec-18 Jan-Dec 18 Net loan-to-deposit ratio (LTD): 113% Group issuances2 EUR 24bn (~EUR 13bn TLAC-eligible) Deposits + M/LT funding / net loans: 114% Main issu
Slide 73: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 73
Slide 74: Coverage ratio by stage
Appendix Coverage ratio by stage Exposure1 Coverage EUR bn Dec-18 Dec-18 Jan-18 Stage 1 845 0.5% 0.6% Stage 2 53 9.2% 8.6% Stage 3 36 42.4% 44.2% (1) Exposure subject to impairment. Additionally, there are EUR 24 bn in customer loans not subject to impairment recorded at mark to market with changes
Slide 75: NPL ratio
Appendix NPL ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 5.62 8.70 6.30 5.82 5.81 5.68 5.57 5.25 Spain 5.22 10.52 6.82 6.32 6.27 6.24 6.23 6.19 Santander Consumer Finance 2.62 2.61 2.60 2.50 2.48 2.44 2.45 2.29 Poland 5.20 4.66 4.70 4.57 4.77 4.58 4.23 4.28 Por
Slide 76: Coverage ratio
Appendix Coverage ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 60.6 59.7 53.7 54.4 56.8 55.2 54.4 52.2 Spain 49.1 56.6 46.2 46.8 51.1 49.0 47.7 45.0 Santander Consumer Finance 108.9 106.5 104.3 101.4 107.2 107.7 106.4 106.4 Poland 61.2 67.5 67.6 68.2 72.0 72.1 7
Slide 77: Non-performing loans and loan-loss allowances
Appendix Non-performing loans and loan-loss allowances. December 2018 Non-performing loans Loan-loss allowances 100%: EUR 35,692 million 100%: EUR 24,061 million Other, 6% Other, 3% USA, 8% USA, 16% Spain, 28% Argentina, 1% Spain, 42% Chile, 5% Argentina, 1% Mexico, 2% Chile, 5% Mexico, 4% Brazil, 1
Slide 78: Cost of credit
Appendix Cost of credit % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 0.38 0.36 0.32 0.31 0.32 0.34 0.37 0.36 Spain 0.33 0.32 0.28 0.30 0.29 0.31 0.35 0.33 Santander Consumer Finance 0.39 0.37 0.34 0.30 0.36 0.37 0.40 0.38 Poland 0.66 0.65 0.61 0.62 0.69 0.71 0.69 0.65
Slide 79: Appendix index
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements 79
Slide 80: Grupo Santander
Appendix Grupo Santander EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 11,246 11,522 11,569 11,556 11,409 11,411 10,989 12,017 45,892 45,826 Gross income 12,029 12,049 12,252 12,062 12,151 12,011 11,720 12,542 48,392 48,424 Operating expenses (5,543) (5,648)
Slide 81: Grupo Santander
Appendix Grupo Santander Constant EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 9,957 10,401 10,870 10,954 11,100 11,316 11,532 11,877 42,181 45,826 Gross income 10,644 10,871 11,517 11,437 11,834 11,901 12,300 12,390 44,468 48,424 Operating expenses (4,981)
Slide 82: Spain
Appendix Spain EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,206 1,409 1,753 1,749 1,710 1,729 1,769 1,783 6,117 6,991 Gross income 1,539 1,475 2,011 1,835 2,063 1,837 2,114 1,880 6,860 7,894 Operating expenses (798) (893) (1,161) (1,188) (1,145) (1,123) (1
Slide 83: Santander Consumer Finance
Appendix Santander Consumer Finance EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,121 1,096 1,121 1,110 1,130 1,116 1,143 1,132 4,449 4,521 Gross income 1,118 1,099 1,135 1,132 1,140 1,126 1,157 1,187 4,484 4,610 Operating expenses (502) (485) (484) (506) (
Slide 84: Santander Consumer Finance
Appendix Santander Consumer Finance Constant EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,111 1,091 1,117 1,109 1,128 1,116 1,144 1,133 4,427 4,521 Gross income 1,108 1,093 1,130 1,131 1,139 1,125 1,157 1,189 4,462 4,610 Operating expenses (498) (483) (482
Slide 85: Poland
Appendix Poland EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 318 343 350 360 359 355 354 380 1,371 1,448 Gross income 321 363 358 378 333 398 367 390 1,419 1,488 Operating expenses (146) (150) (149) (160) (154) (162) (156) (165) (605) (636) Net operating inc
Slide 86: Poland
Appendix Poland PLN million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,374 1,449 1,489 1,522 1,500 1,512 1,525 1,632 5,835 6,170 Gross income 1,386 1,532 1,525 1,599 1,390 1,695 1,579 1,674 6,041 6,338 Operating expenses (630) (634) (636) (675) (642) (690) (672) (70
Slide 87: Portugal
Appendix Portugal EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 261 262 311 313 320 305 303 307 1,147 1,234 Gross income 294 275 345 330 341 346 323 334 1,245 1,344 Operating expenses (139) (142) (166) (167) (158) (165) (157) (162) (614) (642) Net operating i
Slide 88: United Kingdom
Appendix United Kingdom EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,349 1,409 1,317 1,291 1,274 1,304 1,291 1,290 5,366 5,159 Gross income 1,432 1,544 1,397 1,344 1,349 1,373 1,367 1,332 5,716 5,420 Operating expenses (723) (723) (694) (721) (764) (763) (
Slide 89: United Kingdom
Appendix United Kingdom GBP million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,160 1,213 1,183 1,146 1,125 1,142 1,152 1,144 4,702 4,564 Gross income 1,231 1,329 1,255 1,193 1,192 1,203 1,220 1,181 5,008 4,795 Operating expenses (622) (622) (623) (639) (675) (669) (
Slide 90: Brazil
Appendix Brazil EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 3,455 3,413 3,392 3,458 3,403 3,296 3,153 3,404 13,718 13,256 Gross income 3,717 3,502 3,542 3,512 3,445 3,323 3,180 3,396 14,273 13,345 Operating expenses (1,314) (1,233) (1,244) (1,289) (1,165) (
Slide 91: Brazil
Appendix Brazil BRL million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 11,561 12,036 12,567 13,139 13,568 14,121 14,451 14,779 49,304 56,920 Gross income 12,438 12,367 13,129 13,367 13,737 14,241 14,579 14,747 51,301 57,304 Operating expenses (4,397) (4,355) (4,613) (
Slide 92: Mexico
Appendix Mexico EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 804 856 879 811 836 841 927 915 3,350 3,519 Gross income 824 914 892 830 831 868 931 897 3,460 3,527 Operating expenses (319) (361) (356) (345) (340) (363) (384) (376) (1,382) (1,462) Net operating
Slide 93: Mexico
Appendix Mexico MXN million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 17,348 17,505 18,399 18,076 19,257 19,435 20,475 20,671 71,327 79,838 Gross income 17,779 18,706 18,677 18,508 19,143 20,058 20,546 20,264 73,671 80,011 Operating expenses (6,894) (7,386) (7,460) (
Slide 94: Chile
Appendix Chile EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 592 589 534 583 601 612 582 573 2,298 2,367 Gross income 645 644 604 630 640 642 632 622 2,523 2,535 Operating expenses (264) (260) (253) (248) (258) (272) (257) (258) (1,025) (1,045) Net operating
Slide 95: Chile
Appendix Chile CLP million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 413,110 430,039 403,461 434,470 444,260 453,403 449,145 444,368 1,681,080 1,791,177 Gross income 450,136 469,704 456,238 469,635 473,564 475,595 486,844 482,500 1,845,714 1,918,503 Operating expense
Slide 96: Argentina
Appendix Argentina EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 374 428 382 398 343 367 (12) 518 1,582 1,217 Gross income 405 470 423 449 377 430 (70) 472 1,747 1,209 Operating expenses (221) (269) (235) (244) (218) (207) (0) (323) (970) (749) Net operating
Slide 97: Argentina
Appendix Argentina ARS million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 6,241 7,378 7,644 8,101 8,293 10,046 12,292 13,530 29,364 44,160 Gross income 6,764 8,104 8,460 9,103 9,117 11,729 11,492 11,557 32,431 43,896 Operating expenses (3,690) (4,640) (4,713) (4,964)
Slide 98: United States
Appendix United States EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,763 1,738 1,545 1,495 1,435 1,500 1,545 1,770 6,540 6,250 Gross income 1,879 1,880 1,604 1,596 1,578 1,670 1,735 1,967 6,959 6,949 Operating expenses (837) (845) (743) (773) (735) (737) (7
Slide 99: United States
Appendix United States USD million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income 1,877 1,912 1,820 1,765 1,764 1,787 1,796 2,028 7,373 7,374 Gross income 2,001 2,068 1,893 1,884 1,940 1,990 2,018 2,252 7,845 8,199 Operating expenses (891) (929) (875) (909) (904) (878) (8
Slide 100: Corporate Centre
Appendix Corporate Centre EUR million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 NII + Fee income (198) (223) (227) (240) (233) (241) (265) (277) (889) (1,016) Gross income (341) (340) (300) (238) (227) (250) (257) (295) (1,220) (1,028) Operating expenses (119) (118) (118) (120) (121)
Slide 101: Glossary
7 Glossary «> Santander 101
Slide 102: Glossary - Acronyms
Glossary - Acronyms AT1: Additional Tier 1 NPL: Non-performing loans bn: Billion PBT: Profit before tax CET1: Common equity tier 1 P&L: Profit and loss CIB: Corporate & Investment Bank QoQ: Quarter on Quarter CoE: Cost of equity Repos: Repurchase agreements C/I: Cost to income ROE: Return on equity
Slide 103: Glossary – definitions
Glossary – definitions PROFITABILITY AND EFFICIENCY RoTE: Return on tangible capital: Group attributable profit / average of: net equity (excluding minority interests) – intangible assets (including goodwill) RoRWA: Return on risk-weighted assets: consolidated profit / average risk-weighted assets E
Slide 104: 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: