Important information 2 Banco Santander, S.A. (Santander) cautions that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. 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, macro-economic, 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 and other key 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 forward-looking statements. 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 or any advice or recommendation with respect to such securities. 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 persons 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. Nothing contained in this presentation is an offer of securities for sale into the United States or in any other jurisdiction. 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 2000. In making this presentation available, Santander makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity. Note: Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, historical 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. |
Agenda 3 Group highlights H111 H111 Results Group Business areas Trends for the coming quarters Appendix |
Group highlights H111 4 1 Recurring profit for the quarter: EUR 2,013 million. In the first half: EUR 4,121 million Attributable One-off provision of £538 million (net of tax) in relation to payment profit protection insurance (PPI) remediation in the UK After one-off, accounting profit of EUR 3,501 million 2 Credit NPL ratio at Group level: 3.78% quality Groups coverage ratio: 69% 3 Deleveraging and active policy in issues Liquidity Comfortable loans-to-deposits ratio: 116% 4 High generation of free capital in the quarter (20 b.p.) Solvency EBA stress test results underscored validity of its business model |
1 Solid generation of recurring profits 5 Solid generation of QUARTERLY RECURRING PROFITS before the extraordinary provision for PPI (UK) is maintained Groups quarterly attributable Groups profit attributable EUR million EUR million 4,445 4,121 3,736 3,501 2,215 2,230 2,101 2,108 2,013 1,635 1,393 Q110 Q2 Q3 Q4 Q111 Q2 H110 H210 H111 Establishment of an extraordinary provision of EUR 620 million, in relation to payment protection insurance (PPI) remediation in the UK Recurring EPS* of EUR 0.2268 in Q211 (*) Including one-off: EPS in Q211: 0.1569 and in H111: 0.3951 |
1 Solid generation of recurring profits 6 Results are underpinned by the Groups different growth stages in each market Continental Europe (ex Poland) Brazil EUR million Constant US$ mill.; continued operations 2,264 Attributable profit(1) H111 +7% 2,200 2,350 1,780 In euros Poland -21% BZ WBK Global Europe SCF 2% Portugal 6% 12% H110 H111 2% H110 H111 25% Attributable profit: +4% SAN 12% Network+ Banesto UK and Sovereign Latin America ex-Brazil 17% 19% Constant US$ mill.; continued operations Constant EUR mill. UK 5% +16% 1,651 UK* Sovereign 1,420 Sovereign Bank 1,008 966 +58% 256 -4% 162 Poland (BZ WBK) H110 H111 H110 H111 H110 H111 EUR 94 million (3 months) Attributable profit: +29% * Before one-off provision (1) Over recurring operating areas H111 attributable profit |
1 Emerging markets1: profits growing at a faster pace, backed 7 by revenues Revenues growing at a faster pace and improved cost of credit drove profit growth at double digits Basic revenues Expenses and provisions Constant EUR billion Constant EUR billion 5.7 Expenses Provisions 5.3 4.9 5.1 4.8 4.9 4.4 2.7 3.9 2.6 Q110 Q2 Q3 Q4 Q111 Q2 H110 H111 H110 H111 Attributable profit(2) Constant EUR billion +18% 2.6 2.2 H110 H111 (1) Emerging markets (Brazil, Latin America exBrazil and BZ WBK) (2) Excluding BZ WBK contribution, attributable profit: +14% |
1 Mature markets1: recovered revenues are not yet feeding through to profits Higher underlying results due to revenues and specific provisions are absorbed by lower generic provisions in Spain Basic revenues Expenses and provisions Constant EUR billion Constant EUR billion Expenses Spain provisions 5.5 5.5 5.4 5.4 5.4 Specific 4.9 1.7 5.2 4.6 1.3 Generic 1.1 0.4 Net 0.7 0.9 Q110 Q2 Q3 Q4 Q111 Q2 H110 H111 H110 H111 Recurring* attributable profit Constant EUR billion 3.4 -13% 3.0 H110 H111 (*) Before PPI one-off provision (1) Mature markets (Continental Europe excluding BZ WBK, UK and Sovereign) |
2 Credit quality The Groups ratio slides slightly Sharp improvement in SCF and Sovereign Total Group Continental Europe % % Spain SCF 3.78 5.12 5.23 5.13 3.42 3.55 3.61 4.95 3.34 3.37 4.81 4.63 4.24 4.57 4.42 3.71 3.88 3.59 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 United Kingdom and USA Latin America % % UK Sovereign Brazil ex-Brazil 5.14 5.11 4.80 4.61 5.04 5.01 4.97 4.91 4.85 5.05 4.15 3.09 3.02 3.11 3.07 2.94 2.87 3.76 1.88 1.85 1.77 1.76 1.75 1.82 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11* (*) On a like-for-like basis, excluding GEs acquired portfolio in |
2 Credit quality 10 The Groups coverage ratio Group total Continental Europe % % Spain SCF 128 128 122 122 74 75 108 111 73 73 71 69 68 64 65 58 53 49 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 United Kingdom and USA Latin America % % UK Sovereign Brazil ex-Brazil 122 121 113 110 114 114 82 85 101 104 102 75 100 98 98 67 72 65 46 46 48 46 45 41 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11 M10 J10 S10 D10 M11 J11* (*) On a like-for-like basis, excluding GEs acquired portfolio in |
3 Liquidity 11 Maintaining a good liquidity position. Larger growth of deposits than loans; very active in issues Total Group: funds capturing and outflows Groups liquidity EUR billion Loans / Deposits (%) 2010 H111 +75 147 150 +19 135 40 72 117 116 21 Dec08 Dec09 Dec10 Jun11 Outflows Funds capturing Outflows Funds capturing Dep.+ M-L term financing / Loans (%) H111 performance ??Reduction of commercial gap 117 115??Deposits increased EUR 8 billion and loans remained unchanged 106 104 ??Very active policy of issues ??M/L term issues ( 32 bill.) vs. maturities ( 21 bill.) Dec08 Dec09 Dec10 Jun11??Moreover, 15 bill. securitisations in the market High discount capacity at central banks: around EUR 100 billion Outflows: change in loans to customers + maturities of M/L term issues Funds capturing: change in customers deposits + placement of M/L term issues |
4 Solvency 12 Strong generation of organic capital in the current scenario and a proactive management of RWA strengthened our high solvency ratios Core capital performance 9.66% 9.20% Main impacts in 8.61% 8.80% 7.58% ??Organic generation 6.25% of capital : +20 b.p. ??BZ WBK consolidation -55 b.p. ??Impact from one-off -11 b.p. provision (PPI) Dec07 Dec08 Dec09 Dec10 Mar11 Jun11 _____ .... to very solid levels, adequate to our business model and business profile as proven by the latest stress test of 2011 Note: Dec07 according to BIS I |
4 Solvency ratios. Stress test 13 Even in the adverse scenario Santander is the bank obtaining the highest profits, paying the most dividends and retaining the most profit Profit generated in 2011-2012 Stress test impact on Grupo Santander* Santander 8,092 P1 6,247 EUR million P2 3,958 P3 3,280 ??Net op. income 2011-2012: +41,589 3,214 P4 P5 3,079 ??On-balance sheet prov. Dec. 2010: +15,184 3,015 P6 P7 2,924 Total: +56,773 P8 2,883 P9 1,968 ??Gross deterioration 2011-2012: -46,674 P10 1,679 -2,007 P11 1,347??Tax P12 960 P13 105 STRESS TEST Net SURPLUS : +8,092 P14 -64 Cash dividends -2,942 P15 -165 P16 -439 Change CORE TIER I CAPITAL +5,150 P17 -1,306 P18 -1,485 P19 -1,551 P20 -1,999 P21 -3,161 Core Tier I in 2012 8.4% P22 -3,938 Core Tier I (with generic prov.) in 2012 8.9% P23 -5,090 P24 -8,757 P25 -14,927 (*) Source: EBA and Bank of Spain. Chart with detailed information from BoS Comparing SAN with 25 large entities (balance sheet above EUR 300 billion according to The Banker, July 2010) included in the stress test |
Agenda 14 ??Group highlights H111 ??H111 Results Group Business areas ??Trends for the coming quarters ??Appendix |
Grupo Santander results. H111 15 Var. / H110% excl. fx and EUR Mill. H111 Amount % perimeter Net interest income 15,152 +653 +4.5 +1.5 Fees 5,323 +515 +10.7 +6.9 Trading gains and other1 1,662 +96 +6.2 +2.8 Gross income 22,137 +1,264 +6.1 +2.9 1 Operating expenses -9,731 -921 +10.4 +6.6 2 Net operating income 12,406 +343 +2.8 +0.1 Loan-loss provisions -4,871 +48 -1.0 -3.1 3 Net op. income net of Provisions 7,535 +391 +5.5 +2.4 Greater fiscal pressure and -10.4 provisions Attributable profit (recurring) 4,121 -324 -7.3 Extraordinary provision2 -620 Attributable profit 3,501 -944 -21.2 (1) Including dividends, equity accounted income and other operating results (2) Extraordinary provision in relation to payment protection insurance (PPI) remediation in the UK |
Grupo Santander results 16 REVENUES growing at a faster pace and differentiated management of EXPENSES reflect the countries 1 2 Gross income Expenses EUR million +4% 11,285 10,852 10,614 10,563 10,613 +2% 11,037 10,260 +2% 4,824 4,908 4,548 4,687 4,698 4,263 4,794 -1% Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 BZ WBK (3 months) Var. (%) excluding BZ WBK |
Grupo Santander results 17 3 LOAN-LOSS PROVSIONS: lower specific provisions are offset by the lower release of generic ones Specific provisions EUR million Net loan-loss provisions1 5,738 5,252 EUR million H110 H111 2,935 2,684 2,436 2,483 2,404 2,188 Use of generic provisions EUR million Q110 Q2 Q3* Q4 Q111 Q2 -385 (*) Application of Bank of Spains Circular -816 In Q111 generic prov. release: -EUR 412 million In Q211 generic prov.: EUR 27 million H110 H111 (1) Including country risk |
Agenda 18 ??Group highlights H111 ??H111 Results Group Business areas ??Trends for the coming quarters ??Appendix |
EUROPE |
Continental Europe. H111 20 EUR million and % / H110 Networks still impacted by environment but improved underlying trend. Very positive evolution of SCF and Attributable profit: EUR 1,874 million Net operating income Var. H111 / H110 in euros (%) Excl. EUR million perimeter Total 2,465 2,318 2,260 2,347 Global 2,088 Basic 2,005 +6.3 -0.4% businesses revenues 2,092 Commercial 2,016 1,908 1,792 1,870 Gross 1,734 +2.4 -4.3% income Q110 Q2 Q3 Q4 Q111 Q2 Expenses +12.4 +2.4% Attributable profit Net op. EUR million -3.7 -8.3% income 1,227 1,037 1,054 Net op. 820 475 616 income after -10.9 -16.2% LLPs Attributable -17.2 -22.6% profit Q110 Q2 Q3 Q4 Q111 Q2 |
Spain*. Business performance 21 Deleveraging continues. The good liquidity situation attained in 2010 enables the management of price / volume parity Activity More liquidity and higher return Net loans: -6% / Dec. 09 Loans / Deposits (%) 238 240 183 229 223 153 122 122 Dec.09 Jun10 Dec10 Jun11 Dec08 Dec09 Dec10 Jun11 Deposits: +17% / Dec.09Loans return / Deposits cost (%) 3.45 3.45 3.63 3.35 3.31 3.37 185 188 182 155 1.44 1.54 1.46 1.32 1.27 0.91 Dec.09 Jun10 Dec10 Jun11 Q110 Q2 Q3 Q4 Q111 Q2 (*) Including: Santander network, Banesto, SCF Spain, Banif and global businesses in Spain |
Spain* H111. Business performance 22 The accounting profits are impacted by the lower release of generic provisions, but the underlying results are positive Net interest income + Fees + Insurance EUR million Revenues 2,291 2,108 2,146 accelerating 1,955 1,853 1,993 Q110 Q2 Q3 Q4 Q111 Q2 Specific provisions EUR million 1,413 Lower specific 884 1,097 862 provisions 673 655 Q110 Q2 Q3 Q4 Q111 Q2 (*) Including: Santander network, Banesto, SCF Spain, Banif and global businesses in Spain |
Santander Branch Network H111 23 Improved underlying business backed by higher gross income, lower costs and specific loan-loss provisions Activity Net operating income / Provisions EUR million Loans Deposits Profitability / cost Var. EUR billion Net operating Profitability income 691 639 576 588 2.99% 3.35% 497 +15.4 2.88% Provisions 462 Net operating Cost income after 555 397 403 provisions 300 -0.1 1.39% 1.42% 239 -4.1 1.15% -56 -5.6 Q110 Q2 Q3(2) Q4 Q111 Q2 H110 H111 H110 H111 Jun10 Dec10 Jun11 Basic revenues1 EUR million Attributable profit EUR million NII/ATAs EUR million 3.06% 2.77% 3.08% 2.69% 2.55% 2.52% 1,184 1,136 1,060 1,072 399 1,002 974 300 274 226 178 -30 (2) Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 (1) Net interest income + fee income + insurance (2) Application of Bank of Spain Circular 3/2010 |
Banesto H111 24 Banesto shows the same underlying results as Santander Branch Network Activity Net operating income / Provisions EUR million Deposits Loans Profitability / Cost excl. repos Net operating Var. in EUR billion income 384 Profitability 362 317 312 324 3.30% Provisions 2.89% 2.94% 273 +7.0 Net operating income after 302 270 1.95% +0.7 1.73% 1.68% provisions 172 151 -4.3 -5.3 Cost 34 61 Jun10 Dec10 Jun11 (2) H110 H111 H110 H111 Q110 Q2 Q3 Q4 Q111 Q2 Basic revenues1 Attributable profit EUR million NII/ATA s EUR million 1.44% 1.31% 1.33% 1.21% 1.13% 1.05% 601 570 535 525 203 481 489 182 101 67 27 6 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3(2) Q4 Q111 Q2 (1) Net interest income + fee income + insurance (2) Application of Bank of Spain Circular 3/2010 |
Spain. Lending portfolio 25 Gross loans Loans with real estate purposes. Coverage EUR billion EUR million Risk Coverage TOTAL 245 236 Public sector 230 229 Amount Amount % 10 12 Household 12 13 64 mortgages 61 60 59 ??????????????? loans 5,399 1,659 31 Other loans to 31 30 28 28 individuals ???????????? 4,013 467 12 Companies w/o 108 construc, and 106 103 104 real estate ???????? 333 Real estate 31 27 26 25 -12% -4% -3% purpose Total 9,412 (*) 2,459 26 Dec09 Dec10 Mar11 Jun11 (*) 100% of substandard and 50% of NPLs are operations up to date with payments. Loans with real estate purposes. Evolution Foreclosed assets. Coverage EUR million EUR million Gross Net Jun11 Dec10 Var. Amount Coverage Amount ????????? buildings 13,263 12,709 +554 ????????? buildings 3,314 25% 2,493 ?????????? under constr. 1,810 2,548 -738 ?????????? under constr. 700 25% 528 ?????????? land 2,861 3,678 -817 ?????????? land 2,979 38% 1,861 ????????? land 1,542 2,023 -481 ????????? land 992 42% 580 ?????? land 198 252 -54 ?????? land 350 42% 203 ??? mortgage guarantee 5,673 6,124 -451 Total 8,335 32% 5,665 Total 25,347 27,334 -1,987 Change o/ Dec.10 +826 +470 |
Portugal H111 26 Solid starting point of Santander Totta to face the greater environment demands and meet the Financial Assistant Programme requirements Solid balance sheet Liquidity improvement ??Santander Totta has the most solid position ??Strong deleveraging process in the Portuguese banking system Core Tier I NPLs Coverage Loans / Deposits Deposits +M-L term / Loans % % % % % 216 98 99 10.7 8.0 122 139 131 87 3.6 88 1.6 ST Peers ST Peers ST Peers Dec09 Dec10 Jun11 Dec09 Dec10 Jun11 ??No M/L term maturities to??Reduction refinance of commercial in gap ahead H211 of annual and reduced ones in the coming years (Bn. ) plan Target for 2011 1.5 1.2 1.3 0.6 EUR billion Accomplished 0.0 +2.0 +1.0 in H111: H211 2012 2013 2014 2015+ + 1.4 Bn. ??Exposure to Portuguese debt: 1.6 Bn. -1.0 Loans Deposits Total Note: solvency and credit quality ratios as of March 2011 in local criteria; peers data is the weighted average of the main competitors (CGD, Millenium bcp, BES, BPI) |
Portugal H111 27 Active and prudent management amid a sharp business slowdown Activity Net operating income / Provisions EUR million Var. Jun11 / Jun10 Net interest inc. / ATAs Net operating 192 income 188 +21% Provisions 138 151 1.49 132 1.40 1.37 1.39 1.36 1.36 112 Net operating income after 176 -12% provisions 145 125 118 94 71 Loans Deposits Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 Basic revenues1 Attributable profit EUR million EUR million 293 289 137 123 274 262 273 242 108 90 88 41 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 (1) Net interest income + fee income + insurance |
Santander Consumer Finance H111 28 Sharp profit increase underpinned by the main units Activity Results Volumes Net interest inc. / Net operating income / Provisions Provisions (% / ATAs) Var. Jun11 / Jun10 +43% EUR million 4.92 5.09 Net 890 920 917 Net operating 825 860 interest income 786 income 2.16 +18% 3.25 Provisions 2.76 1.84 Provisions 592 Net operating 499 income after 288 354 339 363 Loans Deposits H110 H111 provisions Total portfolio = 74 billion (+18%) Q110 Q2 Q3 Q4 Q111 Q2 EUR billion Var. Jun11 / Jun10 Attributable profit Germany 30 +39% EUR million USA 11 +39% 359 Spain 8 -14% 306 Italy 8 -1% 189 206 205 210 Nordic countries 7 +12% Other euro zone 4 +5% UK 3 +0% Poland 3 +32% Q110 Q2 Q3 Q4 Q111 Q2 |
Poland (BZ WBK) Q211 29 Poland, market with great GDP is almost 40% of the other 11 Has not suffered a recession in the new EU members. last 10 years 38.5 million inhabitants GDP (YoY %)(1) 6% 7% 4% 5% 4% 5% 4% 4% 4% 2% 3% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Low debt vs. GDP High real GDP estimates(2) for the coming years at a public and private sector level 135 130 Poland Infrastructure still to be developed 125 New EU members 114 (ex Poland) Significant investment programs 115 112 105 104 99 102 EU-15 95 2006 2008 2010 2012 .... where we ratified the ??outlook Attributable profit: for EUR 2013 480 mill. announced at the time of the purchase ??Impact on SANs (1) Source: International Monetary Fund. Constant prices (2) Source: EIU. Base 100: 2006. 2005 prices in US$ |
Poland (BZ WBK) Q211 30 Solid and well financed bank, profitable and with a solid structure to achieve expected macroeconomic growth. Consolidates since April EUR billion Very solid balance sheet ??Total Assets 14.1 Well capitalised Activity ??Net loans 8.7 (Jun. 11)??Deposits 10.2 Loans/ TIER I Deposits ??Mutual funds 2.4 ??Shareholders 1. equity 3 85% 13.8% Contribution to the Group: EUR million #1 by profitability vs. peers ??Gross income 248 Results ??Net operating income 134 (Q211) ROA ??Attributable profit 94 Attributable (annual) profit 3.6% 2.3% COMMERCIAL ??Branches* 630 #3 by branch network: BASE ??Headcount 9,744 Leader in service quality (Jun. 11)??Retail customers (mill.) 2.6 Potential for business growth (*) Including franchises |
Poland (BZ WBK) Q211 31 Data in local criteria. Constant EUR million In Q211 the focus on ... profitable obtained results* business growth was maintained and ... over 2010 Loans Basic revenues Costs Total +5% 9,092 +10% 8,674 425 386 +7% Companies and 229 Leasing 6,076 215 5,793 +5% Individual +5% 3,016 customers 2,880 H110 H111 H110 H111 Mar11 Jun11 Deposits Provisions Attributable profit Total 10,442 -2% 10,227 +33% 161 4,062 3,835 -20% Companies -6% 121 55 44 Individual 6,380 6,392 customers H110 H111 H110 H111 Mar11 Jun11 (*) 2010 data on a proforma basis. Data in local criteria |
UNITED KINGDOM |
United Kingdom H111 33 Strong recurring profits absorbed regulatory and funding costs. Impact from one-off provision1 Recurring attributable profit: £ 839 Net operating income mill. (EUR 966 mill.) £ million Var. H111 / H110 en £ (%) Excl. regulatory impacts2 Total 830 825 805 Global 741 729 728 Gross businesses -6.9% -1.2% income Commercial 722 720 714 642 632 668 Expenses +0.8% +0.8% Q110 Q2 Q3 Q4 Q111 Q2 Net op. -11.9% -2.5% income Recurring attributable profit £ million Net op. income +2.3% +14.3% 428 447 435 after LLPs 419 420 374 Recurring -4.2% +17.0% attrib. profit H111 attributable profit after one-off provision = £ 300 mill. Q110 Q2 Q3 Q4 Q111 Q2* (*) After one-off provision, loss for the quarter of £ 118 million (1) Extraordinary provision of £538 million net of tax in relation to payment protection insurance (PPI) remediation (2) (2) Excluding impacts from liquidity, FSCS and Bank Levy |
United Kingdom H111 34 Activity Results Mortgages Companies loans Deposits(1) Gross income £ billion £ billion £ billion £ Million 164 165 1,375 1,380 153 1,348 +8% 28 148 1,284 1,285 +1% 26 1,280 5 4 +3% 21 24 +16%(2) Jun10 Jun11 Jun10 Jun11 Jun10 Jun11 Core Non core Q110 Q2 Q3 Q4 Q111 Q2 Net operating income / Provisions Net interest income / ATAs (%) £ Million Var. Q211 / operating Net Q210 1.44 1.44 1.44 1.43 1.39 830 825 805 1.30 income 741 729 728 -11.7% Net int. income Provisions excl. liquidity 1.42 1.40 impact 1.35 1.30 Net 1.24 operating 623 611 611 +1.6% Net interest 593 601 587 1.15 income income after provisions Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 Note: Activity data in local criteria. (1) Including commercial deposits, from companies and structured products. Moreover, GBM balances and other deposits not included of 11,270 million as of June 2011. (2) Growth in loans to SMEs: +27% |
Brazil |
Brazil H111 36 Solid increase in of basic revenues accelerated net operating income.. In In profits, profits, impact impact from from higher higher tax tax rate and and minority minority interest interest Attributable profit: US$ 1,936 mill. Net operating income (EUR 1,381 million) Constant US$ million 3,459 3,610 Var. H111 / H110 in constant US$ (%) 3,227 3,377 Total 3,134 3,107 Global Basic +13.2 businesses revenues 2,723 2,819 2,949 Retail 2,544 2,640 banking 2,511 Gross income +12.4 Q110 Q2 Q3 Q4 Q111 Q2 Expenses +10.9 Attributable profit Net op. income +13.3 Constant US$ million 1,083 1,060 1,023 Net op. income 912 958 913 +11.9 after LLPs Higher tax rate and minority interest Attributable +3.5 profit Q110 Q2 Q3 Q4 Q111 Q2 Profit before minority interest: +6.8% |
Brazil H111 37 Activity(1) Results Total loans Jun11 / Jun10 Basic revenues % Var. year-on-year Constant US$ million _____ % Var. year-on-year +28% 5,306 5,428 +13.2% +17% +23% +16% 5,035 +6% +8% 4,851 4,778 4,700 +5.9% -5% Individual Car financing Businesses Corporate + Dec09 Dec10 Jun11 customers + companies GBM Q110 Q2 Q3 Q4 Q111 Q2 2010 H111 Net interest income / Net operating income / Provisions Deposits Provisions (% /ATAs) Constant US$ million Var. Q211/Q210 % Var. year-on-year +16.2% 7.66 7.34 Net Net operating 3,610 3,377 3,459 +16% interest income 3,134 3,107 3,227 +13% income 4.70 4.48 Provisions Net operating +5.8% 2.96 2.86 Provisions income after 2,066 2,056 1,998 1,846 provisions 1,690 1,745 -5% Dec09 Dec10 Jun11 H110 H111 Q110 Q2 Q3 Q4 Q111 Q2 (1) Local currency |
Latin America ex-Brazil |
Latin America ex-Brazil H111 39 Sharp profit increase spurred by retail banking: picked up in activity, higher basic revenues and lower cost of credit Attributable profit: US$ 1,510 mill. (EUR 1,077 million) Attributable profit by country Var. H111 / H110 in constant US$ (%) Constant US$ million Var. (%) / Basic revenues +6.1 H110 Gross income +5.8 Mexico* 682 +71.6% Expenses +11.1 Chile 489 +13.3% Net op. income +2.1 Argentina 194 +11.9% Net op. income after LLPs +13.7 Attributable profit* +29.2 Colombia 27 +5.2% Attributable profit P. Rico 23 -8.4% Constant US$ million 760 742 767 Uruguay 14 712 -69.8% 586 582 Other -10 - Intl Private 91 +5.4% Banking Q110 Q2 Q3 Q4 Q111 Q2 (*) Excluding minority interest: Mexico +29.1%; Areas total: |
Latin America ex-Brazil H111 40 Activity(1) Results Total loans Jun11 / Jun10 Basic revenues % Var. year-on-year Constant US$ million _____ % Var. year-on-year +21% +31% 2,203 +14% +26% 2,124 2,108 +21% +20% 2,079 2,061 +6.1% 1,985 +10% +3.7% -6% -2% Dec09 Dec10 Jun11 (2) M o rtg. Co nsumer Cards _____ Co mpanies GB M Cards 2010 H111 (2) Q110 Q2 Q3 Q4 Q111 Q2 ex-M ex. M exico Net interest income / Net operating income / Provisions Deposits Provisions (% / ATAs) Constant US$ million Var. Q211/Q210 % Var. year-on-year Net operating 1,354 +7.3% 4.09 1,323 1,262 1,302 1,285 3.79 Net income 1,228 +16% interest +13% income Provisions 2.98 3.04 Net operating 1,016 1,002 1,040 +15.3% 894 903 940 income after 1.11 -12% 0.75 Provisions Provisions Dec09 Dec10 Jun11 H110 H111 Q110 Q2 Q3 Q4 Q111 Q2 (1) Local currency (2) On a like-for-like basis: Total loans +18%; mortgages +14% |
Mexico H111 41 Profit fuelled by improved trend in revenues and lower provisions needs. Moreover, positive impact from minority interests Attributable profit: US$ 682 mill. Activity and Profitability(1) (EUR 486 million) % Var. year-on-year Net interest income / Var. H111 / H110 in constant US$ (%) Loans Deposits Provisions (% / ATAs) (2) 4.19 +33% 3.85 Net Basic interest +3.1% income revenues +18% +15% +16% 2.87 3.11 Provisions Gross income +3.7% 1.32 0.74 -7% -11% Dec09 Dec10 Jun11 Dec09 Dec10 Jun11 H110 H111 Expenses +5.7% Net operating income after provisions Net op. Constant US$ million _____ % Var. year-on-year +2.5% income 443 +24.3% 413 380 Net op. 341 348 income after +24.3% 286 +13.5% LLPs Attributable +71.6% profit 2010 H111 Q110 Q2 Q3 Q4 Q111 Q2 (1) Local currency (2) On a like-for-like basis: +23% |
Chile H111 42 Similar trends to Mexicos enabled net profit to grow at double digits Attributable profit: US$ 489 mill. Activity and Profitability(1) (EUR 349 million) % Var. year-on-year Net interest income / Var. H111 / H110 in constant US$ (%) Loans Deposits Provisions (% / ATAs) 4.46 Basic 3.98Net +3.3% +14% +15% revenues +13% interest 3.24 income +5% 3.14 Gross +3.5% 1.22 Provisions income 0.84 -6% -13% Dec09 Dec10 Jun11 Dec09 Dec10 Jun11 H110 H111 Expenses +8.1% Net operating income after provisions Net op. Constant US$ million _____ % Var. year-on-year +1.0% income 376 373 359 345 +11.8% Net op. 339 303 +10.4% income after +11.8% LLPs Attributable +13.3% profit Q110 Q2 Q3 Q4 Q111 Q2 2010 H111 (1) Local currency |
SOVEREIGN |
Sovereign H111 44 Consolidating the franchises business and enhanced credit quality Attributable profit: US$ 359 mill. Activity and Profitability(1) (EUR 256 million) % Var. year-on-year Net interest income / Var. H111 / H110 in US$ (%) Provisions (% / ATAs) Loans Deposits 3.29 3.28 +14% Net Gross interest +8.9% +4% income income 2.58 2.13 -1% Provisions -4% 1.16 -8% 0.70 Expenses +8.0% -12% H110 H111 Dec09 Dec10 Jun11 Dec09 Dec10 Jun11 Net op. Attributable profit +9.5% income US$ million Net op. 178 176 183 income +62.9% 157 132 after LLPs 95 Attributable +57.9% profit Q110 Q2 Q3 Q4 Q111 Q2 (1) Local currency Note: Loans data (excl. securitisations) and deposits, under US GAAP |
45 |
CORPORATE ACTIVITIES |
Corporate Activities 46 More negative contribution because of funding costs and lower tax rebates Attributable profit (H111 vs. H110) Main impacts: EUR million ??Net interest income -260 ??Trading gains +213 ??Other results -21 ??Tax -245 ??Total impact on profit: -313 |
Agenda 47 ??Group highlights H111 ??H111 Results Group Business areas ?Trends for the coming quarters ??Appendix |
Main trends for the coming quarters 48 Revenues growth Spain Lower specific provisions not feeding through to profit because of lower release of generic ones Good starting point to face the Portugal Impact on results without eroding the capital SCF Solid profit generation thanks to diversification and business model Management effort in key markets |
Main trends for the coming quarters 49 Poland Entering the Group with good trends in revenues and profitability (BZ WBK) Confirming initial expectations at the moment of its acquisition United Environment of low growth and strong liquidity competition Kingdom Regulatory impacts Latin Faster growth of volumes and revenues America Strengthening installed capacity Sustained contribution to the Group, consistent with the plan to invest in Sovereign operating platforms Solid liquidity, solvency and credit quality |
Agenda 50 ??Group highlights H111 ??H111 Results Group Business areas ??Trends for the coming quarters ?Appendix |
51 Appendix ??Groups Balance Sheet ??Secondary Segments Results ??Spreads, NPL and coverage ratios of the main units ??Construction and real estate sector in Spain |
52 |
Groups balance |
Main trends of the Groups 53 Retail balance sheet, appropriate for the business nature, of low risk, liquid and well capitalised Balance sheet at June 2011 1 ??Lending: 59% of balance sheet EUR billion 1,232 1,232 2 Cash, Central Banks and credit Credit ? Cash and credit institutions 146 institutions: 14% institutions 176 2 Derivatives 75 3 Derivatives 88 Other 39??Derivatives (with counterpart on AFS Portfolio 77 4 3 Trading portfolio 77 5 sheet the liabilities side): 6% of balance Other* 103 6 Customer 624 Deposits 4 ??Available for sale portfolio Loans to (AFS): 6% customers 724 1 Issues and 228 5 subordinated liabilities ??Trading portfolio: 6% Shareholders equity & fixed liabilities 107 6 ??Other (goodwill, fixed assets, Assets Liabilities accruals): 9% (*) Other assets: Goodwill EUR 27 bill., tangible and intangible assets 18 bill., other capital instruments at fair value 8 bill., accruals and other accounts 50 bill. |
54 |
Secondary segments results |
Retail Banking 55 Improved trend in gross income and net operating income backed by lower provisions Recurring attributable profit: Net operating income EUR 4,228 million Var. H111 / H110 en euros (%) Excl. fx and EUR million perimeter +6% Gross 5,980 +7.3% +4% 5,640 5,621 5,685 income 5,448 5,380 Expenses +10.4% +6% Q110 Q2 Q3 Q4 Q111 Q2 Net op. +5.2% +3% Income Recurring attributable profit EUR million Net op. -2% Income +10.7% +8% 2,080 2,183 2,046 after LLPs 1,957 1,789 1,754 Attributable +4.7% +2% profit Q110 Q2 Q3 Q4 Q111 Q2 H111 attributable profit after one-off = EUR 3,608 million (*) After one-off provision, Q211 |
Global Wholesale Banking (GBM) 56 Recurring model focused on customers and with a low risk profile Solid revenues generation ... based ... on a portfolio ??By customer revenues Gross income (mill. ) Gross income (mill. ) 1,364 TOTAL 2,667 -5% 2,538 Total 1,303 1,337 1,230 1,252 Trading 385 1,201 -7% Trading 282 104 210 358 188 162 148 Equities 309 -7% 288 Investment banking 23 +55% 36 Customers 1,199 1,127 Hedging of interest / 1,082 1,042 1,090 1,053 794 -15% 676 exchange rates -4% Q110 Q2 Q3 Q4 Q111 Q2 +2% Corporate banking* 1,155 1,180 .... in our core markets ... and H110 H111 ??Spain, Brazil the UK generate around 72% of customer revenues Customer revenues (*) Including Global Transaction Banking and Credit |
Global Wholesale Banking (GBM) 57 Q211 revenues dented by sluggish provisions because of increased volumes Net operating income Attributable profit EUR million EUR million -15% 1,023 922 943 -25% 848 865 782 714 641 586 584 548 441 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 |
Asset Management and Insurance 58 High contribution to the Group via revenues and profits: 10% revenues of the Groups Asset Management Insurance Total revenues / Total PBT+ paid fees to networks: EUR 1,569 mill. Assets under management Assets (*) Var. / H110 (const. ) EUR Billion % annualised Brazil 620 +51% Spain 229 +7% 124 123 1.04% 101 117 1.03% Germany 199 +17% Other Europe 175 -2% Other Latam 233 +40% D08 D09 D10 Jn11 H110 H111 UK 94 -1% (*) Including fees paid to Sovereign 19 +19% the networks Attributable profit to the Group1 Attributable profit to the Group1 EUR million EUR million 99 98 96 102 101 22 87 21 21 22 17 17 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 (1) After deducting expenses and fees paid to the networks |
59 |
Main units spreads and NPL ratios |
Continental Europe. Main units spreads 60 (%) SAN Branch Network Banesto Retail Banking 2.60 2.53 2.04 1.87 1.89 1.95 2.20 2.00 1.92 1.99 2.03 2.08 2.10 1.90 1.97 2.02 2.20 1.94 1.83 1.83 1.65 1.67 1.41 1.47 0.50 0.56 0.12 0.10 0.04 0.06 0.05 0.18 -0.35 -0.51 -0.52 -0.36 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 Loans Deposits Total Loans Deposits Total Santander Consumer Lending Portugal Retail Banking 6.72 6.94 6.69 5.90 6.19 5.99 1.92 2.03 2.11 2.08 2.06 1.85 1.76 1.82 1.82 1.88 1.96 1.75 0.10 0.21 0.23 0.12 0.09 -0.31 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 Loans Deposits Total |
Continental Europe. NPLs and coverage ratios 61 Banco Santander* Banesto 66% 61% 61% 54% 49% 44% 61% 58% 60% 54% 52% 52% 3.61% 3.65% 3.79% 4.24% 4.68% 5.08% 3.13% 3.49% 3.83% 4.11% 4.31% 4.54% Mar10 Jun Sep Dec Mar11 Jun Mar10 Jun Sep Dec Mar11 Jun NPLs Coverage NPLs Coverage Santander Consumer Portugal 108% 111% 122% 128% 122% 128% 64% 69% 60% 62% 62% 65% 5.12% 5.23% 5.13% 4.95% 4.63% 4.42% 2.90% 3.03% 3.25% 2.32% 2.40% 2.43% Mar10 Jun Sep Dec Mar11 Jun Mar10 Jun Sep Dec Mar11 Jun NPLs Coverage NPLs Coverage (*) Santander Branch Network NPL ratio was 6.73% and coverage 47% as of June 2011 |
Spain. Loans to customers and NPL ratio 62 Gross Loans NPL ratio EUR billion % 18.9 21.3 With real estate 17.0 purpose(1) TOTAL Public sector 245 236 230 229 11.1 10 12 12 13 Household mortgages 64 61 60 59 Total portfolio Other loans to 4.6 4.8 31 30 4.2 Spain individuals 28 28 3.4 3.4 Other portfolio Companies w/o 3.1 3.3 construc. and 108 106 103 104 2.4 Household real estate mortgages Real estate 2.5 2.2 2.4 2.5 31 -12% 27 26 25 purpose -4% -3% Dic09 Dic10 Mar11 Jun11 Dec09 Dec10 Mar11 Jun11 (1) NPL ratio calculated over consolidated balances, excluding intragroup |
United Kingdom. Spreads and NPL ratios 63 (%) Spreads Retail Banking NPLs and coverage 2.28 2.34 2.35 2.13 2.20 2.05 1.99 1.99 2.03 2.03 2.04 1.97 46% 46% 48% 46% 45% 41% -0.06 -0.14 -0.17 -0.25 -0.30 -0.38 1.88% 1.85% 1.77% 1.76% 1.75% 1.82% Q110 Q2 Q3 Q4 Q111 Q2 Mar10 Jun Sep Dec Mar11 Jun Loans Deposits Total NPLs Coverage |
Spreads main countries Latin America 64 (%) Retail Banking Brazil Retail Banking Mexico 16.13 16.23 15.81 15.42 15.84 16.17 12.08 11.42 11.23 10.98 10.67 10.44 15.26 15.29 14.73 14.29 14.72 15.05 10.03 9.50 9.20 8.93 8.58 8.40 0.87 0.94 1.08 1.13 1.12 1.12 2.04 2.05 1.92 2.03 2.05 2.09 Q110 Q2 Q3 Q4 Q111 Q2 Q110 Q2 Q3 Q4 Q111 Q2 Loans Deposits Total Loans Deposits Total Retail Banking Chile 7.49 7.33 7.03 6.69 7.47 7.04 5.24 5.03 4.76 4.52 4.38 4.14 3.09 2.90 2.25 2.30 2.27 2.17 Q110 Q2 Q3 Q4 Q111 Q2 Loans Deposits Total |
Latin America. NPLs and coverage ratios 65 Brazil Mexico 268% 257% 215% 234% 222% 199% 100% 98% 98% 101% 104% 102% 2.20% 5.04% 5.01% 4.97% 4.91% 4.85% 5.05% 1.86% 1.77% 1.84% 1.58% 1.63% Mar10 Jun Sep Dec Mar11 Jun Mar10 Jun Sep Dec Mar11 Jun* NPLs Coverage NPLs Coverage Chile 99% 97% 94% 89% 89% 89% 3.36% 3.58% 3.74% 3.80% 3.65% 3.31% Mar10 Jun Sep Dec Mar11 Jun NPLs Coverage (*) .- On a like-for-like basis, excluding GEs acquired portfolio Including it, NPL ratio: 2.45%; Coverage ratio: 165% |
Sovereign. Spreads and NPL and coverage ratios 66 (%) Spreads NPLs and coverage 2.88 2.95 2.94 2.90 2.66 2.61 82% 85% 64% 67% 72% 75% 2.16 2.24 1.94 1.96 2.04 2.08 0.94 0.99 5.14% 5.11% 4.80% 4.61% 4.15% 3.76% 0.62 0.78 0.66 0.53 Q110 Q2 Q3 Q4 Q111 Q2 Mar10 Jun Sep Dec Mar11 Jun Loans Deposits Total NPLs Coverage |
67 |
Construction and real estate sector in Spain |
68 Chart 1. Financing provided for construction and real estate development and the respective allowance(1). Data pertaining to the consolidated Group (businesses in Spain) Excess over Gross _____ Specific value of amount (2) allowance EUR million collateral 1) Loans registered by the Groups credit institutions (businesses in Spain) 25,347 14,011 2,126 1.1) of which: Doubtful assets 5,399 2,824 1,659 1.2) of which: Substandard assets 4,013 2,031 467 Pro-memoria: - Total general allowances (total businesses in Spain) 333 - Written-off assets 251 Pro-memoria: Groups consolidated data Carrying EUR million amount (3) 1) Total loans and advances to customers excluding public sector (businesses in Spain) 208,493 2) Total consolidated assets (total businesses) 1,231,908 (1) Clasification according to the purpose of the loan, not the debtors CNAE (National Classification of Economic Activities) (2) The current regulation (Circular 3 / 2010, amending 4 / 2004) applies a cut in the valuation of guarantees for the purpose of calculating the allowances: 20% first resindency; 30% offices and rustic properties in operation; 40% other housing; 50% land and real estate development; over the minimum value between the purchase price and the updated appraisal value. The difference between the gross amount and the value of the guarantee adjusted by the regulation, is reflected in this column. (3) Amounts by which assets are recorded in the balance sheet after deducting, where applicable, the amounts built for its coverage. |
69 Chart 2. Breakdown of the financing provided to construction and real estate development. Transactions registered by credit institutions (businesses in Spain) Loans: Gross EUR million amount 1. Without mortgage guarantee 5,673 2. With mortgage guarantee 19,674 2.1 Finished buildings 13,263 2.1.1 Residential 4,935 2.1.2 Other 8,328 2.2 Buildings under construction 1,810 2.2.1 Residential 1,268 2.2.2 Other 542 2.3 Land 4,601 2.3.1 Developed land 2,861 2.3.2 Other land* 1,740 TOTAL 25,347 (*) Including EUR 1,542 million of building land |
70 Chart 3. Loans to households for house purchasing. Transactions registered by credit institutions (businesses in Spain) of which: Gross amount Doubtful EUR million Loans for house purchasing 59,981 1,433 Without mortgage guarantee 689 32 With mortgage guarantee 59,292 1,401 Chart 4. Breakdown of mortgage loans to households for house purchasing, according to the latest available loan-to-value (LTV) ratio. Transactions registered by credit institutions (businesses in Spain) LTV range EUR million LTV 50% 50% LTV 80% 80% LTV 100% LTV 100% Gross amount 20,186 31,267 6,960 879 of which: Doubtful 318 603 308 172 |
71 Chart 5. Foreclosed assets to the consolidated Group entities (businesses in Spain) Gross of which: Net amount amount Allowance EUR million 1. Real estate assets from loans to construction and real estate development 6,337 2,170 4,167 1.1 Finished buildings 1,336 329 1,007 1.1.1 Residential 830 204 626 1.1.2 Other 506 124 381 1.2 Buildings under construction 700 172 528 1.2.1 Residential 688 169 519 1.2.2 Other 12 3 9 1.3 Land 4,301 1,669 2,632 1.3.1 Developed land 2,967 1,114 1,853 1.3.2 Other land* 1,334 555 779 2. Real estate assets from mortgage loans to households for house purchasing 1,759 438 1,321 3. Other foreclosed real estate assets 239 62 177 SUBTOTAL 8,335 2,670 5,665 4. Equity instruments, ownership interests in financing to non-consolidated companies holding these assets 840 438 402 TOTAL 9,175 3,108 6,067 (*) Including EUR 992 million gross (581 million net) of building land |
Banco Santander, S.A. |
||||
Date: July 28, 2011 | By: | /s/ José Antonio Álvarez | ||
Name: | José Antonio Álvarez | |||
Title: | Executive Vice President | |||
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