BANCO SANTANDER, S.A. 30 April 2024
FIXED INCOME INVESTORS PRESENTATION
Q1'24
Important information
Non-IFRS and alternative performance measures
This presentation contains financial information prepared according to International Financial Reporting Standards (IFRS) and taken from our consolidated financial statements, as well as alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015, and other non-IFRS measures. The APMs and non-IFRS measures were calculated with information from Grupo Santander; however, they are neither defined or detailed in the applicable financial reporting framework nor audited or reviewed by our auditors. We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. We consider them to be useful metrics for our management and investors to compare operating performance between periods. APMs we use are presented unless otherwise specified on a constant FX basis, which is computed by adjusting comparative period reported data for the effects of foreign currency translation differences, which distort period-on-period comparisons. Nonetheless, the APMs and non-IFRS measures are supplemental information; their purpose is not to substitute IFRS measures. Furthermore, companies in our industry and others may calculate or use APMs and non-IFRS measures differently, thus making them less useful for comparison purposes. APMs using ESG labels have not been calculated in accordance with the Taxonomy Regulation or with the indicators for principal adverse impact in SFDR. For further details on APMs and Non- IFRS Measures, including their definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see the 2023 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the SEC) on 21 February 2024 (https://www.santander.com/content/dam/santander-com/en/documentos/informacion-sobre-resultados-semestrales-y-anuales-suministrada-a-la-sec/2024/sec-2023-annual-20-f-2023-en.pdf), as well as the section "Alternative performance measures" of
Banco Santander, S.A. (Santander) Q1 2024 Financial Report, published on 30 April 2024 (https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information#quarterly-
results). Underlying measures, which are included in this document, are non-IFRS measures.
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the businesses included and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Non-financial information
This presentation contains, in addition to financial information, non-financial information (NFI), including environmental, social and governance-related metrics, statements, goals, commitments and opinions.
NFI is not audited nor reviewed by an external auditor. NFI is prepared following various external and internal frameworks, reporting guidelines and measurement, collection and verification methods and practices, which are materially different from those applicable to financial information and are in many cases emerging and evolving. NFI is based on various materiality thresholds, estimates, assumptions, judgments and underlying data derived internally and from third parties. NFI is thus subject to significant measurement uncertainties, may not be comparable to NFI of other companies or over time or across periods and its inclusion is not meant to imply that the information is fit for any particular purpose or that it is material to us under mandatory reporting standards. NFI is for informational purposes only and without any liability being accepted in connection with it except where such liability cannot be limited under overriding provisions of applicable law.
Forward-looking statements
Santander hereby warns that this presentation contains "forward-looking statements" as per the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements can be understood through words and expressions like "expect", "project", "anticipate", "should", "intend", "probability", "risk", "VaR", "RoRAC", "RoRWA", "TNAV", "target", "goal", "objective", "estimate", "future", "commitment", "commit", "focus", "pledge" and similar expressions. They include (but are not limited to) statements on future business development, shareholder remuneration policy and NFI.
While these forward-looking statements represent our judgement and future expectations concerning our business developments and results may differ materially from those anticipated, expected, projected or assumed in forward-looking statements.
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Important information
In particular, forward looking statements are based on current expectations and future estimates about Santander's and third-parties' operations and businesses and address matters that are uncertain to varying degrees and may change, including, but not limited to (a) expectations, targets, objectives, strategies and goals relating to environmental, social, safety and governance performance, including expectations regarding future execution of Santander's and third-parties' (including governments and other public actors) energy and climate strategies, and the underlying assumptions and estimated impacts on Santander's and third-parties' businesses related thereto; (b) Santander's and third-parties' approach, plans and expectations in relation to carbon use and targeted reductions of emissions, which may be affected by conflicting interests such as energy security; (c) changes in operations or investments under existing or future environmental laws and regulations; (d) changes in rules and regulations, regulatory requirements and internal policies, including those related to climate-related initiatives ; (e) our own decisions and actions including those affecting or changing our practices, operations, priorities, strategies, policies or procedures; and (f) the uncertainty over the scope of actions that may be required by us, governments and others to achieve goals relating to climate, environmental and social matters, as well as the evolving nature of underlying science and industry and governmental standards and regulations.
In addition, the important factors described in this presentation and other risk factors, uncertainties or contingencies detailed in our most recent Form 20-F and subsequent 6-Ks filed with, or furnished to, the SEC, as well as other unknown or unpredictable factors, could affect our future development and results and could lead to outcomes materially different from what our forward-looking statements anticipate, expect, project or assume.
Forward-looking statements are therefore aspirational, should be regarded as indicative, preliminary and for illustrative purposes only, speak only as of the date of this presentation, are informed by the knowledge, information and views available on such date and are subject to change without notice. Santander is not required to update or revise any forward-looking statements, regardless of new information, future events or otherwise, except as required by applicable law. Santander does not accept any liability in connection with forward-looking statements except where such liability cannot be limited under overriding provisions of applicable law.
Not a securities offer
This presentation and the information it contains does not constitute an offer to sell nor the solicitation of an offer to buy any securities.
Past performance does not indicate future outcomes
Statements about historical performance or growth rates must not be construed as suggesting that future performance, share price or results (including earnings per share) will necessarily be the same or higher than in a previous period. Nothing in this presentation should be taken as a profit and loss forecast.
Third Party Information
In this presentation, Santander relies on and refers to certain information and statistics obtained from publicly-available information and third-party sources, which it believes to be reliable. Neither Santander nor its directors, officers and employees have independently verified the accuracy or completeness of any such publicly-available and third-party information, make any representation or warranty as to the quality, fitness for a particular purpose, non-infringement, accuracy or completeness of such information or undertake any obligation to update such information after the date of this presentation. In no event shall Santander be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for inaccuracies or errors in, or omission from, such publicly-available and third-party information contained herein. Any sources of publicly-available information and third-party information referred or contained herein retain all rights with respect to such information and use of such information herein shall not be deemed to grant a license to any third party.
Note: Quarterly series include adjustments relating to revenue sharing criteria between CIB and Retail & Commercial Banking to better reflect business dynamics of our new operating model with five global businesses as new primary segments; these adjustments do not affect results at the Group level, nor do they affect the full-year results of Retail & Commercial Banking and CIB. Quarterly series also include adjustments to some of the 2023 business volumes metrics in Retail & Commercial Banking, Digital Consumer Bank, CIB and Wealth Management & Insurance to better reflect our five global businesses' perimeters according to our new operating model; these adjustments do not affect business volumes metrics at the Group level.
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Santander, a leading financial group
Q1'24 Highlights
Total assets (€ bn) | 1,800 | ||
Customer loans (€ bn excluding reverse repos) | 1,020 | ||
Customer deposits + mutual funds (€ bn excluding repos) | 1,184 | ||
Branches | 8,405 | ||
Q1'24 Net operating income (pre-provision profit) (€ mn) | 8,833 | ||
Q1'24 Attributable profit (€ mn) | 2,852 | ||
Market capitalization (€ bn; 29-03-24) | 72 | ||
People (headcount) | 211,141 | ||
Customers (mn) | 166 | ||
Shareholders (mn) | 3.6 | ||
Financial inclusion starting 2023 (mn people) | 2.3 | ||
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Index
1 | 2 | 5 | 6 | 8 | ||||||||||||||||||||||||||
7 | ||||||||||||||||||||||||||||||
3 | 4 | |||||||||||||||||||||||||||||
Santander | Capital | Asset | Liquidity & | ESG | Concluding | Links, | ||||||||||||||||||||||||
Business | Quality | Funding. | Remarks | Appendix | ||||||||||||||||||||||||||
Model & | Ratings | and | ||||||||||||||||||||||||||||
Strategy | Glossary |
Q1'24 Summary
Strong YoY profit increase, with double-digit growth in net operating income, supported by customer revenue and efficiency improvements
P&L | Current | Constant | ||
€ million | Q1'24 | Q1'23 | % | % |
NII | 11,983 | 10,185 | 18 | 16 |
Net fee income | 3,240 | 3,043 | 6 | 5 |
Other income | 157 | 707 | -78 | -78 |
Total revenue | 15,380 | 13,935 | 10 | 9 |
Operating expenses | -6,547 | -6,145 | 7 | 5 |
Net operating income | 8,833 | 7,790 | 13 | 11 |
LLPs | -3,125 | -2,873 | 9 | 7 |
Other results* | -1,125 | -822 | 37 | 34 |
Attributable profit | 2,852 | 2,571 | 11 | 9 |
2024 has started with excellent business and commercial dynamics
- Outstanding NII growth
- Record net fee income
- C/I and RoTE improvement
Note: underlying P&L. | 6 |
(*) Including the temporary levy on revenue earned in Spain (-€335mn in Q1'24 and -€224mn in Q1'23). |
Q1'24 Summary
High-single digit revenue growth backed by customer activity across businesses
Total revenue
Total | +9% | ||||
revenue | 14,157 | 14,355 | 14,839 | 14,546 | 15,380 |
Other | |||||
income | Group | ||||
NII + | |||||
Fees | |||||
Q1'23 | Q2 | Q3 | Q4 | Q1'24 |
YoY growth
+9% | Detail by | ||||||||||||
14,157 | +957 | +128 | +98 | +127 | 15,380 | business | |||||||
-1 | -86 | ||||||||||||
+13% | +4% | ||||||||||||
+5% | +17% | -0% | |||||||||||
Q1'23 | Retail | Consumer | CIB | Wealth | Payments | CC | Q1'24 |
- >95% of total revenue is customer related which drove the vast majority of total revenue growth
- Strong revenue increase YoY reflecting the benefits of our diversification, with all businesses and regions contributing
- Retail up double-digit, in a context of solid commercial activity and good margin management across regions
- Consumer grew backed by DCB Europe (higher volumes and active repricing) and Brazil (higher activity and lower interest rates)
- CIB increased to record levels, supported by Global Markets and Global Banking; solid behaviour in the US (+35%) and Mexico (+45%)
- Wealth rose strongly backed by good commercial activity across businesses and good margin management in Private Banking
- Payments up 7% excluding a one-time positive fee in Cards in
Q1'23 from commercial agreements. Of note, PagoNxt +13%
Note: data and YoY % changes in constant euros. | 7 |
Q1'24 Summary
ONE Transformation is driving structural efficiency gains and positive jaws
Efficiency and costs
Efficiency | 44.1% | 44.3% | 43.6% | 44.4% | 42.6% |
Quarterly |
6,222 | 6,354 | 6,463 | 6,465 | 6,547 | Efficiency |
Costs | |||||
Q1'23 | Q2 | Q3 | Q4 | Q1'24 |
YoY growth in real terms1 | |||||||||||||||||
+5% | (+1.1% in real terms1) | 6,547 | Costs | ||||||||||||||
+132 | +140 | +14 | +49 | ||||||||||||||
6,222 | |||||||||||||||||
-2 | -7 | ||||||||||||||||
-0% | -4% | +15% | +1% | +4% | -11% | ||||||||||||
Q1'23 | Retail | Consumer | CIB | Wealth | Payments | CC | Q1'24 |
- Transformation towards simpler and more integrated models continues to drive efficiency gains
- Efficiency improved to 42.6% (-1.5pp YoY; Retail -3.9 pp), within our 2024 target of <43%
- Transformation investments (technology) in Q1'24 totalled €0.5bn
(€2.9bn since 2022) - Costs fairly stable for the third quarter in a row at around €6.5bn, and +1% YoY in real terms
- Retail: costs well under control, despite impacts from salary agreements reviews in some countries and transformation efforts
- Consumer: cost reduction despite investments and business growth
- CIB growth impacted by investments in new products and capabilities in line with our strategy
- Wealth growing slightly, well below revenue, due to higher commercial activity and investments to reinforce our PB teams
- Payments growth due to both Cards and PagoNxt, which are still in an investment phase
- Corporate Centre down driven by ongoing simplification measures
Note: data and YoY % changes in constant euros. | 8 |
(1) Costs in real terms exclude the impact from weighted average inflation. |
Q1'24 Summary
Credit quality remains robust
LLPs and credit quality
CoR | 1.05% | 1.08% | 1.13% | 1.18% | 1.20% | |
3,254 | 3,416 | 3,125 | Credit | |||
2,922 | 2,919 | quality | ||||
LLPs | ||||||
Q1'23 | Q2 | Q3 | Q4 | Q1'24 |
• Credit quality remains robust, backed by overall good economic | |
performance and record low unemployment in most countries | |
• | NPL ratio stood at 3.10% (3.14% Dec-23) with NPL coverage |
and stages stable | |
• | In Retail, which represents 49% of Group's LLPs, CoR remained |
Other credit quality metrics
Mar-23 | Dec-23 | Mar-24 | |
NPL ratio | 3.05% | 3.14% | 3.10% |
Coverage ratio | 68% | 66% | 66% |
Stage 1 | €1,005bn | €1,000bn | €1,007bn |
Stage 2 | €72bn | €80bn | €83bn |
Stage 3 | €34bn | €36bn | €36bn |
Detail
by business
stable QoQ at 1.03% |
− Spain improving CoR, with stable NPL YoY |
− UK CoR at very low levels |
− Brazil NPL improving both QoQ and YoY, and Mexico |
normalizing in line with expectations affected by mix change |
• In Consumer, which represents 36% of Group's LLPs, CoR |
normalized YoY to 2.12% (mainly Consumer US business), in line |
with expectations, while remained fairly stable QoQ |
Note: CoR - provisions to cover losses due to impairment of loans in the last 12 months / average customer loans and advances of the last 12 months. | 9 |
Data in constant euros. |
Q1'24 Summary
FL CET1 ratio well above our target of >12%, driven by strong capital generation
Q1'24 FL CET1 ratio performance
+0.32 | |||||||||||||
12.3 | -0.22 | +0.14 | 12.3 | Capital ratios | |||||||||
-0.24 | Q1'23 | Q1'24 | Diff. | ||||||||||
FL CET1 ratio | 12.2% | 12.3% | 4bps | ||||||||||
FL Total capital ratio | 15.8% | 16.5% | 73bps | ||||||||||
FL Leverage ratio | 4.8% | 4.7% | -8bps | ||||||||||
Dec-23 | Organic | Shareholder | 1 | Regulatory & | Markets | Mar-24 |
generation | remuneration | models | & others |
(1) Shareholder remuneration charged against profit earned in Q1 2024 (split between cash dividends and share buybacks) in line with our 50% payout target. | 10 |
Execution of the shareholder remuneration policy is subject to future corporate and regulatory decisions and approvals. |
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Banco Santander SA published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 16:34:32 UTC.
