FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2018
Commission File Number: 001-12518
Banco Santander, S.A.
(Exact name of registrant as specified in its charter)
Ciudad Grupo Santander
28660 Boadilla del Monte (Madrid) Spain
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
Banco Santander, S.A.
Item |
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1 | Press Release regarding January September 2018 Results | |
2 | January September 2018 Financial Report | |
3 | January September 2018 Earnings Presentation |
Santander attributable profit for the first nine months of 2018 reached 5,742 million - up 13%
Profit before tax for the period was 11,230 million up 10% (+23% in constant euros)
Madrid, 31 October 2018 - PRESS RELEASE
∎ | The bank has earned the loyalty of a further 3.1 million customers in the last twelve months, with lending and customer funds increasing by 3% and 4% respectively Year-on-Year (YoY) in constant euros (i.e. excluding movement in exchange rates). |
∎ | The number of customers using digital services increased to 29.9 million, up 24% YoY, as the Group digital transformation continued to deliver new and improved services for customers. |
∎ | Credit quality improved further during the quarter with the Group non-performing loan (NPL) ratio now at 3.87%, 37 basis points lower than 30 September 2017, while the cost of credit fell by 14 basis points in the same period to 0.98%. |
∎ | In the third quarter alone, attributable profit was 1,990 million, 36% higher than Q3 2017. Profit before tax for the third quarter was up 17% year-on-year (YoY) in constant euros. |
∎ | The Group remains one of the most profitable and efficient banks among its peers, with a return on tangible equity (RoTE) of 11.7%, and a cost-to-income ratio of 46.9%. |
∎ | The Groups fully loaded CET1 ratio reached 11.11% at 30 September 2018, up 31 basis points in the quarter driven by strong organic capital generation. |
∎ | The Group remains on track to grow earnings per share by double digits in 2018 with EPS increasing to 0.331, up 5% compared with the first nine months of 2017. Compared to the second quarter of 2018, Tangible Net Asset Value per share increased by 1.5% to 4.16. |
Banco Santander Group Executive Chairman, Ana Botín, said:
We have again delivered a strong set of results, with attributable profit 13% higher in the first nine months of the year. Importantly, this has been achieved in a responsible and sustainable way, growing loyal and digital customers by investing in our digital transformation, and achieving a top three ranking in customer satisfaction in the majority of our markets.
Santanders profitability (RoTE of 11.7%) and efficiency (cost/income ratio of 46.9%) remain among the best in our peer group, and highlight the strength and predictability of our business model.
Throughout the Group we continue to improve profitability, as well as the quality and recurrence of our earnings, with eight of our markets, representing 85% of our profit, delivering growth in underlying profit, and credit quality continuing to improve across the business.
Corporate Communications | 1 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
In Brazil, Mexico and Spain we are building on the strong momentum we have generated in recent quarters, while in the UK performance is improving quarter-on-quarter, despite the ongoing uncertainties and headwinds.
I am very proud of the performance of our teams. We have made clear progress against all objectives for our people, customers, shareholders and communities, and I am confident we will achieve all the goals set out in our three year plan, including double digit EPS growth this year.
Looking ahead, our leading market position in Europe and the Americas, with a total of 142 million customers, means we have significant potential for many years of further profitable and responsible organic growth. We look forward to setting out our new medium term plans aligned with our current strategy in the New Year.
Results Summary
9M18 (m)
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9M18 v 9M17
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9M18 v 9M17 (EX FX)
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Q318 (m)
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Q318 v Q317
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Q318 v Q317
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GROSS INCOME | 35,882 | -1% | +9% | 11,720 | -4% | +7% | ||||||||
OPERATING EXPENSES | -16,843 | -1% | +8% | -5,361 | -7% | +3% | ||||||||
NET LOAN-LOSS PROVISIONS | -6,418 | -7% | +4% | -2,121 | -6% | +6% | ||||||||
PROFIT BEFORE TAX | 11,230 | +10% | +23% | 3,750 | +4% | +17% | ||||||||
TAX | -4,053 | +16% | +28% | -1,394 | +12% | +26% | ||||||||
UNDERLYING PROFIT | 6,042 | +8% | +21% | 1,990 | +1% | +14% | ||||||||
NET CAPITAL GAINS AND PROVISIONS | -300 | -42% | -42% | 0 | | | ||||||||
ATTRIBUTABLE PROFIT | 5,742 | +13% | +28% | 1,990 | +36% | +58% |
Banco Santander increased attributable profit during the first nine months of 2018 by 13% to 5,742 million (+28% in constant euros), as strong growth in revenues in several markets, including Brazil, Spain, Mexico and Portugal, combined with improvements in credit quality, more than offset the impact of exchange rate depreciation against the euro in certain currencies, including the Argentine peso.
Profit before tax increased by 23% Year-on-Year (YoY) in constant euros to 11,230 million, with underlying profit increasing in eight of the Groups ten markets.
In the third quarter alone attributable profit was 1,990 million, 36% higher than Q3 2017, which was impacted by 515 million in one-off charges, including 300 million restructuring charge for Banco Popular. Profit before tax for the third quarter was up 17% YoY in constant euros.
Gross income in the first nine months of 2018 increased by 9% in constant euros to 35,882 million, with the Group increasing lending and customer funds by 3% and 4% respectively in constant euros, while increasing the number of loyal customers (people who see Santander as their main bank) by 19% to 19.6 million.
Corporate Communications | 2 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Ongoing investment in commercial transformation and digitalisation led to a 8% increase in operating expenses in constant euros, however, the Groups cost/income ratio, a key measure of efficiency, remained among the lowest of our peer group at 46.9% (compared to a peer average of over 65%).
In the first nine months of 2018, the number of customers using digital services increased by 24% YoY to 29.9 million, with the ongoing investment in technology driving an increase in digital service adoption.
In September, Openbank, the Groups 100% digital bank, launched an automated investment service as well as new developments and functionalities, including, among others, a secure password manager feature, and an account aggregator to connect accounts and products from other banks. Also during the quarter, Santander UK launched the Digital Investment Advisor, a new investment advisory tool for retail customers, available on mobile.
Credit quality improved during the quarter with the Group non-performing loan (NPL) ratio now 3.87%, down 37 basis points since 30 September 2017. Cost of credit, a good indicator of credit quality, fell to 0.98%, down 14 basis points since 30 September 2017, the lowest level since 2008.
A balanced presence across both mature and emerging markets remains one of Banco Santanders key strengths. During the first nine month of 2018, the Americas contributed 48% of Group profit and Europe, 52%. Brazil was the largest contributor to Group earnings, with 26% of total underlying profit, followed by Spain with 17%, and the UK with 14%. The lending book also remains well diversified across business segments and geographies.
1. Excluding corporate centre, and Spain Real Estate Activity. 2. Loans excluding repos.
Overall the economic outlook remains positive in all our largest markets and we expect the Group to benefit in the medium term from an improving interest rate environment, and ongoing recovery in Latin America.
In the third quarter, Santander generated 31 basis points in capital, bringing the Groups fully loaded CET1 ratio to 11.11% at 30 September 2018 (applying the transitional arrangement of IFRS 9), in line with its target for the end of the year. This ratio does not include the sale of WiZink, which is expected to close in the coming weeks and add an estimated nine basis points to the Group CET1 ratio, or the impact of the full application of IFRS 9 (-27 basis points), which is subject to a five-year transitional period before full implementation is required in 2022.
Corporate Communications | 3 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Over the last 12 months, Return on Tangible Equity (RoTE), a key measure of profitability, has increased by 70 basis points to 11.7%, while underlying RoTE increased by 34 basis points to 12.1%, making Santander one of the most profitable banks among its peers.
Tangible net asset value per share was 1.5% higher than the second quarter of 2018 and 1% lower than September 2017 at 4.16 (+5% excluding the FX and IFRS implementation impact). Earnings per share (EPS) increased to 0.331, up 5% compared with the first nine months of 2017, while underlying EPS remained broadly flat at 0.349. The Group maintains its target of achieving double digit EPS growth in 2018.
At the AGM on 23 March 2018, the bank announced its intention to increase the dividend paid from 2018 profits by 4.5% to 23 cents per share, subject to approval by the board and general shareholder meeting.
Country Summary (9M18)
In Brazil, attributable profit increased by 2% to 1,942 million (+24% in constant euros) as a focus on customer experience and satisfaction allowed the business to attract an additional one million loyal customers over the past 12 months, with lending and funds increasing by 13% and 17% respectively during the same period in constant euros. Asset quality remained under control with the non-performing loan ratio falling six basis points in 12 months to 5.26% and cost of credit reducing by 38 basis points to 4.17%. Strong business performance was reflected in improved profitability, with RoTE increasing to 20%, from 16.8% at 30 September 2017.
In Spain, attributable profit increased by 27%, to 1,026 million, as the integration of Popular was supported by ongoing growth in customer revenues (+19% YoY) across all main lines and improvements in efficiency. New lending increased 11% YoY driven by strong growth in lending to SMEs (+18% and consumer credit (+21%). The NPL ratio continued to improve, falling 59 basis points since 30 September 2017 to 6.23%. During the quarter, Santander opened the first Work Café in Spain, as an alternative to conventional branches first developed in Santander Chile. The Group also completed the legal integration of Banco Popular in September.
In the UK, attributable profit was 10% lower than the first nine months of 2017 at 1,077 million (-9% in constant euros), as the business continued to invest in strategic, digital transformation and regulatory projects. Trends were favourable compared to Q218, with underlying profit increasing by 5% in constant euros quarter-on-quarter driven by growth in net interest income, good cost control and lower loan loss provision. Uncertainty regarding Brexit continued, however, credit quality remained stable, with the NPL ratio at a very low 1.10%.
Santander Consumer Finance increased attributable profit by 17% in the first nine months of 2018, to 1,000 million (+18% in constant euros), with new lending increasing in most geographies. SCF maintained best-in-class profitability with a RoTE of 16.6% while the NPL ratio (2.45%) remained at a historic low.
Corporate Communications | 4 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
In Mexico, attributable profit increased by 4% to 554 million (+13% in constant euros) as the banks commercial transformation and investment in cutting edge technology helped drive a 10% increase in loans and 6% increase in customer funds in constant euros. As a result, total income increased by 8% YoY in constant euros, while credit quality remained solid, with the NPL ratio falling 15 basis points in the year to 2.41% and cost of credit falling by 42 basis points over the same period to 2.72%. Mexico also launched a new branch model during the quarter called Sucursal Ágil which is designed to cut waiting time and provide a quicker service.
In Chile, attributable profit increased by 5% to 461 million (+8% in constant euros) as a focus on customer satisfaction, loyalty and digital initiatives, helped increase volumes in both lending (+9% YoY in constant euros) and demand deposits (+9% YoY in constant euros). Customer revenues increased to 1,795 million, up 8% in constant euros YoY, while the NPL ratio fell by 17 basis points to 4.78% over the same period.
In the US, attributable profit increased by 36% to 460 million (+47% in constant euros), with loans growing for the second consecutive quarter (+3% YoY in constant euros). Further improvements in efficiency helped reduce the cost/income ratio to 44.6%, down 66 basis points since September 2017. In August the Federal Reserve terminated the 2015 Written Agreement, demonstrating progress the business has made in strengthening its controls and governance.
In Portugal, attributable profit increased by 15% to 364 million, driven by further improvements in efficiency and lower cost of credit. The full integration of Popular was concluded in October 2018.
In Poland attributable profit increased by 8% to 236 million (+8% in constant euros) as loan growth continued across all key products and segments and credit quality remained strong. In September, Bank Zachodni WBK successfully completed a rebrand to Santander, allowing the business to take advantage of from the benefits that come from being part of a common, internationally recognised brand.
As Argentina, which represents c.1% of the Groups attributable profit, is considered a high-inflation economy, from September, based on international accounting standards, the results and balance sheet for the country must be adjusted. This has a negative P&L impact of 169 million for first nine months of 2018, as well as an initial positive impact on the Groups capital of two basis points due to the revaluation of assets. As a result, attributable profit in Argentina for the first nine months fell by 75% to 67 million (-38% in constant euros). The agreement with the IMF allows Argentina to meet its financial obligations for 2018 and 2019, while the adjustment in currency should create greater FX stability going forward.
About Banco Santander
Banco Santander is the largest bank in the Eurozone with a market capitalisation of 69,958 million at 28 September 2018. It has a strong and focused presence in 10 core markets across Europe and the Americas with more than four million shareholders and 200,000 employees serving 142 million customers.
Corporate Communications | 5 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Key Consolidated Data (from Financial Report)
∎ BALANCE SHEET (EUR million) | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Total assets |
1,444,687 | 1,433,833 | 0.8 | 1,444,687 | 1,468,030 | (1.6 | ) | 1,444,305 | ||||||||||||||||||||
Loans and advances to customers |
866,226 | 862,092 | 0.5 | 866,226 | 854,686 | 1.4 | 848,914 | |||||||||||||||||||||
Customer deposits |
778,751 | 774,425 | 0.6 | 778,751 | 778,852 | (0.0 | ) | 777,730 | ||||||||||||||||||||
Total customer funds |
986,199 | 981,363 | 0.5 | 986,199 | 988,386 | (0.2 | ) | 985,703 | ||||||||||||||||||||
Total equity |
105,668 | 104,445 | 1.2 | 105,668 | 108,723 | (2,8 | ) | 106,832 | ||||||||||||||||||||
Note: Total customer funds includes customer deposits, mutual funds, pension funds and managed portfolios
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∎ INCOME STATEMENT (EUR million) | Q318 | Q218 | % | 9M18 | 9M17 | % | 2017 | |||||||||||||||||||||
Net interest income |
8,349 | 8,477 | (1.5 | ) | 25,280 | 25,689 | (1.6 | ) | 34,296 | |||||||||||||||||||
Gross income |
11,720 | 12,011 | (2.4 | ) | 35,882 | 36,330 | (1.2 | ) | 48,392 | |||||||||||||||||||
Net operating income |
6,359 | 6,293 | 1.0 | 19,039 | 19,373 | 0.7 | ) | 25,473 | ||||||||||||||||||||
Underlying profit before tax (1) |
3,750 | 3,791 | (1.1 | ) | 11,230 | 10,175 | 10.4 | 13,550 | ||||||||||||||||||||
Underlying attributable profit to the Group(1) |
1,990 | 1,998 | (0.4 | ) | 6,042 | 5,592 | 8.0 | 7,516 | ||||||||||||||||||||
Attributable profit to the Group |
1,990 | 1,698 | 17.2 | 5,742 | 5,077 | 13.1 | 6,619 | |||||||||||||||||||||
Variations in constant euros: Q318 vs. Q218: Nil: +3.4%; Gross Income: +3.4%; Net operating Income: +7.1%; Underlying attributable profit: +6.1%; Attributable profit: +25.1%. 9M18 vs. 9M17: Nil: +8.3%; Gross Income: +9.0%; Net operating Income: +9.5%; Underlying attributable profit: +21.1%; Attributable profit: +28.4%.
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∎ EPS, PROFITABILITY AND EFFICIENCY (%) | Q318 | Q218 | % | 9M18 | 9M17 | % | 2017 | |||||||||||||||||||||
Underlying EPS (euro)(1) |
0.115 | 0.115 | (0.5 | ) | 0.349 | 0.350 | (0.2 | ) | 0.463 | |||||||||||||||||||
EPS (euro) |
0.115 | 0.096 | 18.7 | 0.331 | 0.316 | 4.7 | 0.404 | |||||||||||||||||||||
RoE |
8.43 | 8.13 | 8.20 | 7.54 | 7.14 | |||||||||||||||||||||||
Underlying RoTE(1) |
11.95 | 12.06 | 12.14 | 11.80 | 11.82 | |||||||||||||||||||||||
RoTE |
11.95 | 11.61 | 11.69 | 10.99 | 10.41 | |||||||||||||||||||||||
RoA |
0.66 | 0.65 | 0.65 | 0.59 | 0.58 | |||||||||||||||||||||||
Underlying RoRWA(1) |
1.59 | 1.60 | 1.60 | 1.47 | 1.48 | |||||||||||||||||||||||
RoRWA |
1.59 | 1.55 | 1.55 | 1.39 | 1.35 | |||||||||||||||||||||||
Efficiency ratio (with amortisatons) |
45.7 | 47.6 | 46.9 | 46.7 | 47.4 | |||||||||||||||||||||||
∎ SOLVENCY AND NPL RATIOS (%) | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Fully loaded CETl(2) |
11.11 | 10.80 | 11.11 | 10.80 | 10.84 | |||||||||||||||||||||||
Phased-in CETl(2) |
11.29 | 10.98 | 11.29 | 12.18 | 12.26 | |||||||||||||||||||||||
NPL ratio |
3.87 | 3.92 | 3.87 | 4.24 | 4.08 | |||||||||||||||||||||||
Coverage Ratio |
67.9 | 68.6 | 67.9 | 65.8 | 65.2 | |||||||||||||||||||||||
∎ MARKET CAPITALISATION AND SHARES | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Shares (millions) |
16,136 | 16,136 | | 16,136 | 16,041 | 0.6 | 16,136 | |||||||||||||||||||||
Share price (euros) |
4,336 | 4,592 | (5.6 | ) | 4,336 | 5,907 | (26.6 | ) | 5,479 | |||||||||||||||||||
Market capitalisation (EUR million) |
69,958 | 74,097 | (5.6 | ) | 69,958 | 94,752 | (262 | ) | 88,410 | |||||||||||||||||||
Tangible book value per share (euro) |
4.16 | 4.10 | 4.16 | 4.20 | 4.15 | |||||||||||||||||||||||
Price / Tangible book value per share (X) |
1.04 | 1.12 | 1.04 | 1.41 | 1.32 | |||||||||||||||||||||||
P/E ratio (X) |
9.83 | 10.62 | 9.83 | 14.02 | 13.56 | |||||||||||||||||||||||
∎ OTHER DATA | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Number of shareholders |
4,190,808 | 4,152,125 | 0.9 | 4,190,808 | 4,070,187 | 3.0 | 4,029,630 | |||||||||||||||||||||
Number of employees |
201,101 | 200,961 | 0.1 | 201,101 | 200,949 | 0.1 | 202,251 | |||||||||||||||||||||
Number of branches |
13,414 | 13,482 | (0.5 | ) | 13,414 | 13,704 | (2.1 | ) | 13,697 |
(1) | In this document we present the figures related to underlying results, which exclude non-recurring Items, as they are recorded in the separate line of net capital gains and provisions, above the line of attributable profit to the Group. Further details on that line are provided in pages 10 and 11 as well as in the Alternative Performance Measures section as Follows below. |
(2) | 2018 data applying the IFRS 9 transitional arrangements. |
Note: The financial information in this report was approved by the Board of Directors, following a favourable report from the Audit Committee.
In accordance with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority on 5 October 2015 (Guidelines on Alternative Performance Measures. ESMA/2015/1415en), we are attaching herewith a glossary with the definitions and the conciliation with the items presented in the income statement of certain alternative performance measures used in this document. Please refer to Alternative Performance Measures Glossary on page 58.
Corporate Communications | 6 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Important Information
In addition to the financial information prepared under International Financial Reporting Standards (IFRS), this press release includes certain alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415es) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see 2018 2Q Financial Report, published as Relevant Fact on 31 October 2018, Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santander website (www.bancosantander.com).
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Santander cautions that this press release contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RORAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this press release and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. 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, industry, 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. Numerous factors, including those reflected in the Form 20-Funder Key Information-Risk Factors- and in the Share Registration Document under Factores de Riesgo- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this press release 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 revise any forward-looking statement, whether as a result of new information, future events or otherwise
The information contained in this press release 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 press release. No investment activity should be undertaken only on the basis of the information contained in this press release. In making this press release available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this press release nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this press release 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.
Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this press release should be construed as a profit forecast.
Corporate Communications | 7 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Financial Report 2018
JANUARYSEPTEMBER
JanuarySeptember 2018 FINANCIAL REPORT 3 Key consolidated data 4 Santander aim 6 Group performance 9 General background 10 Income statement and balance sheet 17 Solvency ratios 18 Risk management 20 Business information 37 Corporate Governance 38 Sustainability 39 The Santander share 40 Financial information. Appendix 58 Alternative Performance Measures All customers. shareholders and the general public can use Santanders official social network channels in all the countries in which the Bank operates,
JANUARY - SEPTEMBER Key consolidated data |
GRUPO SANTANDER. KEY CONSOLIDATED DATA
∎ BALANCE SHEET (EUR million) | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Total assets |
1,444,687 | 1,433,833 | 0.8 | 1,444,687 | 1,468,030 | (1.6) | 1,444,305 | |||||||||||||||||||||
Loans and advances to customers |
866,226 | 862,092 | 0.5 | 866,226 | 854,686 | 1.4 | 848,914 | |||||||||||||||||||||
Customer deposits |
778,751 | 774,425 | 0.6 | 778,751 | 778,852 | (0.0) | 777,730 | |||||||||||||||||||||
Total customer funds |
986,199 | 981,363 | 0.5 | 986,199 | 988,386 | (0.2) | 985,703 | |||||||||||||||||||||
Total equity |
105,668 | 104,445 | 1.2 | 105,668 | 108,723 | (2.8) | 106,832 | |||||||||||||||||||||
Note: Total customer funds includes customer deposits, mutual funds, pension funds and managed portfolios |
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∎ INCOME STATEMENT (EUR million) | Q318 | Q218 | % | 9M18 | 9M17 | % | 2017 | |||||||||||||||||||||
Net interest income |
8,349 | 8,477 | (1.5) | 25,280 | 25,689 | (1.6) | 34,296 | |||||||||||||||||||||
Gross income |
11,720 | 12,011 | (2.4) | 35,882 | 36,330 | (1.2) | 48,392 | |||||||||||||||||||||
Net operating income |
6,359 | 6,293 | 1.0 | 19,039 | 19,373 | (1.7) | 25,473 | |||||||||||||||||||||
Underlying profit before tax (1) |
3,750 | 3,791 | (1.1) | 11,230 | 10,175 | 10.4 | 13,550 | |||||||||||||||||||||
Underlying attributable profit to the Group (1) |
1,990 | 1,998 | (0.4) | 6,042 | 5,592 | 8.0 | 7,516 | |||||||||||||||||||||
Attributable profit to the Group |
1,990 | 1,698 | 17.2 | 5,742 | 5,077 | 13.1 | 6,619 | |||||||||||||||||||||
Variations in constant euros: Q318 vs. Q218: NII: +3.4%; Gross income: +3.4%; Net operating income: +7.1%; Underlying attributable profit: +6.1%; Attributable profit: +25.1%. |
| |||||||||||||||||||||||||||
9M18 vs. 9M17: NII: +8.3%; Gross income: +9.0%; Net operating income: +9.5%; Underlying attributable profit: +21.1%; Attributable profit: +28.4%. |
| |||||||||||||||||||||||||||
∎ EPS, PROFITABILITY AND EFFICIENCY (%) | Q318 | Q218 | % | 9M18 | 9M17 | % | 2017 | |||||||||||||||||||||
Underlying EPS (euro) (1) |
0.115 | 0.115 | (0.5) | 0.349 | 0.350 | (0.2) | 0.463 | |||||||||||||||||||||
EPS (euro) |
0.115 | 0.096 | 18.7 | 0.331 | 0.316 | 4.7 | 0.404 | |||||||||||||||||||||
RoE |
8.43 | 8.13 | 8.20 | 7.54 | 7.14 | |||||||||||||||||||||||
Underlying RoTE (1) |
11.95 | 12.06 | 12.14 | 11.80 | 11.82 | |||||||||||||||||||||||
RoTE |
11.95 | 11.61 | 11.69 | 10.99 | 10.41 | |||||||||||||||||||||||
RoA |
0.66 | 0.65 | 0.65 | 0.59 | 0.58 | |||||||||||||||||||||||
Underlying RoRWA (1) |
1.59 | 1.60 | 1.60 | 1.47 | 1.48 | |||||||||||||||||||||||
RoRWA |
1.59 | 1.55 | 1.55 | 1.39 | 1.35 | |||||||||||||||||||||||
Efficiency ratio (with amortisations) |
45.7 | 47.6 | 46.9 | 46.7 | 47.4 | |||||||||||||||||||||||
∎ SOLVENCY AND NPL RATIOS (%) | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Fully loaded CET1 (2) |
11.11 | 10.80 | 11.11 | 10.80 | 10.84 | |||||||||||||||||||||||
Phased-in CET1 (2) |
11.29 | 10.98 | 11.29 | 12.18 | 12.26 | |||||||||||||||||||||||
NPL ratio |
3.87 | 3.92 | 3.87 | 4.24 | 4.08 | |||||||||||||||||||||||
Coverage ratio |
67.9 | 68.6 | 67.9 | 65.8 | 65.2 | |||||||||||||||||||||||
∎ MARKET CAPITALISATION AND SHARES | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Shares (millions) |
16,136 | 16,136 | | 16,136 | 16,041 | 0.6 | 16,136 | |||||||||||||||||||||
Share price (euros) |
4.336 | 4.592 | (5.6) | 4.336 | 5.907 | (26.6) | 5.479 | |||||||||||||||||||||
Market capitalisation (EUR million) |
69,958 | 74,097 | (5.6) | 69,958 | 94,752 | (26.2) | 88,410 | |||||||||||||||||||||
Tangible book value per share (euro) |
4.16 | 4.10 | 4.16 | 4.20 | 4.15 | |||||||||||||||||||||||
Price / Tangible book value per share (X) |
1.04 | 1.12 | 1.04 | 1.41 | 1.32 | |||||||||||||||||||||||
P/E ratio (X) |
9.83 | 10.62 | 9.83 | 14.02 | 13.56 | |||||||||||||||||||||||
∎ OTHER DATA | Sep-18 | Jun-18 | % | Sep-18 | Sep-17 | % | Dec-17 | |||||||||||||||||||||
Number of shareholders |
4,190,808 | 4,152,125 | 0.9 | 4,190,808 | 4,070,187 | 3.0 | 4,029,630 | |||||||||||||||||||||
Number of employees |
201,101 | 200,961 | 0.1 | 201,101 | 200,949 | 0.1 | 202,251 | |||||||||||||||||||||
Number of branches |
13,414 | 13,482 | (0.5) | 13,414 | 13,704 | (2.1) | 13,697 |
(1) In this document we present the figures related to underlying results, which exclude non-recurring items, as they are recorded in the separate line of net capital gains and provisions, above the line of attributable profit to the Group. Further details on that line are provided in pages 10 and 11 as well as in the Alternative Performance Measures section as follows below.
(2) 2018 data applying the IFRS 9 transitional arrangements.
Note: The financial information in this report was approved by the Board of Directors, following a favourable report from the Audit Committee.
In accordance with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority on 5 October 2015 (Guidelines on Alternative Performance Measures, ESMA/2015/1415en), we are attaching herewith a glossary with the definitions and the conciliation with the items presented in the income statement of certain alternative performance measures used in this document. Please refer to Alternative Performance Measures Glossary on page 58.
Financial Report 2018 3
JANUARY - SEPTEMBER Santander aim |
SANTANDER AIM
SANTANDER AIM Helping people and businesses prosper 81%* 77%* 19.6 (+19%**) 29.9 (+24%**) of employees engaged million loyal million digital perceive that employees customers customers their colleagues behave in a more Simple, Personal and Fair way ...ma o s ke a d d o a i v n ur o d t . . . sati c m e e s s s u t o e st s a d y ed o i á v l t o i a m t p e n m People o d e Customers m s m l r oe o o s d r e p d y o a r e a l m e g m o l r 142 201,101 M p g c a o e million E m n y e a d . . . d r l i e i n s a e u a bb l l y t t i i n i n i l n i n e e v i g ib r t e n r n t a a h s l t s t i h a o Communities* h ó e i g r l s o w s Shareholders n h p u r o c e er g p t o nl in i m n n g ma ve r e i v l e msu st . q d u a i b m 2.1 on ci men . . l o . . i e n c 4.2 t eyd.a t . s l t c a r million people d. s y u e millones helped in 2017 44,862* 1,295* 11.11%*** +5% scholarships agreements with Fully loaded dividend per granted universities CET1 ratio share growth in 2017 and academic institutions expected for in 21 countries 2018 (*) 2017 data (**) Year-on-year % change (***) Calculated using the IFRS 9 transitional arrangements
4 Financial Report 2018
JANUARY - SEPTEMBER Santander aim |
SANTANDER AIM
People The global engagement survey was launched for the fifth time in order to know the level of employees engagement, as well as identify areas of improvement and opportunities so as to make Santander a better place to work. Under MyContribution, the 360 assessment process, in which executives are evaluated by their peers, line managers and their manager, was put into effect. Progress was made in installing the Workday platform (One Team Programme), which will provide us with a talent pool at the global level. Harmonisation of the processes in the countries involved in the first phase was completed. Once the pilot phase of the Strategic Workforce Planning in the UK, Mexico and the corporate centre was concluded, action plans were launched in the rest of countries. This project aims to identify the talent needed by the Group, quantifying the skills required for the future. Young Leaders, the programme to train professionals with leadership potential, was started in order to speed up Santanders transformation. Customers Various strategies continued to be developed under the commercial transformation programme in order to improve customer loyalty and the customer experience. The number of loyal customers rose by 3.1 million and digital ones by 5.7 million year-on-year. Of note among the commercial actions implemented in the third quarter were the opening of the first Work Café in Spain, as an alternative to conventional branches. In Mexico, a new branch model (Sucursal Ágil) was launched in order to cut waiting time and provide a quicker service, Súper Auto (auto and motorcycle finance) and Solicitud Contrato Agro to encourage agro-credits in the SME segment. As regards digitalisation, the strategy was strengthened with Openbank, which launched an automated financial advisor (robo-advisor) and offered new developments and functionalities. The new services include, among others, private and safe storage of all types of passwords and an account aggregator to connect accounts and products from other banks. In the UK, we launched the Digital Investment Advisor, a new investment advisory service, and in Poland the Dzia³alnosc.pl platform for entrepreneurs. In mobile banking, Poland launched mSignature, an app that authorises operations and replaces SMS codes. Shareholders The first interim dividend charged to 2018s earnings was paid in August. In November, on the date on which the second dividend is traditionally paid, the Santander Dividendo Elección programme will be applied, enabling shareholders to choose whether to receive their remuneration in cash and/or in shares. Shareholder Relations and Universia Foundation concluded the 10th edition of scholarships for students with a disability. These funds contribute to the academic progress of shareholders with disabilities who are university students and foster their socio-labour inclusion. Community Banco Santander is ranked the worlds third best bank and the first in Europe in the Dow Jones Sustainability Index (DJSI), the reference index in the environmental sphere which measures companies performance in sustainability matters, in three dimensions (economic, social and environmental). Fortune magazine included Santander in its 2018 Change the World ranking, which includes a small group of companies that combine success with their contribution to society by generating a positive social impact with initiatives that form part of their business strategy. Banco Santander signed an agreement with Spains Ministry of Science, Innovation and Universities and the chairman of Conference of Rectors of Spanish Universities (CRUE) to launch the Santander Erasmus Scholarship programme, which recognises the excellence of Erasmus+ students and favours inclusive education and equality of opportunity. The Bank, via Santander Responsabilidad Solidario managed by Santander Asset Management Spain, provided EUR 2.6 million for various socio-labour insertion projects of collectives at risk of social exclusion.
Financial Report 2018 5
JANUARY - SEPTEMBER Consolidated financial report |
GROUP PERFORMANCE
6 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
GROUP PERFORMANCE
Financial Report 2018 7
JANUARY - SEPTEMBER Consolidated financial report |
MAIN BUSINESS AREAS PERFORMANCE
(Greater detail on pages 20 to 36 and in the appendix)
(Changes in constant euros)
8 Financial Report 2018
JANUARY - SEPTEMBER General background |
GENERAL BACKGROUND
Grupo Santander developed its business in the first nine months in a generally dynamic and solid economic environment. However, the maximum point of the current expansive cycle could have been reached. The countries where the Group conducts its business are performing at a less even pace, although they are growing.
As happened in the first months of the year, trade tensions, despite the agreement reached in the renegotiation of NAFTA, and the tightening of US monetary policy are the main causes of greater uncertainty, which has triggered tensions of varying intensity, particularly in developing markets such as Argentina and Turkey and, to a lesser extent, in Brazil, also affected by general elections.
Other factors such as the Brexit negotiations and the shape of Italys fiscal policy have also weighted on the tone of the markets.
Country | GDP* Change |
Economic performance | ||||
|
Eurozone |
+2.3% |
Growth continued to slowdown as the year advanced. GDP grew 2.2% year-on-year in the second quarter and could be lower in the third. The unemployment rate fell further (8.1% in August) and inflation was 2.1% in September, although the underlying rate was lower.
| |||
|
Spain |
+2.7% |
The economy showed signs of growing less in the third quarter, although growth remained strong at around 2.5% (above the Eurozone average). The jobless rate fell again in the second quarter to 15.3% and inflation was 2.3% in September (underlying rate of 0.8%).
| |||
|
Poland |
+5.2% |
Growth remained strong in the second quarter. The unemployment rate was still at an historic low (3.6% in the second quarter). Inflation fell in September to 1.8% after staying at 2% for three months. The central bank has held its key rate at 1.5% throughout the year.
| |||
|
Portugal |
+2.3% |
Growth accelerated in the second quarter, driven by exports and investment. The labour market continued to improve: the unemployment rate fell to 6.7% in June and the participation rate increased. Inflation reached 1.4% in September.
| |||
|
United Kingdom |
+1.1% |
The economy picked up in the second quarter after a first quarter affected by bad weather. Inflation remained high (2.4% in September) and sterling fluctuated because of Brexit negotiations. The jobless rate of 4.0% in June is one of full employment. The Bank of Englands key rate rose 25 bps in August to 0.75%.
| |||
|
Brazil |
+1.1% |
GDP slowed in the second quarter because of the transport strike and began to pick up gradually in the third. The central bank held the Selic rate at 6.5% but showed it was ready to raise it if the reals depreciation put the inflation target at risk.
| |||
|
Mexico |
+2.0% |
The economy decelerated in the second quarter and gathered pace in the third. Inflation rose to 5.0% in September and the central bank held its key rate at 7.75%, following two rises of 25 bps, until June. The trade agreement with the US and Canada restored some calm and caused the peso to appreciate.
| |||
|
Chile |
+4.8% |
The economy was strong in the second quarter, spurred by private consumption, investment and exports. Inflation rose to 3.1% in September (2.5% in June) and although the key rate remained at 2.5% in the third quarter, there was a rise of 25 bps in October.
| |||
|
Argentina |
-0.5% |
The government renegotiated its agreement with the IMF in order to cover the financing needs for 2018- 2019. The economic programme will focus on correcting the fiscal deficit and inflation in order to stabilise the economy. The economy shrank in the second quarter and inflation rose due to the pesos depreciation.
| |||
|
United States |
+2.7% |
GDP grew strongly in the second quarter (4.1% annualised) and the jobless rate dropped to 3.9%. Inflation is close to the target of the Fed, which continues to normalise its monetary policy. It increased the federal funds rate in September by 25 bps to 2.0-2.25%.
|
(*) Year-on-year change H118
∎ EXCHANGE RATES: 1 EURO / CURRENCY PARITY |
| |||||||||||||||||||||||
Average (income statement) | Period-end (balance sheet) | |||||||||||||||||||||||
9M18 | 9M17 | Sep-18 | Jun-18 | Sep-17 | ||||||||||||||||||||
US dollar |
1.194 | 1.112 | 1.158 | 1.166 | 1.181 | |||||||||||||||||||
Pound sterling |
0.884 | 0.873 | 0.887 | 0.886 | 0.882 | |||||||||||||||||||
Brazilian real |
4.278 | 3.525 | 4.654 | 4.488 | 3.764 | |||||||||||||||||||
Mexican peso |
22.720 | 20.974 | 21.780 | 22.882 | 21.461 | |||||||||||||||||||
Chilean peso |
750.447 | 726.965 | 765.301 | 757.828 | 754.533 | |||||||||||||||||||
Argentine peso |
28.609 | 17.970 | 47.635 | 33.517 | 20.729 | |||||||||||||||||||
Polish zloty |
4.248 | 4.264 | 4.277 | 4.373 | 4.304 |
Financial Report 2018 9
JANUARY - SEPTEMBER Consolidated financial report |
GRUPO SANTANDER RESULTS
Third quarter attributable profit of EUR 1,990 million, affected by the high inflation adjustment in Argentina (EUR -169 million). Profit was 17% higher than the second quarter (+25% in constant euros), which recorded charges related to integrations
|
The first nine months attributable profit stood at EUR 5,742 million, 13% more (+28% in constant euros) and earnings per share 5%
|
Underlying attributable profit was EUR 6,042 million, 8% higher year-on-year and 21% in constant euros. This profit does not include the non-recurring charges in the second quarter of 2018 and the third of 2017.
|
The results reflect solid customer revenue, an efficiency ratio of 46.9%, among the best of our peers and the cost of credit improving to 0.98%
|
The underlying RoTE was 12.1%, higher than in 2017, and the underlying RoRWA rose to 1.60%
|
∎ GRUPO SANTANDER. INCOME STATEMENT |
|
|||||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||||||
Change |
Change |
|||||||||||||||||||||||||||||||
Q318 | Q218 | % | % excl. FX | 9M18 | 9M17 | % | % excl. FX | |||||||||||||||||||||||||
Net interest income |
8,349 | 8,477 | (1.5) | 3.4 | 25,280 | 25,689 | (1.6) | 8.3 | ||||||||||||||||||||||||
Net fee income |
2,640 | 2,934 | (10.0) | (2.8) | 8,529 | 8,648 | (1.4) | 9.7 | ||||||||||||||||||||||||
Gains (losses) on financial transactions |
505 | 361 | 39.9 | 61.0 | 1,359 | 1,282 | 6.0 | 21.6 | ||||||||||||||||||||||||
Other operating income |
226 | 239 | (5.4) | (4.7) | 714 | 712 | 0.3 | 5.6 | ||||||||||||||||||||||||
Dividends |
28 | 229 | (87.8) | (87.2) | 292 | 309 | (5.6) | (1.8) | ||||||||||||||||||||||||
Income from equity-accounted method |
178 | 176 | 1.1 | 8.8 | 532 | 480 | 10.7 | 20.8 | ||||||||||||||||||||||||
Other operating income/expenses |
20 | (166) | | | (110) | (78) | 40.8 | 78.9 | ||||||||||||||||||||||||
Gross income |
11,720 | 12,011 | (2.4) | 3.4 | 35,882 | 36,330 | (1.2) | 9.0 | ||||||||||||||||||||||||
Operating expenses |
(5,361) | (5,718) | (6.2) | (0.7) | (16,843) | (16,957) | (0.7) | 8.4 | ||||||||||||||||||||||||
General administrative expenses |
(4,804) | (5,114) | (6.1) | (0.4) | (15,069) | (15,058) | 0.1 | 9.5 | ||||||||||||||||||||||||
Personnel |
(2,837) | (2,960) | (4.2) | 0.8 | (8,797) | (8,856) | (0.7) | 7.9 | ||||||||||||||||||||||||
Other general administrative expenses |
(1,967) | (2,154) | (8.7) | (2.2) | (6,272) | (6,203) | 1.1 | 11.8 | ||||||||||||||||||||||||
Depreciation and amortisation |
(557) | (604) | (7.8) | (3.1) | (1,774) | (1,899) | (6.6) | 0.2 | ||||||||||||||||||||||||
Net operating income |
6,359 | 6,293 | 1.0 | 7.1 | 19,039 | 19,373 | (1.7) | 9.5 | ||||||||||||||||||||||||
Net loan-loss provisions |
(2,121) | (2,015) | 5.3 | 11.2 | (6,418) | (6,930) | (7.4) | 3.8 | ||||||||||||||||||||||||
Impairment losses on other assets |
(49) | (34) | 44.1 | 46.6 | (107) | (185) | (42.1) | (38.8) | ||||||||||||||||||||||||
Other income |
(439) | (453) | (3.1) | 8.0 | (1,284) | (2,083) | (38.4) | (31.4) | ||||||||||||||||||||||||
Underlying profit before tax |
3,750 | 3,791 | (1.1) | 4.5 | 11,230 | 10,175 | 10.4 | 22.7 | ||||||||||||||||||||||||
Tax on profit |
(1,394) | (1,379) | 1.1 | 6.7 | (4,053) | (3,497) | 15.9 | 28.4 | ||||||||||||||||||||||||
Underlying profit from continuing operations |
2,356 | 2,412 | (2.3) | 3.2 | 7,177 | 6,678 | 7.5 | 19.7 | ||||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | | | ||||||||||||||||||||||||
Underlying consolidated profit |
2,356 | 2,412 | (2.3) | 3.2 | 7,177 | 6,678 | 7.5 | 19.7 | ||||||||||||||||||||||||
Minority interests |
366 | 414 | (11.6) | (10.4) | 1,135 | 1,085 | 4.6 | 12.3 | ||||||||||||||||||||||||
Underlying attributable profit to the Group |
1,990 | 1,998 | (0.4) | 6.1 | 6,042 | 5,592 | 8.0 | 21.1 | ||||||||||||||||||||||||
Net capital gains and provisions* |
| (300) | (100.0) | (100.0) | (300) | (515) | (41.7) | (41.7) | ||||||||||||||||||||||||
Attributable profit to the Group |
1,990 | 1,698 | 17.2 | 25.1 | 5,742 | 5,077 | 13.1 | 28.4 | ||||||||||||||||||||||||
Underlying EPS (euros) |
0.115 | 0.115 | (0.5) | 0.349 | 0.350 | (0.2) | ||||||||||||||||||||||||||
Underlying diluted EPS (euros) |
0.114 | 0.115 | (0.5) | 0.348 | 0.350 | (0.4) | ||||||||||||||||||||||||||
EPS (euros) |
0.115 | 0.096 | 18.7 | 0.331 | 0.316 | 4.7 | ||||||||||||||||||||||||||
Diluted EPS (euros) |
0.114 | 0.096 | 18.7 | 0.330 | 0.316 | 4.4 | ||||||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||||||
Average total assets |
1,431,897 | 1,437,163 | (0.4) | 1,436,286 | 1,392,398 | 3.2 | ||||||||||||||||||||||||||
Average stockholders equity |
94,391 | 94,607 | (0.2) | 94,615 | 93,178 | 1.5 |
(*) | In Q218, integration costs (mainly restructuring costs) net of tax impacts, in Spain: EUR -280 million, Corporate Centre: EUR -40 million and Portugal: EUR 20 million. In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million) and charges for equity stakes and intangible assets (EUR -130 million) |
10 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
∎ QUARTERLY INCOME STATEMENT |
||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||
Q117 | Q217 | Q317 | Q417 | Q118 | Q218 | Q318 | ||||||||||||||||||||||
Net interest income |
8,402 | 8,606 | 8,681 | 8,607 | 8,454 | 8,477 | 8,349 | |||||||||||||||||||||
Net fee income |
2,844 | 2,916 | 2,888 | 2,949 | 2,955 | 2,934 | 2,640 | |||||||||||||||||||||
Gains (losses) on financial transactions |
573 | 286 | 422 | 421 | 493 | 361 | 505 | |||||||||||||||||||||
Other operating income |
211 | 240 | 260 | 85 | 249 | 239 | 226 | |||||||||||||||||||||
Dividends |
41 | 238 | 31 | 75 | 35 | 229 | 28 | |||||||||||||||||||||
Income from equity-accounted method |
133 | 160 | 188 | 223 | 178 | 176 | 178 | |||||||||||||||||||||
Other operating income/expenses |
37 | (157) | 42 | (213) | 36 | (166) | 20 | |||||||||||||||||||||
Gross income |
12,029 | 12,049 | 12,252 | 12,062 | 12,151 | 12,011 | 11,720 | |||||||||||||||||||||
Operating expenses |
(5,543) | (5,648) | (5,766) | (5,961) | (5,764) | (5,718) | (5,361) | |||||||||||||||||||||
General administrative expenses |
(4,915) | (4,983) | (5,161) | (5,267) | (5,151) | (5,114) | (4,804) | |||||||||||||||||||||
Personnel |
(2,912) | (2,943) | (3,000) | (3,116) | (3,000) | (2,960) | (2,837) | |||||||||||||||||||||
Other general administrative expenses |
(2,002) | (2,039) | (2,161) | (2,151) | (2,151) | (2,154) | (1,967) | |||||||||||||||||||||
Depreciation and amortisation |
(629) | (665) | (605) | (694) | (613) | (604) | (557) | |||||||||||||||||||||
Net operating income |
6,486 | 6,401 | 6,486 | 6,101 | 6,387 | 6,293 | 6,359 | |||||||||||||||||||||
Net loan-loss provisions |
(2,400) | (2,280) | (2,250) | (2,181) | (2,282) | (2,015) | (2,121) | |||||||||||||||||||||
Impairment losses on other assets |
(68) | (63) | (54) | (230) | (24) | (34) | (49) | |||||||||||||||||||||
Other income |
(707) | (785) | (591) | (315) | (392) | (453) | (439) | |||||||||||||||||||||
Underlying profit before tax |
3,311 | 3,273 | 3,591 | 3,375 | 3,689 | 3,791 | 3,750 | |||||||||||||||||||||
Tax on profit |
(1,125) | (1,129) | (1,243) | (1,090) | (1,280) | (1,379) | (1,394) | |||||||||||||||||||||
Underlying profit from continuing operations |
2,186 | 2,144 | 2,347 | 2,285 | 2,409 | 2,412 | 2,356 | |||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | | |||||||||||||||||||||
Underlying consolidated profit |
2,186 | 2,144 | 2,347 | 2,285 | 2,409 | 2,412 | 2,356 | |||||||||||||||||||||
Minority interests |
319 | 395 | 371 | 362 | 355 | 414 | 366 | |||||||||||||||||||||
Underlying attributable profit to the Group |
1,867 | 1,749 | 1,976 | 1,924 | 2,054 | 1,998 | 1,990 | |||||||||||||||||||||
Net capital gains and provisions* |
| | (515) | (382) | | (300) | | |||||||||||||||||||||
Attributable profit to the Group |
1,867 | 1,749 | 1,461 | 1,542 | 2,054 | 1,698 | 1,990 | |||||||||||||||||||||
Underlying EPS (euros) ** |
0.120 | 0.112 | 0.118 | 0.113 | 0.120 | 0.115 | 0.115 | |||||||||||||||||||||
Underlying diluted EPS (euros) ** |
0.120 | 0.111 | 0.119 | 0.111 | 0.119 | 0.115 | 0.114 | |||||||||||||||||||||
EPS (euros) ** |
0.120 | 0.112 | 0.084 | 0.088 | 0.120 | 0.096 | 0.115 | |||||||||||||||||||||
Diluted EPS (euros) ** |
0.120 | 0.111 | 0.085 | 0.087 | 0.119 | 0.096 | 0.114 |
(*) Including the following figures net of tax:
| In Q317, integration costs (Banco Popular EUR -300 million, Germany EUR -85 million) and charge for equity stakes and intangible assets (EUR -130 million). |
| In Q417, capital gains from the disposal of the stake in All funds Bank (EUR 297 million), USA tax reform (EUR 73 million), goodwill charges (EUR -603 million) and in the US provisions for hurricanes, repurchase of a minority stake in Santander Consumer USA and other (EUR -149 million). |
| In Q218, integration costs (mainly restructuring costs) net of tax, in Spain: EUR -280 million, Corporate Centre: EUR -40 million and Portugal: EUR 20 millions. |
(**) | Q118 and Q218 data adjusted to the capital increase of July 2017 for like-for-like comparisons with other quarters. |
Financial Report 2018 11
JANUARY - SEPTEMBER Consolidated financial report |
Third quarter results compared to the second quarter of 2018
The third quarter attributable profit was EUR 1,990 million, affected by the inflation adjustment in Argentina (EUR -169 million). Profit was 17% higher than the second quarter (+25% in constant euros), due to the recording in that quarter of EUR -300 million of non-recurring items net of tax associated with integrations (mainly restructuring charges).
Excluding these charges, profit was almost the same as the underlying attributable profit in the second quarter. In constant euros it rose 6%, with the following detail:
| Positive evolution of net interest income, which rose for the sixth straight quarter, and of gains on financial transactions, while fee income was lower because of reduced income from wholesale businesses impacted by the markets environment. The rest of revenue was affected, on the one hand, by the charge in the third quarter for the assessment of monetary assets in Argentina derived from the high inflation and, on the other, by the contribution to the Single Resolution Fund recorded in the second quarter. |
| Operating expenses were slightly lower (-1%) because of those for mature markets (-3%), with all countries recording falls. Costs in developing countries increased 2% because of investments, the automatic salary adjustment to inflation in Argentina and the pesos depreciation againts the dollar. |
| Loan-loss provisions were 11% higher, largely due to SC USA, which seasonally has lower provisions in the second quarter. |
Evolution of results compared to the first nine months of 2017
The first nine months attributable profit of EUR 5,742 million was 13% higher year-on-year in euros and 28% in constant euros. Underlying attributable profit (excluding net capital gains and provisions) was EUR 6,042 million (+8% in euros and +21% in constant euros). The P&L performance by line was as follows. To facilitate analysis and comparisons of management actions, all changes exclude exchange rate impacts.
Gross income
| The structure of our gross income, where net interest income and fee income accounted for 94% of total revenue in the first nine months, well above the average of our competitors, continues to enable us to grow in a consistent and recurring way, limiting the impact that periods of high volatility can have on gains on financial transactions. Gross income increased 9%, as follows: |
| Net interest income rose 8%, due to greater lending and deposit volumes, mainly in developing countries, which overall grew at double-digit rates, and management of spreads. |
All units increased except for the United Kingdom, affected by pressure on spreads on new mortgages and standard variable rate (SVR) balances, and the United States, hit by competitive pressure, reduced spreads and the higher cost of funding. The decline in revenue in the US was offset by a 16% fall in loan-loss provisions.
| Fee income was up 10%, reflecting greater activity and customer loyalty, as well as the strategy of growth in services and higher value-added products and in areas of low capital consumption. Growth in fee income from Retail Banking (+7%) and Wealth Management (+66%), while that from Corporate & Investment Banking was stable. |
| Gains on financial transactions, which account for less than 4% of gross income, increased 22%, while the sum of dividends, equity-accounted income and other income rose 6%, partly due to the higher income from leasing in the United States. |
12 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
Operating expenses
| Operating expenses rose 8% as a result of higher inflation in some countries, investments in transformation and digitalisation, and the perimeter effect. In real terms (excluding inflation and perimeter effect), costs were almost stable. Of note by units was the fall in costs in the United States, Spain, where they fell for the third quarter running, and Portugal, the latter two reflecting the optimisation plans implemented. |
The main rises were in Mexico, due to investments in infrastructure; in Argentina, due to investments in digitalisation and the automatic review of salary agreements from the rise in inflation and in Poland, because of transformation projects and pressure on salaries.
The measures to optimise costs, as part of the ongoing integration processes, will be reflected in greater synergies in the future. This evolution is enabling us to combine the investments made to enhance the customer experience with an operational efficiency that continues to be the sectors reference.
Loan-loss provisions
| Good evolution of credit quality ratios. The NPL ratio, as well as the coverage ratio and the cost of credit, improved in the last 12 months. |
| By countries, provisions fell in the US, Mexico and Portugal and rose in Brazil, although at a slower pace than lending, while the UK maintained a cost of credit of only 8 bps. The main rises were in Spain, due to the greater perimeter, in SCF, because of higher releases and portfolio sales in 2017, but it maintained a cost of credit below the standards for its business, and Argentina due to higher provisions for individual borrowers and the impact of the pesos depreciation on dollar balances. |
| The cost of credit dropped from 1.12% in September 2017 to 0.98% a year later. |
Other results and provisions
| Other results and provisions were EUR -1,391 million, 32% higher than in the first nine months of 2017. This item records different kinds of provisions, as well as capital gains, capital losses and asset impairment. |
| The improvement over 2017 was largely due to lower provisions for legal and labour claims (trabalhistas) in Brazil, lower charges in the UK stemming from potential customer complaints, and some releases from various items made at SCF in 2018 (in 2017 provisions for legal claims and customer complaints were made and restructurings in some of the countries where we operate). |
Profit and profitability
| Underlying pre-tax profit rose 23% year-on-year and underlying attributable profit 21%. Underlying earnings per share were EUR 0.349, in line with that in the first nine months of 2017. Underlying RoTE rose to 12.1% and underlying RoRWA was 1.60%, also higher year-on-year and over the whole of 2017. |
| Including non-recurring items, attributable profit increased 28% (+13% in constant euros), and earnings per share were EUR 0.331 (+5% year-on-year in euros). RoTE was 11.7% and RoRWA 1.55%, in both cases higher than in 2017. |
Financial Report 2018 13
JANUARY - SEPTEMBER Consolidated financial report |
GRUPO SANTANDER. BALANCE SHEET |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Assets | Sep-18 | Sep-17 | Absolute change |
% | Dec-17 | |||||||||||||||
Cash, cash balances at central banks and other demand deposits |
111,704 | 122,055 | (10,351) | (8.5) | 110,995 | |||||||||||||||
Financial assets held for trading |
98,448 | 126,650 | (28,202) | (22.3) | 125,458 | |||||||||||||||
Debt securities |
28,230 | 37,977 | (9,747) | (25.7) | 36,351 | |||||||||||||||
Equity instruments |
17,239 | 18,419 | (1,180) | (6.4) | 21,353 | |||||||||||||||
Loans and advances to customers |
239 | 12,148 | (11,909) | (98.0) | 8,815 | |||||||||||||||
Loans and advances to central banks and credit institutions |
63 | 1,192 | (1,129) | (94.7) | 1,696 | |||||||||||||||
Derivatives |
52,677 | 56,913 | (4,236) | (7.4) | 57,243 | |||||||||||||||
Financial assets designated at fair value through profit or loss |
70,573 | 38,160 | 32,413 | 84.9 | 34,781 | |||||||||||||||
Loans and advances to customers |
24,318 | 20,595 | 3,723 | 18.1 | 20,475 | |||||||||||||||
Loans and advances to central banks and credit institutions |
37,401 | 13,142 | 24,259 | 184.6 | 9,889 | |||||||||||||||
Other (debt securities an equity instruments) |
8,854 | 4,423 | 4,431 | 100.2 | 4,417 | |||||||||||||||
Financial assets at fair value through other comprehensive income |
116,356 | 139,461 | (23,105) | (16.6) | 133,271 | |||||||||||||||
Debt securities |
112,288 | 134,568 | (22,280) | (16.6) | 128,481 | |||||||||||||||
Equity instruments |
2,771 | 4,893 | (2,122) | (43.4) | 4,790 | |||||||||||||||
Loans and advances to customers |
1,297 | | 1,297 | | | |||||||||||||||
Loans and advances to central banks and credit institutions |
| | | | | |||||||||||||||
Financial assets measured at amortised cost |
931,411 | 917,404 | 14,007 | 1.5 | 916,504 | |||||||||||||||
Debt securities |
40,089 | 28,787 | 11,302 | 39.3 | 31,034 | |||||||||||||||
Loans and advances to customers |
840,373 | 821,943 | 18,430 | 2.2 | 819,625 | |||||||||||||||
Loans and advances to central banks and credit institutions |
50,949 | 66,674 | (15,725) | (23.6) | 65,845 | |||||||||||||||
Investments in subsidaries, joint ventures and associates |
9,371 | 6,832 | 2,539 | 37.2 | 6,184 | |||||||||||||||
Tangible assets |
24,727 | 22,708 | 2,019 | 8.9 | 22,975 | |||||||||||||||
Intangible assets |
27,855 | 28,538 | (683) | (2.4) | 28,683 | |||||||||||||||
Goodwill |
24,956 | 25,855 | (899) | (3.5) | 25,769 | |||||||||||||||
Other intangible assets |
2,899 | 2,683 | 216 | 8.0 | 2,914 | |||||||||||||||
Other assets |
54,242 | 66,222 | (11,980) | (18.1) | 65,454 | |||||||||||||||
Total assets |
1,444,687 | 1,468,030 | (23,343) | (1.6) | 1,444,305 | |||||||||||||||
Liabilities and shareholders equity | ||||||||||||||||||||
Financial liabilities held for trading |
66,805 | 110,024 | (43,219) | (39.3) | 107,624 | |||||||||||||||
Customer deposits |
| 27,218 | (27,218) | (100.0) | 28,179 | |||||||||||||||
Debt securities issued |
| | | | | |||||||||||||||
Deposits by central banks and credit institutions |
| 1,629 | (1,629) | (100.0) | 574 | |||||||||||||||
Derivatives |
51,775 | 57,766 | (5,991) | (10.4) | 57,892 | |||||||||||||||
Other |
15,030 | 23,411 | (8,381) | (35.8) | 20,979 | |||||||||||||||
Financial liabilities designated at fair value through profit or loss |
92,182 | 55,049 | 37,133 | 67.5 | 59,617 | |||||||||||||||
Customer deposits |
55,154 | 25,721 | 29,433 | 114.4 | 28,945 | |||||||||||||||
Debt securities issued |
2,323 | 2,733 | (410) | (15.0) | 3,056 | |||||||||||||||
Deposits by central banks and credit institutions |
34,293 | 26,595 | 7,698 | 28.9 | 27,027 | |||||||||||||||
Other |
412 | 0 | 412 | | 589 | |||||||||||||||
Financial liabilities measured at amortized cost |
1,139,066 | 1,147,403 | (8,337) | (0.7) | 1,126,069 | |||||||||||||||
Customer deposits |
723,597 | 725,913 | (2,316) | (0.3) | 720,606 | |||||||||||||||
Debt securities issued |
231,708 | 215,907 | 15,801 | 7.3 | 214,910 | |||||||||||||||
Deposits by central banks and credit institutions |
155,446 | 176,890 | (21,444) | (12.1) | 162,714 | |||||||||||||||
Other |
28,315 | 28,693 | (378) | (1.3) | 27,839 | |||||||||||||||
Liabilities under insurance contracts |
810 | 1,673 | (863) | (51.6) | 1,117 | |||||||||||||||
Provisions |
13,269 | 15,838 | (2,569) | (16.2) | 14,490 | |||||||||||||||
Other liabilities |
26,887 | 29,321 | (2,434) | (8.3) | 28,556 | |||||||||||||||
Total liabilities |
1,339,019 | 1,359,307 | (20,288) | (1.5) | 1,337,472 | |||||||||||||||
Shareholders equity |
119,793 | 115,723 | 4,070 | 3.5 | 116,265 | |||||||||||||||
Capital stock |
8,068 | 8,020 | 48 | 0.6 | 8,068 | |||||||||||||||
Reserves |
107,032 | 103,587 | 3,445 | 3.3 | 103,608 | |||||||||||||||
Attributable profit to the Group |
5,742 | 5,077 | 665 | 13.1 | 6,619 | |||||||||||||||
Less: dividends |
(1,049) | (962) | (87) | 9.0 | (2,029) | |||||||||||||||
Other comprehensive income |
(24,816) | (19,823) | (4,993) | 25.2 | (21,777) | |||||||||||||||
Minority interests |
10,691 | 12,824 | (2,133) | (16.6) | 12,344 | |||||||||||||||
Total equity |
105,668 | 108,723 | (3,055) | (2.8) | 106,832 | |||||||||||||||
Total liabilities and equity |
1,444,687 | 1,468,030 | (23,343) | (1.6) | 1,444,305 |
NOTE: Due to the application of IFRS 9 from 1 January 2018 and the decision to not restate the accounts, as permitted in the regulation, the balance sheet from September 2018 is not comparable with previous reporting periods. As such, for comparative purposes, and given the portfolio reclassification and the corresponding nomenclature changes were not significant, the 2017 accounts have been reorganised in accordance with the new aims and valuation methods. The initial impact as of 1 January 2018 was a 1.8% increase in fair value portfolios and a 0.8% decrease in portfolios valued at amortised cost, including a EUR 2.0 billion increase in impairment losses. The resulting decrease in equity was just under EUR 1.5 billion.
14 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
GRUPO SANTANDER BALANCE SHEET
The evolution of exchange rates had virtually no impact in the third quarter. On a year-on-year basis, negative impact of exchange rates of 2.5 pp on loans and 3.5 pp on funds
|
Lending increased 3% year-on-year (excluding the forex impact) in eight of the ten core units, particularly in developing countries (+11%)
|
Customer funds rose 4% year-on-year (excluding the forex impact), with growth in seven of the ten core units (falls of less than 1% in the other three). Rises in demand deposits and mutual funds and fall in time deposits
|
Gross customer loans and advances (excluding reverse repos)
Gross customer loans and advances excluding reverse repos remained evenly balanced: individuals (45%), consumer credit (16%), SME and companies (28%) and CIB (11%).
| Quarter-on-quarter, and excluding the exchange rate impact, loans were virtually unchanged (+0.2%) with the following performance by country: |
- | Increase of 4% in balances of developing countries, with growth of between 2% and 4% in all countries except for Argentina (+11%), due in part to the impact of the pesos depreciation on dollar balances. |
- | Balances in mature countries declined 1%, very conditioned by Spain (-2%), due to wholesale balances and institutions. |
| Compared to September 2017, there was a 3% increase (eliminating the exchange rate impacts), with the following performance by country: |
- | There were rises in eight of the ten core countries. Of note were all the developing markets which grew 11%: Argentina (+62%), both for balances in pesos as well as the impact of the pesos depreciation on dollar balances, Brazil (+13%), Mexico (+10%), Poland and Chile (+9%). |
- | More moderate growth in the US and UK (+3% and +1%, respectively). |
- | The only declines were in Portugal and Spain (-2%), the first one because of the sale of non-productive portfolios and the second because it was affected by the already commented evolution in the quarter. |
Financial Report 2018 15
JANUARY - SEPTEMBER Consolidated financial report |
Customer funds
Customer funds are well diversified by products: 61% are demand deposits, 21% time deposits and 18% mutual funds.
| In the third quarter, total deposits excluding repos and mutual funds increased 1% excluding exchange rate impacts. By countries: |
| There was a 2% rise in developing markets, notably Argentina and Brazil (+16% and +4%, respectively). Chile, on the other hand, dropped 4% because of the strategy of optimising the cost of funds. |
| In mature markets, the US dropped 1% because of lower public sector balances and the rest of countries hardly changed. Spain continued the strategy of reducing the expensive balances incorporated from Popular (the cost of deposits was 6 bps lower than in the second quarter and 20 bps less than at the end of 2017) and increasing balances of demand deposits and mutual funds. Time deposits declined notably. |
| Compared to September 2017, year-on-year growth was 4% excluding the exchange rate impact. |
| The strategy continued to focus on boosting loyalty and this helped produce rises of 5% in demand deposits and 7% in mutual funds, in both cases with growth in almost all countries. Time deposits fell 2%, due to declines in Spain, the UK and Chile, which offset the significant rises in Brazil (+25%), as part of the strategy of replacing letras financeiras with customer deposits in order to optimise the cost of funds, the US (+22%) and Poland (+20%). |
| By units, total funds rose in seven of the ten core units. The largest increases were in Argentina (+67%), Brazil (+17%) and Poland (+11%). |
Slight falls in Chile, the UK and the US, all of them below 1%. In Chile, due to lower time deposits and mutual funds, while demand deposits rose 9%; in the UK, because of reduced time deposits and savings, as current account deposits grew 5%; and in the US, due to lower demand deposits because of the outflow of public sector balances and the rise in interest rates, partially offset by the increase in time deposits.
As well as capturing customer deposits, Grupo Santander, for strategic reasons, maintains a selective policy of issuing securities in the international fixed income markets and strives to adapt the frequency and volume of its market operations to the structural liquidity needs of each unit, as well as to the receptiveness of each market.
| In the first nine months of 2018, the Group issued: |
| Medium- and long-term senior debt amounting to EUR 14,507 million and covered bonds placed in the market of EUR 5,178 million. Additionally, there were EUR 14,564 million of securitisations placed in the market. |
| Issuances to meet the TLAC (Total Loss-Absorbing Capacity) requirement amounting to EUR 11,246 million, in order to strengthen the Groups situation, consisting of senior non-preferred: EUR 8,261 million; subordinated debt: EUR 1,485 million and preferred: EUR 1,500 million. |
| Maturities of medium- and long-term debt of EUR 19,960 million. |
| The net loan-to-deposit ratio was 111% (110% in September 2017). The ratio of deposits plus medium- and long-term funding to the Groups loans was 114%, underscoring the comfortable funding structure. |
16 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
SOLVENCY RATIOS
The fully loaded CET1 ratio reached 11.11% following an excellent generation of capital in the quarter (+31 bps)
|
Tangible equity per share was EUR 4.16, an increase of 1.5% in the quarter
|
The fully loaded leverage ratio was 5.0%, the same as in September 2017 |
At the end of September, the total phased-in capital ratio stood at 14.81% and the phased-in CET1 ratio at 11.29%, comfortably meeting the minimum levels required by the European Central Bank on a consolidated basis (12.249% for the total capital ratio and 8.749% for the CET1 ratio).
On 1 January 2018 the IFRS 9 came into force, which implied several accounting changes affecting the capital ratios. Santander chose to apply the phase-in under a dynamic approach, which means a five-year transition period. Applying this criteria, the fully loaded CET1 was 11.11% at the end of September. This ratio does not include the estimated 9 bps positive impact from WiZink (expected to be registered in the coming months).
Had the IFRS 9 transitional arrangement not been applied, the total impact on the fully loaded CET1 at end September would have been -27 bps.
Of note in the third quarter was the strong generation of 31 bps of capital from profit and the reduction in risk weighted assets, partly benefiting from securitisations and the review of parameters.
Lastly, and in accordance with the issuance plan to meet the TLAC requirement, there were three issuances in the first nine months, with impact on the capital ratios. In February we issued EUR 1.25 billion of subordinated (Tier 2) debt maturing in 2028. In March we completed a EUR 1.5 billion issuance of contingent convertible capital securities (CoCos), which contribute towards additional tier 1 (AT1) capital levels, and in April in Poland a 10-year PLN 1 billion of subordinated debt (Tier 2) was issued.
NOTE: All 2018 data calculated using the IFRS 9 transitional arrangements, unless otherwise indicated.
Financial Report 2018 17
JANUARY - SEPTEMBER Consolidated financial report |
RISK MANAGEMENT
The Groups NPL ratio continued its favourable trend (-5 bps in the quarter) to 3.87%
|
The cost of credit (0.98%) continued to decline and was 14 bps lower year-on-year
|
Loan-loss provisions at the end of September amounted to EUR 6,418 million and coverage was 68% |
18 Financial Report 2018
JANUARY - SEPTEMBER Consolidated financial report |
NON-PERFORMING LOANS BY QUARTER |
||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||
Q117 |
Q217 |
Q317 | Q417 | Q118 | Q218 | Q318 | ||||||||||||||||||||||
Balance at beginning of period |
33,643 | 32,158 | 50,714 | 39,442 | 37,596 | 37,407 | 36,654 | |||||||||||||||||||||
Net additions |
1,583 | 2,255 | 2,499 | 1,933 | 2,340 | 2,906 | 2,528 | |||||||||||||||||||||
Increase in scope of consolidation |
18 | 20,969 | (10,954) | | | | | |||||||||||||||||||||
Exchange rate differences and other |
536 | (854) | (150) | (358) | 361 | (409) | (140) | |||||||||||||||||||||
Write-offs |
(3,623) | (3,813) | (2,667) | (3,420) | (2,890) | (3,250) | (2,710) | |||||||||||||||||||||
Balance at period-end |
32,158 | 50,714 | 39,442 | 37,596 | 37,407 | 36,654 | 36,332 |
Foreign exchange structural rate risk
Santander maintains a CET1 ratio coverage level of around 100% in order to protect itself from exchange rate movements.
Market risk
| In the quarter, the risk of trading activity of global corporate banking, measured in daily VaR terms at 99%, fluctuated between EUR 6.4 million and EUR 10.2 million. These figures are low compared to the size of the Groups balance sheet and activity. The average VaR was slightly higher in the first part of the quarter due to market volatility, temporarily increasing the exposure to interest rate and FX risk, although always within the established limits. |
| In addition, there are other positions classified for accounting purposes as trading. The total VaR of these trading positions at the end of September was EUR 8.1 million. |
| There was increased market volatility as a result of trade disputes and political instability in various countries, which generated a negative impact during August in structural debt portfolios. |
Financial Report 2018 19
JANUARY - SEPTEMBER Business information |
DESCRIPTION OF BUSINESS
In 2018 Grupo Santander maintained the same general criteria applied in 2017, as well as the business segments, with the following exceptions:
| Banco Populars financial results and balance sheet have been allocated to the corresponding geographic areas. In 2017, starting from the integration date, Banco Popular was reported separately. The main affected areas are: Spain, Portugal and Spain Real Estate Activity. |
| The Wealth Management unit, created at the end of 2017, will be reported independently as a global business. This unit was previously included in Retail Banking. This change has no impact on the geographic segments. |
| Annual adjustment of the Global Customer Relationship Models perimeter, between Retail Banking and Corporate and Investment Banking, with no impact on the geographic businesses. |
These changes have no impact on the Groups figures. However, for comparative purposes, the figures of previous periods have been restated including changes in the affected geographic and global businesses.
Moreover, the balance sheets have been adjusted to the new IFRS 9 regulation. Since retroactive application of this rule is not mandatory, certain lines of the 2018 balance sheet are not comparable with previously reported periods. For comparative purposes, and given the scant significance of portfolio reclassifications and their nomenclature changes, the 2017 accounts have been reorganised in accordance with their purpose and valuation method.
The financial statements of each business unit have been drawn up by aggregating the Groups basic operating units. The information relates to both the accounting data of the units integrated in each segment, as well as that provided by the management information systems. In all cases, the same general principles as those used in the Group are applied.
The operating business areas are structured into two levels:
Geographic businesses. The operating units are segmented by geographical areas. This coincides with the Groups first level of management and reflects Santanders positioning in the worlds three main currency areas (euro, sterling and dollar). The segments reported on are: |
| Continental Europe. This covers all businesses in the area. Detailed financial information is provided on Spain, Portugal, Poland and Santander Consumer Finance (which incorporates all the regions business, including the three countries mentioned herewith). |
| United Kingdom. This includes the businesses developed by the Groups various units and branches in the country. |
| Latin America. This embraces all the Groups financial activities conducted via its banks and subsidiaries in the region. The financial statements of Brazil, Mexico, Chile and Argentina are set out. |
| United States. Includes the holding Santander Holdings USA (SHUSA) and its subsidiaries Santander Bank, Banco Santander Puerto Rico, Santander Consumer USA, Banco Santander International, Santander Investment Securities and the New York branch. |
Global businesses. The activity of the operating units is distributed by the type of business: Retail Banking, Santander Corporate and Invesment Banking, Wealth Management and Spain Real Estate Activity. |
| Retail Banking. This covers all customer banking businesses, including consumer finance, except those of corporate banking, which are managed through the CIB, and asset management and private banking, which are managed by Wealth Management. The results of the hedging positions in each country are also included, conducted within the sphere of each ones Assets and Liabilities Committee. |
| Corporate and Investment Banking (CIB). This business reflects the revenues from global corporate banking, investment banking and markets worldwide including treasuries managed globally (always after the appropriate distribution with Retail Banking customers), as well as equities business. |
| Wealth Management. Includes the asset management business (Santander Asset Management), the new corporate unit of Private Banking and International Private Banking in Miami and Switzerland. |
In addition to these operating units, which report by geographic area and by businesses, the Group continues to maintain the area of Corporate Centre. This area incorporates the centralised activities relating to equity stakes in financial companies, financial management of the structural exchange rate position, assumed within the sphere of the Groups Assets and Liabilities Committee, as well as management of liquidity and of shareholders equity via issuances.
As the Groups holding entity, this area manages all capital and reserves and allocations of capital and liquidity with the rest of businesses. It also incorporates amortisation of goodwill but not the costs related to the Groups central services (charged to the areas), except for corporate and institutional expenses related to the Groups functioning.
The figures of the Groups various units have been drawn up in accordance with these criteria, and so do not coincide individually with those published by each unit. |
20 Financial Report 2018
JANUARY - SEPTEMBER Business information |
NET OPERATING INCOME | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
2,032 | 18.5 | 18.7 | 5,663 | 10.8 | 11.1 | ||||||||||||||||||||||||||
o/w: Spain |
1,012 | 41.7 | 41.7 | 2,644 | 21.7 | 21.7 | ||||||||||||||||||||||||||
Santander Consumer Finance |
682 | 10.1 | 10.3 | 1,932 | 2.8 | 3.4 | ||||||||||||||||||||||||||
Poland |
211 | (10.8) | (9.7) | 626 | 5.1 | 4.6 | ||||||||||||||||||||||||||
Portugal |
166 | (8.9) | (8.9) | 530 | 13.4 | 13.4 | ||||||||||||||||||||||||||
United Kingdom |
637 | 4.5 | 6.4 | 1,832 | (17.9) | (16.8) | ||||||||||||||||||||||||||
Latin America |
3,083 | (9.5) | 1.8 | 9,881 | (5.3) | 13.8 | ||||||||||||||||||||||||||
o/w: Brazil |
2,149 | (3.5) | 3.1 | 6,658 | (4.5) | 15.9 | ||||||||||||||||||||||||||
Mexico |
547 | 8.3 | 3.4 | 1,543 | (3.1) | 4.9 | ||||||||||||||||||||||||||
Chile |
375 | 1.3 | 5.4 | 1,127 | 1.0 | 4.3 | ||||||||||||||||||||||||||
Argentina |
(70) | | (36.9) | 311 | (45.6) | 32.8 | ||||||||||||||||||||||||||
USA |
987 | 5.9 | 3.4 | 2,762 | (6.0) | 1.0 | ||||||||||||||||||||||||||
Operating areas |
6,739 | 1.1 | 6.8 | 20,139 | (2.8) | 7.6 | ||||||||||||||||||||||||||
Corporate Centre |
(380) | 2.2 | 2.2 | (1,100) | (17.8) | (17.8) | ||||||||||||||||||||||||||
Total Group |
6,359 | 1.0 | 7.1 | 19,039 | (1.7) | 9.5 | ||||||||||||||||||||||||||
ATTRIBUTABLE PROFIT TO THE GROUP | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe* |
989 | 27.6 | 27.8 | 2,696 | 12.9 | 13.3 | ||||||||||||||||||||||||||
o/w: Spain* |
526 | 61.8 | 61.8 | 1,306 | 17.9 | 17.9 | ||||||||||||||||||||||||||
Santander Consumer Finance* |
332 | (4.1) | (4.0) | 1,000 | 6.1 | 7.0 | ||||||||||||||||||||||||||
Poland |
80 | (13.2) | (12.1) | 236 | 8.0 | 7.6 | ||||||||||||||||||||||||||
Portugal* |
114 | 10.9 | 10.9 | 344 | 8.9 | 8.9 | ||||||||||||||||||||||||||
United Kingdom |
385 | 3.3 | 5.1 | 1,077 | (10.4) | (9.2) | ||||||||||||||||||||||||||
Latin America |
947 | (15.1) | (4.0) | 3,160 | (0.5) | 20.6 | ||||||||||||||||||||||||||
o/w: Brazil |
619 | (4.3) | 2.3 | 1,942 | 2.1 | 23.9 | ||||||||||||||||||||||||||
Mexico |
195 | 5.9 | 1.1 | 554 | 4.1 | 12.8 | ||||||||||||||||||||||||||
Chile |
153 | (3.3) | 0.5 | 461 | 4.9 | 8.3 | ||||||||||||||||||||||||||
Argentina |
(71) | | | 67 | (74.6) | (38.0) | ||||||||||||||||||||||||||
USA |
125 | (40.5) | (42.9) | 460 | 36.5 | 46.5 | ||||||||||||||||||||||||||
Operating areas* |
2,446 | (1.1) | 4.1 | 7,393 | 4.1 | 13.8 | ||||||||||||||||||||||||||
Corporate Centre* |
(456) | (4.0) | (4.0) | (1,351) | (10.6) | (10.6) | ||||||||||||||||||||||||||
Total Group* |
1,990 | (0.4) | 6.1 | 6,042 | 8.0 | 21.1 | ||||||||||||||||||||||||||
Net capital gains and provisions |
| (100.0) | (100.0) | (300) | (41.7) | (41.7) | ||||||||||||||||||||||||||
Total Group |
1,990 | 17.2 | 25.1 | 5,742 | 13.1 | 28.4 | ||||||||||||||||||||||||||
(*) In the units, underlying attributable profit (excluding net capital gains and provisions). Details on pages 10 and 11. |
|
|||||||||||||||||||||||||||||||
GROSS LOANS AND ADVANCES TO CUSTOMERS EX. REV. REPOS | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
385,133 | (0.4) | (0.6) | 385,133 | 0.9 | 0.8 | ||||||||||||||||||||||||||
o/w: Spain |
214,346 | (1.8) | (1.8) | 214,346 | (2.4) | (2.4) | ||||||||||||||||||||||||||
Santander Consumer Finance |
94,488 | 0.2 | 0.0 | 94,488 | 6.2 | 6.2 | ||||||||||||||||||||||||||
Poland |
24,356 | 4.1 | 1.9 | 24,356 | 9.6 | 8.9 | ||||||||||||||||||||||||||
Portugal |
37,093 | 0.1 | 0.1 | 37,093 | (2.1) | (2.1) | ||||||||||||||||||||||||||
United Kingdom |
237,116 | (1.0) | (0.9) | 237,116 | 0.6 | 1.2 | ||||||||||||||||||||||||||
Latin America |
151,947 | 1.3 | 3.9 | 151,947 | (3.0) | 11.5 | ||||||||||||||||||||||||||
o/w: Brazil |
69,190 | (0.4) | 3.3 | 69,190 | (8.5) | 13.1 | ||||||||||||||||||||||||||
Mexico |
31,853 | 9.0 | 3.8 | 31,853 | 8.5 | 10.1 | ||||||||||||||||||||||||||
Chile |
40,123 | 1.8 | 2.9 | 40,123 | 7.6 | 9.2 | ||||||||||||||||||||||||||
Argentina |
5,799 | (21.8) | 11.1 | 5,799 | (29.3) | 62.4 | ||||||||||||||||||||||||||
USA |
80,686 | 1.4 | 0.7 | 80,686 | 5.2 | 3.1 | ||||||||||||||||||||||||||
Operating areas |
854,882 | (0.1) | 0.2 | 854,882 | 0.5 | 2.9 | ||||||||||||||||||||||||||
Total Group |
861,884 | (0.1) | 0.2 | 861,884 | 0.5 | 3.0 | ||||||||||||||||||||||||||
CUSTOMER FUNDS (CUSTOMER DEP. EX. REPOS + MUTUAL FUNDS) | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
434,192 | 0.5 | 0.3 | 434,192 | 3.6 | 3.6 | ||||||||||||||||||||||||||
o/w: Spain |
318,859 | 0.1 | 0.1 | 318,859 | 2.7 | 2.7 | ||||||||||||||||||||||||||
Santander Consumer Finance |
36,635 | (0.3) | (0.4) | 36,635 | 2.4 | 2.4 | ||||||||||||||||||||||||||
Poland |
30,011 | 4.4 | 2.1 | 30,011 | 11.9 | 11.2 | ||||||||||||||||||||||||||
Portugal |
39,185 | (0.0) | (0.0) | 39,185 | 7.9 | 7.9 | ||||||||||||||||||||||||||
United Kingdom |
205,178 | 0.3 | 0.4 | 205,178 | (1.3) | (0.7) | ||||||||||||||||||||||||||
Latin America |
194,040 | (0.9) | 2.1 | 194,040 | (5.1) | 11.4 | ||||||||||||||||||||||||||
o/w: Brazil |
106,612 | 0.5 | 4.2 | 106,612 | (5.7) | 16.6 | ||||||||||||||||||||||||||
Mexico |
40,407 | 3.5 | (1.5) | 40,407 | 4.6 | 6.1 | ||||||||||||||||||||||||||
Chile |
32,479 | (4.8) | (3.9) | 32,479 | (2.2) | (0.8) | ||||||||||||||||||||||||||
Argentina |
9,271 | (18.1) | 16.3 | 9,271 | (27.5) | 66.6 | ||||||||||||||||||||||||||
USA |
62,000 | (0.3) | (1.0) | 62,000 | 1.8 | (0.2) | ||||||||||||||||||||||||||
Operating areas |
895,410 | 0.1 | 0.6 | 895,410 | 0.4 | 3.9 | ||||||||||||||||||||||||||
Total Group |
895,632 | 0.1 | 0.6 | 895,632 | 0.4 | 3.9 |
Financial Report 2018 21
JANUARY - SEPTEMBER Business information |
SPAIN |
EUR 1,026 Mn | |
Highlights
|
Attributable profit |
Good business dynamics in the first nine months, with a record July in new loans driven by SME and consumer credit
|
Lending to SME, companies and in private banking increased. We maintained the strategy in funds of reducing the cost of deposits, which dropped from 41 bps in the fourth quarter of 2017 to 21 bps in the third of 2018
|
Our contact centre was recognised as the best in Spain. We are further developing the branch model with SMART branches and the opening of the first Work Café in Spain, an alternative channel to conventional branches, in order to better adapt to customers needs
|
We completed the legal integration of Banco Popular
|
Underlying attributable profit was 18% higher year-on-year in the first nine months at EUR 1,306 million |
22 Financial Report 2018
JANUARY - SEPTEMBER Business information |
SANTANDER CONSUMER FINANCE |
EUR 1,000 Mn | |
Highlights (changes in constant euros) |
Attributable profit |
In a better economic scenario, loans rose 6%, with new lending up in almost all countries
|
Revenue growth and the cost of credit continue to be at low levels
|
High profitability (RoTE more than 16%) and underlying attributable profit 7% higher year-on-year
|
Financial Report 2018 23
JANUARY - SEPTEMBER Business information |
POLAND |
EUR 236 Mn | |
Highlights (changes in constant euros)
|
Attributable profit |
Bank Zachodni WBK SA was renamed Santander Bank Polska SA
|
Deutsche Banks transaction is expected to be completed by year-end, as scheduled
|
Volumes rose 9%, with focus on loans to individuals, SME and corporates. Customer funds grew 11%, partly due to actions to attract funds ahead of Deutsche Bank Polska adquisition
|
Underlying attributable profit up 8%, backed by revenue management in an environment of low interest rates
|
24 Financial Report 2018
JANUARY - SEPTEMBER Business information |
PORTUGAL |
EUR 364 Mn Attributable profit
| |
Highlights
| ||
Santander Totta is the countrys largest private sector bank by assets and domestic loans and continued to strengthen its position in the corporate market
| ||
Underlying attributable profit rose 9% in the first nine months, with better efficiency and lower provisions
| ||
In April, DBRS upgraded its long-term debt rating for the Bank to A, with stable outlook, and in September S&P improved the stable outlook to positive
| ||
Financial Report 2018 25
JANUARY - SEPTEMBER Business information |
UNITED KINGDOM |
EUR 1,077 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
We continued to invest in business transformation initiatives which will improve our customer experience and deliver operational efficiencies
| ||
We have delivered growth in mortgages with a focus on customer service and retention
| ||
2018 results have been impacted by ongoing competitive market conditions, higher regulatory, risk and control costs and strategic investment in business transformation, digital enhancement and growth initiatives. Better performance in the third quarter, with underlying attributable profit up 5%
|
26 Financial Report 2018
JANUARY - SEPTEMBER Business information |
BRAZIL |
EUR 1,942 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
Our strategic focus on enhancing the customer experience and satisfaction was reflected in the growth of our customerbase and the improvement in the Net Promoter Score
| ||
Efficiency reached its best level in five years, due to the operational leverage and the continued positive trend in revenue
| ||
Prudent risk management underscored by the growth in lending, with gains of profitable market share, compatible with improvements in the NPL ratio and the cost of credit
| ||
Higher profitability (RoTE of 20.0%) and profit up 24% YoY to EUR 1,942 million in the first nine months
|
Financial Report 2018 27
JANUARY - SEPTEMBER Business information |
MEXICO |
EUR 554 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
The strategy continued to focus on the transformation of the branch network and digitalisation, reflected in greater customer attraction and increased loyalty, and in the launch of new businesses such as auto finance
| ||
In volume terms, there was faster growth in lending. Of note were companies (+17%) and SME (+11%). In customer funds, growth was driven by deposits from individuals, SME and mutual funds
| ||
Good trend in profit. The first nine months attributable profit rose 13% year-on-year, driven by the strong performance of net interest income, fee income and loan-loss provisions
|
28 Financial Report 2018
JANUARY - SEPTEMBER Business information |
CHILE |
EUR 461 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
Continued focus on commercial and branch network transformation. Santander Life, launched at the end of 2017, well received and attracting new customers
| ||
Growth in business volumes, at a faster pace in some segments. Of note the rise in activity with companies
| ||
Underlying attributable profit increased 8% year-on-year, mainly due to net interest income and fee income. The efficiency ratio remained at around 41%
|
Financial Report 2018 29
JANUARY - SEPTEMBER Business information |
ARGENTINA |
EUR 67 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
Santander Río continued to be the leading private sector bank in Argentina by loans and deposits
| ||
The business focus was on digital transformation, customer experience and key segments: Select and Pymes Advance
| ||
he first nine months underlying attributable profit was affected by the high inflation adjustment of EUR -169 million (EUR -81 million for monetary adjustment and EUR -88 million for the exchange rate)
| ||
The first half attributable profit of EUR 137 million was 8% higher year-on-year
|
30 Financial Report 2018
JANUARY - SEPTEMBER Business information |
URUGUAY |
Highlights (changes in constant euros)
|
The Group continued to be the leading private sector bank in the country, focused on growing in retail banking and improving efficiency and the quality of service
|
Underlying attributable profit rose 45%, spurred by the good performance of net interest income and fee income, as well as cost control. RoTE of 29%
|
Commercial activity
| Santander continued to focus on improving customer satisfaction and increasing loyalty. |
| We continued to advance in our digital transformation strategy and in modernising channels. The number of digital customers increased 32% to over 210,000 (penetration of 56%, up from 46% in September 2017). Transactions via digital channels rose 35% year-on-year. Consumer finance companies also increased placements via digital channels. At Creditel they already account for 39% of new loans. |
| Loans grew in target segments, products and currencies: +20% in consumer credit and cards and +22% in the national currency portfolio. Peso deposits grew 10% and foreign currency ones fell 1% year-on-year. |
Results
The first nine months underlying attributable profit was 45% higher year-on-year at EUR 103 million:
| Gross income rose 17%, driven by net interest income and in general, by the main revenue lines. The efficiency ratio was 43.6%, 4 pp better than in the first nine months of 2017. |
| Despite the rise in provisions because of the entry into force of IFRS 9 regulation and other impacts, the NPL ratio remained at a low level (3.05%), coverage was high (120%) and the cost of credit was 2.76%. |
The third quarter underlying attributable profit was 1% higher than the seconds, due to the good performance of net interest income (+10%), which offset the lower gains on financial transactions and the rise in costs and provisions
PERU
Highlights (changes in constant euros)
| The strategy remained focused on the corporate segment, the countrys large companies and the Groups global clients. |
| The specialised auto finance company continued to increase its revenue at double-digit rates. |
| Lending rose 5% compared to September 2017 and deposits rose 13%. |
| Underlying attributable profit in the first nine months was 10% higher at EUR 28 million. The good performance of fee income and gains on financial transactions more than offset the rise in costs from corporate projects. The efficiency ratio was 34.9% and NPL coverage remained high (204%). The third quarter profit was 35% higher quarter-on-quarter due to higher fee income. |
COLOMBIA
Highlights (changes in constant euros)
| Activity in Colombia remained focused on CIB clients, large companies and corporates, contributing solutions in treasury, risk hedging, foreign trade and confirming, developing investment banking products and supporting the countrys infrastructure plan. This offer is in the process of being expanded with a licence for Santander Securities Services Colombia, enabling custody services to be offered. |
| We continued the strategy to consolidate the auto financing business. This will enable us to have the critical mass needed to consolidate ourselves in this market. |
| Lending increased 67% year-on-year, with good evolution of peso loans, while deposits rose 55% thanks to demand and time deposits. |
| The third quarter profit was EUR 3 million and EUR 5 million for the first nine months (+28% year-on-year). Of note was gross income (+49%), spurred by net interest income, fee income and gains on financial transactions. |
Financial Report 2018 31
JANUARY - SEPTEMBER Business information |
UNITED STATES |
EUR 460 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
The Federal Reserve terminated the 2015 Written Agreement signed with Santander Holdings USA on 2 July 2015, demonstrating continued improvement on regulatory issues
| ||
Volume trend improvement, with quarterly and yearly loan growth. Lending rose for the second straight quarter, increasing USD 2.8 billion in the last twelve months
| ||
Underlying attributable profit of EUR 460 million in the first nine months, 47% higher year-on-year, driven by lower costs and provisions and higher income from leasing |
32 Financial Report 2018
JANUARY - SEPTEMBER Business information |
CORPORATE CENTRE |
EUR -1,391 Mn | |
Highlights
|
Attributable profit
| |
The Corporate Centres objective is to aid the operating units by contributing value-added and carrying out the corporate function of oversight and control. It also develops functions related to financial and capital management
| ||
The underlying attributable loss was 11% less year-on-year, due to reduced hedging costs of exchange rates
|
Strategy and functions
The Corporate Centre contributes value to the Group in various ways:
| It makes the Groups governance more solid, through global control frameworks and supervision. |
| Fostering the exchange of best practices in management of costs and economies of scale. This enables us to be one of the most efficient banks in the sector. |
| The Corporate Centre contributes to the Groups revenue growth, by sharing the best commercial practices, launching global commercial initiatives and accelerating the digital transformation simultaneously in all countries. |
It also develops functions related to financial and capital management, as follows:
| Financial Management functions: |
| Structural management of liquidity risk associated with funding the Groups recurring activity, stakes of a financial nature and management of net liquidity related to the needs of some business units. |
| This activity is carried out by diversifying the different funding sources (issuances and other), maintaining an adequate profile at each moment in volumes, maturities and costs. The price at which these operations are made with other Group units is the market rate (euribor or swap) plus the premium, which in the concept of liquidity, the Group supports by immobilising funds during the term of the operation. |
| Interest rate risk is also actively managed in order to soften the impact of interest rate changes on net interest income, conducted via high credit quality, very liquid and low capital consumption derivatives. |
| Strategic management of the exposure to exchange rates on equity and dynamic on the countervalue of the units results in euros for the next 12 months. Net investments in equity are currently covered by EUR 21,399 million (mainly Brazil, UK, Mexico, Chile, US, Poland and Norway) with different instruments (spot, fx, forwards). |
| Management of total capital and reserves: capital allocated to each of the units |
Results
First nine months loss of EUR 1,391 million, including restructuring charges of EUR 40 million (net of tax), down from a loss of EUR 1,641 million in the first nine months of 2017, which included a charge of EUR 130 million for equity stakes and intangible assets.
Excluding these impacts, loss of EUR 1,351 in 2018 compared to EUR 1,511 million in 2017. The improvement was mainly due to lower costs related to hedging of exchange rates.
In addition, net interest income was hit by the volume of issuances made under the funding plan, largely focused on eligible TLAC instruments, and greater liquidity.
Operating expenses, on the other hand, remained virtually unchanged as a result of the streamlining and simplification measures that enable the investment in global projects related to the Groups digital transformation to be offset.
∎ CORPORATE CENTRE |
||||||||||||||||||||||||
EUR million | Q318 | Q218 | Chg.% | 9M18 | 9M17 | Chg.% | ||||||||||||||||||
Gross income |
(257) | (250) | 3.0 | (733) | (981) | (25.3) | ||||||||||||||||||
Net operating income |
(380) | (372) | 2.2 | (1,100) | (1,337) | (17.8) | ||||||||||||||||||
Underlying attributable profit to the Group |
(456) | (475) | (4.0) | (1,351) | (1,511) | (10.6) | ||||||||||||||||||
Attributable profit to the Group |
(456) | (515) | (11.5) | (1,391) | (1,641) | (15.2) | ||||||||||||||||||
Detailed financial information on page 55 |
Financial Report 2018 33
JANUARY - SEPTEMBER Business information |
RETAIL BANKING |
EUR 5,671 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Continued focus on three main priorities: customer loyalty, digital transformation and operational excellence
| ||
As at end September, the Group had more than 19.6 million loyal customers and almost 30 million digital customers
| ||
Underlying attributable profit of EUR 5,931 million, partly driven by the perimeter effect following Populars incorporation and the good dynamics in customer revenue
|
34 Financial Report 2018
JANUARY - SEPTEMBER Business information |
CORPORATE & INVESTMENT BANKING |
EUR 1,258 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Santander is among the leaders in Latin America and Europe, particularly in export & agency finance, debt capital markets and structured financing
| ||
We continued to advance in our mission to help our global customers in their capital issuances, providing them with financing solutions and transaction services. We also continued to adapt our offer of products to the Banks digital transformation
| ||
Underlying attributable profit was 3% lower in the first nine months at EUR 1,258 million than in the same period of 2017 whose first quarter was exceptional in gains on financial transactions. The third quarter profit was 14% higher than the second quarters
|
Financial Report 2018 35
JANUARY - SEPTEMBER Business information |
WEALTH MANAGEMENT |
||
Asset Management and Private Banking |
EUR 392 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Total contribution (net profit + fee income) amounted to EUR 757 million, 10% more than in the first nine months of 2017
| ||
Mutual funds rose 5% in Private Banking and 3% in SAM, despite markets performance
| ||
Lending increased 10% driven by the development of the Private Wealth segment, which offers a differential service to the Groups largest clients |
36 Financial Report 2018
JANUARY - SEPTEMBER Corporate Governance |
CORPORATE GOVERNANCE
A responsible bank has a solid governance model with well-defined functions, it manages risks and opportunities prudently and defines its long-term strategy watching out for the interests of all its stakeholders and society in general.
Balanced | Respect for | Maximum | At the forefront of best | |||
composition of | shareholders | transparency | corporate governance | |||
the Board | rights | in remuneration | practices |
Below are the changes to the board and the board committees agreed in the third quarter:
∎ | Changes in the boards composition |
} | Although there were no changes in the board in the third quarter, the following changes were agreed and announced on 25 September 2018: |
| To appoint Mr Andrea Orcel as a new member of the board and chief executive officer of Banco Santander in place of Mr José Antonio Álvarez Álvarez and filling the vacancy on the board produced by Mr Juan Miguel Villar Mir, who resigned his position in view of the end of his term. |
| To appoint Mr José Antonio Álvarez Álvarez vice chairman of Banco Santanders board and executive chairman of Santander Spain, replacing Mr Rodrigo Echenique Gordillo in both posts. Mr Echenique Gordillo informed the board on 25 June 2018 of his decision to relinquish his functions as an executive director of Banco Santander as of 1 January 2019, without detriment to continuing after this date as a non-executive director. |
} | These appointments will become effective once the relevant authorisations are obtained (including those resulting from Mr Andrea Orcels current employment) and in no event earlier than 1 January 2019. |
} | Once the appointment of Mr José Antonio Álvarez Álvarez is firm, Mr Rodrigo Echenique Gordillo and Mr Guillermo de la Dehesa Romero will continue to be directors of the Bank, but will no longer be vice chairmen. As of then, Mr Bruce Carnegie-Brown and Mr José Antonio Álvarez Álvarez will be the only vice chairmen of Banco Santanders board. |
∎ | Changes in the composition of the boards committees |
} | On 24 July 2018, the board appointed Mr Álvaro Antonio Cardoso de Sousa chairman of the risk supervision, regulation and compliance committee, effective as of 1 October 2018, in place of Mr Bruce Carnegie-Brown, who remains a member of that committee. |
} | Mr Álvaro Antonio Cardoso de Sousa was also appointed on the same date a member of the responsable banking, sustainability and culture committee. |
} | Mr Rodrigo Echenique Gordillo will join the appointments committee, effective as of 1 January 2019, once he ceases his executive functions on Banco Santanders board, as announced on 25 June 2018. |
Financial Report 2018 37
JANUARY - SEPTEMBER Sustainability |
SUSTAINABILITY
We develop our activity in a responsible way, contributing to the economic and social progress of the communities in which we operate, taking into account our impact on the environment and fostering stable relationships with our main stakeholders.
Presence in the socially | 2.1 million people | 183 million | ... of which EUR 129 million | |||
responsible investment | helped in 2017 | social investment | were invested in | |||
indices | in communities | higher education |
Grupo Santander continued to develop new measures within its corporate social responsibility commitment. The main ones in the third quarter were:
∎ | Sustainable governance |
} | In order to adjust Banco Santanders corporate governance and progress toward becoming a more responsible bank, the board created a new committee. The Responsible Banking, Sustainability and Culture Committee advises the board on the Banks values and corporate culture, the sustainability strategy, ethical, social and environmental matters regarding the main stakeholders (employees, customers, shareholders and society) and supervises the correct reporting of non-financial information. This committee meets quarterly and held its first meeting on 4 September. |
∎ | Indexes and analysts |
} | Banco Santander is ranked the third bank in the world and the first in Europe in the Dow Jones Sustainability Index (DJSI), the reference international index that measures companies performance in the sphere of sustainability (in the economic, social and environmental dimensions). |
} | The DJSI accorded Santander the maximum score (100) in aspects such as financial inclusion and energy efficiency, among other sustainability management elements. The bank has formed part of the index for 18 consecutive years, and for the eighth year running Santander is first among Spanish banks. |
∎ | Investment in communities |
} | Banco Santander, via the Santander Responsabilidad Solidario fund managed by Santander Asset Management Spain, delivered EUR 2.6 million which will go to various socio-labour insertion programmes of collectives at risk of social exclusion, as well as to social and international cooperation projects. Santander Corporate & Investment Banking (SCIB) held the event to award the prizes to the winning projects of the second edition of the Social Projects programme, maintaining the commitment to finance and support different foundations and projects proposed by the divisions professionals. |
} | Santander Chile launched a new initiative, Work Café Solidario, in order to support the countrys disadvantaged people. With the sale of craft mugs in the Work Cafés, the bank is supporting the TECHO-Chile Foundation, which helps the most vulnerable communities. |
} | Thanks to the Explorer programme promoted by the bank via Santander Universities, with the coordination of CISE, some 50 young entrepreneurs will display their business ideas in Silicon Valley. |
∎ | Environment and climate change |
} | Banco Santander, the leader in financing the first wind-power project in Spain free of premiums and government subsidies, is structuring and ensuring via SCIB the financing and development of 300 MW awarded in Spains first renewable energy auction. It is the first greenfield project in Spain financed without the need for subsidies, thereby establishing a new business paradigm in the renewable energy sector. |
} | Moreover, in order to promote care of the environment, Santander in Chile will hand out free and gradually re-usable bags that can be recycled, stamped with illustrations of animals at risk of extinction and created by two local entrepreneurs. Once these bags can no longer be used, they can be deposited at any clean point or taken to one of the banks branches and given a new use. |
38 Financial Report 2018
JANUARY - SEPTEMBER The Santander share |
THE SHARE
∎ | Shareholder remuneration |
} | The first dividend of EUR 0.065 per share charged to 2018s earnings was paid in cash in August. |
} | As regards the second remuneration to shareholders, the Santander Scrip Dividend programme will be applied. Each shareholder received a free allocation of new shares for each share owned. There are then three options: sell the rights to the Bank at a set price (EUR 0.035 per right), sell them to the market between 18 October and 1 November at the share price, or receive new shares(*) (one for every 123 rights). In order to tend to the third option, a capital increase for a maximum amount of EUR 565 million (131,188,240 shares) fully charged to reserves will be made. The number of shares to be issued will depend on the number of rights sold to the Bank. On 5 November, shareholders are due to receive the amount in cash if they opted to sell the rights to the Bank, and on 13 November the new shares if they chose this option. |
(*) The options, time periods and procedures indicated can present particularities for holders of Santander shares on foreign stock markets where the Bank is listed. |
∎ | Share price performance |
} | Markets ended the first nine months lower, following a start to the year with rises driven by the positive impact of the USs tax reform. This positive environment, however, dissipated in the following months because of greater volatility in stock markets mainly due to: (i) the political uncertainty in Italy and Brazil; (ii) the lack of agreement over Brexit, (iii) the escalation of trade tensions caused by the US protectionist measures and the possible impact on confidence and the global economy; and (iv) the rise in financial tensions in developing economies as a result of the dollars strengthening, which followed the decision of the Fed and the ECB to continue their policy of monetary normalisation. The Fed raised its interest rates and the ECB announced the end of quantitative easing (its first interest rate rise is expected after the summer of 2019). |
} | In this context, the main indices and the Santander share ended September lower. The Santander share was down 20.9% at EUR 4.336 at the end of September, the Euro Stoxx Banks and Stoxx Banks fell 18.3% and 14.8%, respectively. The Ibex 35 benchmark index of the Madrid Stock Exchange declined 6.5%, the DJ Stoxx 50 3.5% and the MSCI World Banks 8.3%. |
∎ | Market capitalisation and trading |
} | As of 28 September, Santander was the largest bank in the eurozone by market capitalisation (EUR 69,958 million) and the 18th in the world. A total of 15,856 million Santander shares were traded in the first nine months for an effective value of EUR 82,229 million, the largest figure among the shares that comprise the EuroStoxx (liquidity ratio of 98%). |
} | The shares weighting in the DJ Stoxx 50 was 1.9%, 7.3% in the DJ Stoxx Banks and 14.5% in the Ibex 35 at the end of September. |
∎ | Shareholder base |
} | The total number of Santander shareholders at 28 September was 4,190,808 of which 3,920,898 were European (78.1% of the capital stock) and 252,016 from the Americas (20.8%). Excluding the board of Grupo Santander, which represents 1.1% of the Banks capital stock, individuals hold 39.6% and institutional shareholders 59.2%. |
Financial Report 2018 39
40 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ NET FEE INCOME. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q318 | Q218 | Chg.% | 9M18 | 9M17 | Chg.% | |||||||||||||||||||
Fees from services |
1,605 | 1,796 | (10.6) | 5,208 | 5,465 | (4.7) | ||||||||||||||||||
Wealth management and marketing of customer funds |
874 | 896 | (2.4) | 2,714 | 2,550 | 6.4 | ||||||||||||||||||
Securities and custody |
161 | 243 | (33.6) | 607 | 633 | (4.1) | ||||||||||||||||||
Net fee income |
2,640 | 2,934 | (10.0) | 8,529 | 8,648 | (1.4) | ||||||||||||||||||
∎ OPERATING EXPENSES. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q318 | Q218 | Chg.% | 9M18 | 9M17 | Chg.% | |||||||||||||||||||
Personnel expenses |
2,837 | 2,960 | (4.2) | 8,797 | 8,856 | (0.7) | ||||||||||||||||||
General expenses |
1,967 | 2,154 | (8.7) | 6,272 | 6,203 | 1.1 | ||||||||||||||||||
Information technology |
347 | 396 | (12.5) | 1,109 | 904 | 22.7 | ||||||||||||||||||
Communications |
120 | 129 | (6.9) | 382 | 402 | (5.0) | ||||||||||||||||||
Advertising |
143 | 160 | (10.9) | 453 | 545 | (16.9) | ||||||||||||||||||
Buildings and premises |
427 | 450 | (5.0) | 1,354 | 1,364 | (0.7) | ||||||||||||||||||
Printed and office material |
28 | 31 | (10.9) | 89 | 100 | (10.4) | ||||||||||||||||||
Taxes (other than tax on profits) |
118 | 144 | (17.8) | 405 | 394 | 2.7 | ||||||||||||||||||
Other expenses |
784 | 843 | (7.0) | 2,479 | 2,494 | (0.6) | ||||||||||||||||||
Personnel and general expenses |
4,804 | 5,114 | (6.1) | 15,069 | 15,058 | 0.1 | ||||||||||||||||||
Depreciation and amortisation |
557 | 604 | (7.8) | 1,774 | 1,899 | (6.6) | ||||||||||||||||||
Operating expenses |
5,361 | 5,718 | (6.2) | 16,843 | 16,957 | (0.7) |
∎ OPERATING MEANS |
||||||||||||||||||||||||||||
Employees | Branches | |||||||||||||||||||||||||||
Sep-18 | Sep-17 | Chg. | Sep-18 | Sep-17 | Chg. | |||||||||||||||||||||||
Continental Europe |
66,603 | 68,090 | (1,487) | 6,035 | 6,355 | (320) | ||||||||||||||||||||||
o/w: Spain |
32,425 | 33,347 | (922) | 4,398 | 4,499 | (101) | ||||||||||||||||||||||
Santander Consumer Finance |
14,861 | 15,045 | (184) | 441 | 549 | (108) | ||||||||||||||||||||||
Poland |
11,283 | 11,691 | (408) | 519 | 592 | (73) | ||||||||||||||||||||||
Portugal |
6,910 | 6,967 | (57) | 667 | 705 | (38) | ||||||||||||||||||||||
United Kingdom |
25,803 | 25,722 | 81 | 767 | 820 | (53) | ||||||||||||||||||||||
Latin America |
89,587 | 87,862 | 1,725 | 5,948 | 5,835 | 113 | ||||||||||||||||||||||
o/w: Brazil |
46,663 | 46,261 | 402 | 3,552 | 3,422 | 130 | ||||||||||||||||||||||
Mexico |
19,483 | 18,217 | 1,266 | 1,410 | 1,401 | 9 | ||||||||||||||||||||||
Chile |
12,003 | 11,673 | 330 | 408 | 406 | 2 | ||||||||||||||||||||||
Argentina |
9,362 | 9,346 | 16 | 481 | 482 | (1) | ||||||||||||||||||||||
USA |
17,303 | 17,566 | (263) | 664 | 694 | (30) | ||||||||||||||||||||||
Operating areas |
199,296 | 199,240 | 56 | 13,414 | 13,704 | (290) | ||||||||||||||||||||||
Corporate Centre |
1,805 | 1,709 | 96 | |||||||||||||||||||||||||
Total Group |
201,101 | 200,949 | 152 | 13,414 | 13,704 | (290) |
∎ NET LOAN-LOSS PROVSIONS. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q318 | Q218 | Chg.% | 9M18 | 9M17 | Chg.% | |||||||||||||||||||
Non-performing loans |
2,395 | 2,496 | (4.0) | 7,507 | 8,186 | (8.3) | ||||||||||||||||||
Country-risk |
1 | (2) | | 10 | 6 | 69.9 | ||||||||||||||||||
Recovery of written-off assets |
(275) | (478) | (42.5) | (1,098) | (1,262) | (13.0) | ||||||||||||||||||
Net loan-loss provisions |
2,121 | 2,015 | 5.3 | 6,418 | 6,930 | (7.4) |
Financial Report 2018 41
JANUARY - SEPTEMBER Appendix |
∎ LOANS AND ADVANCES TO CUSTOMERS. CONSOLIDATED |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Sep-18 | Sep-17 | Absolute change |
% | Dec-17 | ||||||||||||||||
Commercial bills |
29,416 | 27,101 | 2,315 | 8.5 | 29,287 | |||||||||||||||
Secured loans |
472,298 | 474,786 | (2,488) | (0.5) | 473,935 | |||||||||||||||
Other term loans |
265,751 | 260,005 | 5,746 | 2.2 | 257,441 | |||||||||||||||
Finance leases |
30,386 | 28,113 | 2,273 | 8.1 | 28,511 | |||||||||||||||
Receivable on demand |
8,515 | 8,398 | 117 | 1.4 | 6,721 | |||||||||||||||
Credit cards receivable |
20,535 | 20,846 | (311) | (1.5) | 21,809 | |||||||||||||||
Impaired assets |
34,983 | 37,942 | (2,959) | (7.8) | 36,280 | |||||||||||||||
Gross loans and advances to customers (excl. reverse repos) |
861,884 | 857,189 | 4,695 | 0.5 | 853,985 | |||||||||||||||
Reverse repos |
28,223 | 22,877 | 5,346 | 23.4 | 18,864 | |||||||||||||||
Gross loans and advances to customers |
890,107 | 880,067 | 10,040 | 1.1 | 872,848 | |||||||||||||||
Loan-loss allowances |
23,881 | 25,381 | (1,500) | (5.9) | 23,934 | |||||||||||||||
Loans and advances to customers |
866,226 | 854,686 | 11,540 | 1.4 | 848,914 | |||||||||||||||
∎ CUSTOMER FUNDS. CONSOLIDATED |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Sep-18 | Sep-17 | Absolute change |
% | Dec-17 | ||||||||||||||||
Demand deposits |
540,098 | 522,254 | 17,844 | 3.4 | 525,072 | |||||||||||||||
Time deposits |
191,312 | 203,907 | (12,595) | (6.2) | 199,650 | |||||||||||||||
Mutual funds |
164,221 | 166,171 | (1,950) | (1.2) | 165,413 | |||||||||||||||
Customer deposits excl. repos + Mutual funds |
895,631 | 892,332 | 3,299 | 0.4 | 890,135 | |||||||||||||||
Pension funds |
15,797 | 16,045 | (248) | (1.5) | 16,166 | |||||||||||||||
Managed portfolios |
27,430 | 27,317 | 113 | 0.4 | 26,393 | |||||||||||||||
Subtotal |
938,858 | 935,695 | 3,163 | 0.3 | 932,694 | |||||||||||||||
Repos |
47,341 | 52,691 | (5,350) | (10.2) | 53,009 | |||||||||||||||
Group customer funds |
986,199 | 988,386 | (2,187) | (0.2) | 985,703 | |||||||||||||||
∎ ELIGIBLE CAPITAL (FULLY LOADED) |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Sep-18 | Sep-17 | Absolute change |
% | Dec-17 | ||||||||||||||||
Capital stock and reserves |
116,238 | 111,687 | 4,551 | 4.1 | 111,362 | |||||||||||||||
Attributable profit |
5,742 | 5,077 | 664 | 13.1 | 6,619 | |||||||||||||||
Dividends |
(2,454) | (2,272) | (182) | 8.0 | (2,998) | |||||||||||||||
Other retained earnings |
(26,001) | (20,997) | (5,004) | 23.8 | (23,108) | |||||||||||||||
Minority interests |
6,752 | 7,327 | (574) | (7.8) | 7,228 | |||||||||||||||
Goodwill and intangible assets |
(28,648) | (28,622) | (26) | 0.1 | (28,537) | |||||||||||||||
Other deductions |
(6,292) | (4,990) | (1,302) | 26.1 | (5,004) | |||||||||||||||
Core CET1 |
65,337 | 67,210 | (1,873) | (2.8) | 65,563 | |||||||||||||||
Preferred shares and other eligible T1 |
8,911 | 7,753 | 1,158 | 14.9 | 7,730 | |||||||||||||||
Tier 1 |
74,248 | 74,964 | (715) | (1.0) | 73,293 | |||||||||||||||
Generic funds and eligible T2 instruments |
11,499 | 14,585 | (3,085) | (21.2) | 14,295 | |||||||||||||||
Eligible capital |
85,748 | 89,548 | (3,801) | (4.2) | 87,588 | |||||||||||||||
Risk-weighted assets |
588,074 | 622,548 | (34,474) | (5.5) | 605,064 | |||||||||||||||
|
||||||||||||||||||||
CET1 capital ratio |
11.11 | 10.80 | 0.31 | 10.84 | ||||||||||||||||
T1 capital ratio |
12.63 | 12.04 | 0.59 | 12.11 | ||||||||||||||||
Total capital ratio |
14.58 | 14.38 | 0.20 | 14.48 |
42 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ CONTINENTAL EUROPE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
2,539 | 2.4 | 2.6 | 7,498 | 11.2 | 11.5 | ||||||||||||||||||||||
Net fee income |
1,097 | (1.9) | (1.9) | 3,346 | 10.2 | 10.3 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
279 | 189.8 | 189.5 | 640 | 34.2 | 35.0 | ||||||||||||||||||||||
Other operating income |
147 | 27.8 | 28.6 | 396 | 7.1 | 7.4 | ||||||||||||||||||||||
Gross income |
4,062 | 6.6 | 6.8 | 11,880 | 11.8 | 12.1 | ||||||||||||||||||||||
Operating expenses |
(2,030) | (3.0) | (3.0) | (6,217) | 12.7 | 13.0 | ||||||||||||||||||||||
General administrative expenses |
(1,870) | (3.8) | (3.7) | (5,725) | 12.0 | 12.3 | ||||||||||||||||||||||
Personnel |
(1,013) | (2.3) | (2.3) | (3,084) | 16.3 | 16.6 | ||||||||||||||||||||||
Other general administrative expenses |
(857) | (5.5) | (5.4) | (2,641) | 7.5 | 7.7 | ||||||||||||||||||||||
Depreciation and amortisation |
(160) | 6.7 | 6.8 | (492) | 21.0 | 21.3 | ||||||||||||||||||||||
Net operating income |
2,032 | 18.5 | 18.7 | 5,663 | 10.8 | 11.1 | ||||||||||||||||||||||
Net loan-loss provisions |
(381) | 4.2 | 4.4 | (1,137) | 38.7 | 38.8 | ||||||||||||||||||||||
Other income |
(143) | (2.8) | (2.5) | (423) | (31.7) | (31.6) | ||||||||||||||||||||||
Underlying profit before tax |
1,508 | 25.4 | 25.6 | 4,103 | 11.7 | 12.1 | ||||||||||||||||||||||
Tax on profit |
(411) | 28.1 | 28.2 | (1,100) | 9.8 | 10.1 | ||||||||||||||||||||||
Underlying profit from continuing operations |
1,097 | 24.4 | 24.7 | 3,003 | 12.5 | 12.9 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
1,097 | 24.4 | 24.7 | 3,003 | 12.5 | 12.9 | ||||||||||||||||||||||
Minority interests |
108 | 1.5 | 2.0 | 306 | 8.9 | 8.8 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
989 | 27.6 | 27.8 | 2,696 | 12.9 | 13.3 | ||||||||||||||||||||||
Net capital gains and provisions* |
| (100.0) | (100.0) | (260) | (32.5) | (32.5) | ||||||||||||||||||||||
Attributable profit to the Group |
989 | 91.9 | 92.3 | 2,436 | 21.6 | 22.2 | ||||||||||||||||||||||
(*) In Q218, charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 million) and Portugal (EUR 20 million). In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million)
|
| |||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
377,655 | (0.8) | (1.0) | 377,655 | 0.1 | 0.1 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
137,471 | 6.7 | 6.6 | 137,471 | 6.2 | 6.1 | ||||||||||||||||||||||
Debt securities |
90,349 | (0.1) | (0.3) | 90,349 | (8.3) | (8.4) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
60,144 | (2.8) | (3.1) | 60,144 | (17.1) | (17.1) | ||||||||||||||||||||||
Other financial assets |
34,304 | (8.9) | (8.9) | 34,304 | (11.4) | (11.4) | ||||||||||||||||||||||
Other assets |
36,308 | 0.8 | 0.7 | 36,308 | (16.6) | (16.6) | ||||||||||||||||||||||
Total assets |
676,086 | 0.4 | 0.2 | 676,086 | (1.6) | (1.7) | ||||||||||||||||||||||
Customer deposits |
361,120 | 0.7 | 0.5 | 361,120 | 3.2 | 3.1 | ||||||||||||||||||||||
Central banks and credit institutions |
162,116 | 2.0 | 1.9 | 162,116 | (4.8) | (4.9) | ||||||||||||||||||||||
Debt securities issued |
57,606 | 1.1 | 1.0 | 57,606 | (3.4) | (3.3) | ||||||||||||||||||||||
Other financial liabilities |
41,294 | (5.8) | (5.8) | 41,294 | (15.6) | (15.6) | ||||||||||||||||||||||
Other liabilities |
15,362 | (6.3) | (6.4) | 15,362 | (14.0) | (14.0) | ||||||||||||||||||||||
Total liabilities |
637,497 | 0.4 | 0.3 | 637,497 | (1.4) | (1.5) | ||||||||||||||||||||||
Total equity |
38,590 | (0.3) | (0.6) | 38,590 | (5.1) | (5.2) | ||||||||||||||||||||||
Other managed and marketed customer funds |
104,034 | 0.7 | 0.6 | 104,034 | 5.8 | 5.7 | ||||||||||||||||||||||
Mutual funds |
75,644 | 0.9 | 0.8 | 75,644 | 7.1 | 7.1 | ||||||||||||||||||||||
Pension funds |
15,797 | (0.6) | (0.6) | 15,797 | (1.5) | (1.5) | ||||||||||||||||||||||
Managed portfolios |
12,593 | 0.7 | 0.6 | 12,593 | 7.6 | 7.5 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
385,133 | (0.4) | (0.6) | 385,133 | 0.9 | 0.8 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
434,192 | 0.5 | 0.3 | 434,192 | 3.6 | 3.6 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
11.47 | 2.21 | 10.55 | 0.43 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
50.0 | (5.0) | 52.3 | 0.4 | ||||||||||||||||||||||||
NPL ratio |
5.57 | (0.11) | 5.57 | (0.73) | ||||||||||||||||||||||||
NPL coverage |
54.4 | (0.8) | 54.4 | 0.7 | ||||||||||||||||||||||||
Number of employees |
66,603 | (0.6) | 66,603 | (2.2) | ||||||||||||||||||||||||
Number of branches |
6,035 | (1.6) | 6,035 | (5.0) |
Financial Report 2018 43
JANUARY - SEPTEMBER Appendix |
∎ SPAIN |
||||||||||||||||
(EUR million) |
||||||||||||||||
Income statement | Q318 | % QoQ | 9M18 | % YoY | ||||||||||||
Net interest income |
1,116 | 5.5 | 3,211 | 18.2 | ||||||||||||
Net fee income |
653 | (2.7) | 1,997 | 20.9 | ||||||||||||
Gains (losses) on financial transactions |
227 | 631.6 | 465 | 46.0 | ||||||||||||
Other operating income |
118 | 53.8 | 342 | 1.2 | ||||||||||||
Gross income |
2,114 | 15.1 | 6,015 | 19.7 | ||||||||||||
Operating expenses |
(1,103) | (1.8) | (3,370) | 18.2 | ||||||||||||
General administrative expenses |
(1,028) | (3.0) | (3,130) | 17.5 | ||||||||||||
Personnel |
(572) | (1.7) | (1,742) | 24.5 | ||||||||||||
Other general administrative expenses |
(456) | (4.5) | (1,388) | 9.7 | ||||||||||||
Depreciation and amortisation |
(74) | 17.7 | (240) | 28.2 | ||||||||||||
Net operating income |
1,012 | 41.7 | 2,644 | 21.7 | ||||||||||||
Net loan-loss provisions |
(197) | 0.6 | (599) | 40.0 | ||||||||||||
Other income |
(102) | 18.3 | (292) | 53.7 | ||||||||||||
Underlying profit before tax |
713 | 64.9 | 1,753 | 12.8 | ||||||||||||
Tax on profit |
(186) | 74.7 | (447) | 3.4 | ||||||||||||
Underlying profit from continuing operations |
526 | 61.7 | 1,307 | 16.4 | ||||||||||||
Net profit from discontinued operations |
| | | | ||||||||||||
Underlying consolidated profit |
526 | 61.7 | 1,307 | 16.4 | ||||||||||||
Minority interests |
0 | (65.0) | 1 | (96.5) | ||||||||||||
Underlying attributable profit to the Group |
526 | 61.8 | 1,306 | 17.9 | ||||||||||||
Net capital gains and provisions* |
| (100.0) | (280) | (6.8) | ||||||||||||
Attributable profit to the Group |
526 | | 1,026 | 27.0 | ||||||||||||
(*) In Q218, restructuring costs (EUR -280 million). In 2017, integration costs (EUR -300 million) |
||||||||||||||||
Balance sheet | ||||||||||||||||
Loans and advances to customers |
212,247 | (2.5) | 212,247 | (4.0) | ||||||||||||
Cash, central banks and credit institutions |
113,986 | 8.8 | 113,986 | 15.1 | ||||||||||||
Debt securities |
63,933 | (2.6) | 63,933 | (16.2) | ||||||||||||
o/w: designated at fair value through other comprehensive income |
44,618 | (4.3) | 44,618 | (22.5) | ||||||||||||
Other financial assets |
31,052 | (9.5) | 31,052 | (12.3) | ||||||||||||
Other assets |
21,251 | 5.2 | 21,251 | (20.4) | ||||||||||||
Total assets |
442,469 | (0.0) | 442,469 | (3.5) | ||||||||||||
Customer deposits |
253,177 | (0.2) | 253,177 | 1.7 | ||||||||||||
Central banks and credit institutions |
101,307 | 4.3 | 101,307 | (6.5) | ||||||||||||
Debt securities issued |
23,544 | (2.7) | 23,544 | (12.2) | ||||||||||||
Other financial liabilities |
39,246 | (5.5) | 39,246 | (16.1) | ||||||||||||
Other liabilities |
9,031 | (9.7) | 9,031 | (18.0) | ||||||||||||
Total liabilities |
426,305 | (0.0) | 426,305 | (3.5) | ||||||||||||
Total equity |
16,164 | (0.2) | 16,164 | (4.2) | ||||||||||||
Other managed and marketed customer funds |
92,125 | 0.9 | 92,125 | 5.5 | ||||||||||||
Mutual funds |
66,392 | 1.2 | 66,392 | 7.1 | ||||||||||||
Pension funds |
14,652 | (0.6) | 14,652 | (1.8) | ||||||||||||
Managed portfolios |
11,081 | 1.0 | 11,081 | 6.7 | ||||||||||||
Pro memoria: |
||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
214,346 | (1.8) | 214,346 | (2.4) | ||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
318,859 | 0.1 | 318,859 | 2.7 | ||||||||||||
Ratios (%) and operating means | ||||||||||||||||
Underlying RoTE |
13.19 | 5.05 | 10.81 | (0.51) | ||||||||||||
Efficiency ratio (with amortisations) |
52.1 | (9.0) | 56.0 | (0.7) | ||||||||||||
NPL ratio |
6.23 | (0.01) | 6.23 | (0.59) | ||||||||||||
NPL coverage |
47.7 | (1.3) | 47.7 | 1.5 | ||||||||||||
Number of employees |
32,425 | 0.1 | 32,425 | (2.8) | ||||||||||||
Number of branches |
4,398 | (1.6) | 4,398 | (2.2) |
44 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ SANTANDER CONSUMER FINANCE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
937 | 1.0 | 1.1 | 2,780 | 4.3 | 5.0 | ||||||||||||||||||||||
Net fee income |
206 | 9.4 | 9.5 | 609 | (9.6) | (9.5) | ||||||||||||||||||||||
Gains (losses) on financial transactions |
1 | (94.6) | (94.6) | 21 | | | ||||||||||||||||||||||
Other operating income |
13 | | | 13 | (1.1) | 2.5 | ||||||||||||||||||||||
Gross income |
1,157 | 2.7 | 2.8 | 3,423 | 2.1 | 2.7 | ||||||||||||||||||||||
Operating expenses |
(475) | (6.4) | (6.3) | (1,491) | 1.3 | 1.9 | ||||||||||||||||||||||
General administrative expenses |
(432) | (6.4) | (6.3) | (1,362) | 1.8 | 2.4 | ||||||||||||||||||||||
Personnel |
(209) | (4.6) | (4.5) | (649) | 3.4 | 4.0 | ||||||||||||||||||||||
Other general administrative expenses |
(223) | (8.0) | (7.9) | (713) | 0.4 | 0.9 | ||||||||||||||||||||||
Depreciation and amortisation |
(43) | (6.1) | (6.0) | (129) | (3.5) | (2.9) | ||||||||||||||||||||||
Net operating income |
682 | 10.1 | 10.3 | 1,932 | 2.8 | 3.4 | ||||||||||||||||||||||
Net loan-loss provisions |
(124) | 80.1 | 80.8 | (313) | 51.0 | 51.9 | ||||||||||||||||||||||
Other income |
5 | (63.3) | (63.5) | 41 | | | ||||||||||||||||||||||
Underlying profit before tax |
562 | (0.1) | 0.0 | 1,660 | 5.7 | 6.3 | ||||||||||||||||||||||
Tax on profit |
(157) | 3.7 | 3.8 | (455) | 1.2 | 1.7 | ||||||||||||||||||||||
Underlying profit from continuing operations |
405 | (1.5) | (1.3) | 1,206 | 7.5 | 8.2 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
405 | (1.5) | (1.3) | 1,206 | 7.5 | 8.2 | ||||||||||||||||||||||
Minority interests |
74 | 12.4 | 12.5 | 205 | 14.6 | 14.5 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
332 | (4.1) | (4.0) | 1,000 | 6.1 | 7.0 | ||||||||||||||||||||||
Net capital gains and provisions* |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Attributable profit to the Group |
332 | (4.1) | (4.0) | 1,000 | 16.6 | 17.7 | ||||||||||||||||||||||
(*) In 2017, integration costs (EUR -85 million) |
||||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
92,070 | 0.2 | 0.1 | 92,070 | 6.3 | 6.4 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
5,784 | 11.3 | 11.1 | 5,784 | 8.3 | 8.4 | ||||||||||||||||||||||
Debt securities |
3,446 | 6.9 | 6.4 | 3,446 | (4.3) | (4.3) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
1,911 | (1.5) | (2.2) | 1,911 | (46.0) | (46.0) | ||||||||||||||||||||||
Other financial assets |
20 | (6.0) | (6.2) | 20 | (15.0) | (15.0) | ||||||||||||||||||||||
Other assets |
3,087 | (13.7) | (13.8) | 3,087 | (12.5) | (12.4) | ||||||||||||||||||||||
Total assets |
104,406 | 0.5 | 0.3 | 104,406 | 5.4 | 5.4 | ||||||||||||||||||||||
Customer deposits |
36,683 | (0.2) | (0.4) | 36,683 | 2.4 | 2.4 | ||||||||||||||||||||||
Central banks and credit institutions |
25,209 | 0.1 | (0.0) | 25,209 | 15.0 | 15.1 | ||||||||||||||||||||||
Debt securities issued |
27,529 | 0.7 | 0.6 | 27,529 | 1.1 | 1.2 | ||||||||||||||||||||||
Other financial liabilities |
874 | (12.1) | (12.3) | 874 | (2.3) | (2.3) | ||||||||||||||||||||||
Other liabilities |
3,781 | 2.5 | 2.4 | 3,781 | 0.0 | 0.0 | ||||||||||||||||||||||
Total liabilities |
94,075 | 0.1 | (0.1) | 94,075 | 4.9 | 5.0 | ||||||||||||||||||||||
Total equity |
10,331 | 4.4 | 4.1 | 10,331 | 9.5 | 9.6 | ||||||||||||||||||||||
Other managed and marketed customer funds |
| (100.0) | (100.0) | | (100.0) | (100.0) | ||||||||||||||||||||||
Mutual funds |
| (100.0) | (100.0) | | (100.0) | (100.0) | ||||||||||||||||||||||
Pension funds |
| (100.0) | (100.0) | | (100.0) | (100.0) | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
94,488 | 0.2 | 0.0 | 94,488 | 6.2 | 6.2 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
36,635 | (0.3) | (0.4) | 36,635 | 2.4 | 2.4 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
15.88 | (1.57) | 16.63 | (0.06) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
41.1 | (4.0) | 43.6 | (0.3) | ||||||||||||||||||||||||
NPL ratio |
2.45 | 0.01 | 2.45 | (0.15) | ||||||||||||||||||||||||
NPL coverage |
106.4 | (1.3) | 106.4 | 2.1 | ||||||||||||||||||||||||
Number of employees |
14,861 | (1.5) | 14,861 | (1.2) | ||||||||||||||||||||||||
Number of branches |
441 | (0.2) | 441 | (19.7) |
Financial Report 2018 45
JANUARY - SEPTEMBER Appendix |
∎ POLAND |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
243 | 1.2 | 2.2 | 730 | 6.7 | 6.3 | ||||||||||||||||||||||
Net fee income |
111 | (3.0) | (1.9) | 338 | 3.4 | 3.0 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
15 | (4.4) | (3.2) | 34 | (11.1) | (11.5) | ||||||||||||||||||||||
Other operating income |
(2) | | | (4) | (46.6) | (46.8) | ||||||||||||||||||||||
Gross income |
367 | (7.9) | (6.8) | 1,098 | 5.4 | 5.0 | ||||||||||||||||||||||
Operating expenses |
(156) | (3.6) | (2.5) | (472) | 5.9 | 5.5 | ||||||||||||||||||||||
General administrative expenses |
(142) | (3.9) | (2.8) | (428) | 6.3 | 5.9 | ||||||||||||||||||||||
Personnel |
(83) | 0.0 | 1.0 | (248) | 4.7 | 4.2 | ||||||||||||||||||||||
Other general administrative expenses |
(59) | (8.9) | (7.8) | (180) | 8.7 | 8.3 | ||||||||||||||||||||||
Depreciation and amortisation |
(14) | (0.3) | 0.7 | (44) | 1.8 | 1.4 | ||||||||||||||||||||||
Net operating income |
211 | (10.8) | (9.7) | 626 | 5.1 | 4.6 | ||||||||||||||||||||||
Net loan-loss provisions |
(33) | (19.1) | (18.1) | (120) | 23.7 | 23.2 | ||||||||||||||||||||||
Other income |
(26) | (23.6) | (22.5) | (74) | (5.1) | (5.4) | ||||||||||||||||||||||
Underlying profit before tax |
151 | (6.0) | (4.9) | 432 | 2.6 | 2.2 | ||||||||||||||||||||||
Tax on profit |
(37) | 27.1 | 28.0 | (97) | (7.7) | (8.0) | ||||||||||||||||||||||
Underlying profit from continuing operations |
114 | (13.3) | (12.2) | 335 | 6.1 | 5.7 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
114 | (13.3) | (12.2) | 335 | 6.1 | 5.7 | ||||||||||||||||||||||
Minority interests |
34 | (13.6) | (12.5) | 99 | 1.6 | 1.2 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
80 | (13.2) | (12.1) | 236 | 8.0 | 7.6 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
80 | (13.2) | (12.1) | 236 | 8.0 | 7.6 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
23,639 | 4.7 | 2.4 | 23,639 | 10.0 | 9.3 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
2,128 | 31.6 | 28.7 | 2,128 | 15.3 | 14.6 | ||||||||||||||||||||||
Debt securities |
9,718 | 15.6 | 13.1 | 9,718 | 63.2 | 62.2 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
7,370 | 3.6 | 1.3 | 7,370 | 33.1 | 32.3 | ||||||||||||||||||||||
Other financial assets |
464 | (17.2) | (19.0) | 464 | (19.3) | (19.8) | ||||||||||||||||||||||
Other assets |
1,083 | 5.8 | 3.5 | 1,083 | 17.8 | 17.1 | ||||||||||||||||||||||
Total assets |
37,031 | 8.3 | 5.9 | 37,031 | 20.3 | 19.6 | ||||||||||||||||||||||
Customer deposits |
28,026 | 9.2 | 6.8 | 28,026 | 21.0 | 20.2 | ||||||||||||||||||||||
Central banks and credit institutions |
1,641 | (4.0) | (6.1) | 1,641 | 67.8 | 66.8 | ||||||||||||||||||||||
Debt securities issued |
1,527 | 51.1 | 47.8 | 1,527 | 116.9 | 115.5 | ||||||||||||||||||||||
Other financial liabilities |
457 | 6.9 | 4.6 | 457 | (14.7) | (15.2) | ||||||||||||||||||||||
Other liabilities |
734 | (4.3) | (6.4) | 734 | 2.0 | 1.4 | ||||||||||||||||||||||
Total liabilities |
32,384 | 9.5 | 7.1 | 32,384 | 24.1 | 23.3 | ||||||||||||||||||||||
Total equity |
4,648 | 0.9 | (1.3) | 4,648 | (0.6) | (1.2) | ||||||||||||||||||||||
Other managed and marketed customer funds |
3,898 | 0.8 | (1.4) | 3,898 | 2.7 | 2.1 | ||||||||||||||||||||||
Mutual funds |
3,799 | 1.1 | (1.1) | 3,799 | 2.7 | 2.1 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
99 | (10.5) | (12.5) | 99 | 3.3 | 2.6 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
24,356 | 4.1 | 1.9 | 24,356 | 9.6 | 8.9 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
30,011 | 4.4 | 2.1 | 30,011 | 11.9 | 11.2 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
11.20 | (1.82) | 11.07 | (0.36) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
42.6 | 1.9 | 43.0 | 0.2 | ||||||||||||||||||||||||
NPL ratio |
4.23 | (0.35) | 4.23 | (0.47) | ||||||||||||||||||||||||
NPL coverage |
71.6 | (0.5) | 71.6 | 4.0 | ||||||||||||||||||||||||
Number of employees |
11,283 | (1.8) | 11,283 | (3.5) | ||||||||||||||||||||||||
Number of branches |
519 | (3.9) | 519 | (12.3) |
46 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ PORTUGAL |
||||||||||||||||
(EUR million) |
||||||||||||||||
Income statement | Q318 | % QoQ | 9M18 | % YoY | ||||||||||||
Net interest income |
211 | (1.1) | 646 | 14.2 | ||||||||||||
Net fee income |
92 | 0.2 | 281 | 4.8 | ||||||||||||
Gains (losses) on financial transactions |
6 | (84.1) | 63 | (14.6) | ||||||||||||
Other operating income |
14 | 132.3 | 20 | 218.1 | ||||||||||||
Gross income |
323 | (6.9) | 1,010 | 10.5 | ||||||||||||
Operating expenses |
(157) | (4.7) | (480) | 7.4 | ||||||||||||
General administrative expenses |
(147) | (4.8) | (449) | 7.5 | ||||||||||||
Personnel |
(91) | (4.1) | (278) | 7.0 | ||||||||||||
Other general administrative expenses |
(55) | (6.1) | (171) | 8.2 | ||||||||||||
Depreciation and amortisation |
(10) | (2.9) | (31) | 6.2 | ||||||||||||
Net operating income |
166 | (8.9) | 530 | 13.4 | ||||||||||||
Net loan-loss provisions |
(11) | | (20) | (10.8) | ||||||||||||
Other income |
13 | | (18) | (53.2) | ||||||||||||
Underlying profit before tax |
167 | 4.8 | 492 | 21.1 | ||||||||||||
Tax on profit |
(52) | (6.5) | (146) | 64.3 | ||||||||||||
Underlying profit from continuing operations |
115 | 10.8 | 346 | 9.0 | ||||||||||||
Net profit from discontinued operations |
| | | | ||||||||||||
Underlying consolidated profit |
115 | 10.8 | 346 | 9.0 | ||||||||||||
Minority interests |
1 | (2.7) | 2 | 20.3 | ||||||||||||
Underlying attributable profit to the Group |
114 | 10.9 | 344 | 8.9 | ||||||||||||
Net capital gains and provisions* |
| (100.0) | 20 | | ||||||||||||
Attributable profit to the Group |
114 | (7.1) | 364 | 15.3 | ||||||||||||
(*) In Q218, provisions and restructuring costs associated with inorganic operations, net of tax impacts (EUR 20 million) |
| |||||||||||||||
Balance sheet | ||||||||||||||||
Loans and advances to customers |
35,612 | 0.1 | 35,612 | (1.1) | ||||||||||||
Cash, central banks and credit institutions |
3,191 | (26.8) | 3,191 | (45.2) | ||||||||||||
Debt securities |
11,861 | 0.6 | 11,861 | 2.0 | ||||||||||||
o/w: designated at fair value through other comprehensive income |
5,172 | (0.6) | 5,172 | 0.3 | ||||||||||||
Other financial assets |
1,941 | 0.3 | 1,941 | 6.0 | ||||||||||||
Other assets |
2,298 | (6.3) | 2,298 | (19.7) | ||||||||||||
Total assets |
54,904 | (2.2) | 54,904 | (5.6) | ||||||||||||
Customer deposits |
37,141 | 0.2 | 37,141 | 4.1 | ||||||||||||
Central banks and credit institutions |
7,816 | (13.5) | 7,816 | (31.2) | ||||||||||||
Debt securities issued |
4,309 | (0.5) | 4,309 | (10.4) | ||||||||||||
Other financial liabilities |
243 | (7.5) | 243 | (23.2) | ||||||||||||
Other liabilities |
1,382 | (7.2) | 1,382 | (25.6) | ||||||||||||
Total liabilities |
50,889 | (2.5) | 50,889 | (5.8) | ||||||||||||
Total equity |
4,014 | 2.2 | 4,014 | (3.3) | ||||||||||||
Other managed and marketed customer funds |
3,810 | (2.3) | 3,810 | 7.0 | ||||||||||||
Mutual funds |
2,045 | (3.9) | 2,045 | 3.2 | ||||||||||||
Pension funds |
1,145 | (0.3) | 1,145 | 2.5 | ||||||||||||
Managed portfolios |
620 | (0.6) | 620 | 34.3 | ||||||||||||
Pro memoria: |
||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
37,093 | 0.1 | 37,093 | (2.1) | ||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
39,185 | (0.0) | 39,185 | 7.9 | ||||||||||||
Ratios (%) and operating means | ||||||||||||||||
Underlying RoTE |
11.60 | 1.20 | 11.58 | (0.11) | ||||||||||||
Efficiency ratio (with amortisations) |
48.7 | 1.1 | 47.5 | (1.4) | ||||||||||||
NPL ratio |
7.43 | (0.12) | 7.43 | (0.96) | ||||||||||||
NPL coverage |
53.4 | 0.7 | 53.4 | (2.7) | ||||||||||||
Number of employees |
6,910 | (0.4) | 6,910 | (0.8) | ||||||||||||
Number of branches |
667 | (0.7) | 667 | (5.4) |
Financial Report 2018 47
JANUARY - SEPTEMBER Appendix |
∎ UNITED KINGDOM |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
1,033 | (0.6) | 1.3 | 3,103 | (6.4) | (5.2) | ||||||||||||||||||||||
Net fee income |
258 | (2.6) | (0.8) | 766 | 0.7 | 2.1 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
63 | (1.4) | 0.4 | 184 | (27.2) | (26.2) | ||||||||||||||||||||||
Other operating income |
13 | 138.4 | 145.0 | 37 | (18.5) | (17.4) | ||||||||||||||||||||||
Gross income |
1,367 | (0.4) | 1.4 | 4,089 | (6.5) | (5.3) | ||||||||||||||||||||||
Operating expenses |
(730) | (4.4) | (2.6) | (2,256) | 5.4 | 6.8 | ||||||||||||||||||||||
General administrative expenses |
(670) | 3.9 | 5.9 | (1,986) | 5.2 | 6.6 | ||||||||||||||||||||||
Personnel |
(407) | (3.0) | (1.2) | (1,225) | 20.2 | 21.8 | ||||||||||||||||||||||
Other general administrative expenses |
(263) | 16.8 | 19.0 | (761) | (12.4) | (11.2) | ||||||||||||||||||||||
Depreciation and amortisation |
(60) | (49.8) | (48.5) | (270) | 6.9 | 8.3 | ||||||||||||||||||||||
Net operating income |
637 | 4.5 | 6.4 | 1,832 | (17.9) | (16.8) | ||||||||||||||||||||||
Net loan-loss provisions |
(26) | (30.9) | (28.7) | (129) | 4.6 | 6.0 | ||||||||||||||||||||||
Other income |
(62) | 33.0 | 35.5 | (172) | (53.0) | (52.4) | ||||||||||||||||||||||
Underlying profit before tax |
549 | 4.5 | 6.3 | 1,532 | (12.1) | (11.0) | ||||||||||||||||||||||
Tax on profit |
(159) | 8.6 | 10.4 | (436) | (16.9) | (15.8) | ||||||||||||||||||||||
Underlying profit from continuing operations |
391 | 2.9 | 4.7 | 1,096 | (10.1) | (8.9) | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
391 | 2.9 | 4.7 | 1,096 | (10.1) | (8.9) | ||||||||||||||||||||||
Minority interests |
6 | (17.5) | (15.9) | 19 | 8.4 | 9.9 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
385 | 3.3 | 5.1 | 1,077 | (10.4) | (9.2) | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
385 | 3.3 | 5.1 | 1,077 | (10.4) | (9.2) | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
255,577 | 0.5 | 0.6 | 255,577 | 3.5 | 4.2 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
41,298 | (23.8) | (23.7) | 41,298 | (21.8) | (21.3) | ||||||||||||||||||||||
Debt securities |
26,914 | 1.4 | 1.5 | 26,914 | 4.0 | 4.6 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
14,898 | (2.3) | (2.1) | 14,898 | 43.5 | 44.4 | ||||||||||||||||||||||
Other financial assets |
20,686 | 0.6 | 0.8 | 20,686 | (10.3) | (9.7) | ||||||||||||||||||||||
Other assets |
9,187 | (11.3) | (11.2) | 9,187 | (10.2) | (9.6) | ||||||||||||||||||||||
Total assets |
353,661 | (3.4) | (3.3) | 353,661 | (1.4) | (0.8) | ||||||||||||||||||||||
Customer deposits |
216,426 | (1.4) | (1.3) | 216,426 | (4.8) | (4.2) | ||||||||||||||||||||||
Central banks and credit institutions |
31,021 | (24.4) | (24.3) | 31,021 | 11.1 | 11.8 | ||||||||||||||||||||||
Debt securities issued |
67,877 | 2.0 | 2.1 | 67,877 | 11.7 | 12.4 | ||||||||||||||||||||||
Other financial liabilities |
17,930 | 3.8 | 3.9 | 17,930 | (18.4) | (17.9) | ||||||||||||||||||||||
Other liabilities |
3,935 | (8.9) | (8.7) | 3,935 | (6.2) | (5.6) | ||||||||||||||||||||||
Total liabilities |
337,188 | (3.3) | (3.2) | 337,188 | (1.5) | (0.8) | ||||||||||||||||||||||
Total equity |
16,473 | (4.7) | (4.5) | 16,473 | (1.2) | (0.6) | ||||||||||||||||||||||
Other managed and marketed customer funds |
8,482 | (0.3) | (0.2) | 8,482 | 0.1 | 0.7 | ||||||||||||||||||||||
Mutual funds |
8,372 | (0.3) | (0.1) | 8,372 | 0.1 | 0.8 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
110 | (3.1) | (3.0) | 110 | (4.3) | (3.7) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
237,116 | (1.0) | (0.9) | 237,116 | 0.6 | 1.2 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
205,178 | 0.3 | 0.4 | 205,178 | (1.3) | (0.7) | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
10.48 | 0.44 | 9.90 | (1.04) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
53.4 | (2.2) | 55.2 | 6.2 | ||||||||||||||||||||||||
NPL ratio |
1.10 | (0.02) | 1.10 | (0.22) | ||||||||||||||||||||||||
NPL coverage |
33.1 | (0.9) | 33.1 | 1.6 | ||||||||||||||||||||||||
Number of employees |
25,803 | (0.4) | 25,803 | 0.3 | ||||||||||||||||||||||||
Number of branches |
767 | (1.7) | 767 | (6.5) |
48 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ LATIN AMERICA |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
3,680 | (5.9) | 5.0 | 11,538 | (3.5) | 15.6 | ||||||||||||||||||||||
Net fee income |
1,102 | (17.8) | (2.0) | 3,818 | (7.4) | 15.2 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
132 | (29.1) | 5.2 | 460 | (43.3) | (29.5) | ||||||||||||||||||||||
Other operating income |
(100) | 264.7 | 225.2 | (152) | | | ||||||||||||||||||||||
Gross income |
4,813 | (11.0) | 2.0 | 15,664 | (7.6) | 12.0 | ||||||||||||||||||||||
Operating expenses |
(1,731) | (13.5) | 2.5 | (5,783) | (11.3) | 9.1 | ||||||||||||||||||||||
General administrative expenses |
(1,562) | (14.2) | 1.9 | (5,235) | (11.4) | 9.1 | ||||||||||||||||||||||
Personnel |
(890) | (11.1) | 3.8 | (2,928) | (10.5) | 9.5 | ||||||||||||||||||||||
Other general administrative expenses |
(672) | (17.9) | (0.4) | (2,308) | (12.5) | 8.8 | ||||||||||||||||||||||
Depreciation and amortisation |
(169) | (7.4) | 8.3 | (547) | (10.7) | 8.4 | ||||||||||||||||||||||
Net operating income |
3,083 | (9.5) | 1.8 | 9,881 | (5.3) | 13.8 | ||||||||||||||||||||||
Net loan-loss provisions |
(1,037) | (8.7) | 2.4 | (3,384) | (11.1) | 5.3 | ||||||||||||||||||||||
Other income |
(159) | (17.7) | 8.8 | (506) | (53.4) | (42.0) | ||||||||||||||||||||||
Underlying profit before tax |
1,887 | (9.2) | 0.8 | 5,990 | 8.2 | 30.2 | ||||||||||||||||||||||
Tax on profit |
(738) | (1.9) | 8.5 | (2,209) | 25.5 | 53.0 | ||||||||||||||||||||||
Underlying profit from continuing operations |
1,149 | (13.4) | (3.6) | 3,781 | 0.2 | 19.8 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
1,149 | (13.4) | (3.6) | 3,781 | 0.2 | 19.8 | ||||||||||||||||||||||
Minority interests |
202 | (4.5) | (1.4) | 621 | 3.9 | 16.0 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
947 | (15.1) | (4.0) | 3,160 | (0.5) | 20.6 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
947 | (15.1) | (4.0) | 3,160 | (0.5) | 20.6 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
146,235 | 1.7 | 4.3 | 146,235 | (3.2) | 11.2 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
57,381 | (0.7) | 2.4 | 57,381 | 2.5 | 23.3 | ||||||||||||||||||||||
Debt securities |
55,452 | (1.5) | 0.4 | 55,452 | (11.4) | 3.2 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
27,421 | (3.4) | (0.9) | 27,421 | (24.0) | (11.8) | ||||||||||||||||||||||
Other financial assets |
13,575 | (7.2) | (7.7) | 13,575 | (4.5) | 5.0 | ||||||||||||||||||||||
Other assets |
16,683 | (0.9) | 1.9 | 16,683 | (6.5) | 11.3 | ||||||||||||||||||||||
Total assets |
289,325 | (0.0) | 2.4 | 289,325 | (4.1) | 11.4 | ||||||||||||||||||||||
Customer deposits |
142,080 | 0.2 | 3.0 | 142,080 | (4.3) | 11.6 | ||||||||||||||||||||||
Central banks and credit institutions |
44,931 | (3.5) | (1.3) | 44,931 | 9.2 | 25.1 | ||||||||||||||||||||||
Debt securities issued |
34,888 | 1.8 | 3.6 | 34,888 | (0.4) | 13.9 | ||||||||||||||||||||||
Other financial liabilities |
31,303 | 0.1 | 1.8 | 31,303 | (12.1) | 3.3 | ||||||||||||||||||||||
Other liabilities |
9,927 | 0.6 | 2.7 | 9,927 | (13.2) | 2.1 | ||||||||||||||||||||||
Total liabilities |
263,129 | (0.3) | 2.2 | 263,129 | (3.2) | 12.5 | ||||||||||||||||||||||
Total equity |
26,196 | 2.4 | 4.6 | 26,196 | (12.9) | 1.4 | ||||||||||||||||||||||
Other managed and marketed customer funds |
78,151 | (0.3) | 2.5 | 78,151 | (8.7) | 8.7 | ||||||||||||||||||||||
Mutual funds |
71,746 | (0.4) | 2.4 | 71,746 | (9.0) | 8.7 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
6,405 | 0.7 | 3.3 | 6,405 | (4.4) | 8.8 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
151,947 | 1.3 | 3.9 | 151,947 | (3.0) | 11.5 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
194,040 | (0.9) | 2.1 | 194,040 | (5.1) | 11.4 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
17.93 | (2.51) | 19.21 | 1.51 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
36.0 | (1.0) | 36.9 | (1.5) | ||||||||||||||||||||||||
NPL ratio |
4.33 | (0.07) | 4.33 | (0.08) | ||||||||||||||||||||||||
NPL coverage |
97.1 | 0.3 | 97.1 | 7.0 | ||||||||||||||||||||||||
Number of employees |
89,587 | 0.6 | 89,587 | 2.0 | ||||||||||||||||||||||||
Number of branches |
5,948 | 0.8 | 5,948 | 1.9 |
Financial Report 2018 49
JANUARY - SEPTEMBER Appendix |
∎ BRAZIL |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
2,377 | (1.9) | 4.7 | 7,283 | (3.5) | 17.1 | ||||||||||||||||||||||
Net fee income |
776 | (11.0) | (4.3) | 2,568 | (5.3) | 14.9 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
32 | (2.9) | 3.6 | 114 | (73.7) | (68.1) | ||||||||||||||||||||||
Other operating income |
(4) | (21.0) | (14.1) | (17) | | | ||||||||||||||||||||||
Gross income |
3,180 | (4.3) | 2.4 | 9,949 | (7.6) | 12.2 | ||||||||||||||||||||||
Operating expenses |
(1,031) | (5.8) | 0.8 | (3,291) | (13.2) | 5.3 | ||||||||||||||||||||||
General administrative expenses |
(935) | (5.5) | 1.1 | (2,975) | (12.7) | 6.0 | ||||||||||||||||||||||
Personnel |
(541) | (3.1) | 3.6 | (1,701) | (11.9) | 6.9 | ||||||||||||||||||||||
Other general administrative expenses |
(395) | (8.7) | (2.1) | (1,274) | (13.7) | 4.7 | ||||||||||||||||||||||
Depreciation and amortisation |
(96) | (8.7) | (2.0) | (316) | (17.9) | (0.4) | ||||||||||||||||||||||
Net operating income |
2,149 | (3.5) | 3.1 | 6,658 | (4.5) | 15.9 | ||||||||||||||||||||||
Net loan-loss provisions |
(665) | (11.3) | (4.7) | (2,236) | (13.4) | 5.1 | ||||||||||||||||||||||
Other income |
(174) | 2.3 | 9.0 | (499) | (48.8) | (37.9) | ||||||||||||||||||||||
Underlying profit before tax |
1,310 | 0.2 | 6.9 | 3,923 | 14.9 | 39.4 | ||||||||||||||||||||||
Tax on profit |
(612) | 5.9 | 12.6 | (1,734) | 37.0 | 66.3 | ||||||||||||||||||||||
Underlying profit from continuing operations |
698 | (4.3) | 2.3 | 2,188 | 1.8 | 23.6 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
698 | (4.3) | 2.3 | 2,188 | 1.8 | 23.6 | ||||||||||||||||||||||
Minority interests |
79 | (4.5) | 2.1 | 246 | (0.0) | 21.3 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
619 | (4.3) | 2.3 | 1,942 | 2.1 | 23.9 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
619 | (4.3) | 2.3 | 1,942 | 2.1 | 23.9 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
65,006 | (0.4) | 3.3 | 65,006 | (8.9) | 12.6 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
35,914 | 3.8 | 7.6 | 35,914 | (3.9) | 18.9 | ||||||||||||||||||||||
Debt securities |
35,015 | (8.3) | (4.9) | 35,015 | (19.4) | (0.3) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
16,635 | (13.4) | (10.2) | 16,635 | (32.1) | (16.1) | ||||||||||||||||||||||
Other financial assets |
5,184 | (5.4) | (1.9) | 5,184 | (14.1) | 6.2 | ||||||||||||||||||||||
Other assets |
11,145 | (2.6) | 1.1 | 11,145 | (10.2) | 11.0 | ||||||||||||||||||||||
Total assets |
152,263 | (1.8) | 1.9 | 152,263 | (10.7) | 10.4 | ||||||||||||||||||||||
Customer deposits |
69,052 | 2.3 | 6.1 | 69,052 | (7.0) | 15.0 | ||||||||||||||||||||||
Central banks and credit institutions |
24,892 | (18.8) | (15.7) | 24,892 | (0.6) | 22.9 | ||||||||||||||||||||||
Debt securities issued |
18,164 | 1.9 | 5.7 | 18,164 | (15.0) | 5.1 | ||||||||||||||||||||||
Other financial liabilities |
19,525 | 5.5 | 9.4 | 19,525 | (19.3) | (0.2) | ||||||||||||||||||||||
Other liabilities |
6,323 | 0.0 | 3.7 | 6,323 | (21.1) | (2.5) | ||||||||||||||||||||||
Total liabilities |
137,956 | (2.0) | 1.6 | 137,956 | (9.8) | 11.6 | ||||||||||||||||||||||
Total equity |
14,308 | 0.8 | 4.6 | 14,308 | (19.2) | (0.0) | ||||||||||||||||||||||
Other managed and marketed customer funds |
56,064 | 0.9 | 4.6 | 56,064 | (9.8) | 11.5 | ||||||||||||||||||||||
Mutual funds |
52,181 | 0.8 | 4.5 | 52,181 | (10.2) | 11.0 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
3,883 | 2.4 | 6.2 | 3,883 | (4.6) | 18.0 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
69,190 | (0.4) | 3.3 | 69,190 | (8.5) | 13.1 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
106,612 | 0.5 | 4.2 | 106,612 | (5.7) | 16.6 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
19.98 | (0.13) | 19.96 | 3.17 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
32.4 | (0.5) | 33.1 | (2.2) | ||||||||||||||||||||||||
NPL ratio |
5.26 | | 5.26 | (0.06) | ||||||||||||||||||||||||
NPL coverage |
109.1 | 0.4 | 109.1 | 11.5 | ||||||||||||||||||||||||
Number of employees |
46,663 | (0.0) | 46,663 | 0.9 | ||||||||||||||||||||||||
Number of branches |
3,552 | 1.8 | 3,552 | 3.8 |
50 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ MEXICO |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
728 | 11.6 | 6.7 | 2,030 | 3.0 | 11.6 | ||||||||||||||||||||||
Net fee income |
199 | 5.6 | 0.8 | 575 | 1.1 | 9.5 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
27 | (50.2) | (53.0) | 99 | (10.7) | (3.3) | ||||||||||||||||||||||
Other operating income |
(24) | (13.9) | (18.1) | (74) | 266.1 | 296.6 | ||||||||||||||||||||||
Gross income |
931 | 7.2 | 2.4 | 2,630 | (0.0) | 8.3 | ||||||||||||||||||||||
Operating expenses |
(384) | 5.8 | 1.0 | (1,086) | 4.8 | 13.5 | ||||||||||||||||||||||
General administrative expenses |
(351) | 6.2 | 1.5 | (990) | 5.0 | 13.7 | ||||||||||||||||||||||
Personnel |
(180) | 8.3 | 3.5 | (503) | 6.0 | 14.8 | ||||||||||||||||||||||
Other general administrative expenses |
(171) | 4.1 | (0.6) | (486) | 4.0 | 12.6 | ||||||||||||||||||||||
Depreciation and amortisation |
(33) | 1.2 | (3.6) | (97) | 2.9 | 11.5 | ||||||||||||||||||||||
Net operating income |
547 | 8.3 | 3.4 | 1,543 | (3.1) | 4.9 | ||||||||||||||||||||||
Net loan-loss provisions |
(227) | 20.4 | 15.2 | (616) | (14.3) | (7.2) | ||||||||||||||||||||||
Other income |
(5) | (55.0) | (57.7) | (20) | 36.7 | 48.0 | ||||||||||||||||||||||
Underlying profit before tax |
315 | 3.2 | (1.5) | 908 | 5.5 | 14.3 | ||||||||||||||||||||||
Tax on profit |
(65) | (2.5) | (7.1) | (194) | 7.4 | 16.4 | ||||||||||||||||||||||
Underlying profit from continuing operations |
250 | 4.8 | 0.1 | 713 | 5.0 | 13.7 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
250 | 4.8 | 0.1 | 713 | 5.0 | 13.7 | ||||||||||||||||||||||
Minority interests |
55 | 1.3 | (3.3) | 159 | 8.0 | 17.0 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
195 | 5.9 | 1.1 | 554 | 4.1 | 12.8 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
195 | 5.9 | 1.1 | 554 | 4.1 | 12.8 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
31,445 | 10.6 | 5.3 | 31,445 | 8.2 | 9.8 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
11,463 | (13.9) | (18.1) | 11,463 | 28.4 | 30.3 | ||||||||||||||||||||||
Debt securities |
15,583 | 26.5 | 20.5 | 15,583 | 11.1 | 12.8 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
6,628 | 60.0 | 52.3 | 6,628 | (10.4) | (9.0) | ||||||||||||||||||||||
Other financial assets |
5,549 | (10.2) | (14.5) | 5,549 | (6.0) | (4.6) | ||||||||||||||||||||||
Other assets |
2,907 | 5.3 | 0.2 | 2,907 | 12.8 | 14.5 | ||||||||||||||||||||||
Total assets |
66,946 | 6.3 | 1.2 | 66,946 | 10.7 | 12.3 | ||||||||||||||||||||||
Customer deposits |
34,303 | 3.0 | (2.0) | 34,303 | 9.5 | 11.1 | ||||||||||||||||||||||
Central banks and credit institutions |
11,397 | 35.1 | 28.6 | 11,397 | 15.8 | 17.5 | ||||||||||||||||||||||
Debt securities issued |
6,244 | 5.3 | 0.2 | 6,244 | 26.6 | 28.5 | ||||||||||||||||||||||
Other financial liabilities |
7,323 | (8.6) | (13.0) | 7,323 | 2.2 | 3.7 | ||||||||||||||||||||||
Other liabilities |
2,028 | (6.4) | (10.9) | 2,028 | 11.7 | 13.4 | ||||||||||||||||||||||
Total liabilities |
61,294 | 5.9 | 0.8 | 61,294 | 11.3 | 12.9 | ||||||||||||||||||||||
Total equity |
5,652 | 9.9 | 4.6 | 5,652 | 4.5 | 6.0 | ||||||||||||||||||||||
Other managed and marketed customer funds |
11,233 | 6.1 | 1.0 | 11,233 | 6.6 | 8.2 | ||||||||||||||||||||||
Mutual funds |
11,233 | 6.1 | 1.0 | 11,233 | 6.6 | 8.2 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
31,853 | 9.0 | 3.8 | 31,853 | 8.5 | 10.1 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
40,407 | 3.5 | (1.5) | 40,407 | 4.6 | 6.1 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
20.01 | (0.32) | 19.97 | 0.47 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
41.2 | (0.6) | 41.3 | 1.9 | ||||||||||||||||||||||||
NPL ratio |
2.41 | (0.17) | 2.41 | (0.15) | ||||||||||||||||||||||||
NPL coverage |
120.5 | 4.4 | 120.5 | 10.2 | ||||||||||||||||||||||||
Number of employees |
19,483 | 2.1 | 19,483 | 6.9 | ||||||||||||||||||||||||
Number of branches |
1,410 | 0.6 | 1,410 | 0.6 |
Financial Report 2018 51
JANUARY - SEPTEMBER Appendix |
∎ CHILE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
481 | (2.9) | 1.1 | 1,466 | 3.6 | 7.0 | ||||||||||||||||||||||
Net fee income |
101 | (13.3) | (9.5) | 329 | 9.6 | 13.1 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
45 | 61.8 | 66.7 | 103 | (39.6) | (37.7) | ||||||||||||||||||||||
Other operating income |
4 | 100.0 | 109.3 | 16 | 100.0 | 106.5 | ||||||||||||||||||||||
Gross income |
632 | (1.6) | 2.4 | 1,914 | 1.1 | 4.4 | ||||||||||||||||||||||
Operating expenses |
(257) | (5.6) | (1.7) | (787) | 1.2 | 4.5 | ||||||||||||||||||||||
General administrative expenses |
(231) | (5.8) | (1.9) | (708) | 1.1 | 4.4 | ||||||||||||||||||||||
Personnel |
(147) | (3.5) | 0.3 | (437) | 1.5 | 4.8 | ||||||||||||||||||||||
Other general administrative expenses |
(84) | (9.5) | (5.6) | (271) | 0.5 | 3.8 | ||||||||||||||||||||||
Depreciation and amortisation |
(26) | (4.0) | (0.0) | (79) | 1.7 | 4.9 | ||||||||||||||||||||||
Net operating income |
375 | 1.3 | 5.4 | 1,127 | 1.0 | 4.3 | ||||||||||||||||||||||
Net loan-loss provisions |
(117) | 2.2 | 6.3 | (353) | 0.3 | 3.5 | ||||||||||||||||||||||
Other income |
19 | (41.6) | (38.6) | 73 | 261.9 | 273.6 | ||||||||||||||||||||||
Underlying profit before tax |
276 | (3.8) | 0.1 | 846 | 8.0 | 11.5 | ||||||||||||||||||||||
Tax on profit |
(56) | 0.0 | 4.1 | (171) | 20.2 | 24.1 | ||||||||||||||||||||||
Underlying profit from continuing operations |
221 | (4.7) | (0.8) | 675 | 5.3 | 8.7 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
221 | (4.7) | (0.8) | 675 | 5.3 | 8.7 | ||||||||||||||||||||||
Minority interests |
68 | (7.7) | (3.8) | 214 | 6.2 | 9.7 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
153 | (3.3) | 0.5 | 461 | 4.9 | 8.3 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
153 | (3.3) | 0.5 | 461 | 4.9 | 8.3 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
38,971 | 1.9 | 2.9 | 38,971 | 7.5 | 9.0 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
3,829 | (1.6) | (0.6) | 3,829 | (4.0) | (2.7) | ||||||||||||||||||||||
Debt securities |
3,761 | (10.3) | (9.4) | 3,761 | 12.2 | 13.8 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
3,256 | (15.1) | (14.2) | 3,256 | 19.8 | 21.6 | ||||||||||||||||||||||
Other financial assets |
2,814 | (4.1) | (3.1) | 2,814 | 25.2 | 27.0 | ||||||||||||||||||||||
Other assets |
1,862 | 1.8 | 2.8 | 1,862 | 0.6 | 2.1 | ||||||||||||||||||||||
Total assets |
51,236 | 0.3 | 1.3 | 51,236 | 7.4 | 9.0 | ||||||||||||||||||||||
Customer deposits |
25,432 | (4.2) | (3.2) | 25,432 | (1.5) | (0.1) | ||||||||||||||||||||||
Central banks and credit institutions |
6,184 | 18.0 | 19.2 | 6,184 | 45.9 | 48.0 | ||||||||||||||||||||||
Debt securities issued |
10,051 | 1.2 | 2.2 | 10,051 | 18.4 | 20.1 | ||||||||||||||||||||||
Other financial liabilities |
3,757 | (3.6) | (2.6) | 3,757 | 13.9 | 15.5 | ||||||||||||||||||||||
Other liabilities |
1,058 | 17.4 | 18.6 | 1,058 | (7.0) | (5.7) | ||||||||||||||||||||||
Total liabilities |
46,481 | (0.0) | 0.9 | 46,481 | 8.1 | 9.7 | ||||||||||||||||||||||
Total equity |
4,755 | 3.8 | 4.8 | 4,755 | 1.0 | 2.4 | ||||||||||||||||||||||
Other managed and marketed customer funds |
9,605 | (5.9) | (5.0) | 9,605 | (5.8) | (4.5) | ||||||||||||||||||||||
Mutual funds |
7,084 | (7.2) | (6.3) | 7,084 | (6.4) | (5.0) | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
2,522 | (1.9) | (0.9) | 2,522 | (4.3) | (2.9) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
40,123 | 1.8 | 2.9 | 40,123 | 7.6 | 9.2 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
32,479 | (4.8) | (3.9) | 32,479 | (2.2) | (0.8) | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
19.04 | (0.06) | 18.46 | 0.45 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
40.7 | (1.7) | 41.1 | 0.0 | ||||||||||||||||||||||||
NPL ratio |
4.78 | (0.08) | 4.78 | (0.17) | ||||||||||||||||||||||||
NPL coverage |
59.6 | (0.4) | 59.6 | 1.1 | ||||||||||||||||||||||||
Number of employees |
12,003 | (0.2) | 12,003 | 2.8 | ||||||||||||||||||||||||
Number of branches |
408 | (2.9) | 408 | 0.5 |
52 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ ARGENTINA |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
(6) | | 22.5 | 442 | (39.0) | 48.8 | ||||||||||||||||||||||
Net fee income |
(6) | | 22.2 | 256 | (44.1) | 36.5 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
17 | (71.2) | 55.9 | 110 | (0.7) | 142.5 | ||||||||||||||||||||||
Other operating income |
(75) | | | (71) | | | ||||||||||||||||||||||
Gross income |
(70) | | (2.0) | 737 | (43.2) | 38.6 | ||||||||||||||||||||||
Operating expenses |
(0) | (99.8) | 34.8 | (426) | (41.3) | 43.2 | ||||||||||||||||||||||
General administrative expenses |
10 | | 26.3 | (379) | (43.8) | 37.3 | ||||||||||||||||||||||
Personnel |
8 | | 24.3 | (184) | (44.4) | 35.8 | ||||||||||||||||||||||
Other general administrative expenses |
1 | | 28.2 | (195) | (43.2) | 38.7 | ||||||||||||||||||||||
Depreciation and amortisation |
(10) | (43.3) | 125.1 | (47) | (9.6) | 120.8 | ||||||||||||||||||||||
Net operating income |
(70) | | (36.9) | 311 | (45.6) | 32.8 | ||||||||||||||||||||||
Net loan-loss provisions |
(7) | (90.9) | 26.0 | (131) | 11.4 | 172.1 | ||||||||||||||||||||||
Other income |
4 | | (21.2) | (53) | (22.7) | 88.8 | ||||||||||||||||||||||
Underlying profit before tax |
(73) | | (86.2) | 127 | (67.1) | (19.8) | ||||||||||||||||||||||
Tax on profit |
2 | | 5.6 | (59) | (51.0) | 19.7 | ||||||||||||||||||||||
Underlying profit from continuing operations |
(71) | | | 67 | (74.5) | (37.8) | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
(71) | | | 67 | (74.5) | (37.8) | ||||||||||||||||||||||
Minority interests |
(0) | | (61.7) | 1 | (58.9) | 0.3 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
(71) | | | 67 | (74.6) | (38.0) | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
(71) | | | 67 | (74.6) | (38.0) | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
5,958 | (21.1) | 12.2 | 5,958 | (29.4) | 62.2 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
4,036 | 10.7 | 57.3 | 4,036 | 15.2 | 164.7 | ||||||||||||||||||||||
Debt securities |
478 | (49.1) | (27.7) | 478 | 10.9 | 154.8 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
433 | (34.4) | (6.8) | 433 | 87.2 | 330.2 | ||||||||||||||||||||||
Other financial assets |
16 | (33.6) | (5.6) | 16 | 16.4 | 167.5 | ||||||||||||||||||||||
Other assets |
591 | 3.0 | 46.4 | 591 | (17.0) | 90.7 | ||||||||||||||||||||||
Total assets |
11,079 | (13.0) | 23.7 | 11,079 | (15.4) | 94.3 | ||||||||||||||||||||||
Customer deposits |
8,055 | (13.7) | 22.6 | 8,055 | (20.6) | 82.5 | ||||||||||||||||||||||
Central banks and credit institutions |
1,070 | 7.4 | 52.6 | 1,070 | 170.5 | 521.5 | ||||||||||||||||||||||
Debt securities issued |
376 | (29.9) | (0.4) | 376 | 67.4 | 284.6 | ||||||||||||||||||||||
Other financial liabilities |
665 | (18.8) | 15.4 | 665 | (29.8) | 61.4 | ||||||||||||||||||||||
Other liabilities |
264 | 11.1 | 57.9 | 264 | 17.6 | 170.2 | ||||||||||||||||||||||
Total liabilities |
10,429 | (12.5) | 24.3 | 10,429 | (12.6) | 100.8 | ||||||||||||||||||||||
Total equity |
650 | (19.6) | 14.2 | 650 | (44.3) | 28.0 | ||||||||||||||||||||||
Other managed and marketed customer funds |
1,217 | (38.8) | (13.0) | 1,217 | (54.0) | 5.8 | ||||||||||||||||||||||
Mutual funds |
1,217 | (38.8) | (13.0) | 1,217 | (54.0) | 5.8 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
5,799 | (21.8) | 11.1 | 5,799 | (29.3) | 62.4 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
9,271 | (18.1) | 16.3 | 9,271 | (27.5) | 66.6 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
n.s. | n.s. | 16.47 | (14.43) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
n.s. | n.s. | 57.8 | 1.8 | ||||||||||||||||||||||||
NPL ratio |
2.47 | 0.07 | 2.47 | 0.13 | ||||||||||||||||||||||||
NPL coverage |
124.0 | 2.5 | 124.0 | 21.2 | ||||||||||||||||||||||||
Number of employees |
9,362 | 1.5 | 9,362 | 0.2 | ||||||||||||||||||||||||
Number of branches |
481 | (0.2) | 481 | (0.2) |
Financial Report 2018 53
JANUARY - SEPTEMBER Appendix |
∎ UNITED STATES |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
1,337 | 4.4 | 1.9 | 3,838 | (10.7) | (4.1) | ||||||||||||||||||||||
Net fee income |
208 | (5.3) | (7.9) | 641 | (14.3) | (8.0) | ||||||||||||||||||||||
Gains (losses) on financial transactions |
22 | (6.4) | (8.9) | 61 | | | ||||||||||||||||||||||
Other operating income |
169 | 15.0 | 12.4 | 442 | 38.7 | 48.9 | ||||||||||||||||||||||
Gross income |
1,735 | 3.9 | 1.4 | 4,983 | (7.1) | (0.2) | ||||||||||||||||||||||
Operating expenses |
(748) | 1.4 | (1.1) | (2,220) | (8.5) | (1.7) | ||||||||||||||||||||||
General administrative expenses |
(688) | 1.3 | (1.2) | (2,045) | (6.2) | 0.7 | ||||||||||||||||||||||
Personnel |
(398) | 4.2 | 1.7 | (1,177) | (7.2) | (0.3) | ||||||||||||||||||||||
Other general administrative expenses |
(290) | (2.4) | (4.9) | (868) | (4.9) | 2.1 | ||||||||||||||||||||||
Depreciation and amortisation |
(60) | 2.9 | 0.4 | (175) | (28.2) | (23.0) | ||||||||||||||||||||||
Net operating income |
987 | 5.9 | 3.4 | 2,762 | (6.0) | 1.0 | ||||||||||||||||||||||
Net loan-loss provisions |
(649) | 45.8 | 43.6 | (1,674) | (21.9) | (16.1) | ||||||||||||||||||||||
Other income |
(69) | 38.2 | 35.4 | (142) | 142.7 | 160.6 | ||||||||||||||||||||||
Underlying profit before tax |
269 | (38.5) | (40.9) | 946 | 28.4 | 37.8 | ||||||||||||||||||||||
Tax on profit |
(94) | (32.5) | (34.9) | (299) | 42.1 | 52.6 | ||||||||||||||||||||||
Underlying profit from continuing operations |
175 | (41.3) | (43.7) | 647 | 22.9 | 31.9 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
175 | (41.3) | (43.7) | 647 | 22.9 | 31.9 | ||||||||||||||||||||||
Minority interests |
50 | (43.1) | (45.5) | 187 | (1.3) | 6.0 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
125 | (40.5) | (42.9) | 460 | 36.5 | 46.5 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
125 | (40.5) | (42.9) | 460 | 36.5 | 46.5 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
79,897 | 4.9 | 4.1 | 79,897 | 9.1 | 7.0 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
14,299 | 22.6 | 21.8 | 14,299 | 9.2 | 7.1 | ||||||||||||||||||||||
Debt securities |
13,252 | (7.6) | (8.3) | 13,252 | (18.9) | (20.4) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
9,823 | (10.3) | (10.9) | 9,823 | (31.5) | (32.8) | ||||||||||||||||||||||
Other financial assets |
5,102 | 18.2 | 17.4 | 5,102 | 76.6 | 73.1 | ||||||||||||||||||||||
Other assets |
14,644 | 10.1 | 9.3 | 14,644 | 18.3 | 16.0 | ||||||||||||||||||||||
Total assets |
127,194 | 6.2 | 5.4 | 127,194 | 7.8 | 5.7 | ||||||||||||||||||||||
Customer deposits |
58,910 | 9.1 | 8.3 | 58,910 | 11.4 | 9.2 | ||||||||||||||||||||||
Central banks and credit institutions |
13,153 | (1.5) | (2.2) | 13,153 | (16.1) | (17.7) | ||||||||||||||||||||||
Debt securities issued |
30,712 | 7.7 | 6.9 | 30,712 | 13.8 | 11.6 | ||||||||||||||||||||||
Other financial liabilities |
4,414 | 11.5 | 10.8 | 4,414 | 62.3 | 59.1 | ||||||||||||||||||||||
Other liabilities |
3,820 | 5.2 | 4.5 | 3,820 | (10.1) | (11.9) | ||||||||||||||||||||||
Total liabilities |
111,009 | 7.3 | 6.5 | 111,009 | 8.3 | 6.2 | ||||||||||||||||||||||
Total equity |
16,186 | (1.0) | (1.7) | 16,186 | 5.0 | 2.9 | ||||||||||||||||||||||
Other managed and marketed customer funds |
16,775 | 0.4 | (0.3) | 16,775 | (2.1) | (4.0) | ||||||||||||||||||||||
Mutual funds |
8,453 | 0.2 | (0.5) | 8,453 | 1.4 | (0.6) | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
8,323 | 0.7 | (0.0) | 8,323 | (5.4) | (7.3) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
80,686 | 1.4 | 0.7 | 80,686 | 5.2 | 3.1 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
62,000 | (0.3) | (1.0) | 62,000 | 1.8 | (0.2) | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
3.62 | (2.69) | 4.63 | 1.21 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
43.1 | (1.1) | 44.6 | (0.7) | ||||||||||||||||||||||||
NPL ratio |
3.00 | 0.09 | 3.00 | 0.44 | ||||||||||||||||||||||||
NPL coverage |
145.5 | (11.4) | 145.5 | (42.0) | ||||||||||||||||||||||||
Number of employees |
17,303 | 0.7 | 17,303 | (1.5) | ||||||||||||||||||||||||
Number of branches |
664 | (0.9) | 664 | (4.3) |
54 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ CORPORATE CENTRE |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
Income statement | Q318 | Q218 | % | 9M18 | 9M17 | % | ||||||||||||||||||
Net interest income |
(241) | (233) | 3.4 | (698) | (628) | 11.1 | ||||||||||||||||||
Net fee income |
(24) | (9) | 182.1 | (41) | (21) | 101.0 | ||||||||||||||||||
Gains (losses) on financial transactions |
10 | (8) | | 15 | (257) | | ||||||||||||||||||
Other operating income |
(2) | (1) | 252.8 | (9) | (76) | (88.2) | ||||||||||||||||||
Gross income |
(257) | (250) | 3.0 | (733) | (981) | (25.3) | ||||||||||||||||||
Operating expenses |
(123) | (122) | 0.7 | (367) | (356) | 2.9 | ||||||||||||||||||
Net operating income |
(380) | (372) | 2.2 | (1,100) | (1,337) | (17.8) | ||||||||||||||||||
Net loan-loss provisions |
(28) | (30) | (8.4) | (95) | (37) | 154.7 | ||||||||||||||||||
Other income |
(55) | (50) | 9.1 | (148) | (139) | 6.4 | ||||||||||||||||||
Underlying profit before tax |
(463) | (452) | 2.3 | (1,342) | (1,513) | (11.3) | ||||||||||||||||||
Tax on profit |
7 | (21) | | (9) | 1 | | ||||||||||||||||||
Underlying profit from continuing operations |
(456) | (474) | (3.8) | (1,350) | (1,512) | (10.7) | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
(456) | (474) | (3.8) | (1,350) | (1,512) | (10.7) | ||||||||||||||||||
Minority interests |
(0) | 1 | | 1 | (1) | | ||||||||||||||||||
Underlying attributable profit to the Group |
(456) | (475) | (4.0) | (1,351) | (1,511) | (10.6) | ||||||||||||||||||
Net capital gains and provisions* |
| (40) | (100.0) | (40) | (130) | (69.2) | ||||||||||||||||||
Attributable profit to the Group |
(456) | (515) | (11.5) | (1,391) | (1,641) | (15.2) | ||||||||||||||||||
(*) In Q218, restructuring costs (EUR -40 million). In 2017, charges for equity stakes and intangible assets (EUR -130 million) |
| |||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||
Debt securities |
330 | 351 | (6.1) | 330 | 1,488 | (77.9) | ||||||||||||||||||
Goodwill |
24,956 | 25,035 | (0.3) | 24,956 | 25,855 | (3.5) | ||||||||||||||||||
Capital assigned to Group areas |
81,336 | 83,825 | (3.0) | 81,336 | 84,332 | (3.6) | ||||||||||||||||||
Other financial assets |
20,307 | 16,722 | 21.4 | 20,307 | 10,249 | 98.1 | ||||||||||||||||||
Other assets |
14,417 | 14,561 | (1.0) | 14,417 | 14,485 | (0.5) | ||||||||||||||||||
Total assets |
141,346 | 140,494 | 0.6 | 141,346 | 136,408 | 3.6 | ||||||||||||||||||
Debt securities issued |
42,948 | 40,421 | 6.3 | 42,948 | 36,213 | 18.6 | ||||||||||||||||||
Other financial liabilities |
916 | 1,957 | (53.2) | 916 | 856 | 6.9 | ||||||||||||||||||
Other liabilities |
7,922 | 7,761 | 2.1 | 7,922 | 9,088 | (12.8) | ||||||||||||||||||
Total liabilities |
51,786 | 50,140 | 3.3 | 51,786 | 46,157 | 12.2 | ||||||||||||||||||
Total equity |
89,561 | 90,355 | (0.9) | 89,561 | 90,251 | (0.8) | ||||||||||||||||||
Other managed and marketed customer funds |
7 | 7 | (3.7) | 7 | 3 | 99.4 | ||||||||||||||||||
Mutual funds |
7 | 7 | (3.7) | 7 | 3 | 99.4 | ||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||
Resources | ||||||||||||||||||||||||
Number of employees |
1,805 | 1,785 | 1.1 | 1,805 | 1,709 | 5.6 |
Financial Report 2018 55
JANUARY - SEPTEMBER Appendix |
∎ RETAIL BANKING |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
QoQ |
YoY | |||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||
Net interest income |
7,918 | (1.9) | 2.6 | 24,023 | (0.6) | 8.9 | ||||||||||||||||||
Net fee income |
2,068 | (8.4) | (0.3) | 6,611 | (4.3) | 7.3 | ||||||||||||||||||
Gains (losses) on financial transactions |
219 | 63.5 | 82.0 | 482 | 0.2 | 4.8 | ||||||||||||||||||
Other operating income |
205 | 14.2 | 14.4 | 609 | 6.6 | 12.0 | ||||||||||||||||||
Gross income |
10,411 | (2.2) | 3.1 | 31,726 | (1.3) | 8.5 | ||||||||||||||||||
Operating expenses |
(4,486) | (7.6) | (1.8) | (14,230) | (2.3) | 7.2 | ||||||||||||||||||
Net operating income |
5,924 | 2.4 | 7.2 | 17,496 | (0.5) | 9.6 | ||||||||||||||||||
Net loan-loss provisions |
(2,035) | 6.5 | 12.7 | (6,107) | (3.8) | 8.1 | ||||||||||||||||||
Other income |
(382) | 1.2 | 14.4 | (1,099) | (44.1) | (37.1) | ||||||||||||||||||
Underlying profit before tax |
3,508 | 0.3 | 3.5 | 10,289 | 11.1 | 20.2 | ||||||||||||||||||
Tax on profit |
(1,191) | 5.2 | 9.2 | (3,368) | 18.3 | 29.4 | ||||||||||||||||||
Underlying profit from continuing operations |
2,317 | (2.0) | 0.7 | 6,921 | 7.9 | 16.1 | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
2,317 | (2.0) | 0.7 | 6,921 | 7.9 | 16.1 | ||||||||||||||||||
Minority interests |
321 | (11.0) | (10.1) | 990 | 6.4 | 13.4 | ||||||||||||||||||
Underlying attributable profit to the Group |
1,995 | (0.4) | 2.7 | 5,931 | 8.2 | 16.6 | ||||||||||||||||||
Net capital gains and provisions* |
| (100.0) | (100.0) | (260) | (32.5) | (32.5) | ||||||||||||||||||
Attributable profit to the Group |
1,995 | 14.5 | 18.1 | 5,671 | 11.3 | 20.6 | ||||||||||||||||||
(*) In Q218, charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 million) and Portugal (EUR 20 million). In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million) |
|
∎ CORPORATE & INVESTMENT BANKING |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
QoQ |
YoY |
|||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||
Net interest income |
573 | 5.9 | 16.1 | 1,665 | (10.7) | (0.2) | ||||||||||||||||||
Net fee income |
330 | (17.4) | (12.3) | 1,133 | (8.2) | 0.2 | ||||||||||||||||||
Gains (losses) on financial transactions |
263 | 20.0 | 42.7 | 824 | (19.9) | (7.1) | ||||||||||||||||||
Other operating income |
29 | (50.6) | (47.6) | 121 | (19.1) | (17.0) | ||||||||||||||||||
Gross income |
1,194 | (1.9) | 8.2 | 3,744 | (12.5) | (2.3) | ||||||||||||||||||
Operating expenses |
(524) | 4.3 | 10.2 | (1,554) | 3.8 | 12.0 | ||||||||||||||||||
Net operating income |
670 | (6.3) | 6.8 | 2,190 | (21.2) | (10.4) | ||||||||||||||||||
Net loan-loss provisions |
(42) | (14.5) | (10.1) | (161) | (66.6) | (63.4) | ||||||||||||||||||
Other income |
(24) | (38.4) | (34.9) | (65) | 53.7 | 68.2 | ||||||||||||||||||
Underlying profit before tax |
604 | (3.6) | 10.8 | 1,964 | (12.9) | (0.1) | ||||||||||||||||||
Tax on profit |
(183) | (4.9) | 9.9 | (587) | (5.7) | 9.7 | ||||||||||||||||||
Underlying profit from continuing operations |
421 | (3.1) | 11.2 | 1,377 | (15.7) | (3.8) | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
421 | (3.1) | 11.2 | 1,377 | (15.7) | (3.8) | ||||||||||||||||||
Minority interests |
37 | (16.7) | (13.5) | 119 | (21.6) | (12.1) | ||||||||||||||||||
Underlying attributable profit to the Group |
384 | (1.5) | 14.2 | 1,258 | (15.1) | (2.9) | ||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||
Attributable profit to the Group |
384 | (1.5) | 14.2 | 1,258 | (15.1) | (2.9) |
56 Financial Report 2018
JANUARY - SEPTEMBER Appendix |
∎ WEALTH MANAGEMENT |
||||||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||||||
Income statement | Q318 | % | % excl. FX | 9M18 | % | % excl. FX | ||||||||||||||||||||||||||
Net interest income |
104 | (2.9) | 1.2 | 311 | 2.4 | 12.0 | ||||||||||||||||||||||||||
Net fee income |
266 | (6.3) | (3.7) | 826 | 58.0 | 65.9 | ||||||||||||||||||||||||||
Gains (losses) on financial transactions |
13 | (17.0) | (10.6) | 38 | 30.4 | 39.4 | ||||||||||||||||||||||||||
Other operating income |
(9) | 2.3 | 5.6 | (25) | | | ||||||||||||||||||||||||||
Gross income |
374 | (6.0) | (2.9) | 1,150 | 26.9 | 35.3 | ||||||||||||||||||||||||||
Operating expenses |
(179) | (4.5) | (3.1) | (549) | 40.4 | 49.7 | ||||||||||||||||||||||||||
Net operating income |
194 | (7.4) | (2.6) | 601 | 16.6 | 24.4 | ||||||||||||||||||||||||||
Net loan-loss provisions |
1 | | | (4) | | | ||||||||||||||||||||||||||
Other income |
(5) | 44.1 | 43.5 | (10) | 90.0 | 96.8 | ||||||||||||||||||||||||||
Underlying profit before tax |
190 | (7.9) | (3.0) | 587 | 14.6 | 22.3 | ||||||||||||||||||||||||||
Tax on profit |
(54) | (8.5) | (3.3) | (170) | 30.5 | 39.5 | ||||||||||||||||||||||||||
Underlying profit from continuing operations |
136 | (7.6) | (2.9) | 418 | 9.2 | 16.4 | ||||||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||||||
Underlying consolidated profit |
136 | (7.6) | (2.9) | 418 | 9.2 | 16.4 | ||||||||||||||||||||||||||
Minority interests |
9 | (3.5) | (0.6) | 26 | 40.7 | 53.7 | ||||||||||||||||||||||||||
Underlying attributable profit to the Group |
128 | (7.9) | (3.1) | 392 | 7.6 | 14.6 | ||||||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||||||
Attributable profit to the Group |
128 | (7.9) | (3.1) | 392 | 7.6 | 14.6 |
Financial Report 2018 57
JANUARY - SEPTEMBER Alternative performance measures |
ALTERNATIVE PERFORMANCE MEASURES (APM)
Below we set out information on alternative performance measures in order to comply with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority, ESMA, on 5 October 2015 (Guidelines on Alternative Performance Measures, ESMA/2015/1415en).
| The Group uses the following indicators for managing its business. They enable profitability and efficiency, credit portfolio quality, the volume of tangible equity per share and the net loan-to-deposit ratio to be measured, analysing their evolution over time and comparing them with those of our competitors. |
| The purpose of the profitability and efficiency ratios is to measure the ratio of profit to capital, to tangible capital, to assets and to risk weighted assets, while the efficiency ratio measures how much general administrative expenses (personnel and other) and amortisation costs are needed to generate revenue. |
| The credit risk indicators measure the quality of the credit portfolio and the percentage of non-performing loans covered by provisions. |
| The capitalisation indicator provides information on the volume of tangible equity per share. |
| Other indicators are also included. The loan-to-deposit ratio (LTD) identifies the relationship between net customer loans and advances and customer deposits, assessing the proportion of loans and advances granted by the Group that are funded by customer deposits. The Group also uses gross customer loan magnitudes excluding reverse repurchase agreements (repos) and customer deposits excluding repos. In order to analyse the evolution of the traditional commercial banking business of granting loans and capturing deposits, repos and reverse repos are excluded, as they are mainly treasury business products and highly volatile. |
| Impact of exchange rate movements on profit and loss accounts |
The Group presents, at both the Group level as well as the business unit level, the real changes in the income statement as well as the changes excluding the exchange rate effect, as it considers the latter facilitates analysis, since it enables businesses movements to be identified without taking into account the impact of converting each local currency into euros.
Said variations, excluding the impact of exchange rate movements, are calculated by converting P&L lines for the different business units comprising the Group into our presentation currency, the euro, applying the average exchange rate for the first nine months of 2018 to all periods contemplated in the analysis. The average exchange rates for the main currencies in which the Group operates are set out on page 9.
| Impact of exchange rate movements on the balance sheet |
The Group presents, at both the Group level as well as the business unit level, the real changes in the balance sheet as well as the changes excluding the exchange rate effect for loans and advances to customers excluding reverse repos and customer funds (which comprise deposits and mutual funds) excluding repos. As with the income statement, the reason is to facilitate analysis by isolating the changes in the balance sheet that are not caused by converting each local currency into euros.
These changes excluding the impact of exchange rate movements are calculated by converting loans and advances to customers excluding reverse repos and customer funds excluding repos, into our presentation currency, the euro, applying the closing exchange rate on the last working day of September 2018 to all periods contemplated in the analysis. The end-of-period exchange rates for the main currencies in which the Group operates are set out on page 9.
| Impact of non-recurring items on the consolidated profit and loss accounts |
With regard to the results, a summary of the consolidated profit and loss accounts for the first halves of 2018 and 2017 can be found on page 62. In these accounts, results are included in their corresponding accounting item, even when, in the Groups opinion, they distort the comparison between periods.
Therefore, summarised profit and loss accounts for the first nine months of 2018 and of 2017 and for the previous two quarters of 2018 on page 10. In these accounts, results, including those of said items, net of tax and minority interests, are included in a separate line which the Group names net capital gains and provisions just above the Groups attributable profit. The Group believes that this statement explains more clearly the changes in the income statement. Those capital gains and provisions considered as non-recurring are subtracted from each of the income statement lines where they were naturally recorded.
58 Financial Report 2018
JANUARY - SEPTEMBER Alternative performance measures |
Additionally, for informational purposes, the following table reconciles attributable profit by isolating the non-recurring impacts in the given periods. Further information on net capital gains and provisions is included on pages 10 and 11.
∎ ADJUSTED ATTRIBUTABLE PROFIT TO THE GROUP |
||||||||||||||||||||||||
EUR Million |
||||||||||||||||||||||||
Q318 | Q218 | Chg. (%) | 9M18 | 9M17 | Chg. (%) | |||||||||||||||||||
Unadjusted attributable profit to the Santander Group |
1,990 | 1,698 | +17 | % | 5,742 | 5,077 | +13 | % | ||||||||||||||||
(-) Net capital gains and provisions |
| (300) | (100 | %) | (300) | (515) | (42 | %) | ||||||||||||||||
Adjusted attributable profit to the Santander Group |
1,990 | 1,998 | (0 | %) | 6,042 | 5,592 | +8 | % |
The definitions of each of the previously-mentioned indicators and how they are calculated are given below:
Profitability and Efficiency |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
RoE (Return on equity) |
Groups attributable profit Average stockholders equity* (excl. minority interests) |
This ratio measures the return that shareholders obtain on the funds invested in the entity and as such measures the companys ability to pay shareholders. | ||
RoTE (Return on tangible equity) |
Groups attributable profit Average stockholders equity* (excl. minority interests) - intangible assets |
This is a very common indicator, used to evaluate the profitability of the company as a percentage of a its tangible equity. Its measured as the return that shareholders receive as a percentage of the funds invested in the entity less intangible assets. | ||
Underlying RoTE | Groups underlying attributable profit Average stockholders equity* (excl. minority interests) - intangible assets |
This indicator measures the profitability of the tangible equity of a company arising from ordinary activities, i.e. excluding net capital gains and provisions. | ||
RoA (Return on assets) |
Consolidated profit Average total assets |
This metric, commonly used by analysts, measures the profitability of a company as a percentage of its total assets. It is an indicator that reflects the efficiency of the companys total funds in generating profit over a given period. | ||
RoRWA (Return on risk weighted assets) |
Consolidated profit Average risk weighted assets |
The return adjusted for risk is an derivative of the RoA metric. The difference is that RoRWA measures profit in relation to the banks risk weighted assets. | ||
Underlying RoRWA | Underlying consolidated profit Average risk weighted assets |
This relates the underlying profit (excluding net capital gains and provisions) to the banks risk weighted assets. | ||
Efficiency | Operating expenses** Gross income |
One of the most commonly used indicators when comparing productivity of different financial entities. It measures the amount of funds used to generate the banks operating income. |
Financial Report 2018 59
JANUARY - SEPTEMBER Alternative performance measures |
Credit risk |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
NPL ratio (Non-performing loans ratio) |
Non-performing loans and advances to customers, customer guarantees and customer commitments granted
Total Risk*** |
The NPL ratio is an important variable regarding financial institutions activity since it gives an indication of the level of risk the entities are exposed to. It calculates risks that are, in accounting terms, declared to be non-performing as a percentage of the total outstanding amount of customer credit and contingent liabilities. | ||
Coverage ratio | Provisions to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted Non-performing loans and advances to customers, customer guarantees and customer commitments granted |
The coverage ratio is a fundamental metric in the financial sector. It reflects the level of provisions as a percentage of the non-performing assets (credit risk). Therefore it is a good indicator of the entitys solvency against client defaults both present and future. | ||
Cost of Credit | Allowances for loan-loss provisions over the last 12 months Average loans and advances to customers over the last 12 months |
This ratio quantifies loan-loss provisions arising from credit risk over a defined period of time for a given loan portfolio. As such, it acts as an indicator of credit quality. | ||
Market Capitalisation |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
TNAV per share (Tangible net asset value per share) |
Tangible book value**** Number of shares excluding treasury stock |
This is a very commonly used ratio used to measure the companys accounting value per share having deducted the intangible assets. It is useful in evaluating the amount each shareholder would receive if the company were to enter into liquidation and had to sell all the companys tangible assets. | ||
Other indicators |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
LtD (Loan-to-deposit) |
Net loans and advances to customers Customer deposits |
This is an indicator of the banks liquidity. It measures the total (net) loans and advances to customers as a percentage of customer funds. | ||
Loans and advances (excl. reverse repos) | Gross loans and advances to customers excluding reverse repos |
In order to aid analysis of the commercial banking activity, reverse repos are excluded as they are highly volatile treasury products. | ||
Deposits (excl. repos) | Customer deposits excluding repos | In order to aid analysis of the commercial banking activity, repos are excluded as they are highly volatile treasury products. | ||
PAT + After tax fees paid to SAN (in Wealth Management) | Net profit + Fees paid from Santander Asset Management to Santander, net of taxes, excluding Private Banking customers | Metric to assess Wealth Managements total contribution to Grupo Santander profits |
(*) Stockholders equity = Capital and Reserves + Accumulated other comprehensive income + Group attributable profit + Dividends
(**) Operating expenses: General administrative expenses + Depreciation and amortisation
(***) Total risk = Total loans & advances and guarantees to customers (performing and non-performing) + non-performing contingent liabilities
(****) Tangible book value = Stockholders equity - intangible assets
60 Financial Report 2018
JANUARY - SEPTEMBER Alternative performance measures |
Finally, below the numerical value of each indicator is given for each period.
Profitability and efficiency | Q318 | Q218 | 9M18 | 9M17 | ||||||||||||
RoE |
8.43% | 8.13% | 8.20% | 7.54% | ||||||||||||
Attributable profit to the Group |
7,957 | 7,692 | 7,755 | 6,941 | ||||||||||||
Average stockholders equity (excluding minority interests) |
94,391 | 94,607 | 94,615 | 93,178 | ||||||||||||
RoTE |
11.95% | 11.61% | 11.69% | 10.99% | ||||||||||||
Attributable profit to the Group |
7,957 | 7,692 | 7,755 | 6,941 | ||||||||||||
Average stockholders equity (excl. minority interests) - intangible assets |
66,578 | 66,280 | 66,348 | 63,919 | ||||||||||||
Underlying RoTE |
11.95% | 12.06% | 12.14% | 11.80% | ||||||||||||
Underlying attributable profit to the Group |
7,957 | 7,992 | 8,055 | 7,456 | ||||||||||||
Average stockholders equity (excl. minority interests) - intangible assets |
66,578 | 66,280 | 66,348 | 63,919 | ||||||||||||
RoA |
0.66% | 0.65% | 0.65% | 0.59% | ||||||||||||
Consolidated profit |
9,424 | 9,348 | 9,270 | 8,389 | ||||||||||||
Average total assets |
1,431,897 | 1,437,163 | 1,436,286 | 1,392,398 | ||||||||||||
RoRWA |
1.59% | 1.55% | 1.55% | 1.39% | ||||||||||||
Consolidated profit |
9,424 | 9,348 | 9,270 | 8,389 | ||||||||||||
Average risk weighted assets |
592,061 | 601,729 | 599,746 | 603,751 | ||||||||||||
Underlying RoRWA |
1.59% | 1.60% | 1.60% | 1.47% | ||||||||||||
Underlying consolidated profit |
9,424 | 9,648 | 9,569 | 8,904 | ||||||||||||
Average risk weighted assets |
592,061 | 601,729 | 599,746 | 603,751 | ||||||||||||
Efficiency ratio |
45.7% | 47.6% | 46.9% | 46.7% | ||||||||||||
Operating expenses |
5,361 | 5,718 | 16,843 | 16,957 | ||||||||||||
Gross income |
11,720 | 12,011 | 35,882 | 36,330 | ||||||||||||
Credit risk | Sep-18 | Jun-18 | Sep-18 | Sep-17 | ||||||||||||
NPL ratio |
3.87% | 3.92% | 3.87% | 4.24% | ||||||||||||
Non-performing loans and advances to customers customer guarantees and customer commitments granted |
36,332 | 36,654 | 36,332 | 39,442 | ||||||||||||
Total risk |
939,685 | 934,388 | 939,685 | 929,193 | ||||||||||||
Coverage ratio |
67.9% | 68.6% | 67.9% | 65.8% | ||||||||||||
Provisions to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted |
24,685 | 25,148 | 24,685 | 25,944 | ||||||||||||
Non-performing loans and advances to customers customer guarantees and customer commitments granted |
36,332 | 36,654 | 36,332 | 39,442 | ||||||||||||
Cost of credit |
0.98% | 0.99% | 0.98% | 1.12% | ||||||||||||
Allowances for loan-loss provisions over the last 12 months |
8,600 | 8,729 | 8,600 | 9,335 | ||||||||||||
Average loans and advances to customers over the last 12 months |
879,772 | 880,332 | 879,772 | 836,414 | ||||||||||||
Market capitalization | Sep-18 | Jun-18 | Sep-18 | Sep-17 | ||||||||||||
TNAV (tangible book value) per share |
4.16 | 4.10 | 4.16 | 4.20 | ||||||||||||
Tangible book value |
67,122 | 66,157 | 67,122 | 67,361 | ||||||||||||
Number of shares excl. treasury stock (million) |
16,125 | 16,125 | 16,125 | 16,029 | ||||||||||||
Other | Sep-18 | Jun-18 | Sep-18 | Sep-17 | ||||||||||||
Loan-to-deposit ratio |
111% | 111% | 111% | 110% | ||||||||||||
Net loans and advances to customers |
866,226 | 862,092 | 866,226 | 854,686 | ||||||||||||
Customer deposits |
778,751 | 774,425 | 778,751 | 778,852 | ||||||||||||
Q318 | Q218 | 9M18 | 9M17 | |||||||||||||
PAT + After tax fees paid to SAN (in Wealth Management) (Constant EUR million) |
253 | 259 | 757 | 688 | ||||||||||||
Profit after taxes |
141 | 145 | 418 | 359 | ||||||||||||
Net fee income net of tax |
112 | 114 | 339 | 329 |
Notes:
(1) | Averages included in the RoE, RoTE, RoA and RoRWA denominators are calculated using 4 months worth of data in the case of quarterly figures (from June to September in Q3 and March to June in Q2) and 10 months in the case of annual figures (December to September). |
(2) | For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoE and RoTE is the annualised underlying attributable profit to which said results are added without annualising. |
(3) | For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoA and RoRWA is the annualised underlying consolidated profit, to which said results are added without annualising. |
(4) | The risk weighted assets included in the denominator of the RoRWA metric are calculated in line with the criteria laid out in the CRR (Capital Requirements Regulation). |
Financial Report 2018 61
JANUARY - SEPTEMBER Condensed consolidated financial statements |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED BALANCE SHEET
NOTE: | The financial information for the first nine months of 2018 and 2017 (attached herewith) corresponds to that included in the consolidated summarised financial statements at these dates, drawn up in accordance with the International Accounting Standards (IAS) 34, Interim Financial Information. The accounting policies and methods used are those established by the International Financial Reporting Standards adopted by the European Union (IFRS-EU), Circular 4/2017 of the Bank of Spain, which replaces Circular 4/2004 for those years starting as of 1 January 2018, and the International Financial Reporting Standards issued by the International Accounting Standards Board (IFRS-IASB). |
∎ CONDENSED CONSOLIDATED INCOME STATEMENT (EUR million) |
||||||||
9M18 | 9M17 | |||||||
Interest income |
39,902 | 42,488 | ||||||
Interest expense |
(14,622) | (16,799) | ||||||
Net interest income |
25,280 | 25,689 | ||||||
Dividend income |
292 | 309 | ||||||
Share of results of entities accounted for using the equity method |
532 | 480 | ||||||
Commission income |
10,834 | 10,875 | ||||||
Commission expense |
(2,305) | (2,227) | ||||||
Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net |
576 | 353 | ||||||
Gain or losses on financial assets and liabilities held for trading, net |
1,532 | 1,036 | ||||||
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value through profit or loss |
109 | |||||||
Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net |
146 | (85) | ||||||
Gain or losses from hedge accounting, net |
5 | (35) | ||||||
Exchange differences, net |
(1,009) | 13 | ||||||
Other operating income |
1,179 | 1,188 | ||||||
Other operating expenses |
(1,347) | (1,315) | ||||||
Income from assets under insurance and reinsurance contracts |
2,395 | 1,869 | ||||||
Expenses from liabilities under insurance and reinsurance contracts |
(2,337) | (1,820) | ||||||
Gross income |
35,882 | 36,330 | ||||||
Administrative expenses |
(15,069) | (15,059) | ||||||
Staff costs |
(8,797) | (8,856) | ||||||
Other general administrative expenses |
(6,272) | (6,203) | ||||||
Depreciation and amortisation cost |
(1,774) | (1,899) | ||||||
Provisions or reversal of provisions, net |
(1,725) | (2,622) | ||||||
Impairment or reversal of impairment at financial assets not measured at fair value through profit or loss, net |
(6,473) | (6,973) | ||||||
Financial assets at fair value with changes in other comprehensive income |
(4) | |||||||
Financial assets at amortized cost |
(6,469) | |||||||
Financial assets measured at cost |
(7) | |||||||
Financial assets available-for-sale |
(3) | |||||||
Loans and receivables |
(6,963) | |||||||
Held-to-maturity investments |
| |||||||
Impairment of investments in subsidiaries, joint ventures and associates, net |
| | ||||||
Impairment on non-financial assets, net |
(121) | (141) | ||||||
Tangible assets |
(45) | (44) | ||||||
Intangible assets |
(77) | (41) | ||||||
Others |
1 | (56) | ||||||
Gain or losses on non financial assets and investments, net |
24 | 71 | ||||||
Negative goodwill recognised in results |
| | ||||||
Gains or losses on non-current assets held for sale not classified as discontinued operations |
(158) | (211) | ||||||
Profit or loss before tax from continuing operations |
10,586 | 9,496 | ||||||
Tax expense or income from continuing operations |
(3,709) | (3,332) | ||||||
Profit for the period from continuing operations |
6,877 | 6,164 | ||||||
Profit or loss after tax from discontinued operations |
| | ||||||
Profit for the period |
6,877 | 6,164 | ||||||
Profit attributable to non-controlling interests |
1,135 | 1,087 | ||||||
Profit attributable to the parent |
5,742 | 5,077 | ||||||
Earnings per share |
||||||||
Basic |
0.33 | 0.32 | ||||||
Diluted |
0.33 | 0.32 |
62 Financial Report 2018
JANUARY - SEPTEMBER Condensed consolidated financial statements |
∎ CONDENSED CONSOLIDATED BALANCE SHEET (EUR million) |
||||||||||||
Assets | Sep-18 | Dec-17 | Sep-17 | |||||||||
Cash, cash balances at central banks and other deposits on demand |
111,704 | 110,995 | 122,055 | |||||||||
Financial assets held for trading |
98,448 | 125,458 | 126,649 | |||||||||
Non-trading financial assets mandatorily at fair value through profit or loss |
6,752 | |||||||||||
Financial assets designated at fair value through profit or loss |
63,821 | 34,782 | 38,159 | |||||||||
Financial assets at fair value through other comprehensive income |
116,356 | |||||||||||
Financial assets available-for-sale |
133,271 | 139,461 | ||||||||||
Financial assets at amortised cost |
931,411 | |||||||||||
Loans and receivables |
903,013 | 903,851 | ||||||||||
Investments held-to-maturity |
13,491 | 13,553 | ||||||||||
Hedging derivates |
7,912 | 8,537 | 8,487 | |||||||||
Changes in the fair value of hedged items in portfolio hedges of interest risk |
929 | 1,287 | 1,302 | |||||||||
Investments |
9,371 | 6,184 | 6,832 | |||||||||
Joint ventures companies |
2,052 | 1,987 | 2,525 | |||||||||
Associated entities |
7,319 | 4,197 | 4,307 | |||||||||
Assets under insurance or reinsurance contracts |
342 | 341 | 350 | |||||||||
Tangible assets |
24,727 | 22,974 | 22,708 | |||||||||
Property, plant and equipment |
23,102 | 20,650 | 20,550 | |||||||||
For own-use |
7,777 | 8,279 | 8,217 | |||||||||
Leased out under an operating lease |
15,325 | 12,371 | 12,333 | |||||||||
Investment property |
1,625 | 2,324 | 2,158 | |||||||||
Of which Leased out under an operating lease |
1,237 | 1,332 | 1,318 | |||||||||
Intangible assets |
27,855 | 28,683 | 28,538 | |||||||||
Goodwill |
24,956 | 25,769 | 25,855 | |||||||||
Other intangible assets |
2,899 | 2,914 | 2,683 | |||||||||
Tax assets |
29,901 | 30,243 | 29,800 | |||||||||
Current tax assets |
6,386 | 7,033 | 5,959 | |||||||||
Deferred tax assets |
23,515 | 23,210 | 23,841 | |||||||||
Other assets |
9,713 | 9,766 | 10,847 | |||||||||
Insurance contracts linked to pensions |
218 | 239 | 417 | |||||||||
Inventories |
153 | 1,964 | 2,181 | |||||||||
Other |
9,342 | 7,563 | 8,249 | |||||||||
Non-current assets held for sale |
5,445 | 15,280 | 15,438 | |||||||||
TOTAL ASSETS |
1,444,687 | 1,444,305 | 1,468,030 |
Financial Report 2018 63
JANUARY - SEPTEMBER Condensed consolidated financial statements |
∎ CONDENSED CONSOLIDATED BALANCE SHEET (EUR million) |
||||||||||||
Liabilities and equity | Sep-18 | Dec-17 | Sep-17 | |||||||||
Financial liabilities held for trading |
66,805 | 107,624 | 110,023 | |||||||||
Financial liabilities designated at fair value through profit or loss |
92,182 | 59,616 | 55,049 | |||||||||
Financial liabilities at amortised cost |
1,139,066 | 1,126,069 | 1,147,403 | |||||||||
Hedging derivates |
6,110 | 8,044 | 7,595 | |||||||||
Changes in the fair value of hedged items in portfolio hedges of interest rate risk |
311 | 330 | 313 | |||||||||
Liabilities under insurance or reinsurance contracts |
810 | 1,117 | 1,673 | |||||||||
Provisions |
13,269 | 14,489 | 15,837 | |||||||||
Pensions and other post-retirement obligations |
5,394 | 6,345 | 6,767 | |||||||||
Other long term employee benefits |
1,417 | 1,686 | 1,396 | |||||||||
Taxes and other legal contingencies |
3,032 | 3,181 | 3,782 | |||||||||
Contingent liabilities and commitments |
828 | 617 | 583 | |||||||||
Other provisions |
2,598 | 2,660 | 3,309 | |||||||||
Tax liabilities |
7,953 | 7,592 | 8,948 | |||||||||
Current tax liabilities |
2,655 | 2,755 | 2,831 | |||||||||
Deferred tax liabilities |
5,298 | 4,837 | 6,117 | |||||||||
Other liabilities |
12,513 | 12,591 | 12,461 | |||||||||
Liabilities associated with non-current assets held for sale |
| | 4 | |||||||||
TOTAL LIABILITIES |
1,339,019 | 1,337,472 | 1,359,306 | |||||||||
Equity |
||||||||||||
Shareholders´ equity |
119,793 | 116,265 | 115,723 | |||||||||
Capital |
8,068 | 8,068 | 8,020 | |||||||||
Called up paid capital |
8,068 | 8,068 | 8,020 | |||||||||
Unpaid capital which has been called up |
| | | |||||||||
Share premium |
51,053 | 51,053 | 51,110 | |||||||||
Equity instruments issued other than capital |
549 | 525 | | |||||||||
Equity component of the compound financial instrument |
| | | |||||||||
Other equity instruments issued |
549 | 525 | | |||||||||
Other equity |
217 | 216 | 208 | |||||||||
Accumulated retained earnings |
56,965 | 53,437 | 53,549 | |||||||||
Revaluation reserves |
| | | |||||||||
Other reserves |
(1,696) | (1,602) | (1,215) | |||||||||
(-) Own shares |
(56) | (22) | (64) | |||||||||
Profit attributable to shareholders of the parent |
5,742 | 6,619 | 5,077 | |||||||||
(-) Interim dividends |
(1,049) | (2,029) | (962) | |||||||||
Other comprehensive income |
(24,816) | (21,776) | (19,823) | |||||||||
Items not reclassified to profit or loss |
(2,668) | (4,034) | (3,843) | |||||||||
Items that may be reclassified to profit or loss |
(22,148) | (17,742) | (15,980) | |||||||||
Non-controlling interest |
10,691 | 12,344 | 12,824 | |||||||||
Other comprehensive income |
(1,335) | (1,436) | (1,250) | |||||||||
Other elements |
12,026 | 13,780 | 14,074 | |||||||||
TOTAL EQUITY |
105,668 | 106,833 | 108,724 | |||||||||
TOTAL LIABILITIES AND EQUITY |
1,444,687 | 1,444,305 | 1,468,030 | |||||||||
MEMORANDUM ITEMS |
||||||||||||
Loans commitment granted |
212,115 | 207,671 | 208,153 | |||||||||
Financial guarantees granted |
12,634 | 14,499 | 15,373 | |||||||||
Other commitments granted |
73,433 | 64,917 | 69,636 |
64 Financial Report 2018
JANUARY - SEPTEMBER |
NOTE
i. Important information
In addition to the financial information prepared under International Financial Reporting Standards (IFRS), this report certain alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415en) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please also see Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santanders website (www.santander.com).
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Santander cautions that this financial report contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RoRAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this report and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. 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, industry, 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. Numerous factors, including those reflected in the Form 20-F under Key Information-Risk Factors- and in the Share Registration Documentunder Risk Factors- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this report 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 revise any forward-looking statement, whether as a result of new information, future events or otherwise.
The information contained in this report 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 this report. No investment activity should be undertaken on the basis of the information contained in this report. In making this report available Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this report nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this report 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.
Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this report should be construed as a profit forecast.
Financial Report 2018 65
JANUARY - SEPTEMBER |
66 Financial Report 2018
Investor Relations
Ciudad Grupo Santander Edificio Pereda, 2nd floor Avda de Cantabria s/n 28660 Boadilla del Monte Madrid (Spain) Tel: +34 (91) 259 65 14 / +34 (91) 259 65 20 Fax: +34 (91) 257 02 45 e-mail: [email protected]
Legal Head Office: Paseo Pereda 9-12, Santander (Spain) Tel: +34 (942) 20 61 00
Operational Head Office: Ciudad Grupo Santander Avda. de Cantabria s/n 28660 Boadilla del Monte, Madrid (Spain)
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www.santander.com |
31 October 2018 9M18 Earnings Presentation Here to help you prosper
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 and Markets Authority on 5 October 2015 (ESMA/2015/1415en) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see Q3 2018 Financial Report, published as Relevant Fact on 31 October 2018, Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santanders website (www.santander.com). The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries. Santander cautions that this presentation contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RoRAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. 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 and our shareholder remuneration policy. 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, industry, 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. Numerous factors, including those reflected in the Form 20-F under Key Information-Risk Factors- and in the Share Registration Documentunder Risk Factors- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. 2
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 revise any forward-looking statement, whether as a result of new information, future events or otherwise. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such 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 this presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation available Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000. Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. 3
Index 1. Group performance 9M18 2. Business areas performance 9M18 3. Concluding remarks 4. Appendix 5. Glossary 4
Group performance 9M18 01
Group performance 9M18 9M18 Highlights Our customer base continues to grow: Loyal +19% and Digital +24% YoY Commercial transformation Our digital transformation is increasing the penetration of digital customers and the use of mobile devices Q318 attributable profit: EUR 1,990 mn, affected by the inflation adjustment in Argentina (EUR -169 mn) Results 9M18 attributable profit: EUR 5,742 mn, +13% YoY (+28% in constant euros) 9M18 underlying attributable profit: EUR 6,042 mn, +8% YoY (+21% in constant euros) High profitability: 12.1% underlying RoTE Profitability We continue to generate capital in Q3: +31 bps and solvency FL CET11 Sep-18: 11.11% Banco Populars integration concluded in Portugal and legal integration executed in Spain Outlook On track to meet our 2018 Group targets (1) Data calculated using the IFRS 9 transitional arrangements 6
Group performance 9M18 Our commercial and digital transformations are bearing fruit, and are reflected in a larger customer base and business growth More loyal customers driven by commercial initiatives Digital customers rose at a faster pace Loyal customers Digital customers1 mnmn +24% +19% 29.9 24.2 19.6 16.5 Sep-17 Sep-18 Sep-17 Sep-18 (1) Every natural or legal person that, being part of a commercial bank, has logged in their personal area of internet banking or mobile phone (or both) in the last 30 days 7
Group performance 9M18 9M18 performance driven by strong customer revenue and lower provisions 9M18 9M17 % vs. 9M17 EUR mn Constant Euros euros Net interest income 25,280 25,689 -2 8 Higher customer revenue due to rise in loyal Net fees 8,529 8,648 -1 10 customers, increased business volumes and spreads management Customer revenues 33,809 34,337 -2 9 ROF and other 2,073 1,993 4 16 Gross income 35,882 36,330 -1 9 Operating expenses -16,843 -16,957 -1 8 Higher costs due to commercial transformation and digitalisation investments Net operating income 19,039 19,373 -2 10 Good credit quality evolution, with lower Net loan-loss provisions -6,418 -6,930 -7 4 cost of credit and NPL ratios Other provisions -1,391 -2,268 -39 -32 PBT 11,230 10,175 10 23 Underlying attrib. profit 6,042 5,592 8 21 Net capital gains and provisions -3001 -5152 -42 -42 Attributable Profit 5,742 5,077 13 28 (1) In 9M18 charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 mn), C.C. (EUR -40 mn) and Portugal (EUR 20 mn). 8 (2) In 9M17 charges related to integration costs, equity stakes and intangible assets. In Spain (EUR -300 mn), SCF (EUR -85 mn) and C.C. (EUR -130 mn).
Group performance 9M18 Positive Q3 performance driven by customer revenue growth and cost control Sustained QoQ evolution in core lines reflected in profit growth Constant EUR mn Constant EUR mn +3% 8,672 Net interest 8,222 8,386 8,151 8,153 7,761 income 2,090 7,438 -3% 1,981 1,971 Fee income Underlying profit 1,840 2,764 2,840 2,885 2,804 1,796 2,603 2,682 2,488 1,612 1,536 -1% 4,961 5,128 5,442 5,664 5,607 5,638 5,598 Costs Q117 Q2 Q3 Q4 Q118 Q2 Q3 +11% 2,221 2,210 Attributable profit 2,073 2,023 2,090 2,060 1,987 LLPs 1,612 1,536 1,325 1,418 1,981 1,671 2,090 Q117 Q2 Q3 Q4 Q118 Q2 Q3 Note: Contribution to the SRF (net of tax) recorded in Q217 (EUR -146 mn) and Q218 (EUR -187 mn). Contribution to the DGF (net of tax) in Q417 (EUR -186 mn) 9
Group performance 9M18 Higher NII due to increased business volumes and spreads management Organic growth Lower rates Mature +7% +8% -8 bps 9M18 vs. 9M17 markets +3% Loans Customer funds NIM Net interest income +8% Organic growth Margin improvement Developing markets +10% +15% +32 bps +15% Loans Customer funds NIM Note: YoY change in constant euros. Average volumes. 10
Group performance 9M18 Higher fee income YoY driven by Retail Banking and Wealth Management Loyal customers Total fee income growth by market1 Individuals (mn) Companies (k) Developing Mature +19% +19% markets markets 1,726 +6% 17.9 1,446 +14% 15.1 Sep-17 Sep-18 Sep-17 Sep-18 Activity growth1 Total fee income growth by segment1 CIB 0% Wealth Management mutual fund balances card turnover insurance premiums +66% Retail Banking +7% +14% +9% +7% (1) YoY change in constant euros. 11
Group performance 9M18 We maintain a best-in-class cost-to-income ratio, with better trend in costs Lower growth rates. Most units decreased QoQ Cost-to-income in line with 2018 target 9M18 vs. 9M17, % Nominal1 In real terms2 5.3 1.5 46.7% 47.4% 46.9% 6.8 2.9 1.9 0.3 18.2 -4.0 13.5 7.3 4.5 1.2 7.4 -2.7 9M17 2017 9M18 -1.7 -4.2 Top 3 in customer satisfaction3 in 6 countries 43.2 -4.1 5.5 3.6 2.9 1.4 Note: Constant euros. (1) Spain and Portugal include Popular 12 (2) Excluding inflation and perimeter (3) Corporate benchmark of active customers experience and satisfaction
Group performance 9M18 Continued credit quality improvement Cost of credit NPL and coverage ratios Coverage ratio by stage EUR billion Coverage ratio (%) Exposure1 Coverage 70 69 Sep-18 Sep-18 Jan-18 1.12% 68 66 65 0.98% Stage 1 824 0.5% 0.6% Stage 2 55 8.9% 8.6% NPL ratio (%) Stage 3 36 42.7% 44.2% 4.24 4.08 4.02 3.92 3.87 9M17 9M18 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 (1) Exposure subject to impairment expressed in EUR bn. Additionally, there are EUR 25 bn in customer loans not subject to impairment recorded at mark to market 13 with changes through P&L
Group performance 9M18 Strong capital generation QoQ. In line to meet our 2018 target Fully loaded CET1 evolution % +0.03 11.11 +0.09 11.20 +0.28 10.84 10.80 Dec-17 Jun-181 Organic Others Sep-181 WiZink Pro forma1 Leverage ratio: 5.0% (1) Data calculated using the IFRS 9 transitional arrangements, otherwise the total impact would have been -27 bps 14
Group performance 9M18 Delivering on our commitments: positive performance of the main ratios 12.1 11.8 1.60 1.47 11.7 1.55 11.0 1.39 9M17 9M18 9M17 9M18 Underlying Total TNAV per share (EUR) 0.350 0.349 4.20 +1.5% 4.10 4.16 vs Jun18 0.331 0.316 9M17 9M18 Sep-17 Jun-18 Sep-18 15
Business areas performance 9M18 02
Business areas performance 9M18 Group profit growth driven by most markets 9M18 Underlying attributable profit1 9M18 Underlying attributable profit in core markets Americas Europe EUR mn and % change vs. 9M17 in constant euros 48% 52% 1,942 +24% 1,306 +18% Other Latam, 2% 1,077 -9% Argentina, 1% Chile, 6% UK, 14% 1,000 +7% 554 +13% Spain; 461 +8% Brazil, 17% 26% 460 +47% 344 +9% Mexico, SCF, 13% 7% 236 +8% USA, Portugal, 5% Poland, 6% 67 -38% 3% (1) Excluding Corporate Centre and Spain Real Estate Activity 17
Business areas performance 9M18 Brazil KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (millions) 4.0 5.0 NII 2,377 4.7 7,283 17.1 Digital customers (millions) 8.0 10.5 Fee income 776 -4.3 2,568 14.9 Gross income 3,180 2.4 9,949 12.2 NPL ratio (%) 5.32 5.26 Cost of credit (%) 4.55 4.17 Operating expenses -1,031 0.8 -3,291 5.3 LLPs -665 -4.7 -2,236 5.1 Efficiency ratio (%) 35.2 33.1 PBT 1,310 6.9 3,923 39.4 RoTE (%) 16.8 20.0 Attributable profit 619 2.3 1,942 23.9 (*) EUR mn and % change in constant euros ACTIVITY Commercial strategy focused on customer experience and satisfaction, Volumes in EUR bn Yield on loans contributing to profit and RoTE increase 107 15.92% 15.64% 16.08% 15.62% Loans continued to grow, with market share gains in profitable products. 15.41% Asset quality remains under control, with lower NPL and cost of credit ratios 69 +4% +3% QoQ QoQ Cost of deposits Revenue continued to increase backed by growth in loyal customers: YoY +13% +17% NII (underpinned by higher volumes) and fee income (greater customer activity) YoY 6.42% YoY 5.59% 5.02% 4.44% 4.66% Steady improvement of the efficiency ratio, arising from operating leverage Loans Funds Q317 Q4 Q118 Q2 Q3 Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 18
Business areas performance 9M18 Spain KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 NII 1,116 5.5 3,211 18.2 Loyal customers (millions) 1.6 2.5 Fee income 653 -2.7 1,997 20.9 Digital customers (millions) 3.0 4.3 Gross income¹ 2,114 15.1 6,015 19.7 Operating expenses -1,103 -1.8 -3,370 18.2 NPL ratio (%) 6.82 6.23 LLPs -197 0.6 -599 40.0 Cost of credit (%) 0.28 0.35 PBT 713 64.9 1,753 12.8 Efficiency ratio (%) 56.8 56.0 Underlying att. profit 526 61.8 1,306 17.9 Net capital gains and provisions² 0 -100.0 -280 -6.8 RoTE (%) 11.3 10.8 Attributable profit 526 1,026 27.0 (*) EUR mn (1) Q218 SRF contribution of EUR 163 mn; (2) Restructuring costs after tax ACTIVITY Volumes in EUR bn Q3 profit boosted by customer revenue, lower costs and SRF contribution in Q2 319 Yield on loans QoQ positive performance in NII due to customer NIM improvement with continued reduction in the cost of deposits and slightly higher yield 214 0% 2.03% 2.03% 1.96% 1.96% 1.97% QoQ Activity: double digit growth in new lending (+11%YoY), boosted by SME (+18%) -2% and UPLs (+21%) QoQ Cost of deposits +3% YTD loan portfolio: growth in SME and Corporates (EUR +1.5 bn) and in private 2% YoY banking (EUR +0.5 bn). QoQ impacted by CIB YoY 0.42% 0.41% 0.35% 0.27% 0.21% ans Funds Q317 Q4 Q118 Q2 Q3 YTD funds: growth driven by demand deposits (+6%) and mutual funds (+2%) Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds. Underlying RoTE 19
Business areas performance 9M18 United Kingdom KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (millions) 4.2 4.3 NII 1,033 1.3 3,103 -5.2 Digital customers (millions) 5.0 5.4 Fee income 258 -0.8 766 2.1 Gross income 1,367 1.4 4,089 -5.3 NPL ratio (%) 1.32 1.10 Operating expenses -730 -2.6 -2,256 6.8 Cost of credit (%) 0.03 0.08 LLPs -26 -28.7 -129 6.0 Efficiency ratio (%) 49.0 55.2 PBT 549 6.3 1,532 -11.0 RoTE (%) 10.9 9.9 Attributable profit 385 5.1 1,077 -9.2 (*) EUR mn and % change in constant euros ACTIVITY The UK economy remains relatively stable, however uncertainty remains Volumes in EUR bn Yield on loans 237 Net growth in mortgages (GBP +3.1 bn YoY) with focus on customer service and retention 205 2.83% 2.78% 2.81% 2.75% 2.76% -1% 0% 9M18 profit impacted by ongoing revenue pressures and higher regulatory, risk QoQ QoQ and digital transformation project costs Cost of deposits +1% -1% Q318 profit growth driven by customer revenue, lower costs and LLPs YoY YoY 0.62% 0.63% 0.64% 0.64% 0.64% Credit quality remains strong, maintaining a low cost of credit (8 bps) Q317 Q4 Q118 Q2 Q3 L ns Funds Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 20
Business areas performance 9M18 Santander Consumer Finance P&L* Q318 % Q218 9M18 % 9M17 KEY DATA 9M17 9M18 NII 937 1.1 2,780 5.0 Active customers (millions) 19.6 19.3 Fee income 206 9.5 609 -9.5 Gross income 1,157 2.8 3,423 2.7 NPL ratio (%) 2.60 2.45 Operating expenses -475 -6.3 -1,491 1.9 Cost of credit (%) 0.34 0.40 LLPs -124 80.8 -313 51.9 PBT 562 0.0 1,660 6.3 Efficiency ratio (%) 43.9 43.6 Underlying att. profit 332 -4.0 1,000 7.0 Non-recurring¹ 0 0 -100.0 RoTE (%) 16.7 16.6 Attributable profit 332 -4.0 1,000 17.7 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn Leadership in Europe with best-in-class profitability (RoRWA of 2.4%), boosted by higher NII, cost control and historic low NPLs and cost of credit 94 32 Increased new lending across most countries: auto loans (+13%) and credit Yield on loans cards (+12%) 0% -4% Main contribution to profit: Germany (EUR 233 mn), Nordic countries QoQ QoQ 4.66% 4.61% 4.60% 4.55% 4.51% (EUR 220 mn) and Spain (EUR 184 mn) +6% +8% YoY QoQ profit impacted by higher LLPs due to portfolio sales in Q2 YoY Q317 Q4 Q118 Q2 Q3 Germany commercial network integration on track as scheduled Loans New lending Note: % change in constant euros. Loans excluding reverse repos 21 Excluding Santander Consumer UK profit, which is recorded in Santander UK results. Including it, 9M18 attributable profit: EUR 1,090 mn (+7% vs. 9M17) and Q318 attributable profit: EUR 363 mn (-3% vs. Q218)
Business areas performance 9M18 Good performance: larger customer base, higher profits and better credit quality Strategy focused on the commercial network transformation, digitalisation and attracting retail customers EUR 554 Profit driven by good performance in NII, fee income and cost of credit. Double digit mn; +13% growth in loans, maintaining solid credit quality ratios Focus on customer satisfaction, loyalty and digital initiatives. Loans increased at a faster pace. Strategy to improve liabilities mix 461 Profit up driven by customer revenue and lower cost of credit EUR mn; +8% The Federal Reserve terminated the 2015 Written Agreement it signed with SHUSA demonstrating our continued improvement on regulatory issues Strong increase in profit: lower cost of credit, cost savings and increased income from leasing mn; Santander Bank: increasing profitability by improving NIM and efficiency ratio EUR 460 +47% SC USA: higher profitability (RoTE 15%) driven by lower costs and LLPs, which more than offset the lower spreads Note: Attributable profit. % change vs. 9M17 in constant euros. 22
Business areas performance 9M18 Good performance: larger customer base, higher profits and better credit quality Banco Popular integration was concluded in October Largest1 privately owned bank after Banco Popular integration EUR 344 mn2; +9% PBT boosted by improved efficiency and lower cost of credit Strong GDP growth (>4%), above European average Loan growth continued across all key segments and products. Customer funds increased partly due to extra liquidity building ahead of Deutsche Bank Polska acquisition EUR 236 mn; +8% YoY profit increase driven by customer revenue. Positive QoQ evolution of the main P&L lines, however affected by the seasonal collection of dividends in Q2 Monetary adjustment EUR -81 mn 2018 profit affected by high inflation adjustment Use of fixing exchange rates EUR -88 mn EUR 67 mn; -38% instead of average rates Total impact EUR -169 mn Note: Attributable profit. % change vs. 9M17 in constant euros. 23 (1) By domestic assets and loans (2) Underlying attributable profit
Business areas performance 9M18 Corporate Centre P&L* 9M18 9M17 NII -698 -628 Higher loss in NII due to increased volume of issuances (TLAC) Gains/Losses on FT 15 -257 Better FX hedging results reflected in gains on financial transactions Operating expenses -367 -356 Operating expenses remained virtually unchanged as a result of streamlining and simplification measures Provisions and other income -242 -176 Tax and minority interests -10 2 Underlying att. profit -1,351 -1,511 Net capital gains and provisions -40 -130 Restructuring costs in 9M18 and charges for equity stakes and intangible assets in 9M17 Attributable profit -1,391 -1,641 (*) EUR mn 24
Concluding remarks 03
Concluding remarks We are on track to meet our 2018 targets 2017 9M18 2018 Targets Loyal customers (mn) 17.3 19.6 18.6 Digital customers (mn) 25.4 29.9 30 Fee income1 13% 10% ~10% CAGR 2015-18 Cost of credit 1.07% 0.98% 1.2% 2015-18 average Cost-to-income 47.4% 46.9% 45-47% EPS 2 0.331 Double digit growth (EUR) 0.40 (9M18) DPS (EUR)3 0.22 0.23 Yearly increase FL CET1 10.84% 11.11%4 >11% RoTE5 10.4% 11.7% >11.5% (1) % change in constant euros (2) Underlying EPS: EUR 0.349 (3) Total dividends charged to 2018 earnings are subject to the Board and AGM approval 26 (4) Data calculated using the IFRS 9 transitional arrangements (5) Underlying RoTE 2017 11.8% and 9M18 12.1%
Appendix 04
Appendix 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 28
Appendix Overall increase in loans and customer funds, boosted by developing markets Loan portfolio Customer funds MATURE MARKETS DEVELOPING MARKETS MATURE MARKETS DEVELOPING MARKETS Sep-18 EUR bn YoY Chg. Sep-18 EUR bn YoY Chg. Sep-18 EUR bn YoY Chg. Sep-18 EUR bn YoY Chg. Spain 214 -2% Poland 24 9% Spain 319 3% Poland 30 11% UK 237 1% Brazil 69 13% UK 205 -1% Brazil 107 17% USA 81 3% Mexico 32 10% USA 62 0% Mexico 40 6% SCF 94 6% Chile 40 9% SCF 37 2% Chile 32 -1% Portugal 37 -2% Argentina 6 62% Portugal 39 8% Argentina 9 67% Other individuals, 9% Individuals demand deposits, 36% Home mortgages, 36% CIB, 9% CIB, 11% Loan portfolio Corporates, 12% Customer funds Corporates, 17% by businesses by businesses SMEs, 10% Individuals time deposits, 14% SMEs, 11% Consumer, 16% Consumer, 4% Individuals mutual funds, 15% Note: Loans excluding reverse repos. Customer funds: deposits excluding repos + marketed mutual funds. % change in constant euros. 29
Appendix 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 30
Appendix Mexico KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (thousands) 1,896 2,359 NII 728 6.7 2,030 11.6 Digital customers (thousands) 1,808 2,533 Fee income 199 0.8 575 9.5 Gross income 931 2.4 2,630 8.3 NPL ratio (%) 2.56 2.41 Operating expenses -384 1.0 -1,086 13.5 Cost of credit (%) 3.14 2.72 LLPs -227 15.2 -616 -7.2 Efficiency ratio (%) 39.4 41.3 PBT 315 -1.5 908 14.3 RoTE (%) 19.5 20.0 Attributable profit 195 1.1 554 12.8 (*) EUR mn and % change in constant euros ACTIVITY Strategy focused on the commercial network transformation, digitalisation Volumes in EUR bn and attracting retail customers 40 Yield on loans Strong growth in loans, particularly in commercial and payrolls (+65 bps 32 12.02% 12.02% 12.09% 12.35% 12.49% market share gain YoY), and in deposits, mainly in individuals and SME -1% +4% QoQ Profit up driven by NII (volumes and interest rates), fee income and Cost of deposits QoQ provisions. Higher costs associated with our investment plan +10% +6% 3.37% 3.39% 3.48% 3.57% 3.64% Solid credit quality ratios: lower NPL ratio and cost of credit, and high YoY YoY coverage ratio (120%) Q317 Q4 Q118 Q2 Q3 Loans Funds Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 31
Appendix Chile KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (thousands) 615 646 NII 481 1.1 1,466 7.0 Digital customers (thousands) 988 1,070 Fee income 101 -9.5 329 13.1 Gross income 632 2.4 1,914 4.4 NPL ratio (%) 4.95 4.78 Operating expenses -257 -1.7 -787 4.5 Cost of credit (%) 1.27 1.18 LLPs -117 6.3 -353 3.5 Efficiency ratio (%) 41.1 41.1 PBT 276 0.1 846 11.5 RoTE (%) 18.0 18.5 Attributable profit 153 0.5 461 8.3 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn Largest privately owned bank by assets and customers, in a country with strong economic growth 40 Yield on loans Focus on customer satisfaction, loyalty and digital initiatives: in Q4, will 32 7.33% 7.33% 7.52% 7.53% 7.35% launch Santander Life 2.0 and new branch model openings +3% -4% QoQQoQ Faster growth in loans (individuals: +9%; companies: +10%). In funds, change of Cost of deposits mix strategy (demand deposits: +9%) +9% -1% 1.81% 1.87% 1.78% 1.73% 1.75% YoY YoY Profit up driven by customer revenue and lower cost of credit Q317 Q4 Q118 Q2 Q3 Loans Funds Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 32
Appendix United States KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (thousands) 278 332 NII 1,337 1.9 3,838 -4.1 Digital customers (thousands) 778 869 Fee income 208 -7.9 641 -8.0 Gross income 1,735 1.4 4,983 -0.2 NPL ratio (%) 2.56 3.00 Operating expenses -748 -1.1 -2,220 -1.7 Cost of credit (%) 3.57 3.00 LLPs -649 43.6 -1,674 -16.1 Efficiency ratio (%) 45.2 44.6 PBT 269 -40.9 946 37.8 RoTE (%) 3.4 4.6 Attributable profit 125 -42.9 460 46.5 (*) EUR mn and % change in constant euros ACTIVITY The Federal Reserve terminated the 2015 Written Agreement it signed with Volumes in EUR bn SHUSA demonstrating our continued improvement on regulatory issues Santander Bank Santander Consumer USA Better volume dynamics with loans growing for the second consecutive quarter 46 45 46 and higher YoY 38 +2% -1% +5% Strong increase in profit YoY. QoQ affected by higher LLPs vs. a seasonal +3% QoQQoQQoQ lower Q2 QoQ +2% -1% +11% +10% Santander Bank: increasing profitability by improving NIM and efficiency ratio YoY YoYYoY YoY SC USA: higher profitability (RoTE 15%) driven by lower costs and LLPs, which Loans Funds Loans¹ Managed more than offset the fall in spreads assets Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 33 Santander Banks customers (1) Includes leasing
Appendix Portugal KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 NII 211 -1.1 646 14.2 Loyal customers (thousands) 681 736 Fee income 92 0.2 281 4.8 Digital customers (thousands) 551 691 Gross income¹ 323 -6.9 1,010 10.5 Operating expenses -157 -4.7 -480 7.4 NPL ratio (%) 8.39 7.43 LLPs -11 n.a. -20 -10.8 Cost of credit (%) 0.10 0.03 PBT 167 4.8 492 21.1 Efficiency ratio (%) 48.9 47.5 Underlying att. profit 114 10.9 344 8.9 Net capital gains and provisions² 0 -100.0 20 RoTE (%) 11.7 11.6 Attributable profit 114 -7.1 364 15.3 (*) EUR mn (1) Q218 SRF contribution of EUR 17 mn; (2) Provisions and restructuring costs associated with inorganic operations, net of tax impacts ACTIVITY Volumes in EUR bn Banco Popular integration was concluded in October 39 Yield on loans 37 Largest3 privately owned bank after Popular integration 0% 0% 1.86% 1.84% 1.86% 1.81% 1.74% New lending market shares remain around 19% in corporates and 22% in QoQQoQ mortgages Cost of deposits -2% +8% 9M18 PBT boosted by improved efficiency and lower cost of credit YoY YoY 0.22% 0.19% 0.18% 0.18% 0.15% Q317 Q4 Q118 Q2 Q3 Loans Funds Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds. Underlying RoTE 34 (3) In terms of domestic assets and loans
Appendix Poland KEY DATA 9M17 9M18 P&L* Q318 % Q218 9M18 % 9M17 Loyal customers (thousands) 1,350 1,743 NII 243 2.2 730 6.3 Digital customers (thousands) 2,030 2,175 Fee income 111 -1.9 338 3.0 Gross income 367 -6.8 1,098 5.0 NPL ratio (%) 4.70 4.23 Operating expenses -156 -2.5 -472 5.5 Cost of credit (%) 0.61 0.69 LLPs -33 -18.1 -120 23.2 Efficiency ratio (%) 42.8 43.0 PBT 151 -4.9 432 2.2 RoTE (%) 11.4 11.1 Attributable profit 80 -12.1 236 7.6 (*) EUR mn and % change in constant euros ACTIVITY Strong GDP growth (>4%), above European average Volumes in EUR bn 30 Yield on loans Loan growth continued across all key segments and products. Customer funds increased partly due to extra liquidity building ahead of DBP1 acquisition 24 4.14% 4.15% 4.18% 4.13% 4.10% YoY profit growth driven by customer revenue +2% +2% QoQQoQ Positive Q318: higher customer revenue, lower costs and LLPs, however Cost of deposits QoQ evolution affected by the seasonal collection of dividends in Q2 +9% +11% 0.83% Strong credit quality: lower NPL ratio with the cost of credit impacted by 0.78% 0.72% 0.68% 0.78% YoY YoY portfolio sales in 2017 Q317 Q4 Q118 Q2 Q3 L ns Funds Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 35 (1) DBP: Deutsche Bank Polska
Appendix Argentina impacts on results and capital Argentina meets the criteria to be considered as a high inflation economy. International rules indicate that an economy is considered to be high inflationary if, among other factors, it has a 3-year cumulative inflation rate of above or around 100%. From September Argentinas results and balance sheet must be adjusted by inflation rates. Impact on results that must be applied since 1 January 2018 Impact on the Groups capital ratio of the adjustment application In the first application, fixed assets should be revalued: Monetary adjustment EUR -81 mn Positive capital impact of ~ EUR 105 mn (net of tax) Use of fixing exchange rates instead of EUR -88 mn average rates Representing an increase of about 2 bps in capital Total impact EUR -169 mn The reduction in inflation as the situation normalizes would lead to an equivalent reduction in the accounting adjustment 36
Appendix Argentina KEY DATA 9M17 9M18 P&L* Q318 1 Q3182 % Q218 9M18 % 9M17 Loyal customers (thousands) 1,288 1,397 NII -6 178 22.5 442 48.8 Digital customers (thousands) 1,907 2,084 Fee income -6 102 22.2 256 36.5 Gross income -70 262 -2.0 737 38.6 NPL ratio (%) 2.34 2.47 Operating expenses 0 -175 34.8 -426 43.2 Cost of credit (%) 1.85 2.92 LLPs -7 -58 26.0 -131 172.1 Efficiency ratio (%) 55.9 57.8 PBT -73 9 -86.2 127 -19.8 RoTE (%) 30.9 16.5 Attributable profit -71 -14 67 -38.0 (1) EUR mn (2) Constant EUR mn (*) All % changes in constant euros ACTIVITY Agreement with the IMF allows Argentina to bridge the financial gap for 2018 and Volumes in EUR bn 2019. New monetary and fiscal policies should be reflected in more FX stability Yield on loans and lower inflation 9 20.57% 17.76% 18.65% 19.03% 16.27% Leading privately owned bank in Argentina by loans and deposits 6 +16% Profit affected by high inflation adjustment +11% QoQ Cost of deposits QoQ +67% QoQ customer revenue up due to spreads management and fee income from +62% 6.32% 7.79% YoY 5.25% cash deposits and FX. Higher costs and LLPs partially affected by the pesos YoY 4.36% 4.64% Q317 Q4 Q118 Q2 Q3 depreciation and the automatic review of the collective salary agreement ns Funds Note: % change in constant euros. Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds 37
Appendix Other Latin American countries Attributable profit Constant EUR mn URUGUAY PERU +45% +10% 103 28 26 72 9M17 9M18 9M17 9M18 Focusing on loyalty, transactions and target segments Uruguays profit driven by higher NII and fee income, with improved C/I Perus higher revenue more than offset the cost increase 38
Appendix 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 39
Appendix Retail Banking ACTIVITY P&L* Q318 % Q218 9M18 % 9M17 EUR bn and % change in constant euros NII 7,918 2.6 24,023 8.9 Fee income 2,068 -0.3 6,611 7.3 745 715 Gross income 10,411 3.1 31,726 8.5 Operating expenses -4,486 -1.8 -14,230 7.2 0% +2% LLPs -2,035 12.7 -6,107 8.1 QoQQoQ PBT 3,508 3.5 10,289 20.2 Underlying att. profit 1,995 2.7 5,931 16.6 +4% +2% YoY Net capital gains and provisions¹ 0 -100.0 -260 -32.5 YoY Attributable profit 1,995 18.1 5,671 20.6 Loans Funds (*) EUR mn and % change in constant euros (1) In Q218, charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain and Portugal. In 2017, integration costs Focus on three main priorities: customer loyalty, digital transformation and operational excellence New commercial initiatives and launch of several offers across a multi-channel model Progress in achieving our targets. 19.6 million loyal customers (+19% from September 2017) and 29.9 million digital customers (+24% from September 2017) Profit boosted by the perimeter following Banco Populars acquisition and the strong performance in customer revenue 40
Appendix Corporate & Investment Banking REVENUE P&L* Q318 % Q218 9M18 % 9M17 Constant EUR mn NII 573 16.1 1,665 -0.2 Fee income 330 -12.3 1,133 0.2 TOTAL 3,833 -2% 3,744 Gross income 1,194 8.2 3,744 -2.3 Capital & Other 397 -18% 325 Operating expenses -524 10.2 -1,554 12.0 Global Markets 1,250 -3% 1,216 LLPs -42 -10.1 -161 -63.4 Global Debt Customers 994 -1% 983 0% PBT 604 10.8 1,964 -0.1 Financing Attributable profit 384 14.2 1,258 -2.9 Global Transaction 1,191 +2% 1,219 Banking (*) EUR mn and % change in constant euros 9M17 9M18 Leading positions in Latam and Europe, particularly in export & agency finance, debt capital markets and structured financing Continued support to global customers in their capital issuances, with financing solutions and transactional services Attributable profit down 3% YoY mainly due to lower gains on financial transactions (extraordinarily high in Q117) and higher costs QoQ profit rose 14% driven by the recovery of revenue growth and lower provisions 41
Appendix Wealth Management ACTIVITY P&L* Q318 % Q218 9M18 % 9M17 Constant EUR bn and % change vs 9M17 NII 104 1.2 311 12.0 Total Assets Under 0% 333 Management Fee income 266 -3.7 826 65.9 Funds and investments* 207 +3% Gross income 374 -2.9 1,150 35.3SAM 174 +3% Operating expenses -179 -3.1 -549 49.7Private Banking 58 +5% LLPs 1 -4 Custody of customer PBT 190 -3.0 587 22.3 84 -6% funds Attributable profit 128 -3.1 392 14.6 Customer deposits 42 -1% (*) EUR mn and % change in constant euros Customer loans 14 +10% (*) Total adjusted for funds from private banking customers managed by SAM Note: Total assets marketed and/or managed in 2018 and 2017 Total contribution1 to the Groups profit of EUR 757 million (+10% YoY) Continues to be a reference in private banking and asset management in Spain and Latin America Key initiatives: development of the Private Wealth (UHNW) proposition, Private Banking digital platform, strengthening of SAM value proposition Private Banking as a global segment is a priority: cross-border collaboration volumes grew 19% since December 2017 to EUR 4,152 million In volumes: growth in funds and investments whereas custody is affected by the markets performance; double digit rise in loans driven by the development of Private Wealth Gross income growth driven by increased managed volumes of higher added value (1) Profit after tax + total fee income generated by this business 42
Appendix Spain Real Estate activity Real estate exposure1 Net value EUR bn EUR bn Sep-18 Real estate assets 3.9 9.7 4.8 Foreclosed assets 2.7 4.9 Rental assets 1.2 RE non-performing loans (NPLs) 1.0 Gross value Provisions Net value RE assets + RE non-performing loans 4.9 Sep-18 Sep-18 Management continued to be aimed at reducing these assets, particularly loans and foreclosed assets During the third quarter, the Group reached agreement with a subsidiary of Cerberus Capital Management to sell properties for EUR 1,535 million2 Loss of EUR 187 million in the first nine months of the year (loss of EUR 223 million in the same period of 2017), due to the reduced need for provisions (1) Spain Real Estate activity 43 (2) This transaction is expected to be finalised by the end of 2018 or the beginning of 2019 Appendix Spain Real Estate activity Real estate exposure1 Net value EUR bn EUR bn Sep-18 Real estate assets 3.9 9.7 4.8 Foreclosed assets 2.7 4.9 Rental assets 1.2 RE non-performing loans (NPLs) 1.0 Gross value Provisions Net value RE assets + RE non-performing loans 4.9 Sep-18 Sep-18 Management continued to be aimed at reducing these assets, particularly loans and foreclosed assets During the third quarter, the Group reached agreement with a subsidiary of Cerberus Capital Management to sell properties for EUR 1,535 million2 Loss of EUR 187 million in the first nine months of the year (loss of EUR 223 million in the same period of 2017), due to the reduced need for provisions (1) Spain Real Estate activity 43 (2) This transaction is expected to be finalised by the end of 2018 or the beginning of 2019
Appendix 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 44
Appendix We made good headway YTD in our funding plan to enhance the Groups TLAC position and optimise the cost of capital Key liquidity ratios Funding planissuances Sep-18 Jan-Sep 18 Net loan-to-deposit ratio (LTD): 111% Group issuances2 EUR 19bn (~EUR 11bn TLAC-eligible) Deposits + M/LT funding / net loans: 114% Main issuers Parent bank, SCF and UK Liquidity Coverage Ratio (LCR)1: 154% Main issuance currencies EUR, USD, GBP Comfortable liquidity position Focus on TLAC-eligible instruments, following (Group and subsidiaries) our decentralised liquidity and funding model (1) Provisional data (2) Parent Bank, UK, SCF and USA. 45 Excluding covered bonds and securitisations
Appendix 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 46
NPL ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Continental Europe 5.62 8.70 6.30 5.82 5.81 5.68 5.57 Spain 5.22 10.52 6.82 6.32 6.27 6.24 6.23 Santander Consumer Finance 2.62 2.61 2.60 2.50 2.48 2.44 2.45 Poland 5.20 4.66 4.70 4.57 4.77 4.58 4.23 Portugal 8.47 9.10 8.39 7.51 8.29 7.55 7.43 United Kingdom 1.31 1.23 1.32 1.33 1.17 1.12 1.10 Latin America 4.50 4.40 4.41 4.46 4.43 4.40 4.33 Brazil 5.36 5.36 5.32 5.29 5.26 5.26 5.26 Mexico 2.77 2.58 2.56 2.69 2.68 2.58 2.41 Chile 4.93 5.00 4.95 4.96 5.00 4.86 4.78 Argentina 1.82 2.21 2.34 2.50 2.54 2.40 2.47 USA 2.43 2.64 2.56 2.79 2.86 2.91 3.00 Operating Areas 3.77 5.40 4.27 4.10 4.04 3.94 3.87 Total Group 3.74 5.37 4.24 4.08 4.02 3.92 3.87 47
Coverage ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Continental Europe 60.6 59.7 53.7 54.4 56.8 55.2 54.4 Spain 49.1 56.6 46.2 46.8 51.1 49.0 47.7 Santander Consumer Finance 108.9 106.5 104.3 101.4 107.2 107.7 106.4 Poland 61.2 67.5 67.6 68.2 72.0 72.1 71.6 Portugal 61.7 55.6 56.1 62.1 53.9 52.7 53.4 United Kingdom 33.8 32.6 31.5 32.0 34.6 34.0 33.1 Latin America 90.5 89.2 90.1 85.0 98.4 96.8 97.1 Brazil 98.1 95.5 97.6 92.6 110.4 108.7 109.1 Mexico 104.8 113.8 110.3 97.5 113.5 116.1 120.5 Chile 58.9 58.2 58.5 58.2 61.0 60.0 59.6 Argentina 134.1 109.9 102.8 100.1 121.3 121.5 124.0 USA 202.4 183.1 187.5 170.2 169.1 156.9 145.5 Operating Areas 74.6 67.6 65.7 65.1 69.7 68.3 67.6 Total Group 74.6 67.7 65.8 65.2 70.0 68.6 67.9 48
Non-performing loans and loan-loss allowances. September 2018 Non-performing loans Loan-loss allowances 100%: EUR 36,332 million 100%: EUR 24,685 million Other, 6% Other, 4% USA, 7% USA, 15% Argentina, 1% Spain, 30% Spain, 42% Chile, 6% Mexico, 2% Argentina, 1% Chile, 5% Mexico, 4% Brazil, 11% SCF*, 10% UK, 8% Brazil, 18% Poland, 3% SCF*, 6% Portugal, Portugal, UK, 4% 8% Poland, 3% 6% Percentage over Groups total 49 (*) Excluding SCF UK
Cost of credit % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Continental Europe 0.38 0.36 0.32 0.31 0.32 0.34 0.37 Spain 0.33 0.32 0.28 0.30 0.29 0.31 0.35 Santander Consumer Finance 0.39 0.37 0.34 0.30 0.36 0.37 0.40 Poland 0.66 0.65 0.61 0.62 0.69 0.71 0.69 Portugal 0.07 0.03 0.10 0.04 0.08 0.10 0.03 United Kingdom 0.03 0.02 0.03 0.08 0.10 0.10 0.08 Latin America 3.36 3.36 3.25 3.15 3.12 3.04 2.94 Brazil 4.84 4.79 4.55 4.36 4.35 4.30 4.17 Mexico 2.94 3.01 3.14 3.08 2.95 2.78 2.72 Chile 1.42 1.37 1.27 1.21 1.22 1.18 1.18 Argentina 1.68 1.75 1.85 1.85 2.06 2.47 2.92 USA 3.63 3.65 3.57 3.42 3.29 3.02 3.00 Operating Areas 1.18 1.18 1.12 1.07 1.03 0.99 0.97 Total Group 1.17 1.17 1.12 1.07 1.04 0.99 0.98 50
Appendix 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 51
Grupo Santander EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 11,246 11,522 11,569 11,556 11,409 11,411 10,989 34,337 33,809 Gross income 12,029 12,049 12,252 12,062 12,151 12,011 11,720 36,330 35,882 Operating expenses (5,543) (5,648) (5,766) (5,961) (5,764) (5,718) (5,361) (16,957) (16,843) Net operating income 6,486 6,401 6,486 6,101 6,387 6,293 6,359 19,373 19,039 Net loan-loss provisions (2,400) (2,280) (2,250) (2,181) (2,282) (2,015) (2,121) (6,930) (6,418) Other (775) (848) (645) (544) (416) (487) (488) (2,268) (1,391) Underlying profit before taxes 3,311 3,273 3,591 3,375 3,689 3,791 3,750 10,175 11,230 Underlying consolidated profit 2,186 2,144 2,347 2,285 2,409 2,412 2,356 6,678 7,177 Underlying attributable profit 1,867 1,749 1,976 1,924 2,054 1,998 1,990 5,592 6,042 Net capital gains and provisions* (515) (382) (300) (515) (300) Attributable profit 1,867 1,749 1,461 1,542 2,054 1,698 1,990 5,077 5,742 (*) Including: in Q317 charges for integration costs and equity stakes and intangible assets in Q417 Allfunds capital gains, USA fiscal reform, goodwill charges and in the US, provisions for hurricanes, increased stake in 52 Santander Consumer USA and other in Q218 costs associated to integrations (mainly restructuring costs), net of tax impacts, in Spain, Corporate Centre and Portugal
Grupo Santander Constant EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 9,926 10,364 10,833 10,917 11,062 11,271 11,476 31,123 33,809 Gross income 10,610 10,830 11,477 11,394 11,791 11,845 12,246 32,916 35,882 Operating expenses (4,961) (5,128) (5,442) (5,664) (5,607) (5,638) (5,598) (15,531) (16,843) Net operating income 5,649 5,702 6,035 5,730 6,183 6,207 6,648 17,386 19,039 Net loan-loss provisions (2,073) (2,023) (2,090) (2,060) (2,221) (1,987) (2,210) (6,186) (6,418) Other (692) (758) (596) (512) (399) (471) (522) (2,045) (1,391) Underlying profit before taxes 2,884 2,921 3,349 3,158 3,563 3,750 3,917 9,154 11,230 Underlying consolidated profit 1,902 1,903 2,194 2,145 2,330 2,385 2,461 5,998 7,177 Underlying attributable profit 1,612 1,536 1,840 1,796 1,981 1,971 2,090 4,988 6,042 Net capital gains and provisions* (515) (378) (300) (515) (300) Attributable profit 1,612 1,536 1,325 1,418 1,981 1,671 2,090 4,473 5,742 (*) Including: in Q317 charges for integration costs and equity stakes and intangible assets in Q417 Allfunds capital gains, USA fiscal reform, goodwill charges and in the US, provisions for hurricanes, increased stake in 53 Santander Consumer USA and other in Q218 costs associated to integrations (mainly restructuring costs), net of tax impacts, in Spain, Corporate Centre and Portugal
Spain EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,206 1,409 1,753 1,749 1,710 1,729 1,769 4,368 5,208 Gross income 1,539 1,475 2,011 1,835 2,063 1,837 2,114 5,025 6,015 Operating expenses (798) (893) (1,161) (1,188) (1,145) (1,123) (1,103) (2,852) (3,370) Net operating income 741 582 850 647 918 714 1,012 2,173 2,644 Net loan-loss provisions (163) (144) (120) (175) (207) (196) (197) (428) (599) Other (64) (64) (62) (25) (104) (86) (102) (190) (292) Underlying profit before taxes 514 374 667 447 608 432 713 1,555 1,753 Underlying consolidated profit 367 267 489 333 455 326 526 1,123 1,307 Underlying attributable profit 362 262 484 330 455 325 526 1,108 1,306 Net capital gains and provisions* (300) (280) (300) (280) Attributable profit 362 262 184 330 455 45 526 808 1,026 (*) Including: in Q317 charges for integration costs in Q218 restructuring costs 54
Santander Consumer Finance EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,121 1,096 1,121 1,110 1,130 1,116 1,143 3,339 3,389 Gross income 1,118 1,099 1,135 1,132 1,140 1,126 1,157 3,352 3,423 Operating expenses (502) (485) (484) (506) (509) (507) (475) (1,472) (1,491) Net operating income 616 614 650 625 631 619 682 1,880 1,932 Net loan-loss provisions (61) (57) (90) (58) (120) (69) (124) (207) (313) Other (37) (35) (30) (55) 24 13 5 (102) 41 Underlying profit before taxes 518 522 531 512 535 563 562 1,571 1,660 Underlying consolidated profit 370 382 370 373 388 412 405 1,122 1,206 Underlying attributable profit 314 319 309 311 323 346 332 943 1,000 Net capital gains and provisions* (85) (85) Attributable profit 314 319 224 311 323 346 332 858 1,000 (*) Including: in Q317 charges for integration costs 55
Santander Consumer Finance Constant EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,111 1,092 1,117 1,109 1,129 1,116 1,144 3,320 3,389 Gross income 1,108 1,094 1,131 1,131 1,139 1,126 1,158 3,332 3,423 Operating expenses (498) (483) (482) (506) (509) (507) (475) (1,463) (1,491) Net operating income 610 611 648 625 631 619 683 1,869 1,932 Net loan-loss provisions (60) (58) (89) (58) (120) (69) (124) (206) (313) Other (37) (35) (30) (56) 24 13 5 (102) 41 Underlying profit before taxes 513 519 529 511 534 563 563 1,561 1,660 Underlying consolidated profit 366 379 369 373 388 412 406 1,114 1,206 Underlying attributable profit 310 317 308 311 322 346 332 935 1,000 Net capital gains and provisions* (85) (85) Attributable profit 310 317 223 311 322 346 332 850 1,000 (*) Including: in Q317 charges for integration costs 56
Poland EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 318 343 350 360 359 355 354 1,011 1,068 Gross income 321 363 358 378 333 398 367 1,042 1,098 Operating expenses (146) (150) (149) (160) (154) (162) (156) (446) (472) Net operating income 175 212 209 218 179 236 211 596 626 Net loan-loss provisions (27) (34) (36) (40) (46) (41) (33) (97) (120) Other (23) (27) (28) (19) (13) (34) (26) (78) (74) Underlying profit before taxes 125 152 144 159 120 161 151 421 432 Underlying consolidated profit 86 120 110 116 89 132 114 316 335 Underlying attributable profit 59 83 76 81 63 93 80 219 236 Net capital gains and provisions Attributable profit 59 83 76 81 63 93 80 219 236 57
Poland PLN million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,374 1,449 1,489 1,522 1,500 1,512 1,525 4,312 4,537 Gross income 1,386 1,532 1,525 1,599 1,390 1,695 1,579 4,442 4,664 Operating expenses (630) (634) (636) (675) (642) (690) (672) (1,900) (2,005) Net operating income 756 898 889 924 748 1,005 907 2,542 2,660 Net loan-loss provisions (116) (142) (155) (171) (191) (175) (143) (413) (509) Other (100) (112) (119) (78) (55) (146) (113) (332) (314) Underlying profit before taxes 539 644 614 674 502 684 651 1,797 1,837 Underlying consolidated profit 372 506 470 492 373 560 491 1,348 1,424 Underlying attributable profit 257 351 324 344 264 393 346 932 1,003 Net capital gains and provisions Attributable profit 257 351 324 344 264 393 346 932 1,003 58
Portugal EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 261 262 311 313 320 305 303 834 927 Gross income 294 275 345 330 341 346 323 914 1,010 Operating expenses (139) (142) (166) (167) (158) (165) (157) (447) (480) Net operating income 155 133 179 163 183 182 166 467 530 Net loan-loss provisions 10 5 (37) 10 (8) (0) (11) (22) (20) Other (14) (9) (16) (5) (9) (22) 13 (39) (18) Underlying profit before taxes 151 129 126 168 166 159 167 407 492 Underlying consolidated profit 126 111 81 120 128 104 115 318 346 Underlying attributable profit 125 110 80 119 127 103 114 316 344 Net capital gains and provisions* 20 20 Attributable profit 125 110 80 119 127 123 114 316 364 (*) Including: in Q218 provisions and restructuring costs associated with inorganic operations, net of tax impacts 59
United Kingdom EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,349 1,409 1,317 1,291 1,274 1,304 1,291 4,075 3,869 Gross income 1,432 1,544 1,397 1,344 1,349 1,373 1,367 4,372 4,089 Operating expenses (723) (723) (694) (721) (764) (763) (730) (2,140) (2,256) Net operating income 709 821 703 623 586 610 637 2,232 1,832 Net loan-loss provisions (15) (42) (66) (81) (66) (37) (26) (123) (129) Other (105) (171) (89) (101) (62) (47) (62) (365) (172) Underlying profit before taxes 588 608 547 441 457 526 549 1,744 1,532 Underlying consolidated profit 423 414 382 304 326 380 391 1,219 1,096 Underlying attributable profit 416 408 377 297 320 372 385 1,201 1,077 Net capital gains and provisions Attributable profit 416 408 377 297 320 372 385 1,201 1,077 60
United Kingdom GBP million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,160 1,213 1,183 1,146 1,125 1,142 1,152 3,556 3,420 Gross income 1,231 1,329 1,255 1,193 1,192 1,203 1,220 3,815 3,614 Operating expenses (622) (622) (623) (639) (675) (669) (651) (1,867) (1,995) Net operating income 609 706 632 554 517 534 568 1,947 1,620 Net loan-loss provisions (13) (36) (59) (72) (58) (32) (23) (108) (114) Other (90) (147) (81) (90) (55) (41) (56) (318) (152) Underlying profit before taxes 506 524 492 392 404 461 490 1,521 1,354 Underlying consolidated profit 364 356 344 270 288 333 348 1,064 969 Underlying attributable profit 358 351 339 265 282 326 343 1,048 952 Net capital gains and provisions Attributable profit 358 351 339 265 282 326 343 1,048 952 61
Brazil EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 3,455 3,413 3,392 3,458 3,403 3,296 3,153 10,259 9,851 Gross income 3,717 3,502 3,542 3,512 3,445 3,323 3,180 10,761 9,949 Operating expenses (1,314) (1,233) (1,244) (1,289) (1,165) (1,095) (1,031) (3,791) (3,291) Net operating income 2,403 2,269 2,298 2,223 2,280 2,228 2,149 6,970 6,658 Net loan-loss provisions (910) (852) (819) (814) (822) (750) (665) (2,581) (2,236) Other (358) (349) (268) (211) (154) (170) (174) (975) (499) Underlying profit before taxes 1,135 1,068 1,211 1,198 1,304 1,308 1,310 3,414 3,923 Underlying consolidated profit 713 689 747 738 761 730 698 2,149 2,188 Underlying attributable profit 634 610 659 642 677 647 619 1,902 1,942 Net capital gains and provisions Attributable profit 634 610 659 642 677 647 619 1,902 1,942 62
Brazil BRL million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 11,561 12,036 12,567 13,139 13,568 14,121 14,451 36,165 42,141 Gross income 12,438 12,367 13,129 13,367 13,737 14,241 14,579 37,934 42,557 Operating expenses (4,397) (4,355) (4,613) (4,895) (4,644) (4,697) (4,736) (13,364) (14,076) Net operating income 8,041 8,013 8,516 8,472 9,093 9,544 9,843 24,570 28,480 Net loan-loss provisions (3,045) (3,008) (3,045) (3,105) (3,276) (3,220) (3,070) (9,098) (9,566) Other (1,198) (1,231) (1,007) (825) (615) (727) (793) (3,437) (2,135) Underlying profit before taxes 3,798 3,773 4,464 4,543 5,202 5,597 5,981 12,035 16,780 Underlying consolidated profit 2,386 2,431 2,757 2,802 3,034 3,127 3,200 7,574 9,361 Underlying attributable profit 2,121 2,152 2,432 2,438 2,699 2,772 2,837 6,706 8,308 Net capital gains and provisions Attributable profit 2,121 2,152 2,432 2,438 2,699 2,772 2,837 6,706 8,308 63
Mexico EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 804 856 879 811 836 841 927 2,539 2,604 Gross income 824 914 892 830 831 868 931 2,630 2,630 Operating expenses (319) (361) (356) (345) (340) (363) (384) (1,037) (1,086) Net operating income 505 553 536 485 491 505 547 1,594 1,543 Net loan-loss provisions (233) (246) (240) (187) (200) (189) (227) (718) (616) Other (4) (6) (4) (24) (3) (12) (5) (15) (20) Underlying profit before taxes 267 301 292 274 288 305 315 860 908 Underlying consolidated profit 211 238 231 225 225 238 250 680 713 Underlying attributable profit 163 187 182 178 175 184 195 532 554 Net capital gains and provisions Attributable profit 163 187 182 178 175 184 195 532 554 64
Mexico MXN million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 17,348 17,505 18,399 18,076 19,257 19,435 20,475 53,251 59,167 Gross income 17,779 18,706 18,677 18,508 19,143 20,058 20,546 55,163 59,747 Operating expenses (6,894) (7,386) (7,460) (7,683) (7,832) (8,381) (8,467) (21,740) (24,680) Net operating income 10,886 11,320 11,218 10,825 11,310 11,678 12,079 33,423 35,067 Net loan-loss provisions (5,032) (5,019) (5,015) (4,201) (4,610) (4,357) (5,020) (15,066) (13,987) Other (90) (131) (89) (522) (72) (272) (115) (310) (459) Underlying profit before taxes 5,764 6,170 6,113 6,102 6,628 7,049 6,944 18,047 20,621 Underlying consolidated profit 4,548 4,865 4,841 4,996 5,181 5,511 5,516 14,254 16,208 Underlying attributable profit 3,523 3,829 3,808 3,963 4,021 4,259 4,306 11,160 12,587 Net capital gains and provisions Attributable profit 3,523 3,829 3,808 3,963 4,021 4,259 4,306 11,160 12,587 65
Chile EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 592 589 534 583 601 612 582 1,715 1,795 Gross income 645 644 604 630 640 642 632 1,893 1,914 Operating expenses (264) (260) (253) (248) (258) (272) (257) (777) (787) Net operating income 381 383 351 382 382 370 375 1,116 1,127 Net loan-loss provisions (122) (122) (108) (110) (121) (115) (117) (352) (353) Other 2 7 11 3 22 32 19 20 73 Underlying profit before taxes 261 267 255 276 282 287 276 783 846 Underlying consolidated profit 214 218 209 218 223 232 221 641 675 Underlying attributable profit 147 149 143 146 151 158 153 440 461 Net capital gains and provisions Attributable profit 147 149 143 146 151 158 153 440 461 66
Chile CLP million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 413,110 430,039 403,461 434,470 444,260 453,403 449,145 1,246,609 1,346,808 Gross income 450,136 469,704 456,238 469,635 473,564 475,595 486,844 1,376,079 1,436,003 Operating expenses (184,039) (189,977) (191,129) (184,867) (190,863) (201,511) (198,000) (565,145) (590,374) Net operating income 266,097 279,727 265,110 284,768 282,700 274,084 288,844 810,934 845,629 Net loan-loss provisions (85,110) (89,381) (81,474) (81,875) (89,852) (84,920) (90,252) (255,965) (265,024) Other 1,438 4,750 8,384 2,363 16,034 23,790 14,617 14,572 54,441 Underlying profit before taxes 182,425 195,096 192,020 205,256 208,882 212,954 213,209 569,541 635,045 Underlying consolidated profit 149,458 158,760 157,744 162,572 164,822 171,559 170,114 465,963 506,495 Underlying attributable profit 102,796 108,904 107,839 109,081 111,380 116,945 117,586 319,538 345,911 Net capital gains and provisions Attributable profit 102,796 108,904 107,839 109,081 111,380 116,945 117,586 319,538 345,911 67
Argentina EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 374 428 382 398 343 367 (12) 1,183 698 Gross income 405 470 423 449 377 430 (70) 1,298 737 Operating expenses (221) (269) (235) (244) (218) (207) (0) (726) (426) Net operating income 184 201 187 205 159 223 (70) 572 311 Net loan-loss provisions (29) (42) (46) (41) (49) (75) (7) (118) (131) Other 1 (35) (35) (23) (17) (41) 4 (69) (53) Underlying profit before taxes 156 123 106 141 92 107 (73) 386 127 Underlying consolidated profit 108 86 71 97 67 72 (71) 265 67 Underlying attributable profit 108 85 70 96 66 71 (71) 263 67 Net capital gains and provisions Attributable profit 108 85 70 96 66 71 (71) 263 67 68
Argentina ARS million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 6,241 7,378 7,644 8,101 8,293 10,046 12,292 21,263 30,630 Gross income 6,764 8,104 8,460 9,103 9,117 11,729 11,492 23,328 32,338 Operating expenses (3,690) (4,640) (4,713) (4,964) (5,278) (5,707) (7,693) (13,043) (18,677) Net operating income 3,074 3,464 3,747 4,139 3,840 6,022 3,800 10,285 13,661 Net loan-loss provisions (486) (730) (903) (828) (1,196) (2,021) (2,546) (2,118) (5,764) Other 17 (596) (659) (466) (411) (1,077) (849) (1,238) (2,337) Underlying profit before taxes 2,606 2,138 2,185 2,845 2,232 2,923 404 6,929 5,560 Underlying consolidated profit 1,807 1,486 1,462 1,960 1,610 1,961 (612) 4,755 2,958 Underlying attributable profit 1,795 1,477 1,453 1,948 1,599 1,946 (618) 4,724 2,927 Net capital gains and provisions Attributable profit 1,795 1,477 1,453 1,948 1,599 1,946 (618) 4,724 2,927 69
United States EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,763 1,738 1,545 1,495 1,435 1,500 1,545 5,045 4,480 Gross income 1,879 1,880 1,604 1,596 1,578 1,670 1,735 5,363 4,983 Operating expenses (837) (845) (743) (773) (735) (737) (748) (2,425) (2,220) Net operating income 1,042 1,035 861 824 843 932 987 2,938 2,762 Net loan-loss provisions (811) (697) (634) (638) (579) (445) (649) (2,142) (1,674) Other (32) (24) (2) (31) (23) (50) (69) (58) (142) Underlying profit before taxes 199 314 225 155 241 437 269 737 946 Underlying consolidated profit 138 235 154 109 174 298 175 527 647 Underlying attributable profit 95 149 93 71 125 210 125 337 460 Net capital gains and provisions* (76) Attributable profit 95 149 93 (5) 125 210 125 337 460 (*) Including: in Q417 fiscal reform, provisions for hurricanes, increased stake in Santander Consumer USA and other 70
United States USD million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income 1,877 1,912 1,820 1,765 1,764 1,787 1,796 5,608 5,346 Gross income 2,001 2,068 1,893 1,884 1,940 1,990 2,018 5,962 5,947 Operating expenses (891) (929) (875) (909) (904) (878) (868) (2,696) (2,650) Net operating income 1,109 1,138 1,018 975 1,036 1,112 1,149 3,266 3,297 Net loan-loss provisions (863) (768) (749) (753) (712) (528) (758) (2,381) (1,998) Other (34) (27) (4) (36) (28) (60) (81) (65) (169) Underlying profit before taxes 212 343 265 186 296 524 310 820 1,130 Underlying consolidated profit 147 257 182 132 214 357 201 585 772 Underlying attributable profit 101 163 111 85 154 252 144 375 549 Net capital gains and provisions* (85) Attributable profit 101 163 111 (0) 154 252 144 375 549 (*) Including: in Q417 fiscal reform, provisions for hurricanes, increased stake in Santander Consumer USA and other 71
Corporate Centre EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 9M17 9M18 NII + Fee income (198) (223) (227) (240) (233) (241) (265) (648) (739) Gross income (341) (340) (300) (238) (227) (250) (257) (981) (733) Operating expenses (119) (118) (118) (120) (121) (122) (123) (356) (367) Net operating income (460) (458) (419) (359) (348) (372) (380) (1,337) (1,100) Net loan-loss provisions (5) (11) (22) (8) (37) (30) (28) (37) (95) Other (32) (53) (54) (43) (43) (50) (55) (139) (148) Underlying profit before taxes (497) (522) (495) (410) (427) (452) (463) (1,513) (1,342) Underlying consolidated profit (471) (561) (481) (378) (421) (474) (456) (1,512) (1,350) Underlying attributable profit (468) (563) (480) (378) (421) (475) (456) (1,511) (1,351) Net capital gains and provisions* (130) (306) (40) (130) (40) Attributable profit (468) (563) (610) (684) (421) (515) (456) (1,641) (1,391) (*) Including: in Q317 equity stakes and intangible assets in Q417 goodwill charges 72 in Q218 restructuring costs
Glossary 05
GlossaryAcronyms AFS: Available for sale P&L: Profit and loss bn: Billion QoQ: Quarter on Quarter CET1: Common equity tier 1 Repos: Repurchase agreements C&I: Commercial and Industrial ROF: Gains on financial transactions CIB: Corporate & Investment Bank RoRWA: Return on risk-weighted assets DGF: Deposit guarantee fund RoTE: Return on tangible equity GDP: Gross domestic product RWA: Risk-weighted assets FL: Fully-loaded SCF: Santander Consumer Finance EPS: Earning per share SC USA: Santander Consumer USA LTV: Loan to Value SME: Small and Medium Enterprises LLPs: Loan-loss provisions SRF: Single Resolution Fund M/LT: Medium- long- term ST: Short term mn: million SVR: Standard variable rate MXN: Mexican Pesos TNAV: Tangible net asset value NII: Net interest income UF: Unidad de fomento (Chile) NIM: Net interest margin YoY: Year on Year NPL: Non-performing loans UK: United Kingdom n.m.: Not meaningful US: United States PBT: Profit before tax 74
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 Efficiency: Operating expenses / gross income. Operating expenses defined as general administrative expenses + amortisations CREDIT RISK NPL ratio: Non-performing loans and customer advances, customer guarantees and contingent liabilities / total risk. Total risk is defined as: normal and non-performing balances of customer loans and advances, customer guarantees and contingent liabilities NPL coverage ratio: Provisions to cover losses due to impairment of customer loans and advances, customer guarantees and contingent liabilities / non-performing balances of customer loans and advances, customer guarantees and contingent liabilities Cost of credit: Provisions to cover losses due to impairment of loans in the last 12 months / average customer loans and advances of the last 12 months CAPITALISATION Tangible net asset value per share TNAV: Tangible stockholders equity / number of shares (excluding treasury shares). Tangible stockholders equity calculated as shareholders equity + accumulated other comprehensive incomeintangible assets Notes: 1) The averages for the RoTE and RoRWA denominators are calculated on the basis of ten months from December to September. 2) For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the RoTE is the annualised underlying attributable profit (excluding non-recurring results), to which are added non-recurring results without annualising them. 3) For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the RoRWA is the consolidated annualised result (excluding non-recurring results), to which is added non-recurring results without annualising them. 4) The risk-weighted assets included in the RoRWA denominator are calculated in accordance with the criteria defined by the Capital Requirements Regulation (CRR). 75
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Banco Santander, S.A. | ||||||||
Date: November 5, 2018 | By: | /s/ José García Cantera | ||||||
Name: | José García Cantera | |||||||
Title: | Chief Financial Officer |