Form 6-K

Banco Santander, S.A.

Date: April 28, 2017

/s/ José García Cantera

Name: José García Cantera

Title: Chief Financial Officer

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 April, 2017

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.

TABLE OF CONTENTS


Item

1		Press Release regarding First Quarter 2017 Results

2		January - March 2017 Financial Report

3		Financial Information for January - March 2017

4		First Quarter 2017 Earnings Presentation


		Item 1

Santander earns €1,867 million in attributable profit during Q1 2017 (up 14%)

Profit before tax was €3,311 million, up 17% excluding

currency movements

Madrid, 26 April 2017—PRESS RELEASE

∎	The Group has earned the loyalty of a further 1.5 million customers since Q1’16, with lending and customer funds increasing by 2% and 7% respectively.

∎	The Group continues to be well diversified with Europe contributing 52% of profit and the Americas 48% (Brazil 26%). Attributable profit increased in nine of the Group’s ten core markets, excluding currency movements.

∎	During the first quarter of 2017 the Group’s common equity tier 1 capital ratio increased by 11 basis points to 10.66%, while cost/income ratio improved to 46.1% from 48.1%.

∎	Since Q1 2016, return on tangible equity, a key measure of profitability, has increased by 100 basis points to 12.1%, among the best of our peers. Tangible net asset value per share increased by 5% to €4.26, and earnings per share increased by 14% to €0.122.

Banco Santander Group Executive Chairman, Ana Botín, said:

“It’s been a strong start to the year with positive momentum across all markets and particularly good growth in Latin America, Spain and our consumer finance business. We are earning the loyalty of more customers, delivering ahead of our targets, and maintaining our position as one of the most efficient, profitable, and predictable banks in the world.

“While the environment continues to be challenging for the banking sector, the outlook for Santander is positive. The economies of all our core markets are expected to grow this year and we are confident that our business model, combined with the consistent execution of our strategy, position us well to continue delivering for our customers and teams while growing profitably in the years ahead.”

Income Statement


	Q1’17 (m)	Q1’17 v Q1’16	Q1’17 v Q1’16 (EX FX)
GROSS INCOME	€12,029	+12.1%	+6.2%
OPERATING EXPENSES	€-5,543	+7.5%	+3.1%
OPERATING INCOME	€6,486	+16.4%	+8.9%
NET LOAN-LOSS PROVISIONS	€-2,400	-0.4%	-9.1%
PROFIT BEFORE TAX	€3,311	+21.2%	+16.8%
ATTRIBUTABLE PROFIT	€1,867	+14.3%	+10.0%


Corporate Communications
Ciudad Grupo Santander, edificio Arrecife, pl. 2
28660 Boadilla del Monte (Madrid) Telf.: +34 91 2895211
[email protected]
www.santander.com - Twitter: @bancosantander

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Results Summary

Banco Santander delivered an attributable profit of €1,867 million during the first quarter of 2017, +14% compared to Q1 2016. Excluding currency movements, profit before tax increased by 17% to €3,311 million.

The underlying business performance was strong, with positive trends in all markets and particularly good growth in Latin America, Spain and Santander Consumer Finance. Excluding the impact of currency movements, attributable profits increased in nine of the Group’s ten core markets.

Santander’s differential business model continues to provide strong diversification across both mature and developing markets. In the first quarter of 2017 Europe contributed 52% of Group profit and the Americas 48%. The lending book is also well diversified across business segments and geographies.

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1.	Excluding corporate centre and Spain real estate activities 2. Loans excluding repos.

During the quarter the Group continued to help people and businesses prosper across all its markets. Lending and customer funds increased by 2% and 7% respectively over the past 12 months while the number of loyal customers (people who see Santander as their main bank) increased by 1.5 million to 15.5 million.

The Group’s ongoing investment in technology helped increase the number of digital customers by 4.2 million since Q1 2016 to 22.1 million, while also increasing customer satisfaction. Santander ranks among the top three highest rated banks for customer satisfaction in eight of its nine core geographies.

As well as improving customer satisfaction, the progression in digital transformation, combined with strong cost discipline, allowed Santander to further strengthen its position as one of the most efficient banks in the world, with the cost/income ratio improving to 46.1% from 48.1% during the quarter.


Corporate Communications
Ciudad Grupo Santander, edificio Arrecife, pl. 2
28660 Boadilla del Monte (Madrid) Telf.: +34 91 2895211
[email protected]
www.santander.com - Twitter: @bancosantander

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Credit quality also continued to improve with non-performing loans reducing to 3.74% of total lending, from 4.33% at Q1 2016. The Group’s coverage ratio increased to 75% from 74%, while the cost of credit reduced to 1.17% from 1.22%.

The Group delivered strong growth across its key shareholder measures and continued to meet all strategic targets. Since Q1 2016 return on tangible equity, a key measure of profitability, has increased by 100 basis points to 12.1%, among the best of our peers. Tangible net asset value per share increased by 5% to €4.26, and earnings per share increased by 14% to €0.122.

Strong profitability allowed the Group to further strengthen its capital during the quarter with the common equity tier 1 capital ratio increasing by 11 basis points to 10.66%. This is significantly higher than the Group’s expected minimum regulatory capital requirement for 2019 (9.5%).

Country Summary


Attributable profit to the Group			/ 1Q’16
€ million	1Q’17		%		% w/o FX

Continental Europe		774		9.5		9.0

o/w: Spain		362		17.7		17.7

Santander Consumer Finance		314		25.1		23.4

Poland		59		(7.6)		(8.5)

Portugal		125		3.8		3.8

United Kingdom		416		(8.1)		(2.6)

Latin America		1,050		49.3		30.3

o/w: Brazil		634		76.8		37.7

Mexico		163		14.3		24.1

Chile		147		21.1		9.4

USA		95		16.3		12.4

Operating areas		2,335		20.1		16.4

Corporate Centre		(468)		50.3		50.3

Total Group		1,867		14.3		10.0

In Brazil attributable profit was €634 million, an increase of 77% compared to Q1 2016 driven in part by a strengthening Brazilian Real but also strong business performance. Excluding the currency impact attributable profits grew by 38% with an increase in loyal customers stimulating strong growth in income, and prudent risk management leading to a reduction in loan loss provisions. The proportion of non-performing loans in Brazil continued to be lower than private sector peers.

In the UK attributable profit reduced by 8% to €416 million with solid underlying performance, very strong credit quality and disciplined cost control, offset by both the depreciation of the pound against the euro, and one off costs, including an additional provision for PPI claims of £32 million. Excluding the currency impact, attributable profit increased by 3%.


Corporate Communications
Ciudad Grupo Santander, edificio Arrecife, pl. 2
28660 Boadilla del Monte (Madrid) Telf.: +34 91 2895211
[email protected]
www.santander.com - Twitter: @bancosantander

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In Santander Spain attributable profit increased to €362 million, up 18% compared to the same period in 2016 as provisions normalised and the cost of credit improved for the 12^th consecutive quarter. The successful delivery of the 1|2|3 strategy led to a significant increase in loyal customers (+350,000 since Q1 2016), while the bank’s leading position in wholesale markets helped drive good growth in fee income.

Santander Consumer Finance (SCF) again delivered strong growth in attributable profit, up 25% compared to the same period last year to €314 million (+23% excluding currency movements) driven by an increase in lending across all markets and historically low non-performing loans.

In Mexico an increase in interest rates coupled with good growth in loans and demand deposits helped drive strong growth in income. Attributable profits increased by 14% to €163 million (+24% excluding currency movements). Provisions increased due to an increase in lending and the sale of a non-performing portfolio. The cost of credit remained stable.

In Chile an increase in both lending and deposits since Q1 2016, combined with good cost control and improvements across all credit quality metrics helped drive an increase in attributable profit of 21% to €147 million (+9% excluding currency movements).

In Portugal attributable profit increased by 4% to €125 million compared to Q1 2016 with growth in loyal customers, lower cost of credit and strong cost control offsetting a reduction in revenues due to portfolio sales made in 2016.

In the US attributable profit increased by 16.3% to €95 million compared to Q1 2016 (+12% excluding currency impact). Income at Santander Consumer US fell due to a change in customer risk profile, however, this was offset by an increase in net interest income and lower cost of funds at Santander Bank, as well as lower loan loss provisions.

In Argentina attributable profit increased by 61% to €108 million (+69% excluding currency movements) with strong growth in business volumes pushing up net interest income and fee income, combined with a reduction in the cost of credit and non-performing loans. The profit and loss figures do not include the Citi integration which took place on 31 March 2017.

In Poland attributable profit fell 8% during the same period to €59 million (-9% excluding currency impact) due to higher taxes on profit and the negative impact of the banking asset tax (applied from 1 Feb 2016). Excluding these effects, PBT increased by 20% (+18% excluding currency movements).

About Banco Santander

Banco Santander is the largest bank in the eurozone with a market capitalisation of €83.8 billion. It has a strong and focused presence in 10 core markets across Europe and the Americas with just under 4 million shareholders and 188,000 employees serving 128 million customers.


Corporate Communications
Ciudad Grupo Santander, edificio Arrecife, pl. 2
28660 Boadilla del Monte (Madrid) Telf.: +34 91 2895211
[email protected]
www.santander.com - Twitter: @bancosantander

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Key Consolidated Data

Balance sheet (€ million)

Mar’17

Dec’16

Mar’16

Dec’16

Total assets

1,351,956

1,339,125

1.0

1,324,200

2.1

1,339,125

Net customer loans

795,312

790,470

0.6

773,452

2.8

790,470

Customer deposits

705,786

691,111

2.1

670,627

5.2

691,111

Customer funds

898,110

873,618

2.8

836,377

7.4

873,618

Total equity

104,869

102,699

2.1

98,781

6.2

102,699

Income statement (€ million)

1Q’17

4Q’16

1Q’16

2016

Net interest income

8,402

8,096

3.8

7,624

10.2

31,089

Gross income

12,029

11,288

6.6

10,730

12.1

43,853

Net operating income

6,486

5,835

11.2

5,572

16.4

22,766

Underlying profit before taxes

3,311

2,838

16.7

2,732

21.2

11,288

Underlying attributable profit to the Group

1,867

1,766

5.7

1,633

14.3

6,621

Attributable profit to the Group

1,867

1,598

16.9

1,633

14.3

6,204

Variations w/o FX: Quarterly: Nil: +1.4%; Gross income: +4.2%; Net operating income: +8.6%; Underlying attributable profit: +3.7%; Attributable profit: +13.9%

Year-on-year: Nil: +4.0%; Gross income: +6.2%: Net operating income: +8.9%; Underlying attributable profit: +10.0%; Attributable profit: +10.0%

EPS, profitability and efficiency (%)

1Q’17

4Q’16

1Q’16

2016

Underlying EPS (euro) *

0.122

0.116

5.3

0.108

13.6

0.436

EPS (euro)

0,122

0.104

17.0

0.108

13.6

0.407

RoE

8.19

7.66

7.46

6.99

Underlying RoTE*

12.13

11.57

11.13

11.08

RoTE

12.13

11.29

11.13

10.38

RoA

0.65

0.61

0.58

0.56

Underlying RoRWA*

1.48

1.42

1.33

1.36

RoRWA

1.48

1.38

1.33

1.29

Efficiency ratio (with amortisations)

46.1

48.3

48.1

Solvency and NPL ratios (%)

Mar’17

Dec’l6

Mar’16

Dec’16

CET1 fully-loaded

10.66

10.55

10.27

10.55

CET1 phase-in

12.12

12.53

12.36

12.53

NPL ratio

3.74

3.93

4.33

3.93

Coverage ratio

74.6

73.8

74.0

73.8

Market capitalisation and shares

Mar’17

Dec’16

Mar’16

Dec’16

Shares (millions)

14,582

14,582

14,434

1.0

14,582

Share price (euros)

5.745

4.959

15.8

3.874

48.3

4.959

Market capitalisation (€ million)

83,776

72,314

15.8

55,919

49.8

72,314

Tangible book value (euro)

4.26

4.22

4.07

4.22

Price / Tangible book value (X)

1.35

1.17

0.95

1.17

P/E ratio (X)

11.74

12.18

8.99

12.18

Other data

Mar’17

Dec’16

Mar’16

Dec’16

Number of shareholders

3,957,838

3,928,950

0.7

3,682,927

7.5

3,928,950

Number of employees

188,182

188,492

(0.2

)

194,519

(3.3

)

188,492

Number of branches

12,117

12,235

(1.0

)

12,962

(6.5

)

12,235

(*).- Excluding non-recurring net capital gains and provisions

Note: The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on April, 25 2017, following a favourable report from the Audit Committee on April 19, 2017. The Audit Committee verified that the information for 2017 was based on the same principles and practices as those used to draw up the annual financial statements.


Corporate Communications
Ciudad Grupo Santander, edificio Arrecife, pl. 2
28660 Boadilla del Monte (Madrid) Telf.: +34 91 2895211
[email protected]
www.santander.com - Twitter: @bancosantander

Item 2

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JANUARY - MARCH » Key consolidated data

KEY CONSOLIDATED DATA


Balance sheet (€ million)	Mar’17		Dec’16		%		Mar’16		%		Dec’16
Total assets		1,351,956		1,339,125		1.0		1,324,200		2.1		1,339,125
Net customer loans		795,312		790,470		0.6		773,452		2.8		790,470
Customer deposits		705,786		691,111		2.1		670,627		5.2		691,111
Customer funds		898,110		873,618		2.8		836,377		7.4		873,618
Total equity		104,869		102,699		2.1		98,781		6.2		102,699

Income statement (€ million)	1Q’17		4Q’16		%		1Q’16		%		2016
Net interest income		8,402		8,096		3.8		7,624		10.2		31,089
Gross income		12,029		11,288		6.6		10,730		12.1		43,853
Net operating income		6,486		5,835		11.2		5,572		16.4		22,766
Underlying profit before taxes		3,311		2,838		16.7		2,732		21.2		11,288
Underlying attributable profit to the Group		1,867		1,766		5.7		1,633		14.3		6,621
Attributable profit to the Group		1,867		1,598		16.9		1,633		14.3		6,204

Variations w/o FX:

Quarterly: NII: +1.4%; Gross income: +4.2%; Net operating income: +8.6%; Underlying attributable profit: +3.7%; Attributable profit: +13.9%

Year-on-year: NII: +4.0%; Gross income: +6.2%; Net operating income: +8.9%; Underlying attributable profit: +10.0%; Attributable profit: +10.0%


EPS, profitability and efficiency (%)	1Q’17		4Q’16		%		1Q’16		%		2016
Underlying EPS (euro) *		0.122		0.116		5.3		0.108		13.6		0.436
EPS (euro)		0.122		0.104		17.0		0.108		13.6		0.407
RoE		8.19		7.66				7.46				6.99
Underlying RoTE*		12.13		11.57				11.13				11.08
RoTE		12.13		11.29				11.13				10.38
RoA		0.65		0.61				0.58				0.56
Underlying RoRWA*		1.48		1.42				1.33				1.36
RoRWA		1.48		1.38				1.33				1.29
Efficiency ratio (with amortisations)		46.1		48.3				48.1				48.1

Solvency and NPL ratios (%)	Mar’17		Dec’16		%		Mar’16		%		Dec’16
CET1 fully-loaded		10.66		10.55				10.27				10.55
CET1 phase-in		12.12		12.53				12.36				12.53
NPL ratio		3.74		3.93				4.33				3.93
Coverage ratio		74.6		73.8				74.0				73.8

Market capitalisation and shares	Mar’17		Dec’16		%		Mar’16		%		Dec’16
Shares (millions)		14,582		14,582		—		14,434		1.0		14,582
Share price (euros)		5.745		4.959		15.8		3.874		48.3		4.959
Market capitalisation (€ million)		83,776		72,314		15.8		55,919		49.8		72,314
Tangible book value (euro)		4.26		4.22				4.07				4.22
Price / Tangible book value (X)		1.35		1.17				0.95				1.17
P/E ratio (X)		11.74		12.18				8.99				12.18

Other data	Mar’17		Dec’16		%		Mar’16		%		Dec’16
Number of shareholders		3,957,838		3,928,950		0.7		3,682,927		7.5		3,928,950
Number of employees		188,182		188,492		(0.2)		194,519		(3.3)		188,492
Number of branches		12,117		12,235		(1.0)		12,962		(6.5)		12,235

(*).- Excluding non-recurring net capital gains and provisions

Note:

The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on April, 25 2017, following a favourable report from the Audit Committee on April, 19 2017. The Audit Committee verified that the information for 2017 was based on the same principles and practices as those used to draw up the annual financial statements.


FINANCIAL REPORT 2017		3

JANUARY - MARCH » Santander aim

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4		FINANCIAL REPORT 2017

JANUARY - MARCH » Santander aim


		FIRST QUARTER HIGHLIGHTS

		We launched MyContribution, the new corporate model of performance management that strengthens the Bank’s culture as the driver of transformation. MyContribution balances the objectives on behaviour (40%) and business and performance (60%) for the Corporate Centre. In Flexiworking, the programme aimed at creating a new way of working, new spaces are being forged that strengthen cooperation. Development of the first phase of StarmeUp, the first global recognition network to spur cooperation and recognise those employees who apply the corporate behaviour to their daily working. Employee participation was 47%. The BeHealthy week was held throughout the Group, in order to promote a healthier life style based on the four points of the programme: Know your numbers, Eat, Move, Be balanced.
		The commercial transformation programme started in 2015 continues to drive growth in the number of customers (+1.5 million loyal ones and +4.2 million digital ones in the last 12 months). Our goal is to keep on improving customer satisfaction. In eight of our core countries we are already among the Top 3 in local rankings. We continue to promote various initiatives, such as opening innovative WorkCafé branches in Chile or Smart Red in Spain and other countries. In customer loyalty, the 1\|2\|3 strategy is doing well in various countries, with differentiated value proposals. Also noteworthy was the launch and consolidation of other loyalty products, such as the American Airlines cards, AAdvantage in Brazil and Santander Aeroméxico. Of note in digitalisation was the continuous development of our value offer, with new proposals such as the Investment Hub in the UK (online funds platform) and the good functioning of ContaSuper in Brazil, a digital account and card for those without a bank
		The Annual General Meeting was attended by shareholders accounting for 64.03% of the Bank’s share capital, the highest attendance rate of the Bank’s recent history. The Bank’s corporate management received more than 97% support from those at the meeting. Banco Santander is the first bank to receive the AENOR certificate for management of sustainable events, which certifies the sustainability of its general shareholders’ meeting. Institutional Investor, one of the most prestigious publications in the investor and finance world, assessed our shareholders and investors section in our corporate web as the second best in Europe.
		The World Innovation Summit for Education (WISE) was held at the Group’s headquarters in Madrid. WISE is the main global initiative for fostering innovation and cooperation in education. Santander Impact, a digital space, was created. It shows the initiatives of Santander Universities in all the countries in which it operates, visualising the impact of its academic, social and sponsorship projects on people’s progress. In Poland, a financial education portal was launched, which is easy to access and adapted for people with sight difficulties. In Spain, Santander was the first Spanish company to obtain the certificate of excellence in management of corporate volunteering in the category of Excellence Plus.


FINANCIAL REPORT 2017		5

JANUARY - MARCH » Highlights of the period

HIGHLIGHTS OF THE PERIOD

The commercial transformation is driving growth in loyal and digital customers

The number of lo al customers rose by 1.5 million in the last 12 months, with individuals up 10% and companies 16%.

Digital customers increased by more than 4 million since March 2016, underscoring the strength of the multi channel strategy.

Digital log-ins grew 34% and cash transactions 31%.

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Results: solid profit growth with a good performance in gross income, expenses and provisions

The first quarter attributable profit as 1,867 million, up from €1,633 million in the same period of 2016 (+14% in euros and +10% in constant euros), due to:

•

Gross income increased, both net interest income and fee income. Good performance also of those from the markets.

•

Operating expenses declined in real terms, the fruit of the efficiency plans developed in 2016.

•

Loan-loss provisions continued to fall and the Group’s cost of credit and that of most units improved.

Attributable profit was 17% higher (+14%, in constant euros) than in the fourth quarter, a period affected by non-recurring results and the contribution to the Deposit Guarantee Fund.

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Profitability, earnings and dividend per share. Creation of value for our shareholders

Both the RoTE and RoRWA, were among the best of our peers. They were both higher than in the first and fourth quarters of 2016.

Earnings per share (EPS) were 14% higher than the first quarter of 2016.

The total dividend per share charged to 2016’s earnings increased 5% (+8% in cash). We envisage similar rises for 2017.

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6		FINANCIAL REPORT 2017

JANUARY - MARCH » Highlights of the period

HIGHLIGHTS OF THE PERIOD

Santander maintains growth in commercial activity in almost all markets

Lending rose 2% year-on-year and funds 7%. These increases include a small positive exchange rate impact of 1 p.p. in loans and 2 p.p. in funds.

Excluding this impact:

•

Loans increased in the main segments and in 7 of the 10 core units.

•

Funds grew thanks to demand deposits and mutual funds. They increased in the 10 core units.

Solid funding structure and liquidity. The net loan-to-deposit ratio was 113% (115% in March 2016).

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All credit quality ratios improved

Non-performing loans fell 4% in the quarter and 11% year-on-year.

The NPL ratio dropped further in the quarter (-19 b.p.), with all units performing well (lowest ratios since the first half of 2011).

The cost of credit was 5 b.p. lower than in March 2016. Excluding Santander Consumer USA, the cost was 0.83% (-5 b.p.).

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Solid capital ratios and adjusted to the business model, balance sheet structure and risk profile

Full loaded CET1 of 10.66%, 11 b.p. higher than the fourth quarter of 2016 (+39 b.p. year-on-year), due to ordinary generation of 7 b.p. together with some non-recurring impacts which accounted for an additional 4 b.p.

Total capital ratio of 14.10%, 23 b.p. more than at the end of 2016, due to issuance plans. The full loaded leverage ratio remained at 5.0%.

Tangible capital per share increased for the fourth straight quarter.

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FINANCIAL REPORT 2017		7

JANUARY - MARCH » Highlights of the period

HIGHLIGHTS OF THE PERIOD

Business areas: (more details on pages 19-34 and in the appendix)

(Changes in constant euros)


EUROPE • Continental Europe posted an attributable profit of €774 million, 9% higher year-on-year. Growth was mainly due to lower provisions, a reduction in costs and better fee income stemming from greater customer loyalty. Net interest income was stable. Profit was 25% more than in the fourth quarter (a period impacted by the contribution to the Deposit Guarantee Fund). All units except for Poland (impacted by higher taxes and regulatory issues) generated higher profits than in the first and fourth quarters of 2016. Excluding the impacts, Poland’s profit would have registered double-digit growth. • United Kingdom generated a profit of €416 million, 3% higher than the first quarter of 2016. Gross income increased 6%, costs were under control and provisions though higher were still at low levels. Profit was 21% above the fourth quarter (a period affected by one-off impacts).

THE AMERICAS • Latin America: profit of €1,050 million 30% higher year-on-year, driven by gross income (+18%) and the good performance of net interest income, fee income and gains on financial transactions. This reflected the stronger growth in volumes, better spreads, greater customer loyalty and a good environment in the markets. Provisions were still flat, which improved the cost of credit, and costs were in line with inflation rates. The chart shows notable growth in countries, with three of them surpassing 20%. Profit was 5% higher than the fourth quarter, maintaining the upward trend. • United States: profit was €95 million, 12% more than in the first quarter of 2016. It was also higher than the fourth quarter (affected by some non-recurring impacts). Net interest income was more stable than in previous quarters because of growth in Santander Bank, as Santander Consumer USA is still affected by the change of business mix. Costs were also more stable, although still at high levels, and provisions were lower than in the first quarter of 2016 when there were charges for Oil & Gas.

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8		FINANCIAL REPORT 2017

JANUARY - MARCH » General background

» GENERAL BACKGROUND

Grupo Santander carried out its business in a somewhat more benign environment, with prospects of synchronised economic growth in different parts of the world for the first time in a long while. Mature economies are growing faster and the latest indicators for developing ones point to an improved performance in Latin America, particularly Brazil and Argentina.

US interest rates have begun to rise, although they are still at lows in most mature economies and with it the consequent impact on banking activity.


Country		*GDP var.**	Economic performance
	Euro zone	+1.7%	The improvement in confidence is reflected in the faster pace of economic growth. Inflation has risen and with it the expectations of market interest rate hikes, although the European Central Bank is holding to its monetary policy.
	Spain	+3.2%	Growth remained notable, driven by domestic demand and the continued good performance of exports. Job creation is still strong which will result in the unemployment rate coming down.
	Poland	+2.8%	GDP slowdown in 2016. Inflation rose to 2.0% in March although there are no signs of underlying pressures. As a result, the central bank is expected to hold its interest rates unchanged in the coming months.
	Portugal	+1.4%	The economy gained momentum in the second half of 2016, after growing 0.6% quarter-on-quarter in the fourth quarter. The fiscal deficit stood at 2.1% of GDP, the lowest in 40 years.
	United Kingdom	+1.8%	The economy remained resilient in the face of uncertainties, as underscored by GDP growth in 2016. Inflation was 2.3% in March, after rising rapidly. The jobless rate was 4.7% (slightly above its long-term equilibrium level).
	Brazil	-3.6%	The central bank continued to cut the key Selic rate, to 12.25%. Inflation eased to 4.6% (6.3% in December 2016) and expectations are below 4.5%. The real continued to strengthen, appreciating 2.9% against the dollar and 1.5% against the euro.
	Mexico	+2.3%	Inflation rose to 5.4% in March, due to higher fuel prices and the delayed impact of the peso’s depreciation. The central bank raised its benchmark rate to 6.25%. The peso appreciated 10.3% against the dollar (8.8% against the euro), returning to pre-US election levels.
	Chile	+1.6%	Inflation below 3% in the quarter, with expectations to remain firm. The central bank cut its key rate to 3.0% and maintained the downward bias. The peso appreciated 1.0% against the dollar and depreciated 0.4% against the euro.
	Argentina	-2.3%	Economic policies continued to focus on correcting macroeconomic imbalances and strengthening the external position. Inflation has stabilised at close to 2% a month, international reserves increased 9% and GDP grew 1.1% year-on-year in January.
	United States	+1.6%	Growth was more moderate, but with almost full employment, high confidence and inflation moving toward the goal. The Federal Reserve raised its federal funds rate by 25 b.p. and looks as if it will keep on increasing the rate gradually this year.

(*) 2016 year-on-year change

LOGO Exchange rates: 1 euro / currency parity


	Average (income statement)				Period-end (balance sheet)
	1Q’17		1Q’16		31.03.17		31.12.16		31.03.16
US$		1.065		1.102		1.069		1.054		1.139
Pound sterling		0.860		0.770		0.856		0.856		0.792
Brazilian real		3.346		4.296		3.380		3.431		4.117
Mexican peso		21.577		19.877		20.018		21.772		19.590
Chilean peso		697.904		772.566		710.337		707.612		762.943
Argentine peso		16.682		15.890		16.424		16.705		16.666
Polish zloty		4.320		4.363		4.227		4.410		4.258


FINANCIAL REPORT 2017		9

JANUARY - MARCH » Consolidated financial report

GRUPO SANTANDER RESULTS

The good trend was maintained. The first quarter profit amounted to €1,867 million, 14% higher than in the first quarter of 2016 and 10% in constant euros, largely due to:

•

Growth in commercial revenues, underpinned by net interest income as well as fee income, and a good quarter in gains on financial transactions.

•

Costs under control, mainly due to the savings from the measures taken during 2016 to streamline and simplify the structures.

•

The cost of credit came down from 1.22% in March 2016 to 1.17%, thanks to the improvement in the quality of portfolios.

The efficiency ratio improved to 46.1%, among the best of our competitors.

The RoTE was 100 b.p. higher at 12.13%, among the best of comparable banks.

Earnings per share rose 14% year-on-year to €0.122.

LOGO Income statement

€ million


					Change						Change
	1Q’17		4Q’16		%		% w/o FX		1Q’16		%		% w/o FX
Net interest income		8,402		8,096		3.8		1.4		7,624		10.2		4.0
Net fee income		2,844		2,637		7.8		5.0		2,397		18.6		12.1
Gains (losses) on financial transactions		573		412		39.0		42.0		504		13.6		14.4
Other operating income		211		142		47.8		41.4		204		3.0		(1.0)
Dividends		41		124		(67.1)		(68.9)		44		(6.6)		(7.7)
Income from equity-accounted method		133		130		2.5		(1.5)		83		60.2		47.8
Other operating income/expenses		37		(112)		—		—		78		(52.7)		(53.2)
Gross income		12,029		11,288		6.6		4.2		10,730		12.1		6.2
Operating expenses		(5,543)		(5,453)		1.6		(0.5)		(5,158)		7.5		3.1
General administrative expenses		(4,915)		(4,828)		1.8		(0.4)		(4,572)		7.5		3.0
Personnel		(2,912)		(2,876)		1.3		(0.8)		(2,683)		8.5		4.1
Other general administrative expenses		(2,002)		(1,952)		2.6		0.0		(1,889)		6.0		1.5
Depreciation and amortisation		(629)		(626)		0.5		(1.1)		(586)		7.3		3.7
Net operating income		6,486		5,835		11.2		8.6		5,572		16.4		8.9
Net loan-loss provisions		(2,400)		(2,406)		(0.3)		(3.5)		(2,408)		(0.4)		(9.1)
Impairment losses on other assets		(68)		(159)		(57.2)		(57.0)		(44)		56.1		46.0
Other income		(707)		(432)		63.6		58.6		(389)		81.8		63.5
Underlying profit before taxes		3,311		2,838		16.7		14.9		2,732		21.2		16.8
Tax on profit		(1,125)		(767)		46.7		46.1		(810)		38.8		35.0
Underlying profit from continuing operations		2,186		2,071		5.6		3.6		1,922		13.8		9.3
Net profit from discontinued operations		—		0		(100.0)		(100.0)		—		—		—
Underlying consolidated profit		2,186		2,072		5.5		3.6		1,922		13.8		9.3
Minority interests		319		305		4.6		2.7		288		10.7		5.0
Underlying attributable profit to the Group		1,867		1,766		5.7		3.7		1,633		14.3		10.0
Net capital gains and provisions		—		(169)		(100.0)		(100.0)		—		—		—
Attributable profit to the Group		1,867		1,598		16.9		13.9		1,633		14.3		10.0

Underlying EPS (euros)		0.122		0.116		5.3				0.108		13.6
Underlying diluted EPS (euros)		0.122		0.116		5.2				0.107		13.7

EPS (euros)		0.122		0.104		17.0				0.108		13.6
Diluted EPS (euros)		0.122		0.104		16.9				0.107		13.7

Pro memoria:
Average total assets		1,353,495		1,340,897		0.9				1,335,115		1.4
Average stockholders’ equity		91,174		90,054		1.2				87,571		4.3

(*).- In 4Q’16, PPI UK (-€137 million) and restatement Santander Consumer USA (-€32 million).


10		FINANCIAL REPORT 2017

JANUARY - MARCH » Consolidated financial report

First quarter 2017 compared to fourth quarter of 2016

The first quarter attributable profit was €1,867 million, 17% more than the fourth quarter of 2016 (+14% in constant euros). That quarter was affected by two non-recurring impacts: a €137 million charge to a fund to cover eventual complaints related to payment protection insurance (PPI) in the UK and €32 million for re-statement of Santander Consumer USA figures.

Eliminating these impacts and taxes (+46% in the first quarter), pre-tax profit was 17% higher (+15% in constant euros). Growth was due to:

•

Good evolution of all the revenue lines, mainly fee income, reflecting greater activity and customer loyalty, and gains on financial transactions, benefiting from market conditions. Another factor was the impact of the contribution to the Deposit Guarantee Fund in the fourth quarter.

•

Operating expenses were lower (-1% in constant euros), with all units under control.

•

Loan-loss provisions fell again (-4% in constant euros), reflecting a further improvement in the cost of credit.

First quarter 2017 compared to the same period of 2016

Attributable profit rose 14% year-on-year and 10% in constant euros. The performance of the main lines is set out below, with all changes without the exchange rate impact.

Gross income

•

The structure of our gross income, where net interest income and fee income account for 93% of total revenues, well above the average of our competitors, continues to enable us to grow in a consistent and recurring way. Gross income increased 6%, as follows:

–

Net interest income rose 4%, due to greater lending and higher deposits, mainly in developing countries, and management of spreads.

All units increased their net interest income except for Spain, because of the impact of reduced volumes and interest rate pressure on loans, Portugal, due to sales of public debt and loan portfolios in 2016, and the US, impacted by the fall in auto finance balances and the change of mix toward a lower risk profile (higher FICO).

–

Fee income was up 12%, a faster pace than in previous years, reflecting greater activity and customer loyalty. Double-digit growth in income from commercial and retail banking (86% of the total) as well as from GCB.

–

Gains on financial transactions (only 5% of revenues) rose 14% thanks to the good environment in markets. Of note were Brazil’s good treasury results.

Operating expenses

•

Operating expenses rose 3% as a result of higher inflation in some countries, investments in transformation and costs linked to regulations. In real terms and on a like-for-like basis, the Group’s costs were 1.6% lower, with eight units with flat costs or falling. Of note were Spain (-5%), Portugal (-11%) and Argentina (-10%). The Corporate Centre’s costs fell 5%. Only Mexico’s rose because of the investment plan announced at the end of 2016. Costs also increased in the US.

LOGO


FINANCIAL REPORT 2017		11

JANUARY - MARCH » Consolidated financial report

LOGO

In short, we kept up our focus on operational excellence in order to remain a reference in the sector in terms of efficiency, while we continued to enhance the customer experience.

We took measures in 2016 to streamline and simplify structures, mainly in Spain’s network and the Corporate Centre, enabling us to keep on investing in the commercial transformation (commercial tools, simpler processes, new branch models), while fulfilling our efficiency plans.

Loan-loss provisions

•

Good evolution of credit quality ratios, which were better than in 2016, and loan-loss provisions fell 9%. By countries:

–

Significant reduction in all euro zone units and Poland.

–

The UK maintained cost of credit levels close to zero.

–

Latin America remained broadly stable within a context of greater lending, as all big units maintained or improved their cost of credit. Of note was the change in Brazil’s trend. Its provisions were lower than in the previous two quarters.

–

In the US, provisions fell partly because of those made in the first quarter of 2016 for Oil & Gas.

•

The cost of credit dropped from 1.22% in March 2016 to 1.17% a year later, and is within the goal we announced at the Investor Day.

Other results and provisions

•

Other results and provisions were €775 million negative, higher than in 2016. This item records different kinds of provisions, as well as capital gains, capital losses and asset impairment. The rise over 2016 is diluted by concepts and countries with the largest increases in Brazil and the UK.

Profit and profitability

•

Pre-tax profit rose 17% and attributable profit 10%. The difference was due to the higher tax rate, which rose from around 30% to 34%.

•

RoTE was 12.13%, RoRWA 1.48% and earnings per share (EPS) €0.122. All were higher year-on-year (earnings per share +14%).

LOGO


12		FINANCIAL REPORT 2017

JANUARY - MARCH » Consolidated financial report

LOGO Balance sheet

€ million

Assets

31.03.17

31.03.16

Change

amount

31.12.16

Cash, cash balances at central banks and other demand deposits

74,804

67,545

7,259

10.7

76,454

Financial assets held for trading

143,109

151,550

(8,441)

(5.6)

148,187

Debt securities

46,944

50,060

(3,116)

(6.2)

48,922

Equity instruments

16,174

14,584

1,590

10.9

14,497

Loans and advances to customers

11,375

6,866

4,509

65.7

9,504

Loans and advances to central banks and credit institutions

3,449

3,397

1.5

3,221

Derivatives

65,167

76,643

(11,476)

(15.0)

72,043

Financial assets designated at fair value

46,026

48,771

(2,745)

(5.6)

31,609

Loans and advances to customers

17,865

13,884

3,981

28.7

17,596

Loans and advances to central banks and credit institutions

24,038

30,714

(6,676)

(21.7)

10,069

Other (debt securities an equity instruments)

4,123

4,173

(50)

(1.2)

3,944

Available-for-sale financial assets

118,195

118,298

(103)

(0.1)

116,774

Debt securities

112,946

113,656

(710)

(0.6)

111,287

Equity instruments

5,249

4,642

607

13.1

5,487

Loans and receivables

844,804

824,174

20,630

2.5

840,004

Debt securities

12,901

12,487

414

3.3

13,237

Loans and advances to customers

766,072

752,702

13,370

1.8

763,370

Loans and advances to central banks and credit institutions

65,831

58,985

6,846

11.6

63,397

Held-to-maturity investments

14,268

4,566

9,702

212.5

14,468

Investments in subsidiaries, joint ventures and associates

5,275

3,350

1,925

57.5

4,836

Tangible assets

22,807

25,465

(2,658)

(10.4)

23,286

Intangible assets

29,645

28,693

952

3.3

29,421

o/w: goodwill

26,939

26,209

730

2.8

26,724

Other assets

53,023

51,788

1,235

2.4

54,086

Total assets

1,351,956

1,324,200

27,756

2.1

1,339,125

Liabilities and shareholders’ equity

Financial liabilities held for trading

99,550

108,567

(9,017)

(8.3)

108,765

Customer deposits

10,649

9,570

1,079

11.3

9,996

Debt securities issued

—

Deposits by central banks and credit institutions

644

976

(332)

(34.0)

1,395

Derivatives

67,580

78,608

(11,028)

(14.0)

74,369

Other

20,677

19,413

1,264

6.5

23,005

Financial liabilities designated at fair value

56,606

63,404

(6,798)

(10.7)

40,263

Customer deposits

27,495

28,484

(989)

(3.5)

23,345

Debt securities issued

3,373

3,445

(72)

(2.1)

2,791

Deposits by central banks and credit institutions

25,738

31,474

(5,736)

(18.2)

14,127

Other

—

(1)

(100.0)

—

Financial liabilities measured at amortized cost

1,048,447

1,012,407

36,040

3.6

1,044,240

Customer deposits

667,642

632,573

35,069

5.5

657,770

Debt securities issued

218,019

218,143

(124)

(0.1)

226,078

Deposits by central banks and credit institutions

137,029

138,323

(1,294)

(0.9)

133,876

Other

25,757

23,368

2,389

10.2

26,516

Liabilities under insurance contracts

635

656

(21)

(3.2)

652

Provisions

14,411

14,292

119

0.8

14,459

Other liabilities

27,438

26,093

1,345

5.2

28,047

Total liabilities

1,247,087

1,225,419

21,668

1.8

1,236,426

Shareholders’ equity

107,706

103,264

4,442

4.3

105,977

Capital stock

7,291

7,217

1.0

7,291

Reserves

100,215

94,414

5,801

6.1

94,149

Attributable profit to the Group

1,867

1,633

234

14.3

6,204

Less: dividends

(1,667)

—

(1,667)

—

(1,667)

Accumulated other comprehensive income

(15,122)

(15,949)

827

(5.2)

(15,039)

Minority interests

12,285

11,466

819

7.1

11,761

Total equity

104,869

98,781

6,088

6.2

102,699

Total liabilities and equity

1,351,956

1,324,200

27,756

2.1

1,339,125


FINANCIAL REPORT 2017		13

JANUARY - MARCH » Consolidated financial report

GRUPO SANTANDER BALANCE SHEET

Small positive impact of exchange rates on customer balances: less than 1 p.p. in the quarter and +1/+2 p.p. in 12 months.

Lending, without the exchange rate impact, remained stable in the quarter, while funds increased 1%. The Group has a comfortable net loan-to-deposit ratio of 113%.

In relation to March 2016 and without the exchange rate impact:

•

Loans rose 1% with rises in the combined retail and consumer credit and in 7 of the 10 core units.

•

Funds increased 5%, spurred by demand deposits and mutual funds. Growth in the 10 core units.

The appreciation/depreciation against the euro of the different currencies in which the Group operates had little impact on the evolution of the Group’s customer balances (less than 1 p.p. positive in the quarter and +1/+2 p.p. in 12 months).

Gross customer lending

•

Gross lending excluding repos showed a balanced structure: individuals (48%), consumer credit (16%), SMEs and companies (24%) and GCB (12%).

•

Over the fourth quarter of 2016, lending without the exchange rate remained stable, as follows by countries:

–

Growth in Argentina (+14%, due to Citi’s incorporation), in Chile (+2%) and Poland (+1%).

–

Drop of 3% in the US due to the strategy to improve the risk profile and the sale of some portfolios in Santander Consumer USA, and the lower GCB balances in Santander Bank. Drop of 2% in Mexico largely because of lower government balances, as consumer credit and lending to SMEs and companies increased.

–

In Spain, Santander Consumer Finance and Portugal, the falls were less than 1%, but new lending in the first quarter was higher than in the fourth quarter of 2016 (+18%, +3% and +12%, respectively).

•

The Group’s total lending in constant euros was 1% higher in the first quarter year-on-year:

–

Increases in seven of the 10 core countries, with significant growth in Argentina, SCF, Mexico, Chile and Poland.

–

Lending in Brazil rose 4%, improving the trend of previous quarters.

–

Falls in Spain (-3%) and Portugal (-4%), mainly due to balances in institutions and mortgages in Spain and the sale of a portfolio in Portugal, and in the US (-5%), largely because of fewer originations and the change towards a lower risk portfolio in SCUSA and the sale of portfolios.

–

Lastly, lending to the real estate sector in Spain was down 37% year-on-year.

LOGO


14		FINANCIAL REPORT 2017

JANUARY - MARCH » Consolidated financial report

Customer funds

•

Total funds (deposits excluding repos and mutual funds) rose 1% in the quarter excluding the exchange rate impact. Growth in Argentina (+22%), Brazil (+3%), Spain and SCF (+2%) and the UK (+1%).

•

Growth of 5% over March 2016, excluding the exchange rate impact, as follows:

–

The strategy of loyalty and management of costs helped produce a 12% increase in demand deposits and 11% in mutual funds and a 13% fall in time deposits.

–

After this performance, the funds structure is as follows: demand deposits (59%), time (22%) and mutual funds (19%).

–

Growth in the 10 core units. The largest rise was in Argentina (+68%, partly due to Citi’s incorporation), while SCF, Poland, Brazil, Mexico and Chile each grew 7%.

•

As well as capturing deposits, the Santander Group attaches strategic importance to maintaining a selective policy of issuance in international fixed income markets, seeking to adapt the frequency and volume of market operations to each unit’s structural liquidity needs, as well as to the receptiveness of each market.

•

In the first quarter, the following issues were made:

–

Medium and long-term senior debt of €4,520 million.

–

Securitisations placed in the market amounted to €3,492 million.

–

Eligible TLAC issues (Total Loss-Absorbing Capacity) to strengthen the Group’s position by a total amount of €4,625 million. (senior non-preferred: €3,575 million, subordinated debt: €1,050 million).

–

Medium and long term debt maturities of €14,300 million.

•

The net loan-to-deposit ratio was 113% (115% in March 2016) and the ratio of deposits plus medium and long term funding to the Group’s loans was 114%, underscoring the comfortable funding structure.

Other balance sheet items

•

Securities representing debt classified as available for sale amounted to €112,946 million, €710 million less year-on-year.

•

Investments held to maturity amounted to €14,268 million, with a significant rise over the last 12 months, mainly due to the purchase of a €7,765 million portfolio of UK sovereign debt securities, whose objective is placed within management of the balance sheet of ALCO activity.

•

Tangible assets were €22,807 million, down €2,658 million year-on-year, due to the deconsolidation of assets from the merger of Metrovacesa and Merlín.

•

Lastly, goodwill was €26,939 million (+€730 million year-on-year), largely due to exchange rates impact.

LOGO


FINANCIAL REPORT 2017		15

JANUARY - MARCH » Solvency ratios

SOLVENCY RATIOS

The fully loaded CET1 rose 11 b.p. in the first quarter to 10.66%.

Tangible equity per share increased 5% year-on-year to €4.26.

The fully loaded leverage ratio is 5.0%, in line with December 2016.

•

We continued to improve our solvency ratios. The fully loaded common equity tier 1 (CET1) was 11 b.p. higher at 10.66%, 7 b.p. of which came from ordinary generation and management of risk assets, and 4 b.p. came from some non-recurring impacts such as a negative one from Citi’s incorporation in Argentina and positive from the portfolios available for sale.

•

When calculating the ratio €84 million was deducted for the remuneration of the contingent-convertible preferred shares, as well as treasury stock, which at the end of March was irrelevant.

•

The total fully loaded ratio was 14.10% (+23 b.p.), benefiting from the eligible issues made in the first quarter.

•

This continued improvement in the capital ratios reflects the different measures taken by the Group, including improving and deepening a more active culture of managing capital at all levels. Of note:

–

More teams dedicated to managing capital and greater coordination between the Corporate Centre and local teams

–

A greater weight of capital in incentives.

–

All countries and business units developed their individual capital plans, focusing on having a business that consumes less capital per unit of return in the future.

•

In regulatory terms, the total capital ratio is 14.62% and the CET1 phase-in 12.12%. The minimum ratios required by the European Central Bank for the Santander Group on a consolidated basis for 2017 are 11.25% for the total ratio and 7.75% for the CET1.

LOGO Eligible capital. March 2017

€ million


	Phase-in		Fully-loaded
CET1		72,365		63,680
Basic capital		73,553		69,424
Eligible capital		87,274		84,195
Risk-weighted assets		597,123		597,123

CET1 capital ratio		12.12		10.66
T1 capital ratio		12.32		11.63
Total capital ratio		14.62		14.10

LOGO


16		FINANCIAL REPORT 2017

JANUARY - MARCH » Management risk

RISK MANAGEMENT

The Group’s NPL ratio continued to improve and dropped to 3.74% (-59 b.p. year-on-year; -19 b.p. in the quarter), thanks to the good performance of portfolios in most countries. Of note were Brazil, Spain, Poland and Portugal.

The coverage ratio remained stable at 75%.

The cost of credit was 1.17%, 5 b.p. lower than in March 2016, after improving in 8 of the 10 large units.

Loan-loss provisions were €2,400 million, 9% lower year-on-year, excluding the exchange rate impact.

Credit risk management

•

Net NPL entries in the first quarter were €1,583 million. Non-performing loans amounted to €32,158 million at March 31, 4% lower than at the end of 2016 and 11% year-on-year. The NPL ratio was 3.74%, 59 b.p. better than March 2016 and 19 b.p. below the end of last year.

•

Loan-loss provisions to cover these loans amounted to €24,002 million (75%). In order to properly view this figure, it should be remembered that the UK and Spain NPL ratios are affected by the weight of mortgage balances, which require fewer provisions as they have guarantees.

•

The cost of credit (1.17%) was lower than in the first and fourth quarters of 2016 . This ratio is already within the goal set at the Investor Day for 2016-2018

The NPL and coverage ratios of the main countries where the Group operates are set out below:

•

Spain’s NPL ratio was 5.22%, (19 b.p. lower than at the end of 2016). The favourable trend continue thanks to the positive performance of the portfolio, as well as active management of it. Coverage was 49%.

The Real Estate unit in Spain ended March with a NPL ratio of 93% and coverage of 57%.The total coverage ratio, including the balance outstanding, and coverage of assets foreclosed was also 57%.

•

Santander Consumer Finance’s NPL ratio was 2.62%. This was 6 b.p. better than in the fourth quarter of 2016, due to the good performance of Germany and Italy. Coverage was 109%.

•

In Poland the NPL ratio improved to 5.20% (-22 b.p. in the quarter), mainly due to the good performance of the portfolios of SMEs and individuals, as well as that of companies. Coverage was 61%.

•

Portugal’s NPL ratio was 8.47%. This was-34 b.p. better in the quarter, due to the good trend in companies and SMEs, as well as the good management of both portfolios. Coverage was 62%.

•

In the UK, the NPL ratio was 1.31%. The various portfolios continued to perform well, particularly individuals and companies. Coverage was 34% (78% of the balance are mortgages).

LOGO Credit risk management*

€ million


	31,03,17		31,03,16		Var, %		31,12,16
Non-performing loans		32,158		36,148		(11.0)		33,643
NPL ratio (%)		3.74		4.33				3.93
Loan-loss allowances		24,002		26,756		(10.3)		24,835
For impaired assets		14,636		17,817		(17.9)		15,466
For other assets		9,366		8,940		4.8		9,369
Coverage ratio (%)		74.6		74.0				73.8
Cost of credit (%) **		1.17		1.22				1.18

(*).- Excluding country-risk

(**).- 12 months net loan-loss provisions / average lending

Note: NPL ratio: Non-performing loans / computable assets

LOGO


FINANCIAL REPORT 2017		17

JANUARY - MARCH » Management risk

LOGO Non-performing loans by quarter

€ million


	2016								2017
	1Q		2Q		3Q		4Q		1Q
Balance at beginning of period		37,094		36,148		36,291		34,646		33,643
Net additions		1,668		2,221		1,763		1,710		1,583
Increase in scope of consolidation		13		664		21		36		18
Exchange rate differences and other		72		869		(44)		315		536
Write-offs		(2,699)		(3,612)		(3,385)		(3,063)		(3,623)
Balance at period-end		36,148		36,291		34,646		33,643		32,158

•

Brazil’s NPL ratio improved to 5.36% (-54 b.p. in the quarter), consolidating a downward trend. Of note was the good performance of individuals and SMEs. Coverage rose to 98% from 93% at the end of 2016.

•

Mexico’s NPL ratio remained stable at 2.77%. Coverage was 105%.

•

Chile’s, NPL ratio was 4.93% (5.05% in December 2016). Coverage remained at 59%

•

In the United States, the NPL ratio was 2.43% (+15 b.p. in the quarter) and coverage was 202%.

Santander Bank’s NPL ratio was 27 b.p. lower than at the end of 2016 at 1.06%. Positive evolution of companies, mainly the commercial real estate portfolio. Coverage was 115%.

Santander Consumer USA’s NPL ratio rose to 4.78%, mainly due to the forbearance portfolio. Coverage was 267%.

Structural FX

•

As regards structural exchange rate risk, Santander maintains a fully-loaded CET1 coverage level of around 100% in order to protect itself from currency movements.

Market risk

•

The risk of trading activity in the first quarter of global corporate banking, measured in daily VaR terms at 99%, fluctuated between €13.6 million and €36.0 million. These figures are low compared to the size of the Group’s balance sheet and activity.

•

The average VaR increased during the quarter as a result of the rise in exposure and volatility in the markets, mainly in the interest rate risk factor as well as exchange rates in Latin America.

•

In addition, there are other positions classified for accounting purposes as trading. The total VaR of trading of this accounting perimeter at the end of March was €38.8 million.

LOGO

LOGO Trading portfolios*. VaR by region

€ million


	2017				2016
First quarter	Average		Latest		Average


Total		23.9		35.3		15.0
Europe		8.0		8.4		10.9
USA and Asia		2.6		2.5		1.0
Latin America		20.4		30.3		9.7
Global activities		0.6		0.6		0.8

(*) Activity performance in Global Corporate Banking financial markets

LOGO Trading portfolios*. VaR by market factor

€ million


First quarter	Min		Avg		Max		Last
VaR total		13.6		23.9		36.0		35.3
Diversification effect		(4.1)		(8.4)		(14.3)		(6.8)
Interest rate VaR		12.6		18.3		29.7		20.4
Equity VaR		1.4		3.8		5.9		5.9
FX VaR		2.1		6.3		12.4		12.4
Credit spreads VaR		2.8		3.9		5.1		3.4
Commodities VaR		0.0		0.0		0.1		0.0

(*) Activity performance in Global Corporate Banking financial markets


18		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information

» DESCRIPTION OF THE BUSINESSES

In 2017 Grupo Santander is maintaining the same general criteria applied in 2016, as well as the business segments, with the following exceptions:

•

In the second quarter of 2016, and in order to make it comparable with the same period of 2015, the contribution to the Single Resolution Fund (SRF) of €120 million net was reclassified to “Net capital gains and provisions” from “Other operating results.” In the fourth quarter, this reclassification was reversed. In the information presented here, and in order to facilitate the quarterly comparison, the contribution to the SRF is recorded in “Other operating results”. This change affects the composition of the consolidated Group accounts, Spain, Santander Consumer Finance and Portugal, but not the attributable profit.

•

Assigning to the various countries and global segments the capital gains and non-recurring provisions that were being presented in the Corporate Centre. They relate to the second and fourth quarters of 2016 and affect the attributable profit of the units of Spain (-€216 million), Santander Consumer Finance (+€25 million), Poland (+€29 million), United Kingdom (-€30 million), United States (-€32 million) and, as a counterpart of all of them, the Corporate Centre itself (+€231 million). The Group’s total attributable profit does not change.

•

Annual adjustment of the perimeter of the Global Customer Relationship Model between Retail Banking and Santander Global Corporate Banking. This change has no impact on the geographic businesses.

The financial statements of each business unit have been drawn up by aggregating the Group’s 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 Group’s first level of management and reflects Santander’s positioning in the world’s 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 region’s business, including the three countries mentioned herewith).

United Kingdom. This includes the businesses developed by the Group’s various units and branches in the country.

Latin America. This embraces all the Group’s financial activities conducted via its banks and subsidiaries in the region. The financial statements of Brazil, Mexico and Chile are set out.

United States Includes the holding Santander Holding 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 Global Corporate Banking 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 Global Customer Relationship Model. The results of the hedging positions in each country are also included, conducted within the sphere of each one’s Assets and Liabilities Committee.

Santander Global Corporate Banking (SGCB). This business reflects the revenues from global corporate banking, investment banking and markets worldwide including treasuries managed globally (always after the appropriate distribution with commercial banking customers), as well as equities business.

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 Group’s Assets and Liabilities Committee, as well as management of liquidity and of shareholders’ equity via issues.

As the Group’s 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 Group’s central services (charged to the areas), except for corporate and institutional expenses related to the Group’s functioning.

The figures of the Group’s various units have been drawn up in accordance with these criteria, and so do not coincide individually with those published by each unit.


FINANCIAL REPORT 2017		19

JANUARY - MARCH » Business information by geography


Net operating income			/ 4Q’16				/ 1Q’16
€ million	1Q’17		%		% w/o FX		%		% w/o FX
Continental Europe		1,694		14.2		13.9		5.4		4.9
o/w: Spain		741		41.8		41.8		4.9		4.9
Santander Consumer Finance		616		7.4		7.2		9.6		8.4
Poland		175		(7.8)		(9.0)		5.4		4.3
Portugal		155		(3.5)		(3.5)		(15.3)		(15.3)
United Kingdom		709		(4.5)		(4.7)		(1.5)		9.9
Latin America		3,501		15.0		10.4		45.7		24.6
o/w: Brazil		2,403		27.7		20.1		67.6		30.5
Mexico		505		0.2		1.5		7.3		16.5
Chile		381		(6.3)		(9.2)		18.7		7.3
USA		1,042		10.2		9.5		(12.5)		(15.4)
Operating areas		6,946		11.7		9.3		17.3		10.2
Corporate Centre		(460)		20.7		20.7		31.7		31.7
Total Group		6,486		11.2		8.6		16.4		8.9

Attributable profit to the Group			/ 4Q’16				/ 1Q’16
€ million	1Q’17		%		% w/o FX		%		% w/o FX
Continental Europe		774		25.8		25.5		9.5		9.0
o/w: Spain		362		52.4		52.4		17.7		17.7
Santander Consumer Finance		314		16.6		16.3		25.1		23.4
Poland		59		(6.1)		(7.4)		(7.6)		(8.5)
Portugal		125		18.4		18.4		3.8		3.8
United Kingdom		416		23.3		20.7		(8.1)		2.6
Latin America		1,050		9.1		5.1		49.3		30.3
o/w: Brazil		634		24.3		16.5		76.8		37.7
Mexico		163		(3.2)		(1.8)		14.3		24.1
Chile		147		7.7		4.6		21.1		9.4
USA		95		—		—		16.3		12.4
Operating areas		2,335		23.1		20.5		20.1		16.4
Corporate Centre		(468)		56.7		56.7		50.3		50.3
Total Group		1,867		16.9		13.9		14.3		10.0

Gross customer loans w/o repos			/ 4Q’16				/ 1Q’16
€ million	1Q’17		%		% w/o FX		%		% w/o FX
Continental Europe		302,922		0.1		(0.2)		0.8		0.6
o/w: Spain		150,703		(0.2)		(0.2)		(3.5)		(3.5)
Santander Consumer Finance		87,006		(0.8)		(0.9)		9.9		9.5
Poland		21,903		5.8		1.4		7.0		6.2
Portugal		28,770		(0.9)		(0.9)		(4.2)		(4.2)
United Kingdom		242,581		0.0		(0.0)		(7.3)		0.2
Latin America		163,536		2.8		0.4		19.8		6.8
o/w: Brazil		81,184		1.1		(0.4)		27.1		4.3
Mexico		29,996		7.1		(1.6)		4.3		6.6
Chile		39,259		1.2		1.6		14.4		6.5
USA		85,906		(4.2)		(2.8)		1.2		(5.0)
Operating areas		794,945		0.1		(0.3)		1.4		1.0
Total Group		799,927		0.2		(0.2)		1.6		1.2

Customer funds (deposits w/o repos + mutual funds)			/ 4Q’16				/ 1Q’16
€ million	1Q’17		%		% w/o FX		%		% w/o FX
Continental Europe		328,747		1.9		1.5		4.1		3.9
o/w: Spain		228,917		1.8		1.8		3.9		3.9
Santander Consumer Finance		35,680		1.8		1.7		7.5		7.1
Poland		26,379		1.9		(2.4)		7.7		6.9
Portugal		31,297		(0.4)		(0.4)		2.3		2.3
United Kingdom		213,052		1.2		1.1		(1.5)		6.5
Latin America		197,257		5.2		2.6		22.6		9.0
o/w: Brazil		104,309		4.5		3.0		29.8		6.5
Mexico		39,155		7.5		(1.2)		5.1		7.4
Chile		34,262		(0.9)		(0.5)		15.4		7.4
USA		71,818		(3.2)		(1.8)		8.8		2.2
Operating areas		810,874		2.0		1.4		6.8		5.6
Total Group		811,198		1.9		1.3		6.6		5.5


20		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

SPAIN

LOGO

FIRST QUARTER HIGHLIGHTS

The 1|2|3 strategy continues to yield solid results, including customer capturing and loyalty. The new strategy in means of payment was well received and is reflected in cards’ turnover.

Strong growth in new mortgages and consumer credit. Digital sales increased in all products.

Santander Spain received the Top Employers 2017 certification, underscoring the Group’s commitment to become the best bank to work for.

Attributable profit was 18% higher year-on-year, driven by the lower cost of credit, reduced expenses and higher fee income.


Commercial activity • Thanks to our 1l2l3 strategy, customer loyalty continued to grow at a fast pace. • As a result of our new means of payment strategy, there was a significant rise in issuance of cards, which was reflected in the turnover in credit cards (+34%). • Digital customers rose 8% year-on-year, following a record quarter. We now have more than one million mobile banking customers and the digital contribution to sales increased in all products (8 p.p. in COMEX, 4 p.p. in consumer credit and 3 p.p. in credit cards). • We are leaders in wholesale business operations. In 2016, for the third year running, we were ranked first in the bond and loan market. Santander was the only bank in leading positions in the three IPOs carried out in the first quarter of 2017.

Business evolution • The stock of credit remained stable in the quarter, as new lending continued to recover, particularly mortgages and consumer credit (+34% and +15%, respectively). • Year-on-year and quarter-on-quarter growth in deposits (+10% in demand deposits, in line with our 1l2l3 strategy). • Good evolution in mutual funds (+12% year-on-year) and in new insurance premiums (+13%).

Results Attributable profit was up 18% year-on-year at €362 million. • Good performance of fee income and the income from the equity accounted method offset the pressure on net interest income. Of note in fee income growth in that from GCB (+19%) as well as from retail business (+5%). • Operating expenses continued to fall, the fruit of the efficiency plan in 2016. • Sharp fall in provisions which continued to normalise. Further reduction in the cost of credit for the 12^thconsecutive quarter to 0.33% from 0.54% in March 2016. The NPL ratio dropped to 5.22% (-114 b.p. year-on-year). Profit was 52% higher than in the fourth quarter of 2016 due to stable net interest income, the good performance of gains on financial transactions and fee income. Another factor was the impact in the fourth quarter of the contribution to the Deposit Guarantee Fund.

		Detailed financial information on page 43


FINANCIAL REPORT 2017		21

JANUARY - MARCH » Business information by geography

SANTANDER CONSUMER FINANCE

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Year-on-year increase in new loans in our core countries.

We continued to gain market share, underpinned by a solid business model: diversification, critical mass in key products, efficiency and credit quality.

Attributable profit rose 23% year-on-year, driven by gross income and a lower cost of credit.


Commercial activity • Santander Consumer continued to grow its profits, underpinned by geographic diversification, leading positions and solid business model. It is consolidating a series of agreements with important car manufaturers and shops in Europe, backed by a highly competitive value proposition, high operational efficiency and excellent risk management. • The focuses of management in the first quarter were: – Boost auto finance through pro-active management of brand agreements and development of digital projects. – Sustainable growth, optimising the risk-adjusted profitability. – Increase consumer finance business via a stronger presence in digital channels.

Business evolution • New lending increased 10% year-on-year, spurred by auto finance (+14%). Business grew in all countries, most notably in Spain, the Nordic countries and Italy. • The fall in the stock in the first quarter was due to seasonal issues, because of the larger sales to dealers at the end of 2016. • Customer deposits were up 7% at more than €35,000 million, differentiating us from our competitors. • Recourse to wholesale funding was €3,287 million in the first quarter, via senior issues and securitisations. Deposits and medium and long term issues-securitisations covered 76% of net lending

Results Attributable profit increased 23% year-on-year to €314 million. Of note were: • Higher gross income, mainly due to net interest income (+8% due to greater volumes). • Operating expenses rose at half the pace of gross income, enabling the efficiency ratio to improve by 130 b.p. to 44.9%. • Loan-loss provisions fell and sharply lowered the cost of credit (to 0.39% from 0.64% in the first quarter of 2016), thanks to the good performance of lending. The NPL ratio was 2.62% (-66 b.p.) and coverage 109% (-3 p.p.). • Profit growth particularly in Spain, the Nordic countries and Italy. Profit was higher than in the fourth quarter of 2016 due to net interest income and fee income, as well as reduced provisions.

		Detailed financial information on page 44


22		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

POLAND

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Santander continues to be the market leader in mobile and online banking.

In activity, focus on mortgages, SMEs, leasing and corporates on the assets side, and on current accounts on the liabilities side.

Attributable profit affected by the higher tax rate, higher impact of the tax on assets and the extraordinary contribution to the Deposit Guarantee Fund (BGF).

Despite the above, profit before tax rose 12% y-o-y fuelled by the good performance of net interest income, costs and provisions.


Commercial activity • The Bank´s main goal is to become the bank of first choice, predicting and responding to customer expectations and needs. Transformation goals focus on increasing sales productiveness, cost-efficiency and innovation. • We remained the leading bank in mobile and online banking, the second in the number of active credit cards and the fourth in the number of current accounts in Poland. • In order to enhance our positioning and the customer experience, several actions were launched or strengthened, such as: a programme to increase exports, improvements in cards for companies, the 4Sure programme to improve insurance penetration and boost sales via digital channels. • Both digital and loyal customers rose in the last twelve months. Increase of 12% in loyal companies.

Business evolution • Loans grew broadly: to individuals rose 9%, notably mortgages (+10%) and cards (+9%). Companies increased 4%, with SMEs up 7%, corporates 3% and GCB 12%, partially offset by the drop in real estate (-11%). • Deposits grew 7% year-on-year driven by individuals (+6%), SMEs (+12%) and corporates (+13%). The strategy to reduce the cost of funding reflected the 18% increase in demand deposits and the 8% decline of term deposits. • This evolution maintained our solid funding structure (net loan-to-deposit ratio of 92%).

Results Attributable profit of €59 million in the first quarter of 2017, down 9% year-on-year impacted by the higher tax rate, the extraordinary contribution to the BGF and the higher impact of tax on assets, which in the first quarter of 2016 affected only two months. Profit before tax up 12% driven by the following positive effects: • Net interest income rose 10%, fuelled by higher volumes and management of spreads • Costs declined slightly due to drop in general costs (-4%). • Sharp drop in loan-loss provisions reflected the lower NPL ratio and cost of credit, which dropped from 0.82% in March 2016 to 0.66% in March 2017. Attributable profit declined over the fourth quarter of 2016, mainly due to the impacts already mentioned and some seasonal component.

		Detailed financial information on page 45


FINANCIAL REPORT 2017		23

JANUARY - MARCH » Business information by geography

PORTUGAL

LOGO

FIRST QUARTER HIGHLIGHTS

Strategy to transform the commercial model in order to improve the quality of service.

Lending was affected by the sale of some portfolios, while deposits continued to grow and focused on demand deposits (+39%).

Profit was higher than in the first quarter of 2016, despite lower gross income from the sale of ALCO portfolios, thanks to costs and provisions.

In April a tentative agreement was reached with the Portuguese State to end the litigation relating to a set of interest rate swap contracts signed with public transport companies.


Commercial activity • The Bank is maintaining its strategy of transforming the commercial model, streamlining processes and developing new multi channel distribution solutions in order to improve the quality of customer service and efficiency. • Activity in banking for individuals continues to be underpinned by the 1\|2\|3 World programme, which continued to evolve positively, and doubled number of accounts, credit cards and protection insurance. This was because 48% of customers were not credit card holders, 64% did not have insurance and 41% did not have direct debiting from their accounts. • The focus in companies remained on increasing the number of customers and the volume of business, with various initiatives to achieve greater proximity to customers such as Santander Advance’s non-financial offer. • All these measures are reflected in the strong growth of the customer base and increased loyalty, (individuals: +24%), companies (+47%).

Business evolution • Significant increases in new loans to individuals and companies, with gains in market share. Of note were mortgages, whose market share rose by almost half a point over the last year to 19.7%. • This growth is not yet reflected in the year-on-year stock of credit, which fell, as it was eroded, partly, by the sale of some portfolios. Compared to December 2016, however, mortgages, consumer credit and loans to companies were stable. • Demand deposits increased 39% year-on-year, reflecting the strategy adopted to improve the cost of funding, which fell from 0.68% in March 2016 to 0.30% a year later. Mutual funds up 5%.

Results Attributable profit of €125 million, higher than in the first quarter of 2016. By lines: • Revenues affected by lower balances from the sale of loan and ALCO portfolios in 2016. • Fall in operating expenses from the policy of optimizing the commercial structure in order to adjust it to the business environment. • Recovery of provisions from the sale of loan portfolios. • Improved credit quality. NPL ratio of 8.47%, down from the peak of 10.5% at the time of Banif’s incorporation in 2016. Profit was 18% higher than the fourth quarter’s due to fee income and loan-loss recoveries.

		Detailed financial information on page 46


24		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

UNITED KINGDOM

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Strong business performance, cost discipline and good credit quality supported by still robust UK economic growth.

Solid growth in loans to corporates in a competitive and uncertain operating environment.

Digital transformation continued to support operational efficiency and improve customer experience.

Higher revenues and broadly stable costs produced a 10% increase in net operating income, which did not feed through to profit because of higher provisions for PPI.


Commercial activity Santander UK is well positioned to succeed despite the changeable macro environment. • Leverage the 1\|2\|3 World strategy, which has transformed our business. 1\|2\|3 World customers increased by 21,000 to 5.1 million since the end of 2016. Retail current account balances were up by £1,000 million, and continue to show positive net inflows • We continue to develop our digital proposition: self-service investment platform (Investment Hub), online mortgage application process and the expansion of mobile payment capabilities to include Android Pay. • Loyal customers increased since December 2016, and digital customers reached 4.7 million (+4% in the quarter). As regards banking reform, our implementation is well advanced, with the chosen model minimising the impact on customers and maintaining long-term flexibility in the changeable macro environment.

Business evolution • Customer lending was broadly flat since the end of 2016, with good evolution in lending to companies, (+3%, in both quarter-on-quarter and year-on-year terms). • New gross mortgage lending was £5,300 million, including 4,570 first- time home buyers. It was lower than in the first quarter of 2016, which saw a spike in buy-to-let mortgages ahead of the April 2016 stamp duty increase. • Customer deposits excluding repos increased 6% driven by 1\|2\|3 World. The strategy of reducing time deposits and growing current accounts continues.

Results Attributable profit for the quarter was €416 million, up 3% year-on-year. • Net interest income was up 6% year-on-year, driven by the lower cost of the 1\|2\|3 account, partially offset by SVR attrition and new asset margin pressures. • Operating expenses were broadly flat, as efficiency improvements absorbed investments in business growth, the continued enhancements to our digital channels and the banking reform costs of £25 million. • Credit quality remained strong in all loan portfolios. The NPL ratio improved to 1.31%, and the cost of credit remained low. • Provisions of £32 million for PPI to respond to the Financial Conduct Authority (FCA) guidance published in March 2017. Attributable profit rose 21% over the fourth quarter of 2016, due to lower one-off items.

		Detailed financial information on page 47


FINANCIAL REPORT 2017		25

JANUARY - MARCH » Business information by geography

BRAZIL

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

We continued to advance in our strategic priorities: customer loyalty and satisfaction, digital transformation and operational excellence.

Continued positive trend in gross income (net interest income and fee income), reflecting our revenue recurrence.

Lower loan-loss provisions in the first quarter than in the fourth quarter of 2016 and in year-on-year terms. Better NPL and coverage ratios and lower cost of credit in the quarter.

Attributable profit rose 77% year-on-year in euros (+38% in constant euros), with clear improvement in profitability (RoTE: 16.52%).


Commercial activity Of note among the strategic measures taken in the first quarter were: • Launching the digital process for opening an account, the new website for individuals and the app for customers of the securities company. Santander Way, the app for integral management of credit and debit cards, was downloaded more than two million times. • All these actions pushed up the number of digital customers by 2 million year-on-year, with biometric identification (+6.7 million) and digital transactions. • Focus on operational excellence and enhancing the customer experience after extending the CERTO model to the Contact Centre and adopting the net promoter score (NPS) indicator to measure the level of customer satisfaction. • Agreement to begin the marketing of credit cards of the American Airlines programme (AAdvantage) in April. • In consumer finance, we continued to increase profitability, following the implementation of the new digital model. • Leadership in GCB: ECM, M&A, FX, financial advisory and fixed income.

Business evolution • Lending recovered the pace of year-on-year growth, absorbing a negative impact on balances in dollars (excluding this +6%). Loans to individuals rose 9% (mortgages, +2% and personal loans, +12%) and consumer finance 12%. Credit growth to SMEs also turned positive (+3%), due to the measures developed for this segment. • Funds increased driven by savings and time deposits, agribusiness credit notes and mutual funds.

Results Attributable profit of €634 million (+38% year-on-year). Of note: • Gross income rose fuelled by net interest income (+10%) and the excellent evolution of virtually all fee income lines (+27%), mainly from cards (+53%), securities (+24%), current accounts (+24%) and cash management (+23%). In wholesale business, we benefited from dynamic capital markets, lower inflation and reduced interest rates. • We remained disciplined in costs (which rose in line with average inflation) and improved the efficiency ratio (-4.4 p.p.) to 35.4%. • Loan-loss provisions declined and the cost of credit (4.84%) was lower than in the previous two quarters. The NPL ratio (5.36%) and coverage (98%) were also notably better. Profit was 16% higher than the fourth quarter, driven by growth in gross income and lower costs and provisions.

		Detailed financial information on page 49


26		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

MEXICO

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Strategy centred on being the main bank of our customers, increasing attraction and loyalty and the use of digital channels.

Commercial focus on the Santander Plus programme and on the shared brand card Santander-Aeroméxico.

The strategy is reflected in growth in deposits (+13%), with a positive trend in all products. Loans also increased, mainly to SMEs and companies.

Attributable profit up 24% year-on-year. Of note net interest income (+14%) and fee income (+13%).


Commercial activity New measures were launched in the first quarter and existing actions strengthened: • We continued to drive the Santander Plus programme (more than 1.5 million customers so far, 52% of which are new). • We continued to promote the use of digital channels via improvements in the Portal Público, SuperNet and SuperMóvil, and also with the Supercuenta Go, which enables an account to be opened and managed entirely digitally. We now have more than 1.5 million digital customers. • The Santander Aeroméxico card has more than 500,000 users (34% of whom are new customers). • In demand deposits, we relaunched Dinero Creciente, with simpler processes and competitive rates. In mortgages, alliances with housing developers were strengthened. • The strategy in companies and institutions of attracting the payroll of large corporate clients from different sectors was maintained and in SMEs we continued to offer packets of products with tailored conditions.

Business evolution • All these measures were reflected in a year-on-year rise in lending, both to individuals (+6%) and companies up 9% and SMEs 10%. By products: consumer credit (+8%), mortgages (+4%) and credit cards (+6%). The only drop was in loans to public institutions (-20%). • Customer funds also increased and their structure improved. Demand deposits of individuals rose 17%.

Results Attributable profit grew 24% year-on-year to €163 million: • Net interest income rose 14%, due to growth in loans and demand deposits, as well as higher interest rates. Fee income increased 13%, mainly from transactional banking, financial advisory and IPOs. • Operating expenses were higher because of new commercial projects to attract customers and increase their loyalty, as well as ongoing investments. All of it consistent with an improvement in the efficiency ratio of 1.9 p.p. to 38.8%. • Loan-loss provisions increased because of greater lending and the sale of a non-performing portfolio. The cost of credit remained stable. Attributable profit was 2% lower than in the fourth quarter of 2016, as the good performance of net interest income, fee income and costs was absorbed by lower gains on financial transactions and higher provisions.

		Detailed financial information on page 50


FINANCIAL REPORT 2017		27

JANUARY - MARCH » Business information by geography

CHILE

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Continued progress in transforming the traditional network into a new branch model.

The growth strategy in low risk segments produced improvements in the quality of the portfolio and in the cost of credit.

Attributable profit up 21% (+9% on constant euros), spurred by dynamic commercial revenues and control of costs and provisions (the lowest of the last four quarters).


Commercial activity The Group maintained its strategy of offering long-term profitability in a scenario of lower spreads and greater regulations. • The Bank continued to centre on improving the quality of customer attention and transforming the commercial and retail banking segment, particularly in business with medium-high income clients and SMEs. • Transformation of the traditional network toward a new branch model continued, with new openings of WorkCafé branches. There are now seven and another 20-25 are expected to be opened this year. These branches are more productive and improve customer satisfaction over traditional ones. • Digitalisation is producing an increase in digital customers. Their number is now 979,000. Some 35% of consumer credit was granted digitally via the 123 Click, a new functionality which pushed up Santander’s app to the first position in customer satisfaction.

Business evolution • Activity focused on maintaining the business dynamism in order to avoid the seasonal impact and an economic environment in a downswing. • Lending rose year-on-year due to high income clients (+13%) and SMEs (+8%). Of note was the 14% growth in consumer credit, while mortgages grew at a slower pace after rising extraordinarily in 2015-2016. • Demand deposits rose 4% and mutual funds 46%.

Results The first quarter profit was €147 million (+9% year-on-year), thanks to the good performance of commercial revenues, costs control and provisions. • Net interest income was higher due to greater activity in target segments and management of the cost of funds. Of note in fee income was that from insurance, mutual funds and advisory services in GCB. • The effort to become more efficient and the rolling out of the digital strategy is reflected in control of costs. The efficiency ratio improved by 1.4 p.p. to 40.9%. • All credit quality indicators improved. The cost of credit was 1.42%, the NPL ratio 4.93% and coverage 59%. Profit was higher than in the fourth quarter, due to lower costs and provisions, which more than offset the seasonal impact on net interest income.

		Detailed financial information on page 51


28		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

ARGENTINA

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Citibank’s retail banking was integrated on March 31 following the central bank’s approval.

Focus on Santander Select and Pymes Advance, on exploiting intermediation growth and on becoming a digital bank.

Attributable profit was 69% higher year-on-year, driven by net interest income and fee income.

Commercial activity and Business evolution

•

After taking control of Citi’s retail network, the main goal in the coming months is its integration and to achieve the highest customer and employee satisfaction. Our market share has risen to 11%.

•

In order to keep on improving the quality of service and strengthen our leadership position, we maintained the focus on multi channels, Select and Pymes Advance.

•

The branch transformation plan continued, with 253 branches transformed so far (62% of the total network). Penetration of the Santander Río Mobile app increased (588,000 users, 24% of active customers).

•

All these actions produced growth in the number of loyal (+8%) and digital (+17%) customers, and are increasing crossed selling, loyalty of transaction banking customers and profitability.

•

Lending rose 53% year-on-year and deposits 55% (due to demand deposits). These figures have a perimeter impact of around 15 p.p. due to Citi’s entry. Excluding it, there was notable growth in consumer credit and in UVA mortgages indexed to inflation. Santander Río is the leader in new lending, with a market share of 30%.

Results

Attributable profit of €108 million (+69% year-on-year). These figures do not include the impact of Citi’s integration which occurred on the last day of the first quarter.

•

The commercial strategy and the greater business volumes pushed up net interest income by 48% and fee income by 49%. Of note was fee income from maintaining accounts, securities, mutual funds and foreign currency.

•

Operating expenses increased less than gross income, despite the impact of the salary agreement, the expansion of the branch network and investments in transformation and technology. Net operating income rose 54% and the efficiency ratio improved by more than 4 p.p. to 54.5%.

•

Loan-loss provisions increased less than lending, which maintained the high credit quality. The NPL ratio was 1.82% and coverage 134%.

The first quarter profit was almost the same as the fourth quarter’s. Of note was the 19% rise in fee income.

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Business continued to grow, mainly loans.

Attributable profit up 5% year-on-year

Commercial activity and business evolution

•

The strategy remains focused on the corporate segment, large companies and the Group’s global clients.

•

The auto finance company continued to consolidate its activity. A leasing portfolio was bought for €51 million, which helped to increase lending by 12% year-on-year

Results

•

The first quarter profit was €8 million. Gross income rose 5% driven by gains on financial transactions. Operating expenses were stable. The efficiency ratio improved to 34.1%.

•

High credit quality (NPL ratio of 0.57% and coverage of 384%) and a lower cost of credit.

•

Compared to the fourth quarter of 2016, profit was affected by the seasonal nature of fee income, as both net interest income and costs improved.


FINANCIAL REPORT 2017		29

JANUARY - MARCH » Business information by geography

URUGUAY

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Lending to target segments and products grew (SMEs and consumer credit).

Attributable profit increased, thanks to net interest income and fee income.

Commercial activity and Business evolution

The Group is the country’s largest private sector bank. It concentrates on growing retail banking and enhancing efficiency and the quality of service.

•

Santander continues to focus on improving customer satisfaction and increasing customer loyalty. The Verano Select Experience, a new way of relating to our Select customers, was launched in the first quarter.

•

As part of the process to digitalise and modernise channels, we launched the Buzonera Inteligente. These on-line deposit terminals cover 30% of the bank’s network. The finance companies launched the second version of APP, via which customers can access all services, including loans. This system distinguishes us from our competitors.

•

The growth strategy in digital customers produced a 35% rise year-on-year to 133,000 and a greater degree of penetration.

•

Total lending declined 6% impacted by the peso’s appreciation on foreign currency balances and a strategy that favours capital and profitability. Consumer credit and credit cards, however, grew 13%. Deposits fell 17%, due to the drop in demand deposits caused by the outflow of non-resident deposits and the strategy of lowering the cost of funds captured.

Results

•

The first quarter attributable profit was 11% higher year-on-year at €28 million. Gross income increased 7%, underpinned by net interest income and fee income (+11%). Gains on financial transactions were 38% lower due to the evolution of exchange rates.

•

Operating expenses rose at below the inflation rate, thanks to the ongoing efficiency plan. The efficiency ratio continued to improve, to 48.7% (-1.2 p.p. year-on-year).

•

The NPL ratio remained at a low level (1.81%), coverage was 162% and the cost of credit 1.72%.

•

Attributable profit was 8% higher than the fourth quarter’s, due to higher net interest income and lower costs.

COLOMBIA

LOGO Our bank in Colombia focuses on growing business with Latin American companies, multinational companies, international desk and large and medium-sized local companies. We also provide treasury solutions, risk coverage, foreign trade and confirming, as well developing investment banking products and supporting the country’s infrastructure plan.

LOGO Premier Credit, the auto finance company, focused on increasing its volume of operations by signing commercial agreements with dealer networks. It launched the project that will give Banco Santander de Negocios Colombia the capacity to finance loans originated by Premier Credit.

LOGO The first quarter posted gross operating income of €7 million and an attributable profit of €2 million.


30		FINANCIAL REPORT 2017

JANUARY - MARCH » Business information by geography

UNITED
STATES

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Continued investments targeted at improving business operations and complying with regulatory expectations.

Santander Bank focused on improving profitability by changing business mix, increasing efficiency and optimizing the balance sheet.

Santander Consumer USA maintained its strategy to reduce funding costs, maintaining a strong capital position and building its prime origination platform.

First quarter 2017 attributable profit of €95 million, growing 12% year-on-year.


Commercial activity • Santander US, which includes Santander Bank (SBNA), Santander Consumer USA (SC), Banco Santander International (Miami) and Puerto Rico, continued to make progress in addressing its regulatory issues and meeting regulatory expectations, and in its transformation programme to improve risk management practices and technology infrastructure. • Santander Bank remains focused on improving the customer experience and deepening customer relationships through greater cooperation between business lines, enhancing product offerings and digital capabilities, such as the introduction of Apple Pay. • Santander Consumer USA’s strategy is focused on optimising the performance of assets retained on the balance sheet, lowering the cost of funds and on realising the full value of the agreement with Fiat Chrysler.

Business evolution • Core deposits at Santander Bank increased 6% year-on-year, supported by consumer checking account and commercial deposit growth, reflecting the success of our strategy to deepen retail and commercial customer relationships. • Loans fell 5% year-on-year driven by sale of consumer lending portfolio from SC during 2016 and reduction of commercial loan originations at SBNA and disciplined pricing targeted at improving profitability in SBNA. • SBNA net interest margin has increased to its highest level since 2014, reaching 2.42% in the first quarter of 2017.

Results The first quarter attributable profit was 12% higher y-o-y at €95 million. • Gross income fell 8%, impacted by lower net interest income at Santander Consumer USA driven by change in customer risk profile, partly offset by lower provisions. • Santander Bank, on the other hand, benefited from the rise in interest rates and its lower cost of funds following balance sheet optimization efforts in 2016. • Fee income declined because of lower servicing, while Other Income increased driven by higher leasing volumes. • Operating expenses rose 4%, largely due to investments in Santander Consumer USA while Santander Bank’s costs remained flat. • Loan-loss provisions fell 9% as a result of improved credit performance in SBNA and continued shift in SCs customer risk profile Compared to the fourth quarter, recovery in revenues and profits due to the normalisation of the main P&L lines.

		Detailed financial information on page 52


FINANCIAL REPORT 2017		31

JANUARY - MARCH » Business information by geography

CORPORATE CENTRE

LOGO

FIRST QUARTER HIGHLIGHTS

The centre’s objective is to contribute value-added to the operating units, transferring the Group’s best practices. It also develops functions related to financial and capital management.

Gross income hit by higher costs associated with hedging of exchange rates, which have a positive impact on the business areas.

Operating expenses fell 5% as a result of adopting streamlining and simplification measures in the second quarter of 2016.

Strategy and functions

The corporate centre contributes value to the Group in various ways:

•

It makes the Group’s governance more solid, through global control frameworks and supervision, and making strategic decisions.

•

It makes the Group’s units more efficient, 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.

•

By sharing the best commercial practices, launching global initiatives and driving digitalisation, the Corporate Centre contributes to the Group’s revenue growth.

It also develops functions related to financial and capital management, as follows:

•

Financial Management functions:

–

Structural management of liquidity risk associated with funding the Group’s 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 (issues 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, 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 derivatives of high credit quality, very liquid and low consumption of capital.

–

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 €21,901 million (mainly Brazil, UK, Mexico, Chile, US, Poland and Norway) with different instruments (spot, forex, forwards).

•

Management of total capital and reserves: capital allocated to each of the units.

–

Lastly, and marginally, the Corporate Centre reflects the stakes of a financial nature that the Group makes under its policy of optimising investments.

Results

Loss of €468 million, higher than in previous quarters because of the greater costs associated with exchange rate hedging whose positive impact is reflected in the business areas.

In addition, net interest income was hit by higher financial costs due to the issues made.

Costs, on the other hand, were 5% lower, as a result of the streamlining and simplification measures adopted at the Corporate Centre in the second quarter of 2016.

LOGO Corporate Centre. € million


	1Q’17		4Q’16		Var. %		1Q’16		Var. %
Gross income		(341)		(282)		21.0		(223)		52.6
Net operating income		(460)		(381)		20.7		(349)		31.7
Underlying attributable profit to the Group		(468)		(299)		56.5		(311)		50.3
Attributable profit to the Group		(468)		(299)		56.7		(311)		50.3

Detailed financial information on page 53


32		FINANCIAL REPORT 2017

JANUARY - MARCH » Information by global business

RETAIL

BANKING

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Continued transformation of our commercial model into a model that is increasingly Simple, Personal and Fair.

Focus on three main priorities: customer loyalty and satisfaction, digital transformation and operational excellence.

The Group had 15.5 million loyal customers and 22.1 million digital ones at the end of March.

Euromoney chose Santander as the Best Bank in the World for SMEs in 2016.

Commercial activity

The commercial transformation programme is structured around three main elements:

1. Continuously improve the loyalty and satisfaction of our customers. Of note in the first quarter were:

– The 1l2l3 strategy continues at a good pace in most countries, mainly Spain, UK and Mexico (the latter with Santander Plus).

– We continued to launch loyalty products such as the cards programme of American Airlines, AAdvantage in Brazil and Argentina, the Santander Aeroméxico card in Mexico (more than 500,000 units) and the WorldMember Limited card in Chile.

LOGO

2. Drive the digital transformation of our channels, products and services. Of note:

– Supported by various initiatives in all countries, the Group continued to increase the number of digital customers and their contribution to the sale of all products.

– Since January Google Optimize has been part of the alliance Banco Santander has with Google and Tealium. These are key tools to increase sales and enhance the customer experience in their digital channels.


3. Keep on improving the satisfaction and experience of our customers by working on operational excellence, with new processes that are simpler, more efficient and omnichannel. Of note. – Dinero Creciente was relaunched in Mexico, with simpler processes and competitive rates. – In Brazil, we increased our team of commercial managers for SMEs, while promoting packets of products with tailored conditions. – In Chile, we are opening WorkCafé branches, an innovative model, with co-working areas, a coffee shop and financial services. As a result of these initiatives, we are among the Top 3 in customer satisfaction rankings in eight of the countries where the Group operates. Results (in constant euros) Attributable profit amounted to €1,795 million, (+11% year-on-year), driven by net interest income (+5%) and fee income (+12%) coupled with lower loan-loss provisions. Attributable profit was 20% higher than the fourth quarter, with identical qualitative comments by line, together with the recording of non-recurring negative results in the fourth quarter of 2016.

		Detailed financial information on page 54


FINANCIAL REPORT 2017		33

JANUARY - MARCH » Information by global business

GLOBAL CORPORATE BANKING

LOGO

FIRST QUARTER HIGHLIGHTS (changes in constant euros)

Reference positions in cash management, export finance, trade, working capital solutions, corporate loans and structured financing, among others, in Europe and Latin America.

Positive evolution of revenues while maintaining control of costs, leveraged on the strengths of our business model.

Attributable profit of €610 million, 33% higher year-on-year.


Commercial activity and business evolution • Cash Management: winning various regional mandates in Latin America and Europe confirmed the leadership of our Santander Cash Nexus platform. With around 450,000 transactions a month, the regional cash management platform facilitates connectivity of multinationals and comprehensive management of their international payments. • Export Finance: solid leadership position in our core markets – first in the ranking according to specialised media (TXF and Dealogic) for Latin America and Spain and second in the Middle East where the strong activity begun last year is already bearing fruit. • Trade & Working Capital Solutions: the Group has consolidated itself as the reference trade finance bank in our core markets. Significant increase in receivables purchase programmes following the improved offer of products. • Corporate Finance: we led the main operations in Spain, Continental Europe and Latin America. • Capital markets: we maintained our leadership in Latin America. Of note in Europe and the US was the issue of Glencore in dollars and in euros for Credit Agricole HL SFH. • Syndicated corporate loans: Santander continues to play a significant role in the main M&A operations. Of note in the first quarter was leading the $21.2 billion loan to Reckitt Benckiser for the potential acquisition of Mead Johnson in the US and the €4 billion to Safran for the potential purchase of Zodiac. • Structured financing: Santander maintains its leadership in Latin America, Spain and the UK. It was the sole coordinator and underwriting bank in the first quarter for Banks Group, the first hybrid structure executed in the British market. • Markets: positive evolution of revenues from sales with strong growth in Spain. Greater year-on-year contribution in management of books, notably in the UK, Mexico and Chile.

Results (in constant euros) Attributable profit of €610 million, 33% higher year-on-year. Results were underpinned by the strength and diversification of customer revenues (86% of the total). The area accounted in the first quarter for 13% of gross income and 25% of attributable profit of the Group’s operating areas. • Gross income increased due to global markets, thanks to the good performance of Mexico, Chile, UK and, particularly, Spain and of financing solutions & advisory which remained stable despite the large operations in 2016. • Operating expenses were flat and provisions fell particularly in Spain, Portugal and the US. • Profit was 10% higher than in the fourth quarter of 2016.

		Detailed financial information on page 54


34		FINANCIAL REPORT 2017

JANUARY - MARCH » Corporate Governance

» Corporate Governance

Santander has a solid corporate governance, based on a strong culture and values and an adequate control of risks, which ensures that management is aligned with the interests of our shareholders, investors, employees, suppliers, customers and other stakeholders.

LOGO

Institutional information

In order to encourage the informed participation of shareholders at this year’s annual general meeting of shareholders, on the occasion of the meeting’s calling, all proposed agreements, the relevant reports of administrators and other necessary legal documents regarding the meeting, as well as the Group’s 2016 annual report, and the reports of the auditing, appointments, remuneration, risk supervision, regulation and compliance committees, as well as the sustainability report, were published on the Group’s website (www.santander.com),

These reports set out the main activities of the board and its committees in 2016, including detailed information on the rules and procedures on which the Bank’s corporate governance model is based.

Annual general meeting of shareholders

The meeting was held on April 7 and attended (those present and represented) by 641,150 shareholders owning 9,336,283,351 shares, giving a quorum of 64.025% of the Bank’s share capital.

The agreements submitted to a vote were approved on average by 96.561% of favourable votes. The bank’s corporate management during 2016 was approved by 97.735% of votes.

The directors’ remuneration policy for 2017, 2018 and 2019 was submitted to binding approval at the meeting and received 93.828% of votes in favour. This policy covers directors’ remuneration, because of their status as such and for the exercise of their executive functions, for these years, setting out the amount of annual fixed remuneration, as well as the parameters for setting the variable components of the remuneration of executive directors. It also includes the main terms and conditions of the contracts of executive directors.

Investors and analysts positively assessed the continuity that was carried out in 2016 regarding the structure of the variable components of remuneration, as well as implementing the clawback clauses, in accordance with Bank of Spain circular 2/2016 of February 2.

Among the agreements adopted was the re-election of Ana Patricia Botín-Sanz de Sautuola y O’Shea, José Antonio Álvarez Álvarez, Rodrigo Echenique Gordillo, Belén Romana García and Esther Giménez-Salinas i Colomer, the first three as executive directors and the rest as independent directors. The appointment of Ms. Homaira Akbari as an independent director was also submitted to the shareholders’ meeting. Currently, six women serve on the board of directors (40% of the total members).

As a result of these ratification and re-election agreements, for a period of three years, the board has 15 members, four of whom are executive directors and 11 non-executive. Of the latter, eight are independent, one is proprietary and two are neither proprietary nor independent.

Full information on the agreements adopted at the meeting can be found at www.santander.com.


FINANCIAL REPORT 2017		35

JANUARY - MARCH » Corporate Social Responsibility

» Corporate Social Responsibility

Santander is committed to helping people and businesses prosper:

LOGO

Grupo Santander continued to develop new measures within its corporate social responsibility commitment. The main ones in the first quarter were:

Sustainability Report

Santander published its 2016 Sustainability Report. The report, which can be downloaded from the Bank’s website, highlights the achievements in generating value for employees, customers, shareholders and communities.

Santander invested €209 million in community support programmes in 2016, of which €157 million was for higher education and €52 million for programmes in the sphere of children’s education, entrepreneurship, financial education, art and culture.

Sustainability policies

Banco Santander’s board approved the annual updating of the Group’s sustainability policies: the general one, defence, energy, soft commodities, climate change, volunteering and human rights.

The updating included the Bank’s commitment to financial education and to the principles of its consumer protection policy for customers. The climate change policy was revised in order to bring it into line with the ISO14001:2015 rule. It also describes the activity of the working group on social, environmental, reputational, corporate and local risk, and of the Climate Finance Task Force. This policy is now called the Environmental and Climate Change Management Policy.

Environment and climate change

Energy consumption in 2016 was 8% less than in 2015, CO2 emissions were down 7% and paper consumption cut by 24%. Also noteworthy was the financing of renewable energy projects, a sector where the Bank has a leading position globally. Santander participated in 2016 financing 7,082 MW of projects.

Notable initiatives of investment in the community

Santander Río Universities concluded the XII edition of the Premio Jóvenes Emprendedores, which promotes university-based business ideas in order to foster an entrepreneurial culture.

Bank Zachodni WBK launched a financial education portal to help parents and teachers introduce children to the world of finances and entrepreneurship. It is the only portal of its type in Poland and offers comfortable access from intelligent phones and tablets and includes materials for people with sight problems.

Banco Santander obtained the certificate of excellence in employee volunteer management in the excellence plus category. Santander is the first Spanish company to be awarded this certificate, which accords the recognition by Voluntare of the Group’s employee volunteer programme in Spain. Voluntare is an association of the most active companies and non-profit making entities in this sphere.

Lastly, the World Innovation Summit for Education (WISE), a global reference in innovation and cooperation in education, held a meeting at Grupo Santander headquarters in Madrid.


36		FINANCIAL REPORT 2017

JANUARY - MARCH » The Santander share

» The share

Shareholder remuneration

Shareholders received in February the third interim dividend in cash of €0.055 per share charged to 2016’s earnings.

The board approved the payment of a fourth dividend in cash of €0.055 per share to be paid as of May 2, bringing the total shareholder remuneration in 2016 to €0.21 per share.

It is the board’s intention to increase the dividend per share to be charged to 2017 earnings up to €0.22 euros per share, and so it will be proposed at the 2018 AGM.

Share price performance

The markets performed positively in the first quarter against a backdrop of greater optimism stemming from the prospects for deregulation and the expected tax reform in the US, the quarter point rise in interest rates by the Federal Reserve and the improved economic outlook. The Dutch elections, the upcoming ones in France and the rise in oil prices, which pushed up inflation, added volatility to the stock markets, which ended the quarter with increases.

In this context, the Santander share ended March at €5.745, up 15.8% and ahead of the main indexes. The Ibex 35 rose 11.9%, the increases in DJ Stoxx Banks, MSCI World Banks and the DJ Stoxx 50 were 5.1%, 5.6% and 5.0% respectively.

The total shareholder return (share price+dividend) was 17.1%, putting us among the Top 3 among our global peers and ahead of the main indexes.

Capitalisation and trading

Santander was the euro zone’s largest bank by capitalisation at March 31 and the 15^thin the world (€83,776 million). The share’s weighting in the DJ Stoxx 50 was 2.3%, 8.0% in the DJ Stoxx Banks and 15.4% in the Ibex-35.

A total of 5,847 million Santander shares were traded in the first quarter for an effective value of €30.907, the highest figure among the shares that comprise Eurostoxx (liquidity ratio of 40%). The daily trading volume was 89.9 million shares (€475.5 million).

Shareholder base

The total number of Santander shareholders at March 31 was 3,957,838, of which 3,764,053 were European (78.9% of the capital stock) and 177,920 from the Americas (20.4%). Excluding the board of Grupo Santander, which holds 1.2% of the Bank’s capital stock, individuals hold 42.4% and institutional shareholders 56.4%.

LOGO The Santander share. March 2017


Shareholders and trading data
Shareholders (number)			3,957,838
Shares (number)			14,582,340,701
Average daily turnover (no. of shares)			89,947,372
Share liquidity (%) (Number of shares traded during the year / number of shares)			40

Price movements during the year
Highest			5.795
Lowest			4.919
Last (31.03.17)			5.745
Market capitalisation (millions) (31.03.17)			83,776

Stock market indicators
Price / Tangible book value (X)			1.35
P/E ratio (X)			11.74
Yield* (%)			3.97

(*).-2016 total dividend / 1Q’17 average share price

LOGO


FINANCIAL REPORT 2017		37

JANUARY - MARCH » Appendix

LOGO


38		FINANCIAL REPORT 2017

JANUARY - MARCH » Appendix

LOGO Quarterly income statement

€ million


	2016							2017
	1Q	2Q		3Q		4Q		1Q
Net interest income	7,624		7,570		7,798		8,096		8,402
Net fee income	2,397		2,549		2,597		2,637		2,844
Gains (losses) on financial transactions	504		366		440		412		573
Other operating income	204		270		245		142		211
Dividends	44		209		37		124		41
Income from equity-accounted method	83		112		119		130		133
Other operating income/expenses	78		(51)		90		(112)		37
Gross income	10,730		10,755		11,080		11,288		12,029
Operating expenses	(5,158)		(5,227)		(5,250)		(5,453)		(5,543)
General administrative expenses	(4,572)		(4,632)		(4,692)		(4,828)		(4,915)
Personnel	(2,683)		(2,712)		(2,726)		(2,876)		(2,912)
Other general administrative expenses	(1,889)		(1,920)		(1,966)		(1,952)		(2,002)
Depreciation and amortisation	(586)		(595)		(558)		(626)		(629)
Net operating income	5,572		5,528		5,831		5,835		6,486
Net loan-loss provisions	(2,408)		(2,205)		(2,499)		(2,406)		(2,400)
Impairment losses on other assets	(44)		(29)		(16)		(159)		(68)
Other income	(389)		(515)		(376)		(432)		(707)
Underlying profit before taxes	2,732		2,779		2,940		2,838		3,311
Tax on profit	(810)		(915)		(904)		(767)		(1,125)
Underlying profit from continuing operations	1,922		1,864		2,036		2,071		2,186
Net profit from discontinued operations	—		0		(0)		0		—
Underlying consolidated profit	1,922		1,864		2,036		2,072		2,186
Minority interests	288		338		341		305		319
Underlying attributable profit to the Group	1,633		1,526		1,695		1,766		1,867
Net capital gains and provisions*	—		(248)		—		(169)		—
Attributable profit to the Group	1,633		1,278		1,695		1,598		1,867

Underlying EPS (euros)	0.108		0.100		0.112		0.116		0.122
Underlying diluted EPS (euros)	0.107		0.100		0.112		0.116		0.122

EPS (euros)	0.108		0.083		0.112		0.104		0.122
Diluted EPS (euros)	0.107		0.083		0.112		0.104		0.122

(*) Including :

–

In 2Q’16, capital gains from the disposal of the stake in Visa Europe (€227 million) and restructuring costs (-€475 million).

–

In 4Q’16 PPI UK (-€137 million) and restatement Santander Consumer USA (-€32 million).

LOGO Net fee income. Consolidated

€ million


	1Q’17		4Q’16		Var, %		1Q’16		Var, %
Fees from services		1,785		1,636		9.1		1,449		23.2
Mutual & pension funds		196		191		2.6		182		7.7
Securities and custody		270		249		8.5		224		20.5
Insurance		592		561		5.6		542		9.3
Net fee income		2,844		2,637		7.8		2,397		18.6


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LOGO Operating expenses. Consolidated

€ million


	1Q’17		4Q’16		Var. %		1Q’16		Var. %
Personnel expenses		2,912		2,876		1.3		2,683		8.5
General expenses		2,002		1,952		2.6		1,889		6.0
Information technology		317		262		20.9		289		9.7
Communications		131		122		7.5		130		0.8
Advertising		169		205		(17.3)		146		15.6
Buildings and premises		449		400		12.2		437		2.7
Printed and office material		34		43		(21.8)		34		(1.8)
Taxes (other than profit tax)		124		134		(7.4)		119		4.1
Other expenses		779		786		(1.0)		733		6.2
Personnel and general expenses		4,915		4,828		1.8		4,572		7.5
Depreciation and amortisation		629		626		0.5		586		7.3
Total operating expenses		5,543		5,453		1.6		5,158		7.5

LOGO Operating means. Consolidated


		Employees					Branches
	31.03.17	31.03.16		Var.		31.03.17	31.03.16		Var.
Continental Europe	56,910		58,090		(1,180)	4,719		5,487		(768)
o/w: Spain	22,900		24,204		(1,304)	2,881		3,433		(552)
Santander Consumer Finance	14,862		14,675		187	568		584		(16)
Poland	11,909		11,387		522	631		700		(69)
Portugal	6,232		6,579		(347)	627		752		(125)
United Kingdom	25,954		26,084		(130)	845		854		(9)
Latin America	85,919		90,142		(4,223)	5,789		5,848		(59)
o/w: Brazil	46,420		49,604		(3,184)	3,420		3,439		(19)
Mexico	17,580		17,869		(289)	1,389		1,386		3
Chile	11,858		12,468		(610)	416		471		(55)
USA	17,679		18,229		(550)	764		773		(9)
Operating areas	186,462		192,545		(6,083)	12,117		12,962		(845)
Corporate Centre	1,720		1,974		(254)
Total Group	188,182		194,519		(6,337)	12,117		12,962		(845)

LOGO Net loan-loss provisions. Consolidated

€ million


	1Q’17		4Q’16		Var. %		1Q’16		Var. %
Non performing loans		2,873		2,916		(1.4)		2,771		3.7
Country-risk		4		3		34.8		(3)		—
Recovery of written-off assets		(478)		(513)		(6.9)		(360)		32.9
Total		2,400		2,406		(0.3)		2,408		(0.4)


40		FINANCIAL REPORT 2017

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Customer loans. Consolidated
€ million
	31.03.17		31.03.16		Change amount		%		31.12.16
Commercial bills		22,654		16,777		5,876		35.0		23,894
Secured loans		454,881		462,213		(7,332)		(1.6)		454,563
Other term loans		236,224		222,180		14,044		6.3		232,289
Finance leases		25,703		22,755		2,948		13.0		25,357
Receivable on demand		8,017		8,387		(371)		(4.4)		8,102
Credit cards receivable		21,306		19,222		2,084		10.8		21,363
Impaired assets		31,143		35,442		(4,298)		(12.1)		32,687
Gross customer loans (w/o repos)		799,927		786,976		12,952		1.6		798,254
Repos		18,866		12,631		6,234		49.4		16,609
Gross customer loans		818,793		799,607		19,186		2.4		814,863
Loan-loss allowances		23,481		26,155		(2,673)		(10.2)		24,393
Net customer loans		795,312		773,452		21,859		2.8		790,470

Customer funds. Consolidated
€ million
	31.03.17		31.03.16		Change amount		%		31.12.16
Demand deposits		478,629		432,268		46,361		10.7		467,261
Time deposits		176,798		198,480		(21,683)		(10.9)		181,089
Mutual funds		155,772		129,899		25,872		19.9		147,416
Customer deposits w/o repos + Mutual funds		811,198		760,648		50,550		6.6		795,766
Pension funds		11,344		11,103		241		2.2		11,298
Managed portfolios		25,208		24,748		461		1.9		23,793
Subtotal		847,750		796,499		51,252		6.4		830,858
Repos		50,359		39,878		10,481		26.3		42,761
Customer funds		898,110		836,377		61,733		7.4		873,618

Eligible capital (fully loaded)
€ million
	31.03.17		31.03.16		Change amount		%		31.12.16
Capital stock and reserves		105,043		101,763		3,281		3.2		101,437
Attributable profit		1,867		1,633		234		14.3		6,204
Dividends		(688)		(609)		(80)		13.1		(2,469)
Other retained earnings		(15,767)		(17,455)		1,689		(9.7)		(16,116)
Minority interests		7,158		6,190		968		15.6		6,784
Goodwill and intangible assets		(28,591)		(27,590)		(1,001)		3.6		(28,405)
Other deductions		(5,343)		(5,184)		(158)		3.0		(5,368)
Core CET₁		63,680		58,748		4,932		8.4		62,068
Preferred shares and other eligibles T₁		5,745		5,494		251		4.6		5,767
Tier₁		69,424		64,241		5,183		8.1		67,834
Generic funds and eligible T₂ instruments		14,771		11,410		3,361		29.5		13,749
Eligible capital		84,195		75,651		8,544		11.3		81,584
Risk-weighted assets		597,123		571,916		25,207		4.4		588,088

CET₁ capital ratio		10.66		10.27		0.39				10.55
T₁ capital ratio		11.63		11.23		0.40				11.53
Total capital ratio		14.10		13.23		0.87				13.87


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LOGO Continental Europe (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		2,063		0.3		0.1		0.8		0.3
Net fee income		920		9.4		9.2		4.9		4.6
Gains (losses) on financial transactions		297		25.5		25.0		(3.1)		(3.3)
Other operating income		98		—		—		(4.9)		(4.3)
Gross income		3,379		7.5		7.2		1.4		1.0
Operating expenses		(1,685)		1.5		1.3		(2.4)		(2.8)
General administrative expenses		(1,567)		1.4		1.2		(3.0)		(3.3)
Personnel		(813)		2.2		1.9		(1.5)		(1.9)
Other general administrative expenses		(754)		0.7		0.5		(4.5)		(4.9)
Depreciation and amortisation		(118)		2.6		2.2		6.2		5.6
Net operating income		1,694		14.2		13.9		5.4		4.9
Net loan-loss provisions		(262)		(3.4)		(3.6)		(40.0)		(40.1)
Other income		(247)		(3.8)		(4.1)		115.8		115.1
Underlying profit before taxes		1,185		24.0		23.7		12.2		11.6
Tax on profit		(334)		29.4		29.2		18.7		18.1
Underlying profit from continuing operations		851		22.1		21.7		9.8		9.2
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		851		22.1		21.7		9.8		9.2
Minority interests		78		(6.0)		(6.6)		12.5		12.0
Underlying attributable profit to the Group		774		25.8		25.5		9.5		9.0
Net capital gains and provisions		—		—		(100.0)		—		—
Attributable profit to the Group		774		25.8		25.5		9.5		9.0

Balance sheet
Customer loans		298,441		0.4		0.1		3.0		2.8
Cash, central banks and credit institutions		91,471		18.4		18.4		0.6		0.2
Debt securities		78,778		(2.3)		(2.7)		(7.8)		(7.9)
o/w: available for sale		54,197		(0.5)		(1.0)		(3.8)		(4.1)
Other financial assets		37,617		(7.5)		(7.6)		(23.3)		(23.3)
Other assets		24,211		(0.6)		(0.7)		(14.9)		(15.3)
Total assets		530,518		2.0		1.8		(2.4)		(2.6)
Customer deposits		273,480		1.3		0.9		2.5		2.3
Central banks and credit institutions		121,278		15.3		15.4		(4.9)		(5.4)
Debt securities issued		50,929		(4.0)		(4.1)		0.3		0.1
Other financial liabilities		42,788		(12.8)		(12.8)		(21.5)		(21.5)
Other liabilities		8,898		(5.9)		(6.3)		10.3		10.1
Total liabilities		497,373		2.2		2.0		(2.0)		(2.3)
Total equity		33,145		(1.0)		(1.5)		(7.3)		(7.8)

Other managed and marketed customer funds		77,372		5.1		4.9		9.8		9.7
Mutual funds		57,159		5.8		5.6		11.7		11.7
Pension funds		11,344		0.4		0.4		2.2		2.2
Managed portfolios		8,869		6.6		6.8		7.8		7.2

*Pro memoria:*
Loans w/o repos		302,922		0.1		(0.2)		0.8		0.6
Funds (customer deposits w/o repos + mutual funds)		328,747		1.9		1.5		4.1		3.9

Ratios (%) and operating means
RoTE		10.60		2.36				1.59
Efficiency ratio (with amortisations)		49.9		(2.9)				(1.9)
NPL ratio		5.62		(0.30)				(1.46)
NPL coverage		60.6		0.6				(4.8)
Number of employees		56,910		(0.6)				(2.0)
Number of branches		4,719		(1.8)				(14.0)


42		FINANCIAL REPORT 2017

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LOGO Spain (€ million)


Income statement	1Q’17		%/ 4Q’16		%/ 1Q’16
Net interest income		747		(0.0)		(8.9)
Net fee income		459		1.8		8.3
Gains (losses) on financial transactions		230		46.9		2.7
Other operating income		103		—		36.4
Gross income		1,539		16.2		(0.3)
Operating expenses		(798)		(0.5)		(4.6)
General administrative expenses		(752)		(1.9)		(6.1)
Personnel		(399)		(2.1)		(3.7)
Other general administrative expenses		(352)		(1.6)		(8.7)
Depreciation and amortisation		(46)		28.5		29.2
Net operating income		741		41.8		4.9
Net loan-loss provisions		(163)		91.2		(29.4)
Other income		(64)		(33.6)		72.7
Underlying profit before taxes		514		50.9		17.2
Tax on profit		(146)		50.5		16.0
Underlying profit from continuing operations		367		51.1		17.7
Net profit from discontinued operations		—		—		—
Underlying consolidated profit		367		51.1		17.7
Minority interests		6		(5.4)		13.8
Underlying attributable profit to the Group		362		52.4		17.7
Net capital gains and provisions		—		—		—
Attributable profit to the Group		362		52.4		17.7

Balance sheet
Customer loans		153,060		0.1		(1.2)
Cash, central banks and credit institutions		64,609		19.2		1.0
Debt securities		57,207		(1.5)		(7.5)
o/w: available for sale		39,551		2.1		(1.2)
Other financial assets		34,822		(7.7)		(24.6)
Other assets		8,889		(6.2)		11.5
Total assets		318,588		2.0		(4.8)
Customer deposits		178,633		1.0		1.5
Central banks and credit institutions		66,905		28.5		(3.6)
Debt securities issued		17,702		(15.2)		(23.4)
Other financial liabilities		40,838		(13.0)		(22.5)
Other liabilities		3,457		(17.4)		48.0
Total liabilities		307,535		2.2		(5.0)
Total equity		11,054		(3.9)		(1.2)

Other managed and marketed customer funds		70,076		5.1		10.8
Mutual funds		70,076		5.1		10.8
Pension funds		62,572		4.8		10.5
Managed portfolios		52,176		5.7		12.3

*Pro memoria:*
Loans w/o repos		150,703		(0.2)		(3.5)
Funds (customer deposits w/o repos + mutual funds)		228,917		1.8		3.9

Ratios (%) and operating means
RoTE		12.67		4.45		2.12
Efficiency ratio (with amortisations)		51.8		(8.7)		(2.4)
NPL ratio		5.22		(0.19)		(1.14)
NPL coverage		49.1		0.8		(1.1)
Number of employees		22,900		(0.5)		(5.4)
Number of branches		2,881		(1.0)		(16.1)


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LOGO Santander Consumer Finance (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		889		2.5		2.3		9.7		8.4
Net fee income		232		25.6		25.6		0.6		0.2
Gains (losses) on financial transactions		(2)		(4.5)		(6.0)		56.0		75.8
Other operating income		(1)		—		—		—		—
Gross income		1,118		5.5		5.3		7.0		5.9
Operating expenses		(502)		3.3		3.1		3.9		3.0
General administrative expenses		(458)		4.8		4.7		5.3		4.4
Personnel		(210)		1.9		1.7		4.3		3.3
Other general administrative expenses		(248)		7.5		7.4		6.3		5.4
Depreciation and amortisation		(44)		(10.6)		(10.9)		(8.7)		(9.6)
Net operating income		616		7.4		7.2		9.6		8.4
Net loan-loss provisions		(61)		(29.7)		(30.0)		(46.6)		(47.3)
Other income		(37)		(29.0)		(29.1)		(3.3)		(3.5)
Underlying profit before taxes		518		19.2		19.0		26.5		25.0
Tax on profit		(148)		28.5		28.4		26.6		25.2
Underlying profit from continuing operations		370		15.9		15.6		26.4		24.9
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		370		15.9		15.6		26.4		24.9
Minority interests		56		12.0		11.9		34.4		34.2
Underlying attributable profit to the Group		314		16.6		16.3		25.1		23.4
Net capital gains and provisions		—		—		(100.0)		—		—
Attributable profit to the Group		314		16.6		16.3		25.1		23.4

Balance sheet
Customer loans		84,523		(0.8)		(0.8)		10.9		10.4
Cash, central banks and credit institutions		6,543		(8.4)		(8.3)		11.4		10.7
Debt securities		3,780		(3.7)		(4.2)		5.2		4.4
o/w: available for sale		3,778		(1.2)		(1.7)		5.2		4.4
Other financial assets		33		(14.3)		(14.1)		(51.2)		(51.9)
Other assets		3,426		2.8		2.6		(1.4)		(1.7)
Total assets		98,305		(1.3)		(1.4)		10.1		9.7
Customer deposits		35,679		1.8		1.7		7.5		7.1
Central banks and credit institutions		20,511		(12.2)		(12.2)		(0.9)		(1.4)
Debt securities issued		28,991		3.9		3.9		29.2		28.6
Other financial liabilities		828		(4.9)		(5.0)		37.6		37.3
Other liabilities		3,395		3.5		3.4		7.4		7.1
Total liabilities		89,403		(1.2)		(1.2)		11.6		11.1
Total equity		8,902		(2.8)		(2.9)		(2.7)		(3.1)

Other managed and marketed customer funds		7		(2.0)		(2.0)		1.6		1.6
Mutual funds		2		(12.6)		(12.6)		(10.0)		(10.0)
Pension funds		6		1.3		1.3		5.2		5.2
Managed portfolios		—		—		—		—		—

*Pro memoria:*
Loans w/o repos		87,006		(0.8)		(0.9)		9.9		9.5
Funds (customer deposits w/o repos + mutual funds)		35,680		1.8		1.7		7.5		7.1

Ratios (%) and operating means
RoTE		17.10		2.56				4.26
Efficiency ratio (with amortisations)		44.9		(1.0)				(1.3)
NPL ratio		2.62		(0.06)				(0.66)
NPL coverage		108.9		(0.2)				(3.0)
Number of employees		14,862		(0.4)				1.3
Number of branches		568		0.2				(2.7)


44		FINANCIAL REPORT 2017

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LOGO Poland (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		218		(1.9)		(3.2)		10.6		9.5
Net fee income		101		(0.3)		(1.6)		5.1		4.1
Gains (losses) on financial transactions		16		8.9		7.2		(37.4)		(38.0)
Other operating income		(13)		60.7		59.3		105.5		103.5
Gross income		321		(2.5)		(3.8)		3.2		2.2
Operating expenses		(146)		4.8		3.4		0.6		(0.3)
General administrative expenses		(132)		6.4		5.0		0.7		(0.3)
Personnel		(77)		1.4		0.0		3.8		2.8
Other general administrative expenses		(55)		14.3		12.7		(3.4)		(4.3)
Depreciation and amortisation		(14)		(8.3)		(9.5)		0.2		(0.8)
Net operating income		175		(7.8)		(9.0)		5.4		4.3
Net loan-loss provisions		(27)		(23.0)		(24.1)		(18.6)		(19.4)
Other income		(23)		(8.6)		(9.7)		4.5		3.5
Underlying profit before taxes		125		(3.6)		(4.9)		12.7		11.6
Tax on profit		(39)		1.0		(0.2)		69.8		68.2
Underlying profit from continuing operations		86		(5.5)		(6.8)		(2.1)		(3.1)
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		86		(5.5)		(6.8)		(2.1)		(3.1)
Minority interests		27		(4.2)		(5.5)		12.9		11.8
Underlying attributable profit to the Group		59		(6.1)		(7.4)		(7.6)		(8.5)
Net capital gains and provisions		—		—		(100.0)		—		—
Attributable profit to the Group		59		(6.1)		(7.4)		(7.6)		(8.5)

Balance sheet
Customer loans		21,174		6.0		1.6		7.9		7.2
Cash, central banks and credit institutions		1,860		(7.9)		(11.8)		46.7		45.7
Debt securities		5,824		(7.6)		(11.4)		(3.1)		(3.8)
o/w: available for sale		5,390		(6.7)		(10.6)		2.7		2.0
Other financial assets		564		5.1		0.8		(17.0)		(17.6)
Other assets		953		1.2		(3.0)		(2.3)		(3.0)
Total assets		30,375		2.0		(2.3)		6.4		5.6
Customer deposits		22,981		0.9		(3.3)		7.7		7.0
Central banks and credit institutions		778		(5.6)		(9.5)		16.2		15.3
Debt securities issued		608		20.5		15.5		11.1		10.3
Other financial liabilities		538		5.2		0.9		(10.6)		(11.2)
Other liabilities		878		(4.3)		(8.3)		(4.0)		(4.7)
Total liabilities		25,781		1.0		(3.2)		7.1		6.4
Total equity		4,594		8.3		3.8		2.4		1.6

Other managed and marketed customer funds		3,482		8.7		4.2		7.2		6.4
Mutual funds		3,398		9.0		4.2		7.6		6.4
Pension funds		—		—		4.4		—		6.8
Managed portfolios		84		(0.0)		4.4		(8.1)		6.8

*Pro memoria:*
Loans w/o repos		21,903		5.8		1.4		7.0		6.2
Funds (customer deposits w/o repos + mutual funds)		26,379		1.9		(2.4)		7.7		6.9

Ratios (%) and operating means
RoTE		9.68		(1.07)				(1.04)
Efficiency ratio (with amortisations)		45.5		3.2				(1.1)
NPL ratio		5.20		(0.22)				(0.73)
NPL coverage		61.2		0.2				(5.8)
Number of employees		11,909		(0.8)				4.6
Number of branches		631		(4.1)				(9.9)


FINANCIAL REPORT 2017		45

JANUARY - MARCH » Appendix

LOGO Portugal (€ million)



Income statement	1Q’17		% / 4Q’16		% / 1Q’16
Net interest income		172		(5.7)		(6.1)
Net fee income		89		29.2		(1.2)
Gains (losses) on financial transactions		34		(12.2)		(36.3)
Other operating income		(1)		—		—
Gross income		294		(3.5)		(12.9)
Operating expenses		(139)		(3.4)		(9.9)
General administrative expenses		(129)		(3.4)		(11.0)
Personnel		(83)		(0.5)		(5.1)
Other general administrative expenses		(46)		(8.1)		(19.9)
Depreciation and amortisation		(10)		(3.5)		6.6
Net operating income		155		(3.5)		(15.3)
Net loan-loss provisions		10		—		—
Other income		(14)		171.7		525.9
Underlying profit before taxes		151		3.2		(4.7)
Tax on profit		(25)		(37.5)		(32.5)
Underlying profit from continuing operations		126		18.4		3.7
Net profit from discontinued operations		—		—		—
Underlying consolidated profit		126		18.4		3.7
Minority interests		1		(0.2)		(23.4)
Underlying attributable profit to the Group		125		18.4		3.8
Net capital gains and provisions		—		—		—
Attributable profit to the Group		125		18.4		3.8

Balance sheet
Customer loans		27,215		(0.4)		(1.6)
Cash, central banks and credit institutions		3,544		44.1		(15.6)
Debt securities		10,786		(7.2)		(9.5)
o/w: available for sale		4,538		(20.1)		(25.1)
Other financial assets		1,612		(3.3)		(14.5)
Other assets		1,945		11.5		(2.4)
Total assets		45,102		0.6		(5.3)
Customer deposits		29,784		(0.7)		2.2
Central banks and credit Institutions		7,256		7.6		(24.7)
Debt securities issued		3,628		(4.6)		(22.8)
Other financial liabilities		325		(7.0)		(9.8)
Other liabilities		704		19.3		(18.6)
Total liabilities		41,697		0.5		(6.7)
Total equity		3,405		2.2		16.1

Other managed and marketed customer funds		2,886		4.2		5.1
Mutual funds		1,513		5.4		4.8
Pension funds		942		1.0		4.4
Managed portfolios		431		7.2		7.9

*Pro memoria:*
Loans w/o repos		28,770		(0.9)		(4.2)
Funds (customer deposits w/o repos + mutual funds)		31,297		(0.4)		2.3

Ratios (%) and operating means
RoTE		15.30		2.48		(1.90)
Efficiency ratio (with amortisations)		47.2		0.0		1.5
NPL ratio		8.47		(0.34)		(0.08)
NPL coverage		61.7		(2.0)		(26.0)
Number of employees		6,232		(1.2)		(5.3)
Number of branches		627		(4.6)		(16.6)


46		FINANCIAL REPORT 2017

JANUARY - MARCH » Appendix

LOGO United Kingdom (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		1,096		2.2		1.5		(5.1)		6.0
Net fee income		254		7.9		6.5		(9.5)		1.1
Gains (losses) on financial transactions		71		(22.3)		(22.0)		4.7		16.9
Other operating income		12		(56.8)		(55.7)		5.6		17.9
Gross income		1,432		0.5		(0.2)		(5.4)		5.6
Operating expenses		(723)		5.9		4.7		(8.8)		1.8
General administrative expenses		(644)		6.7		5.4		(10.3)		0.2
Personnel		(344)		0.4		(0.4)		(7.3)		3.5
Other general administrative expenses		(300)		15.0		12.8		(13.5)		(3.4)
Depreciation and amortisation		(79)		0.0		(0.3)		4.6		16.8
Net operating income		709		(4.5)		(4.7)		(1.5)		9.9
Net loan-loss provisions		(15)		—		—		134.8		162.1
Other income		(105)		(15.1)		(13.5)		78.4		99.1
Underlying profit before taxes		588		(13.4)		(13.2)		(10.1)		0.4
Tax on profit		(165)		(15.9)		(16.0)		(14.0)		(4.0)
Underlying profit from continuing operations		423		(12.3)		(12.1)		(8.4)		2.2
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		423		(12.3)		(12.1)		(8.4)		2.2
Minority interests		7		(19.2)		(19.8)		(25.7)		(17.0)
Underlying attributable profit to the Group		416		(12.2)		(11.9)		(8.1)		2.6
Net capital gains and provisions*		—		(100.0)		(100.0)		—		—
Attributable profit to the Group		416		23.3		20.7		(8.1)		2.6

(*).- In 4Q’16, PPI (-€137 million)

Balance sheet
Customer loans		253,322		0.8		0.7		(5.3)		2.3
Cash, central banks and credit institutions		34,186		(6.7)		(6.8)		(9.0)		(1.6)
Debt securities		27,859		(0.7)		(0.7)		38.8		50.0
o/w: available for sale		11,595		(5.0)		(5.1)		(0.3)		7.7
Other financial assets		25,582		(4.6)		(4.7)		(10.8)		(3.6)
Other assets		11,551		(5.3)		(5.4)		8.8		17.6
Total assets		352,499		(0.7)		(0.8)		(3.3)		4.5
Customer deposits		215,724		1.7		1.6		(0.7)		7.3
Central banks and credit institutions		21,971		1.8		1.7		44.5		56.1
Debt securities issued		66,375		(6.7)		(6.7)		(13.4)		(6.4)
Other financial liabilities		26,895		(3.6)		(3.7)		(10.5)		(3.2)
Other liabilities		5,230		0.2		0.1		(14.8)		(8.0)
Total liabilities		336,196		(0.5)		(0.6)		(2.6)		5.2
Total equity		16,303		(4.2)		(4.3)		(15.4)		(8.5)

Other managed and marketed customer funds		8,683		1.4		1.3		(1.2)		6.8
Mutual funds		8,566		1.4		1.3		(1.1)		6.9
Pension funds		—		—		—		—		—
Managed portfolios		117		(0.2)		(0.3)		(5.1)		2.5

*Pro memoria:*
Loans w/o repos		242,581		0.0		(0.0)		(7.3)		0.2
Funds (customer deposits w/o repos + mutual funds)		213,052		1.2		1.1		(1.5)		6.5

Ratios (%) and operating means
RoTE		11.27		(0,38)				1.12
Efficiency ratio (with amortisations)		50.5		2.6				(1.9)
NPL ratio		1.31		(0.10)				(0.18)
NPL coverage		33.8		0.9				(2.7)
Number of employees		25,954		1.0				(0.5)
Number of branches		845		0.1				(1.1)


FINANCIAL REPORT 2017		47

JANUARY - MARCH » Appendix

LOGO Latin America (€ million)


			/ 4Q’16		/ 1Q’16
Income statement	1Q’17		%	% w/o FX	%	% w/o FX
Net interest income		3,947	6.5	2.2	29.7		11.1
Net fee income		1,401	6.4	1.3	45.8		25.4
Gains (losses) on financial transactions		329	124.1	137.5	132.6		129.3
Other operating income		3	(88.4)	(90.8)	—		—
Gross income		5,680	9.4	4.9	37.2		18.0
Operating expenses		(2,179)	1.4	(2.9)	25.5		8.8
General administrative expenses		(1,973)	0.7	(3.6)	24.5		8.0
Personnel		(1,092)	0.3	(4.1)	25.7		8.8
Other general administrative expenses		(882)	1.1	(3.1)	23.1		7.1
Depreciation and amortisation		(205)	9.5	4.9	35.7		16.5
Net operating income		3,501	15.0	10.4	45.7		24.6
Net loan-loss provisions		(1,306)	(1.7)	(6.1)	18.2		(0.0)
Other income		(360)	45.8	37.4	90.5		50.6
Underlying profit before taxes		1,835	24.9	21.0	65.3		45.2
Tax on profit		(590)	76.7	74.1	119.4		92.3
Underlying profit from continuing operations		1,245	9.6	5.7	48.0		30.1
Net profit from discontinued operations		—	—	—	—		—
Underlying consolidated profit		1,245	9.6	5.7	48.0		30.1
Minority interests		195	12.6	8.9	41.6		28.8
Underlying attributable profit to the Group		1,050	9.1	5.1	49.3		30.3
Net capital gains and provisions		—	—	—	—		—
Attributable profit to the Group		1,050	9.1	5.1	49.3		30.3

Balance sheet
Customer loans		156,743	3.0	0.7	18.9		6.2
Cash, central banks and credit institutions		68,922	2.3	(0.5)	28.2		12.3
Debt securities		64,130	1.3	(1.6)	13.4		0.3
o/w: available for sale		30,460	4.2	1.3	14.2		0.5
Other financial assets		18,202	(2.6)	(6.6)	35.2		25.9
Other assets		19,666	2.6	0.3	14.3		(1.4)
Total assets		327,664	2.1	(0.5)	20.1		6.6
Customer deposits		153,207	6.6	3.9	22.2		9.0
Central banks and credit institutions		47,793	0.4	(2.4)	14.1		1.8
Debt securities issued		45,108	(4.9)	(6.7)	14.7		(0.9)
Other financial liabilities		39,120	(5.5)	(8.8)	25.3		13.7
Other liabilities		11,564	2.4	(0.2)	26.6		10.1
Total liabilities		296,792	1.8	(0.8)	20.2		6.7
Total equity		30,872	5.3	2.9	19.0		5.6

Other managed and marketed customer funds		87,794	7.7	5.4	28.7		11.0
Mutual funds		81,009	8.0	5.6	28.0		10.4
Pension funds		—	—	—	—		—
Managed portfolios		6,785	4.7	3.9	38.0		19.0

*Pro memoria:*
Loans w/o repos		163,536	2.8	0.4	19.8		6.8
Funds (customer deposits w/o repos + mutual funds)		197,257	5.2	2.6	22.6		9.0

Ratios (%) and operating means
RoTE		17.40	1.13		3.09
Efficiency ratio (with amortisations)		38.4	(3.0)		(3.6)
NPL ratio		4.50	(0.31)		(0.38)
NPL coverage		90.5	3.2		10.8
Number of employees		85,919	(0.5)		(4.7)
Number of branches		5,789	(0.5)		(1.0)


48		FINANCIAL REPORT 2017

JANUARY - MARCH » Appendix

LOGO Brazil (€ million)


			/ 4Q’16			/ 1Q’16
Income statement	1Q’17		%	% w/o FX		%	% w/o FX
Net interest income		2,522	11.1		4.3	40.7		9.6
Net fee income		934	5.3		(1.9)	63.0		27.0
Gains (losses) on financial transactions		247	—		—	—		—
Other operating income		15	(66.6)		(70.2)	18.9		(7.4)
Gross income		3,717	16.6		9.5	56.1		21.6
Operating expenses		(1,314)	0.7		(5.9)	38.8		8.1
General administrative expenses		(1,182)	(0.4)		(6.9)	38.0		7.5
Personnel		(665)	0.3		(6.3)	40.7		9.6
Other general administrative expenses		(517)	(1.2)		(7.6)	34.6		4.8
Depreciation and amortisation		(132)	11.2		4.6	46.5		14.1
Net operating income		2,403	27.7		20.1	67.6		30.5
Net loan-loss provisions		(910)	(4.5)		(10.4)	26.4		(1.6)
Other income		(358)	85.8		74.7	102.0		57.3
Underlying profit before taxes		1,135	54.1		45.5	111.6		64.8
Tax on profit		(422)	161.5		154.6	208.0		139.9
Underlying profit from continuing operations		713	24.0		16.1	78.6		39.1
Net profit from discontinued operations		—	—		—	—		—
Underlying consolidated profit		713	24.0		16.1	78.6		39.1
Minority interests		79	21.7		13.3	94.1		51.2
Underlying attributable profit to the Group		634	24.3		16.5	76.8		37.7
Net capital gains and provisions		—	—		—	—		—
Attributable profit to the Group		634	24.3		16.5	76.8		37.7

Balance sheet
Customer loans		76,522	1.4		(0.1)	26.5		3.9
Cash, central banks and credit institutions		40,441	(2.2)		(3.6)	28.6		5.6
Debt securities		42,078	(1.0)		(2.5)	24.3		2.1
o/w: available for sale		18,401	13.1		11.4	16.7		(4.2)
Other financial assets		9,106	7.3		5.7	111.4		73.5
Other assets		13,603	(0.5)		(2.0)	13.0		(7.3)
Total assets		181,749	0.1		(1.3)	27.9		5.0
Customer deposits		75,858	4.7		3.1	27.0		4.2
Central banks and credit institutions		25,841	(5.1)		(6.5)	20.3		(1.2)
Debt securities issued		29,075	(8.2)		(9.6)	9.8		(9.8)
Other financial liabilities		24,921	(0.2)		(1.7)	68.6		38.4
Other liabilities		7,836	3.6		2.1	32.2		8.5
Total liabilities		163,530	(0.2)		(1.7)	27.4		4.6
Total equity		18,218	3.6		2.1	32.7		9.0

Other managed and marketed customer funds		63,852	7.1		5.5	31.3		7.8
Mutual funds		59,638	7.0		5.4	30.5		7.2
Pension funds		—	—		—	—		—
Managed portfolios		4,214	8.1		6.5	43.7		18.0

*Pro memoria:*
Loans w/o repos		81,184	1.1		(0.4)	27.1		4.3
Funds (customer deposits w/o repos + mutual funds)		104,309	4.5		3.0	29.8		6.5

Ratios (%) and operating means
RoTE		16.52	2.59			3.01
Efficiency ratio (with amortisations)		35.4	(5.6)			(4.4)
NPL ratio		5.36	(0.54)			(0.57)
NPL coverage		98.1	5.0			14.4
Number of employees		46,420	(0.7)			(6.4)
Number of branches		3,420	(0.3)			(0.6)


FINANCIAL REPORT 2017		49

JANUARY - MARCH » Appendix

LOGO Mexico (€ million)


			/ 4Q’16			/ 1Q’16
Income statement	1Q’17		%	% w/o FX		%	% w/o FX
Net interest income		624	1.5		2.8	5.1		14.0
Net fee income		180	0.4		1.6	3.9		12.7
Gains (losses) on financial transactions		33	(37.8)		(36.3)	(2.6)		5.7
Other operating income		(13)	(31.2)		(29.1)	41.6		53.7
Gross income		824	(0.5)		0.8	4.0		12.9
Operating expenses		(319)	(1.6)		(0.4)	(0.8)		7.7
General administrative expenses		(291)	(3.1)		(1.9)	(0.7)		7.8
Personnel		(150)	(4.1)		(2.9)	(1.7)		6.7
Other general administrative expenses		(141)	(2.1)		(0.9)	0.4		9.0
Depreciation and amortisation		(29)	17.2		18.1	(2.0)		6.3
Net operating income		505	0.2		1.5	7.3		16.5
Net loan-loss provisions		(233)	14.9		16.0	5.4		14.4
Other income		(4)	(44.9)		(44.3)	(32.9)		(27.1)
Underlying profit before taxes		267	(8.8)		(7.4)	10.1		19.6
Tax on profit		(56)	(25.2)		(23.8)	2.2		10.9
Underlying profit from continuing operations		211	(3.1)		(1.7)	12.5		22.1
Net profit from discontinued operations		—	—		—	—		—
Underlying consolidated profit		211	(3.1)		(1.7)	12.5		22.1
Minority interests		47	(2.6)		(1.4)	6.6		15.7
Underlying attributable profit to the Group		163	(3.2)		(1.8)	14.3		24.1
Net capital gains and provisions		—	—		—	—		—
Attributable profit to the Group		163	(3.2)		(1.8)	14.3		24.1

Balance sheet
Customer loans		29,316	7.3		(1.3)	2.1		4.4
Cash, central banks and credit institutions		14,760	10.5		1.6	35.6		38.6
Debt securities		16,200	14.7		5.5	(4.4)		(2.3)
o/w: available for sale		6,978	(1.6)		(9.5)	24.0		26.7
Other financial assets		6,575	(14.8)		(21.7)	1.1		3.3
Other assets		2,958	14.2		5.0	13.6		16.1
Total assets		69,809	7.2		(1.4)	6.4		8.7
Customer deposits		33,971	17.5		8.0	20.4		23.0
Central banks and credit institutions		13,283	17.9		8.4	15.3		17.9
Debt securities issued		5,429	0.7		(7.4)	(0.4)		1.8
Other financial liabilities		9,785	(22.6)		(28.9)	(22.4)		(20.7)
Other liabilities		1,842	(9.5)		(16.8)	8.5		10.9
Total liabilities		64,311	6.7		(1.9)	8.1		10.5
Total equity		5,498	13.2		4.1	(10.6)		(8.7)

Other managed and marketed customer funds		10,905	6.5		(2.1)	(6.2)		(4.2)
Mutual funds		10,905	6.5		(2.1)	(6.2)		(4.2)
Pension funds		—	—		—	—		—
Managed portfolios		—	—		—	—		—

*Pro memoria:*
Loans w/o repos		29,996	7.1		(1.6)	4.3		6.6
Funds (customer deposits w/o repos + mutual funds)		39,155	7.5		(1.2)	5.1		7.4

Ratios (%) and operating means
RoTE		18.75	1.30			5.81
Efficiency ratio (with amortisations)		38.8	(0.4)			(1.9)
NPL ratio		2.77	0.01			(0.29)
NPL coverage		104.8	1.0			7.3
Number of employees		17,580	(0.2)			(1.6)
Number of branches		1,389	—			0.2


50		FINANCIAL REPORT 2017

JANUARY - MARCH » Appendix

LOGO Chile (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		485		(7.0)		(9.9)		15.1		4.0
Net fee income		107		17.0		13.9		22.3		10.5
Gains (losses) on financial transactions		49		(22.4)		(25.1)		1.4		(8.4)
Other operating income		4		—		—		—		—
Gross income		645		(4.1)		(6.9)		16.0		4.8
Operating expenses		(264)		(0.6)		(3.5)		12.2		1.3
General administrative expenses		(238)		(0.1)		(2.9)		10.4		(0.3)
Personnel		(140)		(5.4)		(8.0)		9.7		(0.9)
Other general administrative expenses		(98)		8.6		5.6		11.3		0.5
Depreciation and amortisation		(26)		(5.3)		(8.5)		32.4		19.6
Net operating income		381		(6.3)		(9.2)		18.7		7.3
Net loan-loss provisions		(122)		(7.0)		(9.4)		11.7		0.9
Other income		2		—		—		41.9		28.2
Underlying profit before taxes		261		8.5		5.4		22.5		10.7
Tax on profit		(47)		2.3		(1.0)		17.7		6.3
Underlying profit from continuing operations		214		9.9		6.9		23.6		11.7
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		214		9.9		6.9		23.6		11.7
Minority interests		67		15.2		12.1		29.6		17.1
Underlying attributable profit to the Group		147		7.7		4.6		21.1		9.4
Net capital gains and provisions		—		—		—		—		—
Attributable profit to the Group		147		7.7		4.6		21.1		9.4

Balance sheet
Customer loans		38,137		1.3		1.7		14.4		6.5
Cash, central banks and credit institutions		5,755		(3.4)		(3.0)		8.6		1.1
Debt securities		4,494		(16.0)		(15.6)		20.8		12.5
o/w: available for sale		3,951		(17.5)		(17.1)		12.3		4.6
Other financial assets		2,501		1.1		1.5		(4.5)		(11.1)
Other assets		2,067		0.1		0.5		8.9		1.4
Total assets		52,954		(1.0)		(0.6)		12.9		5.1
Customer deposits		26,340		(3.6)		(3.2)		6.7		(0.6)
Central banks and credit institutions		6,678		(6.9)		(6.5)		6.2		(1.1)
Debt securities issued		10,258		0.8		1.2		40.9		31.2
Other financial liabilities		3,384		21.1		21.6		11.6		3.9
Other liabilities		1,218		(0.6)		(0.2)		5.1		(2.2)
Total liabilities		47,877		(1.7)		(1.3)		12.8		5.0
Total equity		5,077		5.3		5.7		14.1		6.2

Other managed and marketed customer funds		10,545		6.5		6.9		49.3		39.0
Mutual funds		7,974		8.9		9.3		57.0		46.2
Pension funds		—		—		—		—		—
Managed portfolios		2,571		(0.4)		(0.0)		29.6		20.6

*Pro memoria:*
Loans w/o repos		39,259		1.2		1.6		14.4		6.5
Funds (customer deposits w/o repos + mutual funds)		34,262		(0.9)		(0.5)		15.4		7.4

Ratios (%) and operating means
RoTE		17.07		(0.13)				0.63
Efficiency ratio (with amortisations)		40.9		1.4				(1.4)
NPL ratio		4.93		(0.12)				(0.52)
NPL coverage		58.9		(0.2)				4.3
Number of employees		11,858		(1.2)				(4.9)
Number of branches		416		(4.4)				(11.7)


FINANCIAL REPORT 2017		51

JANUARY - MARCH » Appendix

LOGO United States (€ million)


			/ 4Q’16				/ 1Q’16
Income statement	1Q’17		%		% w/o FX		%		% w/o FX
Net interest income		1,489		2.7		1.6		(3.8)		(7.0)
Net fee income		273		6.1		5.2		(3.5)		(6.8)
Gains (losses) on financial transactions		(5)		(65.8)		(67.8)		—		—
Other operating income		122		4.6		3.7		5.3		1.7
Gross income		1,879		3.9		2.9		(4.5)		(7.7)
Operating expenses		(837)		(3.1)		(4.4)		7.8		4.1
General administrative expenses		(757)		(2.6)		(3.9)		7.7		4.1
Personnel		(445)		7.4		6.1		7.0		3.4
Other general administrative expenses		(312)		(13.9)		(15.3)		8.7		5.0
Depreciation and amortisation		(80)		(7.3)		(8.7)		8.2		4.6
Net operating income		1,042		10.2		9.5		(12.5)		(15.4)
Net loan-loss provisions		(811)		(6.5)		(7.7)		(5.9)		(9.1)
Other income		(32)		301.2		324.4		(50.7)		(52.4)
Underlying profit before taxes		199		179.9		206.3		(24.5)		(27.1)
Tax on profit		(61)		266.3		329.2		(40.6)		(42.6)
Underlying profit from continuing operations		138		153.3		171.5		(14.2)		(17.1)
Net profit from discontinued operations		—		—		—		—		—
Underlying consolidated profit		138		153.3		171.5		(14.2)		(17.1)
Minority interests		43		5.4		7.2		(45.8)		(47.6)
Underlying attributable profit to the Group		95		585.4		772.3		16.3		12.4
Net capital gains and provisions*		—		(100.0)		(100.0)		—		—
Attributable profit to the Group		95		—		—		16.3		12.4

(*).- In 4Q’16, restatement Santander Consumer USA (-€32 million).

Balance sheet
Customer loans		81,841		(4.2)		(2.8)		1.2		(4.9)
Cash, central banks and credit institutions		20,457		20.5		22.3		(1.6)		(7.6)
Debt securities		19,059		6.2		7.8		(0.3)		(6.3)
o/w: available for sale		16,704		8.2		9.7		(3.9)		(9.8)
Other financial assets		3,041		(14.7)		(13.5)		(2.0)		(7.9)
Other assets		13,269		(1.9)		(0.5)		10.2		3.5
Total assets		137,669		0.2		1.6		1.3		(4.9)
Customer deposits		63,101		(2.1)		(0.7)		6.0		(0.5)
Central banks and credit institutions		22,240		(0.1)		1.3		(30.6)		(34.8)
Debt securities issued		28,241		7.2		8.7		26.0		18.3
Other financial liabilities		3,032		4.3		5.8		16.0		9.0
Other liabilities		4,493		(5.8)		(4.5)		4.8		(1.6)
Total liabilities		121,108		0.3		1.7		0.2		(5.9)
Total equity		16,561		(0.5)		0.9		10.5		3.7

Other managed and marketed customer funds		18,423		(2.1)		(0.8)		0.7		(5.4)
Mutual funds		8,986		(9.7)		(8.4)		31.9		23.9
Pension funds		—		—		—		—		—
Managed portfolios		9,437		6.3		7.8		(17.8)		(22.8)

*Pro memoria:*
Loans w/o repos		85,906		(4.2)		(2.8)		1.2		(5.0)
Funds (customer deposits w/o repos + mutual funds)		71,818		(3.2)		(1.8)		8.8		2.2

Ratios (%) and operating means
RoTE		2.81		2.74				0.11
Efficiency ratio (with amortisations)		44.6		(3.2)				5.1
NPL ratio		2.43		0.15				0.24
NPL coverage		202.4		(12.0)				(18.7)
Number of employees		17,679		1.0				(3.0)
Number of branches		764		(0.5)				(1.2)


52		FINANCIAL REPORT 2017

JANUARY - MARCH » Appendix

LOGO Corporate Centre (€ million)


Income statement	1Q’17		4Q’16		%		1Q’16		%
Net interest income		(194)		(189)		2.5		(169)		15.1
Net fee income		(4)		(14)		(68.8)		(5)		(2.2)
Gains (losses) on financial transactions		(119)		(47)		153.1		(32)		270.1
Other operating income		(23)		(31)		(24.9)		(18)		29.1
Gross income		(341)		(282)		21.0		(223)		52.6
Operating expenses		(119)		(99)		20.1		(126)		(5.2)
Net operating income		(460)		(381)		20.7		(349)		31.7
Net loan-loss provisions		(5)		0		—		1		—
Other income		(32)		44		—		(5)		525.3
Underlying profit before taxes		(497)		(337)		47.3		(353)		40.7
Tax on profit		26		39		(31.8)		36		(26.6)
Underlying profit from continuing operations		(471)		(299)		57.5		(317)		48.3
Net profit from discontinued operations		—		0		(100.0)		—		—
Underlying consolidated profit		(471)		(298)		57.8		(317)		48.3
Minority interests		(3)		0		—		(6)		(54.2)
Underlying attributable profit to the Group		(468)		(299)		56.5		(311)		50.3
Net capital gains and provisions		—		—		—		—		—
Attributable profit to the Group		(468)		(299)		56.7		(311)		50.3

Balance sheet
Debt securities		781		1,374		(43.1)		3,178		(75.4)
Goodwill		26,939		26,724		0.8		26,209		2.8
Capital assigned to Group areas		83,902		78,537		6.8		82,637		1.5
Other financial assets		10,661		9,872		8.0		9,470		12.6
Other assets		15,115		15,648		(3.4)		14,761		2.4
Total assets		137,398		132,154		4.0		136,255		0.8
Debt securities issued		30,740		30,922		(0.6)		32,459		(5.3)
Other financial liabilities		2,469		4,042		(38.9)		4,903		(49.6)
Other liabilities		12,299		12,422		(1.0)		13,410		(8.3)
Total liabilities		45,507		47,387		(4.0)		50,772		(10.4)
Total equity		91,891		84,768		8.4		85,483		7.5

Other managed and marketed customer funds		52		—		—		—		—
Mutual funds		52		—		—		—		—
Pension funds		—		—		—		—		—
Managed portfolios		—		—		—		—		—

Resources
Number of employees		1,720		1,724		(0.2)		1,974		(12.9)


FINANCIAL REPORT 2017		53

JANUARY - MARCH » Appendix

LOGO Retail Banking (€ million)


			/ 4Q’16			/ 1Q’16
Income statement	1Q’17		%	% w/o FX		%	% w/o FX
Net interest income		7,948	4.7		2.5	10.6		4.7
Net fee income		2,448	6.6		3.6	19.1		12.3
Gains (losses) on financial transactions		225	(25.6)		(27.0)	23.6		48.1
Other operating income		185	408.6		427.2	5.7		2.5
Gross income		10,806	5.7		3.3	12.6		6.9
Operating expenses		(4,888)	0.8		(1.4)	8.7		3.8
Net operating income		5,918	10.1		7.6	16.0		9.7
Net loan-loss provisions		(2,242)	(2.5)		(5.9)	3.8		(5.5)
Other income		(686)	30.9		28.0	65.1		48.5
Underlying profit before taxes		2,991	17.1		15.7	18.4		16.7
Tax on profit		(920)	39.2		38.2	34.6		33.9
Underlying profit from continuing operations		2,070	9.4		7.9	12.4		10.4
Net profit from discontinued operations		—	—		—	—		—
Underlying consolidated profit		2,070	9.4		7.9	12.4		10.4
Minority interests		276	6.9		5.1	8.1		4.5
Underlying attributable profit to the Group		1,795	9.8		8.3	13.1		11.4
Net capital gains and provisions*		—	(100.0)		(100.0)	—		—
Attributable profit to the Group		1,795	22.5		20.0	13.1		11.4

*Pro memoria:*
Loans w/o repos		695,240	0.5		0.1	1.7		1.8
Funds (customer deposits w/o repos + mutual funds)		743,261	2.0		1.5	7.0		6.1

(*).-

In 4Q’16, PPI (-€137 million) and restatement Santander Consumer USA (-€32 million).

LOGO Global Corporate Banking (€ million)


				/ 4Q’16			/ 1Q’16
Income statement	1Q’17		%	% w/o FX		%	% w/o FX
Net interest income		656	(7.1)		(9.7)	6.2		(1.9)
Net fee income		399	12.6		10.9	15.7		10.8
Gains (losses) on financial transactions		467	217.0		251.4	31.8		22.7
Other operating income		43	(65.0)		(67.1)	13.5		10.5
Gross income		1,565	17.6		15.9	15.5		8.1
Operating expenses		(487)	6.2		4.3	1.6		(0.4)
Net operating income		1,078	23.6		22.0	23.2		12.4
Net loan-loss provisions		(132)	141.8		147.3	(40.8)		(45.7)
Other income		(14)	(62.7)		(63.8)	—		—
Underlying profit before taxes		932	19.4		17.7	43.2		30.5
Tax on profit		(265)	38.3		39.3	40.5		27.4
Underlying profit from continuing operations		667	13.2		10.9	44.3		31.7
Net profit from discontinued operations		—	—		—	—		—
Underlying consolidated profit		667	13.2		10.9	44.3		31.7
Minority interests		57	18.0		15.1	39.0		19.6
Underlying attributable profit to the Group		610	12.8		10.5	44.8		33.0
Net capital gains and provisions		—	—		—	—		—
Attributable profit to the Group		610	12.8		10.5	44.8		33.0

*Pro memoria:*
Loans w/o repos		96,025	(1.6)		(2.4)	2.0		(2.1)
Funds (customer deposits w/o repos + mutual funds)		67,553	1.7		0.4	4.9		1.4


54		FINANCIAL REPORT 2017

JANUARY - MARCH » Glossary

» Glossary - Definitions

PROFITABILITY AND EFFICIENCY

•

RoE: Return on Equity: Group’s attributable profit / average of: capital + reserves + retained profit + accumulated other comprehensive income

•

RoTE: Return on tangible equity: Group’s attributable profit / average of: capital + reserves + retained profit + accumulated other comprehensive income - goodwill - intangible assets

•

Underlying RoTE: Return on tangible equity: Group’s underlying profit / average of: capital + reserves + retained profit + accumulated other comprehensive income - goodwill - intangible assets

•

RoA: Return on assets: consolidated profit / average total assets

•

RoRWA: Return on risk-weighted assets: consolidated profit / average risk-weighted assets

•

Underlying RoRWA: Return on risk-weighted assets: underlying consolidated profit / average risk-weighted assets

•

Efficiency (with amortisations): Operating expenses / gross income. Operating expenses defined as general administrative expenses + amortisations

CREDIT RISK

•

NPL ratio: Loans and advances to customers and non-performing contingent liabilities (excluding country-risk) / total lending. Lending defined as total loans and advances to customers and contingent liabilities (excluding country-risk)

•

NPL coverage ratio: Provisions to cover losses due to impairment of loans and advances to customers and contingent liabilities (excluding country-risk) / total loans and advances to customers and non-performing contingent liabilities (excluding country-risk)

•

Cost of credit: 12 month loan-loss provisions / 12 month average lending

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 income - goodwill - intangible assets

SANTANDER GLOBAL CORPORATE BANKING

•

Global Transaction Banking: includes the business of cash management, trade finance, basic financing and custody

•

Financing Solutions & Advisory: includes the units of origination and distribution of corporate loans and structured financings, bond and securitisation origination teams, corporate finance units (mergers and acquisitions, primary markets of equities, investment solutions for corporate clients via derivatives), and asset & based finance

•

Global Markets: includes the sale and distribution of fixed income and equity derivatives, interest rates and inflation; the trading and hedging of exchange rates, and short-term money markets for the Group’s wholesale and retail clients; management of books associated with distribution; and brokerage of equities, and derivatives for investment and hedging solutions

Notes:

1) The average figures to calculate RoE, RoTE, RoA and RoRWA, include in the denominators, are calculated considering the four months from December to March, when relating to the first quarter data

2) In periods under a year, and when there are non-recurring results, the profit used to calculate the RoE and RoTE, is the annualised underlying attributable profit (excluding non-recurring results), to which the non-recurring results without annualising are added

3) In periods under a year, and where there are non-recurring results, the profit used to calculate the RoA and RoRWA, is the annualised consolidated profit (excluding non-recurring results), to which the non-recurring results without annualising are added

4) The risk-weighted assets included in the RoRWA denominator are calculated according to the criteria defined in the CRR (Capital Requirements Regulation)


FINANCIAL REPORT 2017		55

JANUARY - MARCH

Important information

Banco Santander, S.A. (“Santander”) cautions that this report contains forward-looking statements. Forward-looking statements contained in this report include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental, political and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; (5) transaction, commercial and operating factors; and (6) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated and will indicate in our past and future filings and reports, including those with the Spanish Securities Commission (“CNMV”) and the Securities and Exchange Commission of the United States of America (the “SEC”) could adversely affect our business and financial performance and should be considered in evaluating any forward-looking statements contained herein. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forwardlooking statements.

Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. These statements are only predictions and are not guarantees of future performance, results, actions or events. 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.

Statements as to historical performance, share price 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.


56		FINANCIAL REPORT 2017

JANUARY - MARCH »


FINANCIAL REPORT 2017		57

LOGO

Item 3

LOGO

Key consolidated data


					Change
	1Q ‘17		1Q ‘16		Amount			%			2016
Balance sheet (€ million)
Total assets		1,351,956		1,324,200		27,756			2.1			1,339,125
Net customer loans		795,312		773,452		21,859			2.8			790,470
Customer deposits		705,786		670,627		35,159			5.2			691,111
Customer funds		898,110		836,377		61,733			7.4			873,618
Total equity		104,869		98,781		6,088			6.2			102,699

Income statement (€ million)
Net interest income		8,402		7,624		778			10.2			31,089
Gross income		12,029		10,730		1,299			12.1			43,853
Net operating income		6,486		5,572		914			16.4			22,766
Underlying profit before taxes		3,311		2,732		579			21.2			11,288
Underlying attributable profit to the Group		1,867		1,633		234			14.3			6,621
Attributable profit to the Group		1,867		1,633		234			14.3			6,204

(*).- Change in constant euro

Net interest income: +4.0%; Gross income: +6.2%; Net operating income: +8.9%; Underlying attributable profit: +10.0%; Attributable profit: +10.0%

EPS, profitability and efficiency (%)
Underlying EPS (euro) *		0.122		0.108		0.02			13.6			0.436
EPS (euro)		0.122		0.108		0.02			13.6			0.407
RoE		8.19		7.46								6.99
Underlying RoTE *		12.13		11.13								11.08
RoTE		12.13		11.13								10.38
RoA		0.65		0.58								0.56
Underlying RoRWA *		1.48		1.33								1.36
RoRWA		1.48		1.33								1.29
Efficiency ratio (with amortisations)		46.1		48.1								48.1

Solvency and NPL ratios (%)
CET1 fully-loaded		10.66		10.27								10.55
CET1 phase-in		12.12		12.36								12.53
NPL ratio		3.74		4.33								3.93
Coverage ratio		74.6		74.0								73.8

Market capitalisation and shares
Shares (millions)		14,582		14,434		148			1.0			14,582
Share price (euros)		5.745		3.874		1.871			48.3			4.959
Market capitalisation (€ million)		83,776		55,919		27,856			49.8			72,314
Tangible book value (euro)		4.26		4.07								4.22
Price / Tangible book value (X)		1.35		0.95								1.17
P/E ratio (X)		11.74		8.99								12.18

Other data
Number of shareholders		3,957,838		3,682,927		274,911			7.5			3,928,950
Number of employees		188,182		194,519		(6,337	)		(3.3	)		188,492
Number of branches		12,117		12,962		(845	)		(6.5	)		12,235

(*).-

Excluding non-recurring net capital gains and provisions

Note: The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on April, 25 2017, following a favourable report from the Audit Committee on April, 19 2017. The Audit Committee verified that the information for 2017 was based on the same principles and practices as those used to draw up the annual financial statements.

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Income statement

€ million


							Change
	1Q 17			1Q 16			Amount			%

Net interest income		8,402			7,624			778			10.2
Net fee income		2,844			2,397			446			18.6
Gains (losses) on financial transactions		573			504			68			13.6
Other operating income		211			204			6			3.0
Dividends		41			44			(3	)		(6.6	)
Income from equity-accounted method		133			83			50			60.2
Other operating income/expenses		37			78			(41	)		(52.7	)
Gross income		12,029			10,730			1,299			12.1
Operating expenses		(5,543	)		(5,158	)		(386	)		7.5
General administrative expenses		(4,915	)		(4,572	)		(343	)		7.5
Personnel		(2,912	)		(2,683	)		(229	)		8.5
Other general administrative expenses		(2,002	)		(1,889	)		(113	)		6.0
Depreciation and amortisation		(629	)		(586	)		(43	)		7.3
Net operating income		6,486			5,572			914			16.4
Net loan-loss provisions		(2,400	)		(2,408	)		9			(0.4	)
Impairment losses on other assets		(68	)		(44	)		(24	)		56.1
Other income		(707	)		(389	)		(318	)		81.8
Underlying profit before taxes		3,311			2,732			579			21.2
Tax on profit		(1,125	)		(810	)		(315	)		38.8
Underlying profit from continuing operations		2,186			1,922			265			13.8
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,186			1,922			265			13.8
Minority interests		319			288			31			10.7
Underlying attributable profit to the Group		1,867			1,633			234			14.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,867			1,633			234			14.3

Underlying EPS (euros)		0.122			0.108			0.015			13.6
Underlying diluted EPS (euros)		0.122			0.107			0.015			13.7

EPS (euros)		0.122			0.108			0.015			13.6
Diluted EPS (euros)		0.122			0.107			0.015			13.7
Pro memoria:
Average total assets		1,353,495			1,335,115			18,380			1.4
Average stockholders’ equity		91,171			87,571			3,600			4.1

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Quarterly income statement

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17

Net interest income		7,624			7,570			7,798			8,096			8,402
Net fee income		2,397			2,549			2,597			2,637			2,844
Gains (losses) on financial transactions		504			366			440			412			573
Other operating income		204			270			245			142			211
Dividends		44			209			37			124			41
Income from equity-accounted method		83			112			119			130			133
Other operating income/expenses		78			(51	)		90			(112	)		37
Gross income		10,730			10,755			11,080			11,288			12,029
Operating expenses		(5,158	)		(5,227	)		(5,250	)		(5,453	)		(5,543	)
General administrative expenses		(4,572	)		(4,632	)		(4,692	)		(4,828	)		(4,915	)
Personnel		(2,683	)		(2,712	)		(2,726	)		(2,876	)		(2,912	)
Other general administrative expenses		(1,889	)		(1,920	)		(1,966	)		(1,952	)		(2,002	)
Depreciation and amortisation		(586	)		(595	)		(558	)		(626	)		(629	)
Net operating income		5,572			5,528			5,831			5,835			6,486
Net loan-loss provisions		(2,408	)		(2,205	)		(2,499	)		(2,406	)		(2,400	)
Impairment losses on other assets		(44	)		(29	)		(16	)		(159	)		(68	)
Other income		(389	)		(515	)		(376	)		(432	)		(707	)
Underlying profit before taxes		2,732			2,779			2,940			2,838			3,311
Tax on profit		(810	)		(915	)		(904	)		(767	)		(1,125	)
Underlying profit from continuing operations		1,922			1,864			2,036			2,071			2,186
Net profit from discontinued operations		—			0			(0	)		0			—
Underlying consolidated profit		1,922			1,864			2,036			2,072			2,186
Minority interests		288			338			341			305			319
Underlying attributable profit to the Group		1,633			1,526			1,695			1,766			1,867
Net capital gains and provisions*		—			(248	)		—			(169	)		—
Attributable profit to the Group		1,633			1,278			1,695			1,598			1,867

Underlying EPS (euros)		0.108			0.100			0.112			0.116			0.122
Underlying diluted EPS (euros)		0.107			0.100			0.112			0.116			0.122

EPS (euros)		0.108			0.083			0.112			0.104			0.122
Diluted EPS (euros)		0.107			0.083			0.112			0.104			0.122
(*).- Including – In 2Q’16, capital gains from the disposal of the stake in Visa Europe (€227 million) and restructuring costs (-€475 million). – In 4Q’16 PPI UK (-€137 million) and restatement Santander Consumer USA (-€32 million).

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Income statement

Constant € million


							Change
	1Q 17			1Q 16			Amount			%

Net interest income		8,402			8,080			322			4.0
Net fee income		2,844			2,536			307			12.1
Gains (losses) on financial transactions		573			501			72			14.4
Other operating income		211			213			(2	)		(1.0	)
Dividends		41			44			(3	)		(7.7	)
Income from equity-accounted method		133			90			43			47.8
Other operating income/expenses		37			78			(42	)		(53.2	)
Gross income		12,029			11,330			700			6.2
Operating expenses		(5,543	)		(5,377	)		(167	)		3.1
General administrative expenses		(4,915	)		(4,770	)		(144	)		3.0
Personnel		(2,912	)		(2,798	)		(115	)		4.1
Other general administrative expenses		(2,002	)		(1,973	)		(30	)		1.5
Depreciation and amortisation		(629	)		(606	)		(23	)		3.7
Net operating income		6,486			5,953			533			8.9
Net loan-loss provisions		(2,400	)		(2,640	)		240			(9.1	)
Impairment losses on other assets		(68	)		(47	)		(21	)		46.0
Other income		(707	)		(433	)		(275	)		63.5
Underlying profit before taxes		3,311			2,834			477			16.8
Tax on profit		(1,125	)		(833	)		(292	)		35.0
Underlying profit from continuing operations		2,186			2,001			185			9.3
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,186			2,001			185			9.3
Minority interests		319			304			15			5.0
Underlying attributable profit to the Group		1,867			1,697			170			10.0
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,867			1,697			170			10.0

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Quarterly income statement

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17

Net interest income		8,080			7,930			8,053			8,283			8,402
Net fee income		2,536			2,677			2,676			2,709			2,844
Gains (losses) on financial transactions		501			382			464			404			573
Other operating income		213			279			250			149			211
Dividends		44			211			37			131			41
Income from equity-accounted method		90			117			122			135			133
Other operating income/expenses		78			(50	)		90			(118	)		37
Gross income		11,330			11,268			11,442			11,544			12,029
Operating expenses		(5,377	)		(5,410	)		(5,393	)		(5,572	)		(5,543	)
General administrative expenses		(4,770	)		(4,798	)		(4,821	)		(4,936	)		(4,915	)
Personnel		(2,798	)		(2,810	)		(2,801	)		(2,935	)		(2,912	)
Other general administrative expenses		(1,973	)		(1,988	)		(2,020	)		(2,002	)		(2,002	)
Depreciation and amortisation		(606	)		(612	)		(572	)		(636	)		(629	)
Net operating income		5,953			5,858			6,049			5,972			6,486
Net loan-loss provisions		(2,640	)		(2,384	)		(2,627	)		(2,487	)		(2,400	)
Impairment losses on other assets		(47	)		(30	)		(16	)		(158	)		(68	)
Other income		(433	)		(543	)		(376	)		(446	)		(707	)
Underlying profit before taxes		2,834			2,900			3,031			2,880			3,311
Tax on profit		(833	)		(956	)		(932	)		(770	)		(1,125	)
Underlying profit from continuing operations		2,001			1,944			2,099			2,111			2,186
Net profit from discontinued operations		—			0			(0	)		0			—
Underlying consolidated profit		2,001			1,944			2,099			2,111			2,186
Minority interests		304			355			351			311			319
Underlying attributable profit to the Group		1,697			1,589			1,748			1,800			1,867
Net capital gains and provisions*		—			(258	)		3			(161	)		—
Attributable profit to the Group		1,697			1,331			1,751			1,639			1,867

(*).- Including

-	In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

-	In 4Q’16 PPI UK and restatement Santander Consumer USA.

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Exchange rates: 1 euro / currency parity


	Average				Period-end
	1Q 17		1Q 16		31.03.17		31.12.16		31.03.16

US$		1.065		1.102		1.069		1.054		1.139
Pound sterling		0.860		0.770		0.856		0.856		0.792
Brazilian real		3.346		4.296		3.380		3.431		4.117
Mexican peso		21.577		19.877		20.018		21.772		19.590
Chilean peso		697.904		772.566		710.337		707.612		762.943
Argentine peso		16.682		15.890		16.424		16.705		16.666
Polish zloty		4.320		4.363		4.227		4.410		4.258

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Net fee income

€ million


						Change
	1Q 17		1Q 16		Amount		%
Fees from services		1,785		1,449		336		23.2
Mutual & pension funds		196		182		14		7.7
Securities and custody		270		224		46		20.5
Insurance		592		542		50		9.3
Net fee income		2,844		2,397		446		18.6

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Operating expenses

€ million


					Change
	1Q 17		1Q 16		Amount			%
Personnel expenses		2,912		2,683		229			8.5
General expenses		2,002		1,889		113			6.0
Information technology		317		289		28			9.7
Communications		131		130		1			0.8
Advertising		169		146		23			15.6
Buildings and premises		449		437		12			2.7
Printed and office material		34		34		(1	)		(1.8	)
Taxes (other than profit tax)		124		119		5			4.1
Other expenses		779		733		45			6.2
Personnel and general expenses		4,915		4,572		343			7.5
Depreciation and amortisation		629		586		43			7.3
Total operating expenses		5,543		5,158		386			7.5

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Net loan-loss provisions

€ million


							Change
	1Q 17			1Q 16			Amount			%

Non performing loans		2,873			2,771			103			3.7
Country-risk		4			(3	)		7			—
Recovery of written-off assets		(478	)		(360	)		(118	)		32.9
Total		2,400			2,408			(9	)		(0.4	)

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Balance sheet

€ million


							Change
	31.03.17			31.03.16			Amount			%			31.12.16
Assets
Cash, cash balances at central banks and other demand deposits		74,804			67,545			7,259			10.7			76,454
Financial assets held for trading		143,109			151,550			(8,441	)		(5.6	)		148,187
Debt securities		46,944			50,060			(3,116	)		(6.2	)		48,922
Equity instruments		16,174			14,584			1,590			10.9			14,497
Loans and advances to customers		11,375			6,866			4,509			65.7			9,504
Loans and advances to central banks and credit institutions		3,449			3,397			52			1.5			3,221
Derivatives		65,167			76,643			(11,476	)		(15.0	)		72,043
Financial assets designated at fair value		46,026			48,771			(2,745	)		(5.6	)		31,609
Loans and advances to customers		17,865			13,884			3,981			28.7			17,596
Loans and advances to central banks and credit institutions		24,038			30,714			(6,676	)		(21.7	)		10,069
Other (debt securities an equity instruments)		4,123			4,173			(50	)		(1.2	)		3,944
Available-for-sale financial assets		118,195			118,298			(103	)		(0.1	)		116,774
Debt securities		112,946			113,656			(710	)		(0.6	)		111,287
Equity instruments		5,249			4,642			607			13.1			5,487
Loans and receivables		844,804			824,174			20,630			2.5			840,004
Debt securities		12,901			12,487			414			3.3			13,237
Loans and advances to customers		766,072			752,702			13,370			1.8			763,370
Loans and advances to central banks and credit institutions		65,831			58,985			6,846			11.6			63,397
Held-to-maturity investments		14,268			4,566			9,702			212.5			14,468
Investments in subsidaries, joint ventures and associates		5,275			3,350			1,925			57.5			4,836
Tangible assets		22,807			25,465			(2,658	)		(10.4	)		23,286
Intangible assets		29,645			28,693			952			3.3			29,421
o/w: goodwill		26,939			26,209			730			2.8			26,724
Other assets		53,023			51,788			1,235			2.4			54,086
Total assets		1,351,956			1,324,200			27,756			2.1			1,339,125

Liabilities and shareholders’ equity
Financial liabilities held for trading		99,550			108,567			(9,017	)		(8.3	)		108,765
Customer deposits		10,649			9,570			1,079			11.3			9,996
Debt securities issued		—			—			—			—			—
Deposits by central banks and credit institutions		644			976			(332	)		(34.0	)		1,395
Derivatives		67,580			78,608			(11,028	)		(14.0	)		74,369
Other		20,677			19,413			1,264			6.5			23,005
Financial liabilities designated at fair value		56,606			63,404			(6,798	)		(10.7	)		40,263
Customer deposits		27,495			28,484			(989	)		(3.5	)		23,345
Debt securities issued		3,373			3,445			(72	)		(2.1	)		2,791
Deposits by central banks and credit institutions		25,738			31,474			(5,736	)		(18.2	)		14,127
Other		—			1			(1	)		(100.0	)		—
Financial liabilities measured at amortized cost		1,048,447			1,012,407			36,040			3.6			1,044,240
Customer deposits		667,642			632,573			35,069			5.5			657,770
Debt securities issued		218,019			218,143			(124	)		(0.1	)		226,078
Deposits by central banks and credit institutions		137,029			138,323			(1,294	)		(0.9	)		133,876
Other		25,757			23,368			2,389			10.2			26,516
Liabilities under insurance contracts		635			656			(21	)		(3.2	)		652
Provisions		14,411			14,292			119			0.8			14,459
Other liabilities		27,438			26,093			1,345			5.2			28,047
Total liabilities		1,247,087			1,225,419			21,668			1.8			1,236,426
Shareholders’ equity		107,706			103,264			4,442			4.3			105,977
Capital stock		7,291			7,217			74			1.0			7,291
Reserves		100,215			94,414			5,801			6.1			94,149
Attributable profit to the Group		1,867			1,633			234			14.3			6,204
Less: dividends		(1,667	)		—			(1,667	)		—			(1,667	)
Accumulated other comprehensive income		(15,122	)		(15,949	)		827			(5.2	)		(15,039	)
Minority interests		12,285			11,466			819			7.1			11,761
Total equity		104,869			98,781			6,088			6.2			102,699
Total liabilities and equity		1,351,956			1,324,200			27,756			2.1			1,339,125

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Balance sheet

€ million


	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Assets
Cash, cash balances at central banks and other demand deposits		67,545			65,368			63,717			76,454			74,804
Financial assets held for trading		151,550			157,497			152,814			148,187			143,109
Debt securities		50,060			45,077			41,233			48,922			46,944
Equity instruments		14,584			14,237			14,764			14,497			16,174
Loans and advances to customers		6,866			8,747			9,390			9,504			11,375
Loans and advances to central banks and credit institutions		3,397			2,161			3,671			3,221			3,449
Derivatives		76,643			87,275			83,756			72,043			65,167
Financial assets designated at fair value		48,771			42,846			45,158			31,609			46,026
Loans and advances to customers		13,884			13,928			15,433			17,596			17,865
Loans and advances to central banks and credit institutions		30,714			24,810			25,645			10,069			24,038
Other (debt securities an equity instruments)		4,173			4,108			4,080			3,944			4,123
Available-for-sale financial assets		118,298			116,385			113,947			116,774			118,195
Debt securities		113,656			111,672			109,241			111,287			112,946
Equity instruments		4,642			4,713			4,706			5,487			5,249
Loans and receivables		824,174			842,878			828,539			840,004			844,804
Debt securities		12,487			13,672			13,396			13,237			12,901
Loans and advances to customers		752,702			760,781			748,467			763,370			766,072
Loans and advances to central banks and credit institutions		58,985			68,425			66,676			63,397			65,831
Held-to-maturity investments		4,566			4,820			12,276			14,468			14,268
Investments in subsidaries, joint ventures and associates		3,350			3,411			3,481			4,836			5,275
Tangible assets		25,465			26,314			25,979			23,286			22,807
Intangible assets		28,693			29,146			28,748			29,421			29,645
o/w: goodwill		26,209			26,541			26,148			26,724			26,939
Other assets		51,788			54,241			54,879			54,086			53,023
Total assets		1,324,200			1,342,906			1,329,538			1,339,125			1,351,956

Liabilities and shareholders’ equity
Financial liabilities held for trading		108,567			118,582			116,249			108,765			99,550
Customer deposits		9,570			8,755			5,943			9,996			10,649
Debt securities issued		—			—			—			—			—
Deposits by central banks and credit institutions		976			960			2,393			1,395			644
Derivatives		78,608			87,254			85,407			74,369			67,580
Other		19,413			21,613			22,506			23,005			20,677
Financial liabilities designated at fair value		63,404			48,548			47,149			40,263			56,606
Customer deposits		28,484			25,425			24,465			23,345			27,495
Debt securities issued		3,445			2,995			2,965			2,791			3,373
Deposits by central banks and credit institutions		31,474			20,127			19,718			14,127			25,738
Other		1			1			1			—			—
Financial liabilities measured at amortized cost		1,012,407			1,031,650			1,021,138			1,044,240			1,048,447
Customer deposits		632,573			637,723			637,031			657,770			667,642
Debt securities issued		218,143			227,991			225,709			226,078			218,019
Deposits by central banks and credit institutions		138,323			138,366			134,590			133,876			137,029
Other		23,368			27,570			23,808			26,516			25,757
Liabilities under insurance contracts		656			644			665			652			635
Provisions		14,292			15,174			14,883			14,459			14,411
Other liabilities		26,093			27,962			28,332			28,047			27,438
Total liabilities		1,225,419			1,242,560			1,228,416			1,236,426			1,247,087
Shareholders’ equity		103,264			103,637			105,221			105,977			107,706
Capital stock		7,217			7,217			7,217			7,291			7,291
Reserves		94,414			94,303			94,192			94,149			100,215
Attributable profit to the Group		1,633			2,911			4,606			6,204			1,867
Less: dividends		—			(794	)		(794	)		(1,667	)		(1,667	)
Accumulated other comprehensive income		(15,949	)		(15,027	)		(16,326	)		(15,039	)		(15,122	)
Minority interests		11,466			11,736			12,227			11,761			12,285
Total equity		98,781			100,346			101,122			102,699			104,869
Total liabilities and equity		1,324,200			1,342,906			1,329,538			1,339,125			1,351,956

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Customer loans

€ million


					Change
	31.03.17		31.03.16		Amount			%			31.12.16
Commercial bills		22,654		16,777		5,876			35.0			23,894
Secured loans		454,881		462,213		(7,332	)		(1.6	)		454,563
Other term loans		236,224		222,180		14,044			6.3			232,289
Finance leases		25,703		22,755		2,948			13.0			25,357
Receivable on demand		8,017		8,387		(371	)		(4.4	)		8,102
Credit cards receivable		21,306		19,222		2,084			10.8			21,363
Impaired assets		31,143		35,442		(4,298	)		(12.1	)		32,687
Gross customer loans (w/o repos)		799,927		786,976		12,952			1.6			798,254
Repos		18,866		12,631		6,234			49.4			16,609
Gross customer loans		818,793		799,607		19,186			2.4			814,863
Loan-loss allowances		23,481		26,155		(2,673	)		(10.2	)		24,393
Net customer loans		795,312		773,452		21,859			2.8			790,470

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Customer loans

€ million


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17
Commercial bills		16,777		20,318		19,789		23,894		22,654
Secured loans		462,213		458,218		450,754		454,563		454,881
Other term loans		222,180		228,827		225,974		232,289		236,224
Finance leases		22,755		23,296		24,402		25,357		25,703
Receivable on demand		8,387		9,096		8,098		8,102		8,017
Credit cards receivable		19,222		19,990		19,554		21,363		21,306
Impaired assets		35,442		35,370		33,753		32,687		31,143
Gross customer loans (w/o repos)		786,976		795,116		782,324		798,254		799,927
Repos		12,631		14,054		15,568		16,609		18,866
Gross customer loans		799,607		809,170		797,892		814,863		818,793
Loan-loss allowances		26,155		25,713		24,602		24,393		23,481
Net customer loans		773,452		783,457		773,290		790,470		795,312

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Credit risk management *

€ million


					Change
	31.03.17		31.03.16		Amount			%			31.12.16

Non-performing loans		32,158		36,148		(3,990	)		(11.0	)		33,643
NPL ratio (%)		3.74		4.33		(0.59 p.	)					3.93
Loan-loss allowances		24,002		26,756		(2,755	)		(10.3	)		24,835
For impaired assets		14,636		17,817		(3,181	)		(17.9	)		15,466
For other assets		9,366		8,940		426			4.8			9,369
Coverage ratio (%)		74.6		74.0		0.6 p.						73.8
Cost of credit (%) **		1.17		1.22		(0.05 p.	)					1.18

(*).-

Excluding country-risk

(**).-

12 months net loan-loss provisions / average lending

Note:

NPL ratio: Non-performing loans / computable assets

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Credit risk management *

€ million


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17
Non-performing loans		36,148		36,291		34,646		33,643		32,158
NPL ratio (%)		4.33		4.29		4.15		3.93		3.74
Loan-loss allowances		26,756		26,317		25,171		24,835		24,002
For impaired assets		17,817		17,667		16,724		15,466		14,636
For other assets		8,940		8,650		8,447		9,369		9,366
Coverage ratio (%)		74.0		72.5		72.7		73.8		74.6
Cost of credit (%) **		1.22		1.19		1.19		1.18		1.17

(*).-

Excluding country-risk

(**).-

12 months net loan-loss provisions / average lending

Note:

NPL ratio: Non-performing loans / computable assets

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Non-performing loans by quarter

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Balance at beginning of the period		37,094			36,148			36,291			34,646			33,643
Net entries		1,668			2,221			1,763			1,710			1,583
Increase in scope of consolidation		13			664			21			36			18
Exchange rate differences and other		72			869			(44	)		315			536
Write-offs		(2,699	)		(3,612	)		(3,385	)		(3,063	)		(3,623	)
Balance at period-end		36,148			36,291			34,646			33,643			32,158

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Customer funds

€ million


					Change
	31.03.17		31.03.16		Amount			%			31.12.16
Demand deposits		478,629		432,268		46,361			10.7			467,261
Time deposits		176,798		198,480		(21,683	)		(10.9	)		181,089
Mutual funds		155,772		129,899		25,872			19.9			147,416
Customer deposits w/o repos + Mutual funds		811,198		760,648		50,550			6.6			795,766
Pension funds		11,344		11,103		241			2.2			11,298
Managed portfolios		25,208		24,748		461			1.9			23,793
Subtotal		847,750		796,499		51,252			6.4			830,858
Repos		50,359		39,878		10,481			26.3			42,761
Customer funds		898,110		836,377		61,733			7.4			873,618

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Customer funds

€ million


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17
Demand deposits		432,268		441,006		445,045		467,261		478,629
Time deposits		198,480		187,446		183,045		181,089		176,798
Mutual funds		129,899		137,428		141,053		147,416		155,772
Customer deposits w/o repos + Mutual funds		760,648		765,880		769,143		795,766		811,198
Pension funds		11,103		10,979		11,034		11,298		11,344
Managed portfolios		24,748		26,073		26,962		23,793		25,208
Subtotal		796,499		802,932		807,138		830,858		847,750
Repos		39,878		43,451		39,349		42,761		50,359
Customer funds		836,377		846,383		846,488		873,618		898,110

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Eligible capital (phase-in)

€ million

Change

31.03.17

31.03.16

Amount

31.12.16

CET1

72,365

70,694

1,670

2.4

73,709

Basic capital

73,553

70,694

2,859

4.0

73,709

Eligible capital

87,274

81,093

6,181

7.6

86,337

Risk-weighted assets

597,123

571,959

25,163

4.4

588,088

CET1 capital ratio

12.12

12.36

(0.24

)

12.53

T1 capital ratio

12.32

12.36

(0.04

)

12.53

Total capital ratio

14.62

14.18

0.44

14.68

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Eligible capital (fully loaded)

€ million


							Change
	31.03.17			31.03.16			Amount			%			31.12.16
Capital stock and reserves		105,043			101,763			3,281			3.2			101,437
Attributable profit		1,867			1,633			234			14.3			6,204
Dividends		(688	)		(609	)		(80	)		13.1			(2,469	)
Other retained earnings		(15,767	)		(17,455	)		1,689			(9.7	)		(16,116	)
Minority interests		7,158			6,190			968			15.6			6,784
Goodwill and intangible assets		(28,591	)		(27,590	)		(1,001	)		3.6			(28,405	)
Other deductions		(5,343	)		(5,184	)		(158	)		3.0			(5,368	)
Core CET1		63,680			58,748			4,932			8.4			62,068
Preferred shares and other eligibles T1		5,745			5,494			251			4.6			5,767
Tier 1		69,424			64,241			5,183			8.1			67,834
Generic funds and eligible T2 instruments		14,771			11,410			3,361			29.5			13,749
Eligible capital		84,195			75,651			8,544			11.3			81,584
Risk-weighted assets		597,123			571,916			25,207			4.4			588,088
CET1 capital ratio		10.66			10.27			0.39						10.55
T1 capital ratio		11.63			11.23			0.40						11.53
Total capital ratio		14.10			13.23			0.87						13.87

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Key data by principal segments


	Net operating income												Profit to the Group
	1Q 17			1Q 16			Var (%)			Change (%) w/o FX			1Q 17			1Q 16			Var (%)			Change (%) w/o FX
Income statement (€ million)
Continental Europe		1,694			1,608			5.4			4.9			774			706			9.5			9.0
o/w: Spain		741			706			4.9			4.9			362			307			17.7			17.7
Santander Consumer Finance		616			562			9.6			8.4			314			251			25.1			23.4
Poland		175			166			5.4			4.3			59			64			(7.6	)		(8.5	)
Portugal		155			183			(15.3	)		(15.3	)		125			121			3.8			3.8
United Kingdom		709			719			(1.5	)		9.9			416			453			(8.1	)		2.6
Latin America		3,501			2,404			45.7			24.6			1,050			703			49.3			30.3
o/w: Brazil		2,403			1,434			67.6			30.5			634			359			76.8			37.7
Mexico		505			470			7.3			16.5			163			143			14.3			24.1
Chile		381			321			18.7			7.3			147			122			21.1			9.4
USA		1,042			1,191			(12.5	)		(15.4	)		95			82			16.3			12.4
Operating areas		6,946			5,922			17.3			10.2			2,335			1,944			20.1			16.4
Corporate Centre		(460	)		(349	)		31.7			31.7			(468	)		(311	)		50.3			50.3
Total Group		6,486			5,572			16.4			8.9			1,867			1,633			14.3			10.0

	Gross loans w/o repos												Customer deposits w/o repos + mutual funds
	31.03.17			31.03.16			Var (%)			Change (%) w/o FX			31.03.17			31.03.16			Var (%)			Change (%) w/o FX
Activity (€ million)
Continental Europe		302,922			300,441			0.8			0.6			328,747			315,791			4.1			3.9
o/w: Spain		150,703			156,134			(3.5	)		(3.5	)		228,917			220,295			3.9			3.9
Santander Consumer Finance		87,006			79,136			9.9			9.5			35,680			33,197			7.5			7.1
Poland		21,903			20,467			7.0			6.2			26,379			24,487			7.7			6.9
Portugal		28,770			30,018			(4.2	)		(4.2	)		31,297			30,589			2.3			2.3
United Kingdom		242,581			261,770			(7.3	)		0.2			213,052			216,318			(1.5	)		6.5
Latin America		163,536			136,490			19.8			6.8			197,257			160,927			22.6			9.0
o/w: Brazil		81,184			63,875			27.1			4.3			104,309			80,383			29.8			6.5
Mexico		29,996			28,760			4.3			6.6			39,155			37,245			5.1			7.4
Chile		39,259			34,320			14.4			6.5			34,262			29,702			15.4			7.4
USA		85,906			84,897			1.2			(5.0	)		71,818			65,983			8.8			2.2
Operating areas		794,945			783,599			1.4			1.0			810,874			759,018			6.8			5.6
Total Group		799,927			787,033			1.6			1.2			811,198			760,647			6.6			5.5

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Key data by principal segments

RoTE (%)

Efficiency ratio

1Q 17

1Q 16

1Q 17

1Q 16

Profitability and efficiency (%)

Continental Europe

10.60

9.01

49.9

51.8

o/w: Spain

12.67

10.55

51.8

54.2

Santander Consumer Finance

17.10

12.83

44.9

46.2

Poland

9.68

10.71

45.5

46.6

Portugal

15.30

17.21

47.2

45.7

United Kingdom

11.27

10.15

50.5

52.4

Latin America

17.40

14.31

38.4

41.9

o/w: Brazil

16.52

13.50

35.4

39.8

Mexico

18.75

12.95

38.8

40.7

Chile

17.07

16.43

40.9

42.3

USA

2.81

2.70

44.6

39.5

Operating areas

11.43

9.60

43.8

45.9

Total Group

12.13

11.13

46.1

48.1


	NPL ratio				Coverage ratio				Cost of credit
	31.03.17		31.03.16		31.03.17		31.03.16		31.03.17		31.03.16
Credit quality (%)
Continental Europe		5.62		7.08		60.6		65.4		0.38		0.60
o/w: Spain		5.22		6.36		49.1		50.2		0.33		0.54
Santander Consumer Finance		2.62		3.28		108.9		111.9		0.39		0.64
Poland		5.20		5.93		61.2		67.0		0.66		0.82
Portugal		8.47		8.55		61.7		87.7		0.07		0.28
United Kingdom		1.31		1.49		33.8		36.5		0.03		0.01
Latin America		4.50		4.88		90.5		79.7		3.36		3.39
o/w: Brazil		5.36		5.93		98.1		83.7		4.84		4.63
Mexico		2.77		3.06		104.8		97.5		2.94		2.95
Chile		4.93		5.45		58.9		54.6		1.42		1.58
USA		2.43		2.19		202.4		221.1		3.63		3.85
Operating areas		3.77		4.36		74.6		73.3		1.18		1.24
Total Group		3.74		4.33		74.6		74.0		1.17		1.22


	Employees				Branches
	31.03.17		31.03.16		31.03.17		31.03.16
Operating means
Continental Europe		56,910		58,090		4,719		5,487
o/w: Spain		22,900		24,204		2,881		3,433
Santander Consumer Finance		14,862		14,675		568		584
Poland		11,909		11,387		631		700
Portugal		6,232		6,579		627		752
United Kingdom		25,954		26,084		845		854
Latin America		85,919		90,142		5,789		5,848
o/w: Brazil		46,420		49,604		3,420		3,439
Mexico		17,580		17,869		1,389		1,386
Chile		11,858		12,468		416		471
USA		17,679		18,229		764		773
Operating areas		186,462		192,545		12,117		12,962
Corporate Centre		1,720		1,974
Total Group		188,182		194,519		12,117		12,962

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Operating areas

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		8,596			7,792			803			10.3
Net fee income		2,848			2,402			446			18.6
Gains (losses) on financial transactions		692			537			155			28.9
Other operating income		234			223			11			5.1
Gross income		12,370			10,953			1,416			12.9
Operating expenses		(5,424	)		(5,032	)		(392	)		7.8
General administrative expenses		(4,941	)		(4,620	)		(322	)		7.0
Personnel		(2,694	)		(2,480	)		(213	)		8.6
Other general administrative expenses		(2,247	)		(2,139	)		(108	)		5.1
Depreciation and amortisation		(483	)		(412	)		(71	)		17.1
Net operating income		6,946			5,922			1,024			17.3
Net loan-loss provisions		(2,394	)		(2,409	)		15			(0.6	)
Other income		(744	)		(428	)		(316	)		73.9
Underlying profit before taxes		3,808			3,085			723			23.4
Tax on profit		(1,151	)		(846	)		(305	)		36.1
Underlying profit from continuing operations		2,657			2,239			418			18.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,657			2,239			418			18.7
Minority interests		322			295			27			9.3
Underlying attributable profit to the Group		2,335			1,944			391			20.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		2,335			1,944			391			20.1


					Change
	31.03.17		31.03.16		Amount			%
Balance sheet
Customer loans		790,347		769,988		20,359			2.6
Cash, central banks and credit institutions		215,037		203,032		12,005			5.9
Debt securities		189,826		181,154		8,672			4.8
o/w: available for sale		112,955		112,059		896			0.8
Other financial assets		84,443		94,254		(9,811	)		(10.4	)
Other assets		68,698		68,326		372			0.5
Total assets		1,348,350		1,316,754		31,597			2.4
Customer deposits		705,513		668,997		36,516			5.5
Central banks and credit institutions		213,283		216,704		(3,421	)		(1.6	)
Debt securities issued		190,653		189,130		1,522			0.8
Other financial liabilities		111,836		118,357		(6,522	)		(5.5	)
Other liabilities		30,185		27,629		2,556			9.3
Total liabilities		1,251,469		1,220,818		30,651			2.5
Total equity		96,881		95,936		945			1.0
Other managed and marketed customer funds		192,272		165,750		26,522			16.0
Mutual funds		155,719		129,899		25,820			19.9
Pension funds		11,344		11,103		241			2.2
Managed portfolios		25,208		24,748		461			1.9
Pro memoria:
Gross customer loans w/o repos		794,945		783,599		11,345			1.4
Funds (customer deposits w/o repos + mutual funds)		810,874		759,018		51,855			6.8
Ratios (%) and other data
RoTE		11.43		9.60		1.83 p.
Efficiency ratio (with amortisations)		43.8		45.9		(2.09 p.	)
NPL ratio		3.77		4.36		(0.59 p.	)
Coverage ratio		74.6		73.3		1.30 p.
Number of employees		186,462		192,545		(6,083	)		(3.2	)
Number of branches		12,117		12,962		(845	)		(6.5	)

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Operating areas

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		7,792			7,757			7,993			8,286			8,596
Net fee income		2,402			2,554			2,604			2,651			2,848
Gains (losses) on financial transactions		537			432			537			459			692
Other operating income		223			255			263			173			234
Gross income		10,953			10,999			11,397			11,570			12,370
Operating expenses		(5,032	)		(5,106	)		(5,145	)		(5,354	)		(5,424	)
General administrative expenses		(4,620	)		(4,672	)		(4,710	)		(4,886	)		(4,941	)
Personnel		(2,480	)		(2,525	)		(2,549	)		(2,642	)		(2,694	)
Other general administrative expenses		(2,139	)		(2,147	)		(2,161	)		(2,244	)		(2,247	)
Depreciation and amortisation		(412	)		(434	)		(435	)		(468	)		(483	)
Net operating income		5,922			5,893			6,251			6,216			6,946
Net loan-loss provisions		(2,409	)		(2,201	)		(2,504	)		(2,406	)		(2,394	)
Other income		(428	)		(489	)		(333	)		(635	)		(744	)
Underlying profit before taxes		3,085			3,203			3,415			3,175			3,808
Tax on profit		(846	)		(921	)		(965	)		(805	)		(1,151	)
Underlying profit from continuing operations		2,239			2,282			2,450			2,370			2,657
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		2,239			2,282			2,450			2,370			2,657
Minority interests		295			338			343			305			322
Underlying attributable profit to the Group		1,944			1,944			2,107			2,065			2,335
Net capital gains and provisions		—			(62	)		—			(169	)		—
Attributable profit to the Group		1,944			1,882			2,107			1,896			2,335

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Customer loans		769,988			778,760			768,799			786,040			790,347
Cash, central banks and credit institutions		203,032			202,088			202,697			198,246			215,037
Debt securities		181,154			175,570			178,443			189,938			189,826
o/w: available for sale		112,059			110,255			109,216			111,335			112,955
Other financial assets		94,254			104,697			101,564			89,770			84,443
Other assets		68,326			70,924			71,527			69,258			68,698
Total assets		1,316,754			1,332,039			1,323,029			1,333,252			1,348,350
Customer deposits		668,997			670,842			666,187			690,254			705,513
Central banks and credit institutions		216,704			208,525			205,998			196,591			213,283
Debt securities issued		189,130			195,693			195,108			197,947			190,653
Other financial liabilities		118,357			132,652			129,270			121,257			111,836
Other liabilities		27,629			28,972			29,782			30,734			30,185
Total liabilities		1,220,818			1,236,684			1,226,345			1,236,783			1,251,469
Total equity		95,936			95,355			96,684			96,469			96,881
Other managed and marketed customer funds		165,750			174,480			179,049			182,497			192,272
Mutual funds		129,899			137,428			141,053			147,406			155,719
Pension funds		11,103			10,979			11,034			11,298			11,344
Managed portfolios		24,748			26,073			26,962			23,793			25,208
Pro memoria:
Gross customer loans w/o repos		783,599			790,639			778,265			793,847			794,945
Funds (customer deposits w/o repos + mutual funds)		759,018			764,819			767,891			794,899			810,874
Other information
NPL ratio		4.36			4.32			4.19			3.95			3.77
Coverage ratio		73.3			72.0			72.8			73.5			74.6
Cost of credit		1.24			1.20			1.20			1.19			1.18

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Operating areas

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		8,596			8,248			348			4.2
Net fee income		2,848			2,541			307			12.1
Gains (losses) on financial transactions		692			533			159			29.8
Other operating income		234			229			5			2.1
Gross income		12,370			11,551			819			7.1
Operating expenses		(5,424	)		(5,251	)		(173	)		3.3
General administrative expenses		(4,941	)		(4,818	)		(123	)		2.6
Personnel		(2,694	)		(2,595	)		(99	)		3.8
Other general administrative expenses		(2,247	)		(2,223	)		(24	)		1.1
Depreciation and amortisation		(483	)		(432	)		(50	)		11.6
Net operating income		6,946			6,301			645			10.2
Net loan-loss provisions		(2,394	)		(2,641	)		247			(9.3	)
Other income		(744	)		(474	)		(270	)		56.8
Underlying profit before taxes		3,808			3,185			622			19.5
Tax on profit		(1,151	)		(869	)		(282	)		32.5
Underlying profit from continuing operations		2,657			2,316			340			14.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,657			2,316			340			14.7
Minority interests		322			310			12			3.8
Underlying attributable profit to the Group		2,335			2,006			329			16.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		2,335			2,006			329			16.4

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		790,347			771,706			18,641			2.4
Cash, central banks and credit institutions		215,037			209,503			5,534			2.6
Debt securities		189,826			188,424			1,402			0.7
o/w: available for sale		112,955			116,107			(3,152	)		(2.7	)
Other financial assets		84,443			93,322			(8,879	)		(9.5	)
Other assets		68,698			71,170			(2,472	)		(3.5	)
Total assets		1,348,350			1,334,125			14,226			1.1
Customer deposits		705,513			672,320			33,193			4.9
Central banks and credit institutions		213,283			223,354			(10,071	)		(4.5	)
Debt securities issued		190,653			191,173			(521	)		(0.3	)
Other financial liabilities		111,836			119,491			(7,655	)		(6.4	)
Other liabilities		30,185			28,835			1,350			4.7
Total liabilities		1,251,469			1,235,174			16,295			1.3
Total equity		96,881			98,951			(2,070	)		(2.1	)
Other managed and marketed customer funds		192,272			177,252			15,020			8.5
Mutual funds		155,719			139,830			15,889			11.4
Pension funds		11,344			11,103			241			2.2
Managed portfolios		25,208			26,319			(1,110	)		(4.2	)
Pro memoria:
Gross customer loans w/o repos		794,945			786,866			8,078			1.0
Funds (customer deposits w/o repos + mutual funds)		810,874			767,557			43,317			5.6

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Operating areas

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		8,248			8,117			8,247			8,472			8,596
Net fee income		2,541			2,682			2,683			2,724			2,848
Gains (losses) on financial transactions		533			449			561			451			692
Other operating income		229			266			267			180			234
Gross income		11,551			11,514			11,759			11,826			12,370
Operating expenses		(5,251	)		(5,289	)		(5,289	)		(5,473	)		(5,424	)
General administrative expenses		(4,818	)		(4,838	)		(4,839	)		(4,994	)		(4,941	)
Personnel		(2,595	)		(2,623	)		(2,624	)		(2,701	)		(2,694	)
Other general administrative expenses		(2,223	)		(2,215	)		(2,215	)		(2,294	)		(2,247	)
Depreciation and amortisation		(432	)		(451	)		(449	)		(479	)		(483	)
Net operating income		6,301			6,225			6,470			6,353			6,946
Net loan-loss provisions		(2,641	)		(2,380	)		(2,632	)		(2,487	)		(2,394	)
Other income		(474	)		(519	)		(333	)		(648	)		(744	)
Underlying profit before taxes		3,185			3,326			3,505			3,218			3,808
Tax on profit		(869	)		(962	)		(993	)		(808	)		(1,151	)
Underlying profit from continuing operations		2,316			2,364			2,513			2,409			2,657
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		2,316			2,364			2,513			2,409			2,657
Minority interests		310			355			353			310			322
Underlying attributable profit to the Group		2,006			2,008			2,160			2,099			2,335
Net capital gains and provisions		—			(72	)		3			(161	)		—
Attributable profit to the Group		2,006			1,936			2,163			1,938			2,335

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		771,706			781,418			783,379			789,406			790,347
Cash, central banks and credit institutions		209,503			205,234			208,173			199,936			215,037
Debt securities		188,424			178,918			183,243			191,857			189,826
o/w: available for sale		116,107			112,279			112,028			112,245			112,955
Other financial assets		93,322			104,543			103,088			90,554			84,443
Other assets		71,170			72,040			73,471			69,538			68,698
Total assets		1,334,125			1,342,153			1,351,355			1,341,291			1,348,350
Customer deposits		672,320			673,915			679,183			694,198			705,513
Central banks and credit institutions		223,354			211,305			210,074			197,664			213,283
Debt securities issued		191,173			196,751			199,485			198,561			190,653
Other financial liabilities		119,491			133,506			132,316			122,745			111,836
Other liabilities		28,835			29,550			30,781			31,005			30,185
Total liabilities		1,235,174			1,245,026			1,251,840			1,244,172			1,251,469
Total equity		98,951			97,127			99,514			97,119			96,881
Other managed and marketed customer funds		177,252			179,257			185,439			184,145			192,272
Mutual funds		139,830			141,397			146,503			149,139			155,719
Pension funds		11,103			10,979			11,034			11,298			11,344
Managed portfolios		26,319			26,881			27,903			23,708			25,208
Pro memoria:
Gross customer loans w/o repos		786,866			794,113			793,402			797,325			794,945
Funds (customer deposits w/o repos + mutual funds)		767,557			770,252			784,063			799,909			810,874

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Continental Europe

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		2,063			2,046			17			0.8
Net fee income		920			878			43			4.9
Gains (losses) on financial transactions		297			307			(10	)		(3.1	)
Other operating income		98			103			(5	)		(4.9	)
Gross income		3,379			3,333			45			1.4
Operating expenses		(1,685	)		(1,726	)		41			(2.4	)
General administrative expenses		(1,567	)		(1,615	)		48			(3.0	)
Personnel		(813	)		(825	)		12			(1.5	)
Other general administrative expenses		(754	)		(789	)		36			(4.5	)
Depreciation and amortisation		(118	)		(111	)		(7	)		6.2
Net operating income		1,694			1,608			86			5.4
Net loan-loss provisions		(262	)		(437	)		174			(40.0	)
Other income		(247	)		(114	)		(132	)		115.8
Underlying profit before taxes		1,185			1,057			128			12.2
Tax on profit		(334	)		(281	)		(53	)		18.7
Underlying profit from continuing operations		851			776			76			9.8
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		851			776			76			9.8
Minority interests		78			69			9			12.5
Underlying attributable profit to the Group		774			706			67			9.5
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		774			706			67			9.5

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		298,441			289,694			8,747			3.0
Cash, central banks and credit institutions		91,471			90,914			557			0.6
Debt securities		78,778			85,416			(6,638	)		(7.8	)
o/w: available for sale		54,197			56,361			(2,164	)		(3.8	)
Other financial assets		37,617			49,021			(11,403	)		(23.3	)
Other assets		24,211			28,463			(4,252	)		(14.9	)
Total assets		530,518			543,507			(12,989	)		(2.4	)
Customer deposits		273,480			266,841			6,640			2.5
Central banks and credit institutions		121,278			127,576			(6,298	)		(4.9	)
Debt securities issued		50,929			50,784			145			0.3
Other financial liabilities		42,788			54,493			(11,704	)		(21.5	)
Other liabilities		8,898			8,065			832			10.3
Total liabilities		497,373			507,759			(10,386	)		(2.0	)
Total equity		33,145			35,748			(2,603	)		(7.3	)
Other managed and marketed customer funds		77,372			70,481			6,890			9.8
Mutual funds		57,159			51,151			6,007			11.7
Pension funds		11,344			11,103			241			2.2
Managed portfolios		8,869			8,227			642			7.8
Pro memoria:
Gross customer loans w/o repos		302,922			300,441			2,481			0.8
Funds (customer deposits w/o repos + mutual funds)		328,747			315,791			12,955			4.1
Ratios (%) and other data
RoTE		10.60			9.01			1.59 p.
Efficiency ratio (with amortisations)		49.9			51.8			(1.91 p.	)
NPL ratio		5.62			7.08			(1.46 p.	)
Coverage ratio		60.6			65.4			(4.80 p.	)
Number of employees		56,910			58,090			(1,180	)		(2.0	)
Number of branches		4,719			5,487			(768	)		(14.0	)

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Continental Europe

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		2,046			2,019			2,038			2,057			2,063
Net fee income		878			883			895			842			920
Gains (losses) on financial transactions		307			108			166			237			297
Other operating income		103			93			128			7			98
Gross income		3,333			3,103			3,227			3,143			3,379
Operating expenses		(1,726	)		(1,710	)		(1,685	)		(1,659	)		(1,685	)
General administrative expenses		(1,615	)		(1,605	)		(1,578	)		(1,545	)		(1,567	)
Personnel		(825	)		(829	)		(806	)		(796	)		(813	)
Other general administrative expenses		(789	)		(775	)		(772	)		(748	)		(754	)
Depreciation and amortisation		(111	)		(106	)		(107	)		(115	)		(118	)
Net operating income		1,608			1,393			1,542			1,483			1,694
Net loan-loss provisions		(437	)		(280	)		(354	)		(271	)		(262	)
Other income		(114	)		(188	)		(112	)		(256	)		(247	)
Underlying profit before taxes		1,057			925			1,075			955			1,185
Tax on profit		(281	)		(253	)		(292	)		(258	)		(334	)
Underlying profit from continuing operations		776			672			783			698			851
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		776			672			783			698			851
Minority interests		69			80			98			83			78
Underlying attributable profit to the Group		706			592			685			615			774
Net capital gains and provisions		—			(169	)		—			—			—
Attributable profit to the Group		706			423			685			615			774

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		289,694			293,891			294,084			297,214			298,441
Cash, central banks and credit institutions		90,914			83,095			88,491			77,232			91,471
Debt securities		85,416			78,657			83,313			80,639			78,778
o/w: available for sale		56,361			53,129			54,353			54,474			54,197
Other financial assets		49,021			51,283			51,800			40,689			37,617
Other assets		28,463			28,129			27,573			24,360			24,211
Total assets		543,507			535,055			545,261			520,134			530,518
Customer deposits		266,841			264,410			268,800			269,934			273,480
Central banks and credit institutions		127,576			118,521			121,783			105,152			121,278
Debt securities issued		50,784			52,056			53,038			53,064			50,929
Other financial liabilities		54,493			57,090			57,538			49,042			42,788
Other liabilities		8,065			8,066			8,295			9,452			8,898
Total liabilities		507,759			500,143			509,454			486,644			497,373
Total equity		35,748			34,912			35,807			33,490			33,145
Other managed and marketed customer funds		70,481			70,180			71,681			73,624			77,372
Mutual funds		51,151			51,444			52,778			54,010			57,159
Pension funds		11,103			10,979			11,034			11,298			11,344
Managed portfolios		8,227			7,757			7,869			8,316			8,869
Pro memoria:
Gross customer loans w/o repos		300,441			303,425			301,781			302,564			302,922
Funds (customer deposits w/o repos + mutual funds)		315,791			312,850			319,232			322,606			328,747
Other information
NPL ratio		7.08			6.84			6.43			5.92			5.62
Coverage ratio		65.4			61.3			61.3			60.0			60.6
Cost of credit		0.60			0.51			0.46			0.44			0.38

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Continental Europe

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		2,063			2,058			6			0.3
Net fee income		920			880			41			4.6
Gains (losses) on financial transactions		297			307			(10	)		(3.3	)
Other operating income		98			102			(4	)		(4.3	)
Gross income		3,379			3,347			32			1.0
Operating expenses		(1,685	)		(1,733	)		48			(2.8	)
General administrative expenses		(1,567	)		(1,621	)		54			(3.3	)
Personnel		(813	)		(829	)		16			(1.9	)
Other general administrative expenses		(754	)		(792	)		39			(4.9	)
Depreciation and amortisation		(118	)		(112	)		(6	)		5.6
Net operating income		1,694			1,614			80			4.9
Net loan-loss provisions		(262	)		(437	)		175			(40.1	)
Other income		(247	)		(115	)		(132	)		115.1
Underlying profit before taxes		1,185			1,062			123			11.6
Tax on profit		(334	)		(283	)		(51	)		18.1
Underlying profit from continuing operations		851			779			72			9.2
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		851			779			72			9.2
Minority interests		78			69			8			12.0
Underlying attributable profit to the Group		774			710			64			9.0
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		774			710			64			9.0

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		298,441			290,446			7,995			2.8
Cash, central banks and credit institutions		91,471			91,256			216			0.2
Debt securities		78,778			85,580			(6,802	)		(7.9	)
o/w: available for sale		54,197			56,520			(2,323	)		(4.1	)
Other financial assets		37,617			49,034			(11,416	)		(23.3	)
Other assets		24,211			28,578			(4,367	)		(15.3	)
Total assets		530,518			544,893			(14,375	)		(2.6	)
Customer deposits		273,480			267,278			6,203			2.3
Central banks and credit institutions		121,278			128,192			(6,914	)		(5.4	)
Debt securities issued		50,929			50,901			28			0.1
Other financial liabilities		42,788			54,507			(11,718	)		(21.5	)
Other liabilities		8,898			8,081			817			10.1
Total liabilities		497,373			508,958			(11,585	)		(2.3	)
Total equity		33,145			35,935			(2,789	)		(7.8	)
Other managed and marketed customer funds		77,372			70,557			6,814			9.7
Mutual funds		57,159			51,179			5,980			11.7
Pension funds		11,344			11,103			241			2.2
Managed portfolios		8,869			8,275			594			7.2
Pro memoria:
Gross customer loans w/o repos		302,922			301,211			1,711			0.6
Funds (customer deposits w/o repos + mutual funds)		328,747			316,256			12,491			3.9

LOGO

Continental Europe

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		2,058			2,030			2,046			2,062			2,063
Net fee income		880			886			897			843			920
Gains (losses) on financial transactions		307			109			166			238			297
Other operating income		102			93			128			7			98
Gross income		3,347			3,117			3,236			3,150			3,379
Operating expenses		(1,733	)		(1,716	)		(1,690	)		(1,663	)		(1,685	)
General administrative expenses		(1,621	)		(1,610	)		(1,583	)		(1,548	)		(1,567	)
Personnel		(829	)		(832	)		(809	)		(798	)		(813	)
Other general administrative expenses		(792	)		(778	)		(774	)		(750	)		(754	)
Depreciation and amortisation		(112	)		(106	)		(107	)		(115	)		(118	)
Net operating income		1,614			1,401			1,546			1,487			1,694
Net loan-loss provisions		(437	)		(282	)		(355	)		(272	)		(262	)
Other income		(115	)		(188	)		(112	)		(257	)		(247	)
Underlying profit before taxes		1,062			931			1,079			958			1,185
Tax on profit		(283	)		(254	)		(293	)		(258	)		(334	)
Underlying profit from continuing operations		779			677			786			700			851
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		779			677			786			700			851
Minority interests		69			80			98			83			78
Underlying attributable profit to the Group		710			597			688			617			774
Net capital gains and provisions		—			(169	)		0			0			—
Attributable profit to the Group		710			428			688			617			774

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		290,446			295,328			294,559			298,048			298,441
Cash, central banks and credit institutions		91,256			83,362			88,673			77,278			91,471
Debt securities		85,580			79,002			83,476			80,926			78,778
o/w: available for sale		56,520			53,431			54,502			54,739			54,197
Other financial assets		49,034			51,319			51,817			40,708			37,617
Other assets		28,578			28,243			27,654			24,385			24,211
Total assets		544,893			537,253			546,179			521,345			530,518
Customer deposits		267,278			265,695			269,334			270,924			273,480
Central banks and credit institutions		128,192			118,920			122,047			105,117			121,278
Debt securities issued		50,901			52,160			52,988			53,083			50,929
Other financial liabilities		54,507			57,127			57,556			49,063			42,788
Other liabilities		8,081			8,127			8,317			9,494			8,898
Total liabilities		508,958			502,029			510,241			487,681			497,373
Total equity		35,935			35,225			35,938			33,665			33,145
Other managed and marketed customer funds		70,557			70,366			71,787			73,750			77,372
Mutual funds		51,179			51,598			52,852			54,145			57,159
Pension funds		11,103			10,979			11,034			11,298			11,344
Managed portfolios		8,275			7,790			7,901			8,307			8,869
Pro memoria:
Gross customer loans w/o repos		301,211			304,926			302,280			303,443			302,922
Funds (customer deposits w/o repos + mutual funds)		316,256			314,288			319,840			323,731			328,747

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Spain

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		747			819			(73	)		(8.9	)
Net fee income		459			424			35			8.3
Gains (losses) on financial transactions		230			224			6			2.7
Other operating income		103			75			27			36.4
Gross income		1,539			1,543			(4	)		(0.3	)
Operating expenses		(798	)		(837	)		39			(4.6	)
General administrative expenses		(752	)		(801	)		49			(6.1	)
Personnel		(399	)		(415	)		15			(3.7	)
Other general administrative expenses		(352	)		(386	)		34			(8.7	)
Depreciation and amortisation		(46	)		(36	)		(10	)		29.2
Net operating income		741			706			35			4.9
Net loan-loss provisions		(163	)		(231	)		68			(29.4	)
Other income		(64	)		(37	)		(27	)		72.7
Underlying profit before taxes		514			438			75			17.2
Tax on profit		(146	)		(126	)		(20	)		16.0
Underlying profit from continuing operations		367			312			55			17.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		367			312			55			17.7
Minority interests		6			5			1			13.8
Underlying attributable profit to the Group		362			307			55			17.7
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		362			307			55			17.7

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		153,060			154,848			(1,788	)		(1.2	)
Cash, central banks and credit institutions		64,609			63,966			643			1.0
Debt securities		57,207			61,853			(4,646	)		(7.5	)
o/w: available for sale		39,551			40,028			(478	)		(1.2	)
Other financial assets		34,822			46,176			(11,354	)		(24.6	)
Other assets		8,889			7,970			919			11.5
Total assets		318,588			334,813			(16,225	)		(4.8	)
Customer deposits		178,633			176,049			2,584			1.5
Central banks and credit institutions		66,905			69,432			(2,527	)		(3.6	)
Debt securities issued		17,702			23,103			(5,401	)		(23.4	)
Other financial liabilities		40,838			52,706			(11,868	)		(22.5	)
Other liabilities		3,457			2,336			1,121			48.0
Total liabilities		307,535			323,626			(16,092	)		(5.0	)
Total equity		11,054			11,187			(133	)		(1.2	)
Other managed and marketed customer funds		70,076			63,236			6,840			10.8
Mutual funds		52,176			46,447			5,730			12.3
Pension funds		10,396			10,194			201			2.0
Managed portfolios		7,504			6,594			910			13.8
Pro memoria:
Gross customer loans w/o repos		150,703			156,134			(5,430	)		(3.5	)
Funds (customer deposits w/o repos + mutual funds)		228,917			220,295			8,621			3.9
Ratios (%) and other data
RoTE		12.67			10.55			2.12 p.
Efficiency ratio (with amortisations)		51.8			54.2			(2.37 p.	)
NPL ratio		5.22			6.36			(1.14 p.	)
Coverage ratio		49.1			50.2			(1.10 p.	)
Number of employees		22,900			24,204			(1,304	)		(5.4	)
Number of branches		2,881			3,433			(552	)		(16.1	)

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Spain

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		819			783			728			747			747
Net fee income		424			449			456			451			459
Gains (losses) on financial transactions		224			65			149			157			230
Other operating income		75			46			64			(30	)		103
Gross income		1,543			1,343			1,398			1,324			1,539
Operating expenses		(837	)		(834	)		(824	)		(802	)		(798	)
General administrative expenses		(801	)		(799	)		(791	)		(766	)		(752	)
Personnel		(415	)		(410	)		(401	)		(408	)		(399	)
Other general administrative expenses		(386	)		(389	)		(390	)		(358	)		(352	)
Depreciation and amortisation		(36	)		(35	)		(33	)		(36	)		(46	)
Net operating income		706			509			574			522			741
Net loan-loss provisions		(231	)		(129	)		(140	)		(85	)		(163	)
Other income		(37	)		(82	)		(51	)		(97	)		(64	)
Underlying profit before taxes		438			298			382			340			514
Tax on profit		(126	)		(85	)		(108	)		(97	)		(146	)
Underlying profit from continuing operations		312			213			274			243			367
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		312			213			274			243			367
Minority interests		5			5			5			6			6
Underlying attributable profit to the Group		307			208			270			237			362
Net capital gains and provisions*		—			(216	)		—			—			—
Attributable profit to the Group		307			(8	)		270			237			362

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		154,848			156,467			153,370			152,850			153,060
Cash, central banks and credit institutions		63,966			56,843			63,234			54,207			64,609
Debt securities		61,853			56,509			60,485			58,084			57,207
o/w: available for sale		40,028			38,174			38,564			38,727			39,551
Other financial assets		46,176			48,144			48,769			37,741			34,822
Other assets		7,970			7,854			7,498			9,473			8,889
Total assets		334,813			325,816			333,355			312,354			318,588
Customer deposits		176,049			174,784			176,272			176,779			178,633
Central banks and credit institutions		69,432			61,363			66,985			52,071			66,905
Debt securities issued		23,103			20,994			20,340			20,863			17,702
Other financial liabilities		52,706			55,133			55,525			46,951			40,838
Other liabilities		2,336			2,208			2,347			4,186			3,457
Total liabilities		323,626			314,482			321,468			300,850			307,535
Total equity		11,187			11,333			11,887			11,504			11,054
Other managed and marketed customer funds		63,236			63,529			64,894			66,649			70,076
Mutual funds		46,447			46,907			48,076			49,357			52,176
Pension funds		10,194			10,079			10,128			10,359			10,396
Managed portfolios		6,594			6,543			6,690			6,932			7,504
Pro memoria:
Gross customer loans w/o repos		156,134			157,337			152,944			150,960			150,703
Funds (customer deposits w/o repos + mutual funds)		220,295			218,687			222,002			224,798			228,917
Other information
NPL ratio		6.36			6.06			5.82			5.41			5.22
Coverage ratio		50.2			47.6			47.6			48.3			49.1
Cost of credit		0.54			0.45			0.41			0.37			0.33

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

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Santander Consumer Finance

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		889			811			79			9.7
Net fee income		232			230			1			0.6
Gains (losses) on financial transactions		(2	)		(1	)		(1	)		56.0
Other operating income		(1	)		6			(6	)		—
Gross income		1,118			1,045			73			7.0
Operating expenses		(502	)		(483	)		(19	)		3.9
General administrative expenses		(458	)		(435	)		(23	)		5.3
Personnel		(210	)		(201	)		(9	)		4.3
Other general administrative expenses		(248	)		(234	)		(15	)		6.3
Depreciation and amortisation		(44	)		(48	)		4			(8.7	)
Net operating income		616			562			54			9.6
Net loan-loss provisions		(61	)		(114	)		53			(46.6	)
Other income		(37	)		(39	)		1			(3.3	)
Underlying profit before taxes		518			410			108			26.5
Tax on profit		(148	)		(117	)		(31	)		26.6
Underlying profit from continuing operations		370			293			77			26.4
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		370			293			77			26.4
Minority interests		56			42			14			34.4
Underlying attributable profit to the Group		314			251			63			25.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		314			251			63			25.1

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		84,523			76,235			8,288			10.9
Cash, central banks and credit institutions		6,543			5,876			668			11.4
Debt securities		3,780			3,593			187			5.2
o/w: available for sale		3,778			3,591			187			5.2
Other financial assets		33			67			(34	)		(51.2	)
Other assets		3,426			3,476			(49	)		(1.4	)
Total assets		98,305			89,247			9,058			10.1
Customer deposits		35,679			33,195			2,484			7.5
Central banks and credit institutions		20,511			20,707			(197	)		(0.9	)
Debt securities issued		28,991			22,433			6,558			29.2
Other financial liabilities		828			601			226			37.6
Other liabilities		3,395			3,162			233			7.4
Total liabilities		89,403			80,099			9,304			11.6
Total equity		8,902			9,148			(246	)		(2.7	)
Other managed and marketed customer funds		7			7			0			1.6
Mutual funds		2			2			(0	)		(10.0	)
Pension funds		6			5			0			5.2
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		87,006			79,136			7,870			9.9
Funds (customer deposits w/o repos + mutual funds)		35,680			33,197			2,483			7.5
Ratios (%) and other data
RoTE		17.10			12.83			4.26 p.
Efficiency ratio (with amortisations)		44.9			46.2			(1.31 p.	)
NPL ratio		2.62			3.28			(0.66 p.	)
Coverage ratio		108.9			111.9			(3.00 p.	)
Number of employees		14,862			14,675			187			1.3
Number of branches		568			584			(16	)		(2.7	)

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Santander Consumer Finance

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		811			833			880			867			889
Net fee income		230			228			219			184			232
Gains (losses) on financial transactions		(1	)		(5	)		(6	)		(2	)		(2	)
Other operating income		6			(6	)		13			10			(1	)
Gross income		1,045			1,051			1,106			1,060			1,118
Operating expenses		(483	)		(468	)		(467	)		(486	)		(502	)
General administrative expenses		(435	)		(425	)		(422	)		(437	)		(458	)
Personnel		(201	)		(201	)		(201	)		(206	)		(210	)
Other general administrative expenses		(234	)		(225	)		(220	)		(231	)		(248	)
Depreciation and amortisation		(48	)		(43	)		(45	)		(49	)		(44	)
Net operating income		562			583			639			574			616
Net loan-loss provisions		(114	)		(70	)		(116	)		(87	)		(61	)
Other income		(39	)		(41	)		(36	)		(52	)		(37	)
Underlying profit before taxes		410			472			487			434			518
Tax on profit		(117	)		(147	)		(142	)		(115	)		(148	)
Underlying profit from continuing operations		293			324			346			319			370
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		293			324			346			319			370
Minority interests		42			43			55			50			56
Underlying attributable profit to the Group		251			282			291			269			314
Net capital gains and provisions*		—			25			—			—			—
Attributable profit to the Group		251			307			291			269			314

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		76,235			79,592			82,525			85,180			84,523
Cash, central banks and credit institutions		5,876			6,086			6,508			7,144			6,543
Debt securities		3,593			3,615			4,021			3,927			3,780
o/w: available for sale		3,591			3,508			3,915			3,823			3,778
Other financial assets		67			47			47			38			33
Other assets		3,476			3,645			3,530			3,333			3,426
Total assets		89,247			92,985			96,632			99,622			98,305
Customer deposits		33,195			32,981			34,339			35,050			35,679
Central banks and credit institutions		20,707			22,287			21,882			23,373			20,511
Debt securities issued		22,433			25,399			27,275			27,892			28,991
Other financial liabilities		601			795			820			870			828
Other liabilities		3,162			3,294			3,505			3,280			3,395
Total liabilities		80,099			84,756			87,821			90,466			89,403
Total equity		9,148			8,229			8,811			9,156			8,902
Other managed and marketed customer funds		7			7			7			7			7
Mutual funds		2			2			2			2			2
Pension funds		5			5			6			6			6
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		79,136			82,272			85,215			87,742			87,006
Funds (customer deposits w/o repos + mutual funds)		33,197			32,983			34,340			35,052			35,680
Other information
NPL ratio		3.28			2.95			2.86			2.68			2.62
Coverage ratio		111.9			110.6			110.7			109.1			108.9
Cost of credit		0.64			0.55			0.49			0.47			0.39

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe.

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Santander Consumer Finance

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		889			821			69			8.4
Net fee income		232			231			1			0.2
Gains (losses) on financial transactions		(2	)		(1	)		(1	)		75.8
Other operating income		(1	)		6			(6	)		—
Gross income		1,118			1,056			62			5.9
Operating expenses		(502	)		(488	)		(15	)		3.0
General administrative expenses		(458	)		(439	)		(19	)		4.4
Personnel		(210	)		(203	)		(7	)		3.3
Other general administrative expenses		(248	)		(236	)		(13	)		5.4
Depreciation and amortisation		(44	)		(49	)		5			(9.6	)
Net operating income		616			569			48			8.4
Net loan-loss provisions		(61	)		(116	)		55			(47.3	)
Other income		(37	)		(39	)		1			(3.5	)
Underlying profit before taxes		518			414			104			25.0
Tax on profit		(148	)		(118	)		(30	)		25.2
Underlying profit from continuing operations		370			296			74			24.9
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		370			296			74			24.9
Minority interests		56			42			14			34.2
Underlying attributable profit to the Group		314			255			60			23.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		314			255			60			23.4

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		84,523			76,544			7,980			10.4
Cash, central banks and credit institutions		6,543			5,909			635			10.7
Debt securities		3,780			3,622			158			4.4
o/w: available for sale		3,778			3,620			158			4.4
Other financial assets		33			68			(35	)		(51.9	)
Other assets		3,426			3,485			(58	)		(1.7	)
Total assets		98,305			89,627			8,678			9.7
Customer deposits		35,679			33,322			2,357			7.1
Central banks and credit institutions		20,511			20,794			(284	)		(1.4	)
Debt securities issued		28,991			22,546			6,444			28.6
Other financial liabilities		828			603			225			37.3
Other liabilities		3,395			3,170			225			7.1
Total liabilities		89,403			80,436			8,967			11.1
Total equity		8,902			9,191			(289	)		(3.1	)
Other managed and marketed customer funds		7			7			0			1.6
Mutual funds		2			2			(0	)		(10.0	)
Pension funds		6			5			0			5.2
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		87,006			79,456			7,551			9.5
Funds (customer deposits w/o repos + mutual funds)		35,680			33,324			2,356			7.1

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Santander Consumer Finance

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		821			839			886			869			889
Net fee income		231			229			219			184			232
Gains (losses) on financial transactions		(1	)		(5	)		(6	)		(2	)		(2	)
Other operating income		6			(6	)		13			10			(1	)
Gross income		1,056			1,058			1,111			1,062			1,118
Operating expenses		(488	)		(471	)		(469	)		(487	)		(502	)
General administrative expenses		(439	)		(428	)		(424	)		(438	)		(458	)
Personnel		(203	)		(202	)		(203	)		(206	)		(210	)
Other general administrative expenses		(236	)		(226	)		(221	)		(231	)		(248	)
Depreciation and amortisation		(49	)		(43	)		(45	)		(49	)		(44	)
Net operating income		569			587			643			575			616
Net loan-loss provisions		(116	)		(71	)		(117	)		(87	)		(61	)
Other income		(39	)		(42	)		(36	)		(53	)		(37	)
Underlying profit before taxes		414			475			490			435			518
Tax on profit		(118	)		(148	)		(142	)		(115	)		(148	)
Underlying profit from continuing operations		296			327			348			320			370
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		296			327			348			320			370
Minority interests		42			43			55			50			56
Underlying attributable profit to the Group		255			284			293			270			314
Net capital gains and provisions*		—			26			(0	)		(0	)		—
Attributable profit to the Group		255			310			293			270			314

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		76,544			79,895			82,374			85,215			84,523
Cash, central banks and credit institutions		5,909			6,104			6,488			7,133			6,543
Debt securities		3,622			3,652			4,013			3,947			3,780
o/w: available for sale		3,620			3,546			3,907			3,843			3,778
Other financial assets		68			47			46			38			33
Other assets		3,485			3,656			3,530			3,338			3,426
Total assets		89,627			93,354			96,451			99,671			98,305
Customer deposits		33,322			33,131			34,292			35,090			35,679
Central banks and credit institutions		20,794			22,371			21,829			23,370			20,511
Debt securities issued		22,546			25,477			27,214			27,890			28,991
Other financial liabilities		603			797			820			872			828
Other liabilities		3,170			3,305			3,503			3,285			3,395
Total liabilities		80,436			85,081			87,659			90,507			89,403
Total equity		9,191			8,273			8,792			9,164			8,902
Other managed and marketed customer funds		7			7			7			7			7
Mutual funds		2			2			2			2			2
Pension funds		5			5			6			6			6
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		79,456			82,599			85,068			87,792			87,006
Funds (customer deposits w/o repos + mutual funds)		33,324			33,133			34,294			35,092			35,680

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe.

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Poland

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		218			197			21			10.6
Net fee income		101			96			5			5.1
Gains (losses) on financial transactions		16			25			(9	)		(37.4	)
Other operating income		(13	)		(6	)		(7	)		105.5
Gross income		321			311			10			3.2
Operating expenses		(146	)		(145	)		(1	)		0.6
General administrative expenses		(132	)		(131	)		(1	)		0.7
Personnel		(77	)		(74	)		(3	)		3.8
Other general administrative expenses		(55	)		(57	)		2			(3.4	)
Depreciation and amortisation		(14	)		(14	)		(0	)		0.2
Net operating income		175			166			9			5.4
Net loan-loss provisions		(27	)		(33	)		6			(18.6	)
Other income		(23	)		(22	)		(1	)		4.5
Underlying profit before taxes		125			111			14			12.7
Tax on profit		(39	)		(23	)		(16	)		69.8
Underlying profit from continuing operations		86			88			(2	)		(2.1	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		86			88			(2	)		(2.1	)
Minority interests		27			24			3			12.9
Underlying attributable profit to the Group		59			64			(5	)		(7.6	)
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		59			64			(5	)		(7.6	)

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		21,174			19,616			1,558			7.9
Cash, central banks and credit institutions		1,860			1,268			593			46.7
Debt securities		5,824			6,011			(187	)		(3.1	)
o/w: available for sale		5,390			5,246			144			2.7
Other financial assets		564			680			(116	)		(17.0	)
Other assets		953			975			(22	)		(2.3	)
Total assets		30,375			28,549			1,826			6.4
Customer deposits		22,981			21,329			1,652			7.7
Central banks and credit institutions		778			670			108			16.2
Debt securities issued		608			547			61			11.1
Other financial liabilities		538			601			(64	)		(10.6	)
Other liabilities		878			915			(37	)		(4.0	)
Total liabilities		25,781			24,061			1,720			7.1
Total equity		4,594			4,488			106			2.4
Other managed and marketed customer funds		3,482			3,249			233			7.2
Mutual funds		3,398			3,158			240			7.6
Pension funds		—			—			—			—
Managed portfolios		84			91			(7	)		(8.1	)
Pro memoria:
Gross customer loans w/o repos		21,903			20,467			1,437			7.0
Funds (customer deposits w/o repos + mutual funds)		26,379			24,487			1,892			7.7
Ratios (%) and other data
RoTE		9.68			10.71			(1.04 p.	)
Efficiency ratio (with amortisations)		45.5			46.6			(1.14 p.	)
NPL ratio		5.20			5.93			(0.73 p.	)
Coverage ratio		61.2			67.0			(5.80 p.	)
Number of employees		11,909			11,387			522			4.6
Number of branches		631			700			(69	)		(9.9	)

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Poland

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		197			200			215			222			218
Net fee income		96			97			106			101			101
Gains (losses) on financial transactions		25			30			14			14			16
Other operating income		(6	)		17			(5	)		(8	)		(13	)
Gross income		311			345			330			329			321
Operating expenses		(145	)		(146	)		(149	)		(139	)		(146	)
General administrative expenses		(131	)		(132	)		(134	)		(124	)		(132	)
Personnel		(74	)		(75	)		(77	)		(76	)		(77	)
Other general administrative expenses		(57	)		(56	)		(57	)		(48	)		(55	)
Depreciation and amortisation		(14	)		(14	)		(15	)		(15	)		(14	)
Net operating income		166			199			181			190			175
Net loan-loss provisions		(33	)		(34	)		(43	)		(35	)		(27	)
Other income		(22	)		(29	)		(6	)		(25	)		(23	)
Underlying profit before taxes		111			136			132			129			125
Tax on profit		(23	)		(28	)		(32	)		(38	)		(39	)
Underlying profit from continuing operations		88			108			100			91			86
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		88			108			100			91			86
Minority interests		24			33			31			28			27
Underlying attributable profit to the Group		64			75			69			63			59
Net capital gains and provisions*		—			29			—			—			—
Attributable profit to the Group		64			104			69			63			59

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		19,616			19,524			20,226			19,979			21,174
Cash, central banks and credit institutions		1,268			1,952			1,685			2,021			1,860
Debt securities		6,011			5,362			5,597			6,301			5,824
o/w: available for sale		5,246			4,502			4,998			5,774			5,390
Other financial assets		680			599			539			537			564
Other assets		975			945			941			941			953
Total assets		28,549			28,382			28,987			29,779			30,375
Customer deposits		21,329			21,136			22,000			22,780			22,981
Central banks and credit institutions		670			1,030			753			824			778
Debt securities issued		547			528			505			504			608
Other financial liabilities		601			597			550			511			538
Other liabilities		915			988			869			917			878
Total liabilities		24,061			24,279			24,678			25,537			25,781
Total equity		4,488			4,103			4,310			4,243			4,594
Other managed and marketed customer funds		3,249			3,146			3,351			3,202			3,482
Mutual funds		3,158			3,047			3,245			3,118			3,398
Pension funds		—			—			—			—			—
Managed portfolios		91			99			106			84			84
Pro memoria:
Gross customer loans w/o repos		20,467			20,342			21,092			20,697			21,903
Funds (customer deposits w/o repos + mutual funds)		24,487			24,182			25,246			25,898			26,379
Other information
NPL ratio		5.93			5.84			5.71			5.42			5.20
Coverage ratio		67.0			65.8			68.9			61.0			61.2
Cost of credit		0.82			0.75			0.76			0.70			0.66

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

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Poland

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		218			199			19			9.5
Net fee income		101			97			4			4.1
Gains (losses) on financial transactions		16			25			(10	)		(38.0	)
Other operating income		(13	)		(6	)		(7	)		103.5
Gross income		321			314			7			2.2
Operating expenses		(146	)		(146	)		1			(0.3	)
General administrative expenses		(132	)		(133	)		0			(0.3	)
Personnel		(77	)		(75	)		(2	)		2.8
Other general administrative expenses		(55	)		(58	)		2			(4.3	)
Depreciation and amortisation		(14	)		(14	)		0			(0.8	)
Net operating income		175			168			7			4.3
Net loan-loss provisions		(27	)		(33	)		6			(19.4	)
Other income		(23	)		(22	)		(1	)		3.5
Underlying profit before taxes		125			112			13			11.6
Tax on profit		(39	)		(23	)		(16	)		68.2
Underlying profit from continuing operations		86			89			(3	)		(3.1	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		86			89			(3	)		(3.1	)
Minority interests		27			24			3			11.8
Underlying attributable profit to the Group		59			65			(6	)		(8.5	)
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		59			65			(6	)		(8.5	)

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		21,174			19,760			1,414			7.2
Cash, central banks and credit institutions		1,860			1,277			583			45.7
Debt securities		5,824			6,055			(231	)		(3.8	)
o/w: available for sale		5,390			5,284			105			2.0
Other financial assets		564			685			(121	)		(17.6	)
Other assets		953			982			(29	)		(3.0	)
Total assets		30,375			28,759			1,616			5.6
Customer deposits		22,981			21,486			1,495			7.0
Central banks and credit institutions		778			674			103			15.3
Debt securities issued		608			551			57			10.3
Other financial liabilities		538			606			(68	)		(11.2	)
Other liabilities		878			921			(44	)		(4.7	)
Total liabilities		25,781			24,238			1,543			6.4
Total equity		4,594			4,521			73			1.6
Other managed and marketed customer funds		3,482			3,273			209			6.4
Mutual funds		3,398			3,181			217			6.8
Pension funds		—			—			—			—
Managed portfolios		84			92			(8	)		(8.8	)
Pro memoria:
Gross customer loans w/o repos		21,903			20,617			1,286			6.2
Funds (customer deposits w/o repos + mutual funds)		26,379			24,667			1,712			6.9

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Poland

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		199			203			216			225			218
Net fee income		97			98			106			102			101
Gains (losses) on financial transactions		25			30			14			15			16
Other operating income		(6	)		18			(5	)		(8	)		(13	)
Gross income		314			349			331			333			321
Operating expenses		(146	)		(148	)		(150	)		(141	)		(146	)
General administrative expenses		(133	)		(133	)		(134	)		(126	)		(132	)
Personnel		(75	)		(76	)		(77	)		(77	)		(77	)
Other general administrative expenses		(58	)		(57	)		(57	)		(49	)		(55	)
Depreciation and amortisation		(14	)		(14	)		(15	)		(15	)		(14	)
Net operating income		168			201			181			192			175
Net loan-loss provisions		(33	)		(35	)		(43	)		(35	)		(27	)
Other income		(22	)		(29	)		(6	)		(26	)		(23	)
Underlying profit before taxes		112			137			133			131			125
Tax on profit		(23	)		(28	)		(32	)		(39	)		(39	)
Underlying profit from continuing operations		89			109			100			92			86
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		89			109			100			92			86
Minority interests		24			33			31			28			27
Underlying attributable profit to the Group		65			76			70			64			59
Net capital gains and provisions*		—			30			(0	)		0			—
Attributable profit to the Group		65			105			69			64			59

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		19,760			20,493			20,669			20,848			21,174
Cash, central banks and credit institutions		1,277			2,048			1,722			2,109			1,860
Debt securities		6,055			5,628			5,720			6,575			5,824
o/w: available for sale		5,284			4,726			5,107			6,026			5,390
Other financial assets		685			628			551			560			564
Other assets		982			992			962			982			953
Total assets		28,759			29,790			29,623			31,074			30,375
Customer deposits		21,486			22,184			22,483			23,771			22,981
Central banks and credit institutions		674			1,081			770			860			778
Debt securities issued		551			554			517			526			608
Other financial liabilities		606			627			562			533			538
Other liabilities		921			1,038			888			957			878
Total liabilities		24,238			25,484			25,219			26,647			25,781
Total equity		4,521			4,307			4,404			4,427			4,594
Other managed and marketed customer funds		3,273			3,302			3,425			3,341			3,482
Mutual funds		3,181			3,198			3,317			3,254			3,398
Pension funds		—			—			—			—			—
Managed portfolios		92			104			108			87			84
Pro memoria:
Gross customer loans w/o repos		20,617			21,351			21,555			21,597			21,903
Funds (customer deposits w/o repos + mutual funds)		24,667			25,382			25,800			27,025			26,379

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

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Poland

PLN million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		940			858			82			9.5
Net fee income		435			418			17			4.1
Gains (losses) on financial transactions		67			108			(41	)		(38.0	)
Other operating income		(56	)		(27	)		(28	)		103.5
Gross income		1,386			1,357			29			2.2
Operating expenses		(630	)		(632	)		2			(0.3	)
General administrative expenses		(571	)		(572	)		2			(0.3	)
Personnel		(333	)		(324	)		(9	)		2.8
Other general administrative expenses		(238	)		(249	)		11			(4.3	)
Depreciation and amortisation		(59	)		(60	)		0			(0.8	)
Net operating income		756			724			31			4.3
Net loan-loss provisions		(116	)		(144	)		28			(19.4	)
Other income		(100	)		(97	)		(3	)		3.5
Underlying profit before taxes		539			483			56			11.6
Tax on profit		(167	)		(99	)		(68	)		68.2
Underlying profit from continuing operations		372			384			(12	)		(3.1	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		372			384			(12	)		(3.1	)
Minority interests		115			103			12			11.8
Underlying attributable profit to the Group		257			281			(24	)		(8.5	)
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		257			281			(24	)		(8.5	)

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		89,492			83,517			5,976			7.2
Cash, central banks and credit institutions		7,862			5,397			2,465			45.7
Debt securities		24,615			25,592			(977	)		(3.8	)
o/w: available for sale		22,779			22,334			445			2.0
Other financial assets		2,385			2,895			(511	)		(17.6	)
Other assets		4,027			4,150			(123	)		(3.0	)
Total assets		128,380			121,551			6,830			5.6
Customer deposits		97,128			90,810			6,318			7.0
Central banks and credit institutions		3,287			2,851			436			15.3
Debt securities issued		2,569			2,329			239			10.3
Other financial liabilities		2,273			2,560			(287	)		(11.2	)
Other liabilities		3,709			3,894			(185	)		(4.7	)
Total liabilities		108,965			102,443			6,522			6.4
Total equity		19,415			19,107			308			1.6
Other managed and marketed customer funds		14,716			13,833			883			6.4
Mutual funds		14,362			13,445			917			6.8
Pension funds		—			—			—			—
Managed portfolios		354			389			(34	)		(8.8	)
Pro memoria:
Gross customer loans w/o repos		92,574			87,139			5,435			6.2
Funds (customer deposits w/o repos + mutual funds)		111,490			104,255			7,235			6.9

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Poland

PLN million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		858			876			931			971			940
Net fee income		418			425			459			442			435
Gains (losses) on financial transactions		108			130			62			63			67
Other operating income		(27	)		76			(23	)		(35	)		(56	)
Gross income		1,357			1,507			1,430			1,440			1,386
Operating expenses		(632	)		(638	)		(647	)		(609	)		(630	)
General administrative expenses		(572	)		(576	)		(581	)		(544	)		(571	)
Personnel		(324	)		(330	)		(334	)		(332	)		(333	)
Other general administrative expenses		(249	)		(247	)		(247	)		(211	)		(238	)
Depreciation and amortisation		(60	)		(62	)		(66	)		(66	)		(59	)
Net operating income		724			869			783			831			756
Net loan-loss provisions		(144	)		(149	)		(186	)		(153	)		(116	)
Other income		(97	)		(126	)		(25	)		(111	)		(100	)
Underlying profit before taxes		483			593			573			566			539
Tax on profit		(99	)		(122	)		(138	)		(167	)		(167	)
Underlying profit from continuing operations		384			471			434			399			372
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		384			471			434			399			372
Minority interests		103			144			134			122			115
Underlying attributable profit to the Group		281			327			300			277			257
Net capital gains and provisions*		—			128			(0	)		0			—
Attributable profit to the Group		281			455			300			277			257

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		83,517			86,614			87,359			88,115			89,492
Cash, central banks and credit institutions		5,397			8,657			7,277			8,912			7,862
Debt securities		25,592			23,788			24,174			27,791			24,615
o/w: available for sale		22,334			19,972			21,586			25,467			22,779
Other financial assets		2,895			2,655			2,328			2,367			2,385
Other assets		4,150			4,193			4,064			4,151			4,027
Total assets		121,551			125,909			125,202			131,336			128,380
Customer deposits		90,810			93,761			95,025			100,469			97,128
Central banks and credit institutions		2,851			4,569			3,253			3,634			3,287
Debt securities issued		2,329			2,343			2,183			2,224			2,569
Other financial liabilities		2,560			2,649			2,374			2,253			2,273
Other liabilities		3,894			4,385			3,754			4,045			3,709
Total liabilities		102,443			107,707			106,589			112,625			108,965
Total equity		19,107			18,202			18,614			18,711			19,415
Other managed and marketed customer funds		13,833			13,957			14,475			14,121			14,716
Mutual funds		13,445			13,516			14,018			13,752			14,362
Pension funds		—			—			—			—			—
Managed portfolios		389			441			457			370			354
Pro memoria:
Gross customer loans w/o repos		87,139			90,241			91,102			91,280			92,574
Funds (customer deposits w/o repos + mutual funds)		104,255			107,278			109,042			114,220			111,490

(*).-

In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

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Portugal

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		172			183			(11	)		(6.1	)
Net fee income		89			90			(1	)		(1.2	)
Gains (losses) on financial transactions		34			54			(20	)		(36.3	)
Other operating income		(1	)		10			(12	)		—
Gross income		294			337			(43	)		(12.9	)
Operating expenses		(139	)		(154	)		15			(9.9	)
General administrative expenses		(129	)		(145	)		16			(11.0	)
Personnel		(83	)		(88	)		4			(5.1	)
Other general administrative expenses		(46	)		(57	)		11			(19.9	)
Depreciation and amortisation		(10	)		(9	)		(1	)		6.6
Net operating income		155			183			(28	)		(15.3	)
Net loan-loss provisions		10			(22	)		33			—
Other income		(14	)		(2	)		(12	)		525.9
Underlying profit before taxes		151			158			(8	)		(4.7	)
Tax on profit		(25	)		(37	)		12			(32.5	)
Underlying profit from continuing operations		126			122			4			3.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		126			122			4			3.7
Minority interests		1			1			(0	)		(23.4	)
Underlying attributable profit to the Group		125			121			5			3.8
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		125			121			5			3.8

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		27,215			27,655			(441	)		(1.6	)
Cash, central banks and credit institutions		3,544			4,198			(654	)		(15.6	)
Debt securities		10,786			11,915			(1,129	)		(9.5	)
o/w: available for sale		4,538			6,055			(1,517	)		(25.1	)
Other financial assets		1,612			1,886			(274	)		(14.5	)
Other assets		1,945			1,992			(47	)		(2.4	)
Total assets		45,102			47,647			(2,544	)		(5.3	)
Customer deposits		29,784			29,146			638			2.2
Central banks and credit institutions		7,256			9,643			(2,386	)		(24.7	)
Debt securities issued		3,628			4,700			(1,072	)		(22.8	)
Other financial liabilities		325			360			(35	)		(9.8	)
Other liabilities		704			864			(160	)		(18.6	)
Total liabilities		41,697			44,713			(3,016	)		(6.7	)
Total equity		3,405			2,933			472			16.1
Other managed and marketed customer funds		2,886			2,745			141			5.1
Mutual funds		1,513			1,444			69			4.8
Pension funds		942			902			40			4.4
Managed portfolios		431			399			31			7.9
Pro memoria:
Gross customer loans w/o repos		28,770			30,018			(1,248	)		(4.2	)
Funds (customer deposits w/o repos + mutual funds)		31,297			30,589			707			2.3
Ratios (%) and other data
RoTE		15.30			17.21			(1.90 p.	)
Efficiency ratio (with amortisations)		47.2			45.7			1.53 p.
NPL ratio		8.47			8.55			(0.08 p.	)
Coverage ratio		61.7			87.7			(26.00 p.	)
Number of employees		6,232			6,579			(347	)		(5.3	)
Number of branches		627			752			(125	)		(16.6	)

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Portugal

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		183			188			180			182			172
Net fee income		90			74			80			69			89
Gains (losses) on financial transactions		54			15			4			39			34
Other operating income		10			4			23			14			(1	)
Gross income		337			281			287			304			294
Operating expenses		(154	)		(149	)		(142	)		(143	)		(139	)
General administrative expenses		(145	)		(140	)		(133	)		(133	)		(129	)
Personnel		(88	)		(88	)		(80	)		(83	)		(83	)
Other general administrative expenses		(57	)		(52	)		(52	)		(50	)		(46	)
Depreciation and amortisation		(9	)		(9	)		(9	)		(10	)		(10	)
Net operating income		183			132			145			161			155
Net loan-loss provisions		(22	)		(6	)		(16	)		(9	)		10
Other income		(2	)		(21	)		(5	)		(5	)		(14	)
Underlying profit before taxes		158			104			124			146			151
Tax on profit		(37	)		(24	)		(31	)		(40	)		(25	)
Underlying profit from continuing operations		122			81			93			106			126
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		122			81			93			106			126
Minority interests		1			1			1			1			1
Underlying attributable profit to the Group		121			80			92			106			125
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		121			80			92			106			125

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		27,655			27,889			27,595			27,328			27,215
Cash, central banks and credit institutions		4,198			3,535			3,347			2,459			3,544
Debt securities		11,915			11,835			11,865			11,622			10,786
o/w: available for sale		6,055			5,851			5,773			5,683			4,538
Other financial assets		1,886			1,890			1,850			1,667			1,612
Other assets		1,992			1,734			1,780			1,745			1,945
Total assets		47,647			46,883			46,436			44,820			45,102
Customer deposits		29,146			29,964			30,374			30,002			29,784
Central banks and credit institutions		9,643			8,164			7,415			6,743			7,256
Debt securities issued		4,700			4,488			4,221			3,805			3,628
Other financial liabilities		360			312			344			349			325
Other liabilities		864			791			744			590			704
Total liabilities		44,713			43,718			43,098			41,489			41,697
Total equity		2,933			3,165			3,338			3,331			3,405
Other managed and marketed customer funds		2,745			2,686			2,655			2,770			2,886
Mutual funds		1,444			1,389			1,356			1,435			1,513
Pension funds		902			894			900			933			942
Managed portfolios		399			403			400			402			431
Pro memoria:
Gross customer loans w/o repos		30,018			29,918			29,260			29,030			28,770
Funds (customer deposits w/o repos + mutual funds)		30,589			31,353			31,730			31,438			31,297
Other information
NPL ratio		8.55			10.46			9.40			8.81			8.47
Coverage ratio		87.7			61.9			57.8			63.7			61.7
Cost of credit		0.28			0.21			0.17			0.18			0.07

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Spain’s real estate activity

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		(8	)		(12	)		4			(31.8	)
Net fee income		1			0			0			13.5
Gains (losses) on financial transactions		(0	)		0			(0	)		—
Other operating income		6			10			(4	)		(37.3	)
Gross income		(1	)		(1	)		(0	)		40.1
Operating expenses		(49	)		(54	)		5			(9.6	)
General administrative expenses		(47	)		(52	)		4			(8.5	)
Personnel		(10	)		(14	)		4			(25.5	)
Other general administrative expenses		(37	)		(38	)		1			(2.4	)
Depreciation and amortisation		(2	)		(3	)		1			(29.4	)
Net operating income		(50	)		(55	)		5			(8.8	)
Net loan-loss provisions		(21	)		(25	)		5			(18.0	)
Other income		(44	)		(11	)		(33	)		295.9
Underlying profit before taxes		(115	)		(92	)		(24	)		25.7
Tax on profit		35			27			8			29.2
Underlying profit from continuing operations		(81	)		(65	)		(16	)		24.3
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		(81	)		(65	)		(16	)		24.3
Minority interests		(11	)		(1	)		(9	)		645.5
Underlying attributable profit to the Group		(70	)		(63	)		(6	)		9.9
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		(70	)		(63	)		(6	)		9.9

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		1,629			2,551			(922	)		(36.1	)
Cash, central banks and credit institutions		827			724			103			14.2
Debt securities		240			603			(363	)		(60.1	)
o/w: available for sale		—			—			—			—
Other financial assets		423			102			321			314.6
Other assets		7,108			11,994			(4,886	)		(40.7	)
Total assets		10,227			15,974			(5,747	)		(36.0	)
Customer deposits		56			110			(54	)		(48.9	)
Central banks and credit institutions		6,526			9,377			(2,851	)		(30.4	)
Debt securities issued		—			—			—			—
Other financial liabilities		34			77			(43	)		(56.3	)
Other liabilities		213			577			(364	)		(63.1	)
Total liabilities		6,829			10,141			(3,312	)		(32.7	)
Total equity		3,398			5,833			(2,435	)		(41.7	)
Other managed and marketed customer funds		4			35			(31	)		(89.2	)
Mutual funds		4			35			(31	)		(89.2	)
Pension funds		0			1			(1	)		(88.8	)
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		3,680			5,887			(2,208	)		(37.5	)
Funds (customer deposits w/o repos + mutual funds)		60			145			(85	)		(58.5	)

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Spain’s real estate activity

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		(12	)		(10	)		(13	)		(8	)		(8	)
Net fee income		0			(0	)		0			0			1
Gains (losses) on financial transactions		0			(1	)		(0	)		9			(0	)
Other operating income		10			22			26			14			6
Gross income		(1	)		11			13			16			(1	)
Operating expenses		(54	)		(54	)		(54	)		(48	)		(49	)
General administrative expenses		(52	)		(51	)		(52	)		(46	)		(47	)
Personnel		(14	)		(14	)		(13	)		(9	)		(10	)
Other general administrative expenses		(38	)		(37	)		(38	)		(37	)		(37	)
Depreciation and amortisation		(3	)		(3	)		(3	)		(3	)		(2	)
Net operating income		(55	)		(42	)		(42	)		(33	)		(50	)
Net loan-loss provisions		(25	)		(51	)		(38	)		(52	)		(21	)
Other income		(11	)		(25	)		(12	)		(74	)		(44	)
Underlying profit before taxes		(92	)		(118	)		(92	)		(159	)		(115	)
Tax on profit		27			35			28			48			35
Underlying profit from continuing operations		(65	)		(83	)		(65	)		(111	)		(81	)
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		(65	)		(83	)		(65	)		(111	)		(81	)
Minority interests		(1	)		(2	)		8			(2	)		(11	)
Underlying attributable profit to the Group		(63	)		(81	)		(72	)		(109	)		(70	)
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		(63	)		(81	)		(72	)		(109	)		(70	)

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		2,551			2,302			1,932			1,990			1,629
Cash, central banks and credit institutions		724			998			985			1,390			827
Debt securities		603			242			242			239			240
o/w: available for sale		—			—			—			—			—
Other financial assets		102			463			466			423			423
Other assets		11,994			12,018			11,988			6,949			7,108
Total assets		15,974			16,024			15,613			10,991			10,227
Customer deposits		110			114			105			68			56
Central banks and credit institutions		9,377			8,684			8,473			7,262			6,526
Debt securities issued		—			646			696			—			—
Other financial liabilities		77			87			86			35			34
Other liabilities		577			573			579			229			213
Total liabilities		10,141			10,104			9,939			7,595			6,829
Total equity		5,833			5,919			5,674			3,397			3,398
Other managed and marketed customer funds		35			34			30			31			4
Mutual funds		35			33			30			31			4
Pension funds		1			1			0			0			0
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		5,887			5,432			4,825			4,230			3,680
Funds (customer deposits w/o repos + mutual funds)		145			147			134			100			60

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United Kingdom

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		1,096			1,154			(58	)		(5.1	)
Net fee income		254			280			(26	)		(9.5	)
Gains (losses) on financial transactions		71			68			3			4.7
Other operating income		12			11			1			5.6
Gross income		1,432			1,513			(81	)		(5.4	)
Operating expenses		(723	)		(794	)		70			(8.8	)
General administrative expenses		(644	)		(718	)		74			(10.3	)
Personnel		(344	)		(371	)		27			(7.3	)
Other general administrative expenses		(300	)		(346	)		47			(13.5	)
Depreciation and amortisation		(79	)		(76	)		(4	)		4.6
Net operating income		709			719			(11	)		(1.5	)
Net loan-loss provisions		(15	)		(7	)		(9	)		134.8
Other income		(105	)		(59	)		(46	)		78.4
Underlying profit before taxes		588			654			(66	)		(10.1	)
Tax on profit		(165	)		(192	)		27			(14.0	)
Underlying profit from continuing operations		423			462			(39	)		(8.4	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		423			462			(39	)		(8.4	)
Minority interests		7			9			(2	)		(25.7	)
Underlying attributable profit to the Group		416			453			(37	)		(8.1	)
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		416			453			(37	)		(8.1	)

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		253,322			267,628			(14,307	)		(5.3	)
Cash, central banks and credit institutions		34,186			37,563			(3,377	)		(9.0	)
Debt securities		27,859			20,068			7,790			38.8
o/w: available for sale		11,595			11,633			(39	)		(0.3	)
Other financial assets		25,582			28,670			(3,089	)		(10.8	)
Other assets		11,551			10,620			932			8.8
Total assets		352,499			364,549			(12,051	)		(3.3	)
Customer deposits		215,724			217,282			(1,558	)		(0.7	)
Central banks and credit institutions		21,971			15,210			6,761			44.5
Debt securities issued		66,375			76,614			(10,239	)		(13.4	)
Other financial liabilities		26,895			30,038			(3,143	)		(10.5	)
Other liabilities		5,230			6,142			(912	)		(14.8	)
Total liabilities		336,196			345,286			(9,090	)		(2.6	)
Total equity		16,303			19,264			(2,961	)		(15.4	)
Other managed and marketed customer funds		8,683			8,784			(101	)		(1.2	)
Mutual funds		8,566			8,661			(95	)		(1.1	)
Pension funds		—			—			—			—
Managed portfolios		117			124			(6	)		(5.1	)
Pro memoria:
Gross customer loans w/o repos		242,581			261,770			(19,190	)		(7.3	)
Funds (customer deposits w/o repos + mutual funds)		213,052			216,318			(3,266	)		(1.5	)
Ratios (%) and other data
RoTE		11.27			10.15			1.12 p.
Efficiency ratio (with amortisations)		50.5			52.4			(1.93 p.	)
NPL ratio		1.31			1.49			(0.18 p.	)
Coverage ratio		33.8			36.5			(2.70 p.	)
Number of employees		25,954			26,084			(130	)		(0.5	)
Number of branches		845			854			(9	)		(1.1	)

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United Kingdom

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		1,154			1,136			1,043			1,072			1,096
Net fee income		280			258			259			235			254
Gains (losses) on financial transactions		68			95			64			91			71
Other operating income		11			12			11			27			12
Gross income		1,513			1,501			1,377			1,425			1,432
Operating expenses		(794	)		(788	)		(703	)		(683	)		(723	)
General administrative expenses		(718	)		(705	)		(630	)		(604	)		(644	)
Personnel		(371	)		(358	)		(346	)		(343	)		(344	)
Other general administrative expenses		(346	)		(346	)		(284	)		(261	)		(300	)
Depreciation and amortisation		(76	)		(83	)		(73	)		(79	)		(79	)
Net operating income		719			713			675			742			709
Net loan-loss provisions		(7	)		(68	)		(44	)		61			(15	)
Other income		(59	)		(71	)		(85	)		(124	)		(105	)
Underlying profit before taxes		654			574			545			679			588
Tax on profit		(192	)		(173	)		(175	)		(196	)		(165	)
Underlying profit from continuing operations		462			401			370			483			423
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		462			401			370			483			423
Minority interests		9			11			7			9			7
Underlying attributable profit to the Group		453			390			364			474			416
Net capital gains and provisions*		—			107			—			(137	)		—
Attributable profit to the Group		453			497			364			338			416

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		267,628			259,852			250,294			251,250			253,322
Cash, central banks and credit institutions		37,563			36,307			33,754			36,643			34,186
Debt securities		20,068			20,620			26,315			28,045			27,859
o/w: available for sale		11,633			11,837			11,995			12,204			11,595
Other financial assets		28,670			32,832			30,168			26,819			25,582
Other assets		10,620			12,571			13,234			12,202			11,551
Total assets		364,549			362,184			353,764			354,960			352,499
Customer deposits		217,282			212,152			203,785			212,113			215,724
Central banks and credit institutions		15,210			20,933			22,305			21,590			21,971
Debt securities issued		76,614			72,556			73,204			71,108			66,375
Other financial liabilities		30,038			33,799			31,949			27,913			26,895
Other liabilities		6,142			6,120			6,167			5,221			5,230
Total liabilities		345,286			345,560			337,410			337,945			336,196
Total equity		19,264			16,623			16,355			17,014			16,303
Other managed and marketed customer funds		8,784			8,365			8,544			8,564			8,683
Mutual funds		8,661			8,246			8,426			8,447			8,566
Pension funds		—			—			—			—			—
Managed portfolios		124			119			117			118			117
Pro memoria:
Gross customer loans w/o repos		261,770			251,977			241,752			242,510			242,581
Funds (customer deposits w/o repos + mutual funds)		216,318			211,699			206,256			210,611			213,052
Other information
NPL ratio		1.49			1.47			1.47			1.41			1.31
Coverage ratio		36.5			36.5			36.0			32.9			33.8
Cost of credit		0.01			0.03			0.05			0.02			0.03

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

In 4Q’16 PPI.

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United Kingdom

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		1,096			1,034			62			6.0
Net fee income		254			251			3			1.1
Gains (losses) on financial transactions		71			61			10			16.9
Other operating income		12			10			2			17.9
Gross income		1,432			1,355			77			5.6
Operating expenses		(723	)		(711	)		(13	)		1.8
General administrative expenses		(644	)		(643	)		(1	)		0.2
Personnel		(344	)		(332	)		(12	)		3.5
Other general administrative expenses		(300	)		(310	)		11			(3.4	)
Depreciation and amortisation		(79	)		(68	)		(11	)		16.8
Net operating income		709			645			64			9.9
Net loan-loss provisions		(15	)		(6	)		(9	)		162.1
Other income		(105	)		(53	)		(52	)		99.1
Underlying profit before taxes		588			586			2			0.4
Tax on profit		(165	)		(172	)		7			(4.0	)
Underlying profit from continuing operations		423			414			9			2.2
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		423			414			9			2.2
Minority interests		7			8			(1	)		(17.0	)
Underlying attributable profit to the Group		416			406			11			2.6
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		416			406			11			2.6

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		253,322			247,614			5,708			2.3
Cash, central banks and credit institutions		34,186			34,754			(568	)		(1.6	)
Debt securities		27,859			18,567			9,291			50.0
o/w: available for sale		11,595			10,763			831			7.7
Other financial assets		25,582			26,526			(944	)		(3.6	)
Other assets		11,551			9,825			1,726			17.6
Total assets		352,499			337,287			15,212			4.5
Customer deposits		215,724			201,033			14,692			7.3
Central banks and credit institutions		21,971			14,072			7,899			56.1
Debt securities issued		66,375			70,885			(4,510	)		(6.4	)
Other financial liabilities		26,895			27,792			(896	)		(3.2	)
Other liabilities		5,230			5,683			(453	)		(8.0	)
Total liabilities		336,196			319,464			16,732			5.2
Total equity		16,303			17,823			(1,520	)		(8.5	)
Other managed and marketed customer funds		8,683			8,127			556			6.8
Mutual funds		8,566			8,013			553			6.9
Pension funds		—			—			—			—
Managed portfolios		117			114			3			2.5
Pro memoria:
Gross customer loans w/o repos		242,581			242,194			387			0.2
Funds (customer deposits w/o repos + mutual funds)		213,052			200,140			12,911			6.5

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United Kingdom

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		1,034			1,039			1,033			1,079			1,096
Net fee income		251			236			256			238			254
Gains (losses) on financial transactions		61			87			64			91			71
Other operating income		10			11			11			26			12
Gross income		1,355			1,373			1,363			1,435			1,432
Operating expenses		(711	)		(720	)		(697	)		(691	)		(723	)
General administrative expenses		(643	)		(645	)		(625	)		(611	)		(644	)
Personnel		(332	)		(328	)		(342	)		(345	)		(344	)
Other general administrative expenses		(310	)		(317	)		(283	)		(266	)		(300	)
Depreciation and amortisation		(68	)		(76	)		(72	)		(80	)		(79	)
Net operating income		645			652			667			744			709
Net loan-loss provisions		(6	)		(62	)		(43	)		55			(15	)
Other income		(53	)		(65	)		(83	)		(121	)		(105	)
Underlying profit before taxes		586			525			541			678			588
Tax on profit		(172	)		(158	)		(173	)		(196	)		(165	)
Underlying profit from continuing operations		414			367			368			481			423
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		414			367			368			481			423
Minority interests		8			10			7			9			7
Underlying attributable profit to the Group		406			357			361			473			416
Net capital gains and provisions*		—			96			3			(128	)		—
Attributable profit to the Group		406			454			364			345			416

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		247,614			251,035			251,903			251,441			253,322
Cash, central banks and credit institutions		34,754			35,075			33,971			36,671			34,186
Debt securities		18,567			19,921			26,484			28,066			27,859
o/w: available for sale		10,763			11,435			12,072			12,214			11,595
Other financial assets		26,526			31,718			30,362			26,840			25,582
Other assets		9,825			12,145			13,319			12,211			11,551
Total assets		337,287			349,894			356,039			355,229			352,499
Customer deposits		201,033			204,953			205,095			212,274			215,724
Central banks and credit institutions		14,072			20,223			22,448			21,606			21,971
Debt securities issued		70,885			70,094			73,675			71,162			66,375
Other financial liabilities		27,792			32,653			32,154			27,934			26,895
Other liabilities		5,683			5,912			6,206			5,225			5,230
Total liabilities		319,464			333,835			339,579			338,202			336,196
Total equity		17,823			16,059			16,460			17,027			16,303
Other managed and marketed customer funds		8,127			8,081			8,599			8,571			8,683
Mutual funds		8,013			7,966			8,481			8,453			8,566
Pension funds		—			—			—			—			—
Managed portfolios		114			115			118			118			117
Pro memoria:
Gross customer loans w/o repos		242,194			243,427			243,306			242,694			242,581
Funds (customer deposits w/o repos + mutual funds)		200,140			204,516			207,582			210,771			213,052

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

In 4Q’16 PPI.

LOGO

United Kingdom

£ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		942			889			53			6.0
Net fee income		218			216			2			1.1
Gains (losses) on financial transactions		61			52			9			16.9
Other operating income		10			8			2			17.9
Gross income		1,231			1,166			66			5.6
Operating expenses		(622	)		(611	)		(11	)		1.8
General administrative expenses		(554	)		(553	)		(1	)		0.2
Personnel		(296	)		(286	)		(10	)		3.5
Other general administrative expenses		(258	)		(267	)		9			(3.4	)
Depreciation and amortisation		(68	)		(59	)		(10	)		16.8
Net operating income		609			554			55			9.9
Net loan-loss provisions		(13	)		(5	)		(8	)		162.1
Other income		(90	)		(45	)		(45	)		99.1
Underlying profit before taxes		506			504			2			0.4
Tax on profit		(142	)		(148	)		6			(4.0	)
Underlying profit from continuing operations		364			356			8			2.2
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		364			356			8			2.2
Minority interests		6			7			(1	)		(17.0	)
Underlying attributable profit to the Group		358			349			9			2.6
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		358			349			9			2.6

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		216,724			211,841			4,883			2.3
Cash, central banks and credit institutions		29,247			29,733			(486	)		(1.6	)
Debt securities		23,834			15,885			7,949			50.0
o/w: available for sale		9,919			9,208			711			7.7
Other financial assets		21,886			22,694			(808	)		(3.6	)
Other assets		9,882			8,406			1,476			17.6
Total assets		301,573			288,559			13,014			4.5
Customer deposits		184,559			171,990			12,569			7.3
Central banks and credit institutions		18,797			12,039			6,758			56.1
Debt securities issued		56,786			60,644			(3,858	)		(6.4	)
Other financial liabilities		23,010			23,777			(767	)		(3.2	)
Other liabilities		4,474			4,862			(387	)		(8.0	)
Total liabilities		287,626			273,311			14,315			5.2
Total equity		13,948			15,248			(1,300	)		(8.5	)
Other managed and marketed customer funds		7,429			6,953			475			6.8
Mutual funds		7,328			6,855			473			6.9
Pension funds		—			—			—			—
Managed portfolios		100			98			2			2.5
Pro memoria:
Gross customer loans w/o repos		207,535			207,204			331			0.2
Funds (customer deposits w/o repos + mutual funds)		182,272			171,226			11,046			6.5

LOGO

United Kingdom

£ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		889			893			888			928			942
Net fee income		216			203			220			205			218
Gains (losses) on financial transactions		52			75			55			78			61
Other operating income		8			10			9			23			10
Gross income		1,166			1,180			1,172			1,234			1,231
Operating expenses		(611	)		(619	)		(599	)		(594	)		(622	)
General administrative expenses		(553	)		(554	)		(537	)		(526	)		(554	)
Personnel		(286	)		(282	)		(294	)		(297	)		(296	)
Other general administrative expenses		(267	)		(272	)		(243	)		(228	)		(258	)
Depreciation and amortisation		(59	)		(65	)		(62	)		(69	)		(68	)
Net operating income		554			561			573			640			609
Net loan-loss provisions		(5	)		(53	)		(37	)		48			(13	)
Other income		(45	)		(56	)		(71	)		(104	)		(90	)
Underlying profit before taxes		504			452			465			583			506
Tax on profit		(148	)		(136	)		(149	)		(169	)		(142	)
Underlying profit from continuing operations		356			316			316			414			364
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		356			316			316			414			364
Minority interests		7			8			6			7			6
Underlying attributable profit to the Group		349			307			311			407			358
Net capital gains and provisions*		—			83			2			(110	)		—
Attributable profit to the Group		349			390			313			297			358

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		211,841			214,768			215,511			215,116			216,724
Cash, central banks and credit institutions		29,733			30,008			29,063			31,373			29,247
Debt securities		15,885			17,043			22,658			24,012			23,834
o/w: available for sale		9,208			9,783			10,328			10,449			9,919
Other financial assets		22,694			27,136			25,975			22,962			21,886
Other assets		8,406			10,390			11,395			10,447			9,882
Total assets		288,559			299,345			304,602			303,909			301,573
Customer deposits		171,990			175,343			175,465			181,607			184,559
Central banks and credit institutions		12,039			17,301			19,205			18,485			18,797
Debt securities issued		60,644			59,968			63,031			60,881			56,786
Other financial liabilities		23,777			27,935			27,509			23,899			23,010
Other liabilities		4,862			5,058			5,310			4,470			4,474
Total liabilities		273,311			285,606			290,520			289,342			287,626
Total equity		15,248			13,739			14,082			14,567			13,948
Other managed and marketed customer funds		6,953			6,914			7,356			7,332			7,429
Mutual funds		6,855			6,815			7,255			7,232			7,328
Pension funds		—			—			—			—			—
Managed portfolios		98			98			101			101			100
Pro memoria:
Gross customer loans w/o repos		207,204			208,259			208,156			207,632			207,535
Funds (customer deposits w/o repos + mutual funds)		171,226			174,969			177,592			180,321			182,272

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

In 4Q’16 PPI.

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Latin America

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		3,947			3,044			903			29.7
Net fee income		1,401			961			440			45.8
Gains (losses) on financial transactions		329			141			187			132.6
Other operating income		3			(7	)		10			—
Gross income		5,680			4,139			1,540			37.2
Operating expenses		(2,179	)		(1,736	)		(443	)		25.5
General administrative expenses		(1,973	)		(1,584	)		(389	)		24.5
Personnel		(1,092	)		(868	)		(223	)		25.7
Other general administrative expenses		(882	)		(716	)		(165	)		23.1
Depreciation and amortisation		(205	)		(151	)		(54	)		35.7
Net operating income		3,501			2,404			1,098			45.7
Net loan-loss provisions		(1,306	)		(1,105	)		(202	)		18.2
Other income		(360	)		(189	)		(171	)		90.5
Underlying profit before taxes		1,835			1,110			725			65.3
Tax on profit		(590	)		(269	)		(321	)		119.4
Underlying profit from continuing operations		1,245			841			404			48.0
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		1,245			841			404			48.0
Minority interests		195			137			57			41.6
Underlying attributable profit to the Group		1,050			703			347			49.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,050			703			347			49.3

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		156,743			131,830			24,913			18.9
Cash, central banks and credit institutions		68,922			53,769			15,153			28.2
Debt securities		64,130			56,563			7,568			13.4
o/w: available for sale		30,460			26,683			3,778			14.2
Other financial assets		18,202			13,461			4,742			35.2
Other assets		19,666			17,206			2,460			14.3
Total assets		327,664			272,829			54,836			20.1
Customer deposits		153,207			125,348			27,859			22.2
Central banks and credit institutions		47,793			41,879			5,914			14.1
Debt securities issued		45,108			39,319			5,789			14.7
Other financial liabilities		39,120			31,213			7,907			25.3
Other liabilities		11,564			9,136			2,428			26.6
Total liabilities		296,792			246,896			49,896			20.2
Total equity		30,872			25,933			4,939			19.0
Other managed and marketed customer funds		87,794			68,191			19,604			28.7
Mutual funds		81,009			63,275			17,735			28.0
Pension funds		—			—			—			—
Managed portfolios		6,785			4,916			1,869			38.0
Pro memoria:
Gross customer loans w/o repos		163,536			136,490			27,046			19.8
Funds (customer deposits w/o repos + mutual funds)		197,257			160,927			36,330			22.6
Ratios (%) and other data
RoTE		17.40			14.31			3.09 p.
Efficiency ratio (with amortisations)		38.4			41.9			(3.58 p.	)
NPL ratio		4.50			4.88			(0.38 p.	)
Coverage ratio		90.5			79.7			10.80 p.
Number of employees		85,919			90,142			(4,223	)		(4.7	)
Number of branches		5,789			5,848			(59	)		(1.0	)

LOGO

Latin America

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		3,044			3,140			3,456			3,706			3,947
Net fee income		961			1,121			1,181			1,317			1,401
Gains (losses) on financial transactions		141			222			297			147			329
Other operating income		(7	)		25			(9	)		23			3
Gross income		4,139			4,507			4,925			5,193			5,680
Operating expenses		(1,736	)		(1,834	)		(1,974	)		(2,148	)		(2,179	)
General administrative expenses		(1,584	)		(1,666	)		(1,796	)		(1,960	)		(1,973	)
Personnel		(868	)		(938	)		(991	)		(1,088	)		(1,092	)
Other general administrative expenses		(716	)		(728	)		(805	)		(872	)		(882	)
Depreciation and amortisation		(151	)		(168	)		(178	)		(188	)		(205	)
Net operating income		2,404			2,673			2,952			3,045			3,501
Net loan-loss provisions		(1,105	)		(1,149	)		(1,329	)		(1,329	)		(1,306	)
Other income		(189	)		(217	)		(133	)		(247	)		(360	)
Underlying profit before taxes		1,110			1,308			1,490			1,469			1,835
Tax on profit		(269	)		(352	)		(407	)		(334	)		(590	)
Underlying profit from continuing operations		841			955			1,083			1,135			1,245
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		841			955			1,083			1,135			1,245
Minority interests		137			152			166			173			195
Underlying attributable profit to the Group		703			803			917			962			1,050
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		703			803			917			962			1,050

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		131,830			141,873			142,414			152,187			156,743
Cash, central banks and credit institutions		53,769			65,061			63,831			67,400			68,922
Debt securities		56,563			57,579			53,519			63,314			64,130
o/w: available for sale		26,683			28,333			29,094			29,219			30,460
Other financial assets		13,461			17,436			16,486			18,696			18,202
Other assets		17,206			17,647			17,986			19,171			19,666
Total assets		272,829			299,596			294,236			320,768			327,664
Customer deposits		125,348			134,898			133,436			143,747			153,207
Central banks and credit institutions		41,879			42,333			39,642			47,585			47,793
Debt securities issued		39,319			45,148			44,278			47,436			45,108
Other financial liabilities		31,213			38,896			37,406			41,395			39,120
Other liabilities		9,136			10,233			10,760			11,291			11,564
Total liabilities		246,896			271,508			265,523			291,454			296,792
Total equity		25,933			28,087			28,713			29,315			30,872
Other managed and marketed customer funds		68,191			76,722			79,125			81,482			87,794
Mutual funds		63,275			70,759			72,890			75,002			81,009
Pension funds		—			—			—			—			—
Managed portfolios		4,916			5,964			6,235			6,480			6,785
Pro memoria:
Gross customer loans w/o repos		136,490			147,770			148,690			159,134			163,536
Funds (customer deposits w/o repos + mutual funds)		160,927			174,157			175,579			187,516			197,257
Other information
NPL ratio		4.88			4.98			4.94			4.81			4.50
Coverage ratio		79.7			81.4			84.5			87.3			90.5
Cost of credit		3.39			3.41			3.42			3.37			3.36

LOGO

Latin America

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		3,947			3,554			393			11.1
Net fee income		1,401			1,117			284			25.4
Gains (losses) on financial transactions		329			143			185			129.3
Other operating income		3			(3	)		5			—
Gross income		5,680			4,812			867			18.0
Operating expenses		(2,179	)		(2,003	)		(176	)		8.8
General administrative expenses		(1,973	)		(1,827	)		(147	)		8.0
Personnel		(1,092	)		(1,004	)		(88	)		8.8
Other general administrative expenses		(882	)		(823	)		(58	)		7.1
Depreciation and amortisation		(205	)		(176	)		(29	)		16.5
Net operating income		3,501			2,809			692			24.6
Net loan-loss provisions		(1,306	)		(1,307	)		0			(0.0	)
Other income		(360	)		(239	)		(121	)		50.6
Underlying profit before taxes		1,835			1,264			571			45.2
Tax on profit		(590	)		(307	)		(283	)		92.3
Underlying profit from continuing operations		1,245			957			288			30.1
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		1,245			957			288			30.1
Minority interests		195			151			44			28.8
Underlying attributable profit to the Group		1,050			806			244			30.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,050			806			244			30.3

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		156,743			147,563			9,180			6.2
Cash, central banks and credit institutions		68,922			61,359			7,563			12.3
Debt securities		64,130			63,929			202			0.3
o/w: available for sale		30,460			30,313			147			0.5
Other financial assets		18,202			14,458			3,744			25.9
Other assets		19,666			19,948			(282	)		(1.4	)
Total assets		327,664			307,257			20,408			6.6
Customer deposits		153,207			140,619			12,588			9.0
Central banks and credit institutions		47,793			46,971			823			1.8
Debt securities issued		45,108			45,520			(412	)		(0.9	)
Other financial liabilities		39,120			34,410			4,710			13.7
Other liabilities		11,564			10,508			1,056			10.1
Total liabilities		296,792			278,028			18,764			6.7
Total equity		30,872			29,229			1,643			5.6
Other managed and marketed customer funds		87,794			79,086			8,708			11.0
Mutual funds		81,009			73,383			7,626			10.4
Pension funds		—			—			—			—
Managed portfolios		6,785			5,703			1,082			19.0
Pro memoria:
Gross customer loans w/o repos		163,536			153,053			10,483			6.8
Funds (customer deposits w/o repos + mutual funds)		197,257			180,894			16,363			9.0

LOGO

Latin America

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		3,554			3,497			3,642			3,864			3,947
Net fee income		1,117			1,250			1,250			1,383			1,401
Gains (losses) on financial transactions		143			245			320			139			329
Other operating income		(3	)		29			(11	)		29			3
Gross income		4,812			5,020			5,201			5,414			5,680
Operating expenses		(2,003	)		(2,032	)		(2,080	)		(2,243	)		(2,179	)
General administrative expenses		(1,827	)		(1,844	)		(1,892	)		(2,047	)		(1,973	)
Personnel		(1,004	)		(1,039	)		(1,047	)		(1,138	)		(1,092	)
Other general administrative expenses		(823	)		(805	)		(845	)		(909	)		(882	)
Depreciation and amortisation		(176	)		(188	)		(188	)		(196	)		(205	)
Net operating income		2,809			2,988			3,121			3,171			3,501
Net loan-loss provisions		(1,307	)		(1,287	)		(1,419	)		(1,392	)		(1,306	)
Other income		(239	)		(251	)		(135	)		(262	)		(360	)
Underlying profit before taxes		1,264			1,450			1,567			1,517			1,835
Tax on profit		(307	)		(398	)		(432	)		(339	)		(590	)
Underlying profit from continuing operations		957			1,052			1,135			1,177			1,245
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		957			1,052			1,135			1,177			1,245
Minority interests		151			165			172			179			195
Underlying attributable profit to the Group		806			887			963			999			1,050
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		806			887			963			999			1,050

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		147,563			148,715			151,304			155,726			156,743
Cash, central banks and credit institutions		61,359			68,494			68,177			69,255			68,922
Debt securities		63,929			60,562			57,315			65,176			64,130
o/w: available for sale		30,313			29,803			31,073			30,072			30,460
Other financial assets		14,458			18,239			17,663			19,490			18,202
Other assets		19,948			18,593			19,204			19,607			19,666
Total assets		307,257			314,603			313,664			329,254			327,664
Customer deposits		140,619			141,602			141,943			147,444			153,207
Central banks and credit institutions		46,971			44,396			42,332			48,989			47,793
Debt securities issued		45,520			47,567			47,153			48,346			45,108
Other financial liabilities		34,410			40,750			40,125			42,882			39,120
Other liabilities		10,508			10,782			11,498			11,582			11,564
Total liabilities		278,028			285,097			283,052			299,243			296,792
Total equity		29,229			29,506			30,612			30,011			30,872
Other managed and marketed customer funds		79,086			80,858			84,489			83,262			87,794
Mutual funds		73,383			74,585			77,905			76,734			81,009
Pension funds		—			—			—			—			—
Managed portfolios		5,703			6,273			6,584			6,528			6,785
Pro memoria:
Gross customer loans w/o repos		153,053			154,930			157,991			162,807			163,536
Funds (customer deposits w/o repos + mutual funds)		180,894			182,794			186,879			192,282			197,257

LOGO

Brazil

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		2,522			1,793			729			40.7
Net fee income		934			573			361			63.0
Gains (losses) on financial transactions		247			3			244			—
Other operating income		15			13			2			18.9
Gross income		3,717			2,381			1,337			56.1
Operating expenses		(1,314	)		(947	)		(367	)		38.8
General administrative expenses		(1,182	)		(857	)		(325	)		38.0
Personnel		(665	)		(473	)		(192	)		40.7
Other general administrative expenses		(517	)		(384	)		(133	)		34.6
Depreciation and amortisation		(132	)		(90	)		(42	)		46.5
Net operating income		2,403			1,434			969			67.6
Net loan-loss provisions		(910	)		(720	)		(190	)		26.4
Other income		(358	)		(177	)		(181	)		102.0
Underlying profit before taxes		1,135			536			599			111.6
Tax on profit		(422	)		(137	)		(285	)		208.0
Underlying profit from continuing operations		713			399			314			78.6
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		713			399			314			78.6
Minority interests		79			41			38			94.1
Underlying attributable profit to the Group		634			359			275			76.8
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		634			359			275			76.8

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		76,522			60,470			16,052			26.5
Cash, central banks and credit institutions		40,441			31,449			8,991			28.6
Debt securities		42,078			33,845			8,234			24.3
o/w: available for sale		18,401			15,761			2,640			16.7
Other financial assets		9,106			4,308			4,798			111.4
Other assets		13,603			12,042			1,560			13.0
Total assets		181,749			142,114			39,635			27.9
Customer deposits		75,858			59,737			16,121			27.0
Central banks and credit institutions		25,841			21,478			4,363			20.3
Debt securities issued		29,075			26,468			2,607			9.8
Other financial liabilities		24,921			14,777			10,144			68.6
Other liabilities		7,836			5,928			1,908			32.2
Total liabilities		163,530			128,389			35,141			27.4
Total equity		18,218			13,725			4,494			32.7
Other managed and marketed customer funds		63,852			48,621			15,232			31.3
Mutual funds		59,638			45,689			13,949			30.5
Pension funds		—			—			—			—
Managed portfolios		4,214			2,932			1,282			43.7
Pro memoria:
Gross customer loans w/o repos		81,184			63,875			17,309			27.1
Funds (customer deposits w/o repos + mutual funds)		104,309			80,383			23,926			29.8
Ratios (%) and other data
RoTE		16.52			13.50			3.01 p.
Efficiency ratio (with amortisations)		35.4			39.8			(4.42 p.	)
NPL ratio		5.36			5.93			(0.57 p.	)
Coverage ratio		98.1			83.7			14.40 p.
Number of employees		46,420			49,604			(3,184	)		(6.4	)
Number of branches		3,420			3,439			(19	)		(0.6	)

LOGO

Brazil

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		1,793			1,878			2,123			2,269			2,522
Net fee income		573			704			776			887			934
Gains (losses) on financial transactions		3			97			153			(14	)		247
Other operating income		13			23			(2	)		46			15
Gross income		2,381			2,703			3,050			3,187			3,717
Operating expenses		(947	)		(1,046	)		(1,177	)		(1,305	)		(1,314	)
General administrative expenses		(857	)		(942	)		(1,061	)		(1,187	)		(1,182	)
Personnel		(473	)		(523	)		(593	)		(663	)		(665	)
Other general administrative expenses		(384	)		(418	)		(467	)		(523	)		(517	)
Depreciation and amortisation		(90	)		(104	)		(117	)		(119	)		(132	)
Net operating income		1,434			1,657			1,873			1,882			2,403
Net loan-loss provisions		(720	)		(753	)		(951	)		(953	)		(910	)
Other income		(177	)		(193	)		(134	)		(193	)		(358	)
Underlying profit before taxes		536			711			788			736			1,135
Tax on profit		(137	)		(231	)		(244	)		(161	)		(422	)
Underlying profit from continuing operations		399			481			544			575			713
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		399			481			544			575			713
Minority interests		41			51			56			65			79
Underlying attributable profit to the Group		359			429			488			510			634
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		359			429			488			510			634

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		60,470			68,034			68,140			75,474			76,522
Cash, central banks and credit institutions		31,449			40,881			41,323			41,352			40,441
Debt securities		33,845			36,624			34,717			42,513			42,078
o/w: available for sale		15,761			17,243			17,324			16,275			18,401
Other financial assets		4,308			7,945			6,958			8,486			9,106
Other assets		12,042			12,589			12,787			13,677			13,603
Total assets		142,114			166,074			163,925			181,502			181,749
Customer deposits		59,737			68,672			68,970			72,478			75,858
Central banks and credit institutions		21,478			22,141			20,658			27,226			25,841
Debt securities issued		26,468			31,200			29,685			31,679			29,075
Other financial liabilities		14,777			20,628			20,431			24,974			24,921
Other liabilities		5,928			7,046			7,274			7,561			7,836
Total liabilities		128,389			149,688			147,018			163,917			163,530
Total equity		13,725			16,386			16,907			17,584			18,218
Other managed and marketed customer funds		48,621			55,908			56,698			59,631			63,852
Mutual funds		45,689			52,385			52,955			55,733			59,638
Pension funds		—			—			—			—			—
Managed portfolios		2,932			3,522			3,743			3,898			4,214
Pro memoria:
Gross customer loans w/o repos		63,875			72,096			72,376			80,306			81,184
Funds (customer deposits w/o repos + mutual funds)		80,383			91,507			93,350			99,771			104,309
Other information
NPL ratio		5.93			6.11			6.12			5.90			5.36
Coverage ratio		83.7			85.3			89.3			93.1			98.1
Cost of credit		4.63			4.71			4.87			4.89			4.84

LOGO

Brazil

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		2,522			2,302			220			9.6
Net fee income		934			735			198			27.0
Gains (losses) on financial transactions		247			3			243			—
Other operating income		15			17			(1	)		(7.4	)
Gross income		3,717			3,057			661			21.6
Operating expenses		(1,314	)		(1,216	)		(98	)		8.1
General administrative expenses		(1,182	)		(1,100	)		(82	)		7.5
Personnel		(665	)		(607	)		(58	)		9.6
Other general administrative expenses		(517	)		(494	)		(24	)		4.8
Depreciation and amortisation		(132	)		(116	)		(16	)		14.1
Net operating income		2,403			1,841			562			30.5
Net loan-loss provisions		(910	)		(924	)		15			(1.6	)
Other income		(358	)		(228	)		(130	)		57.3
Underlying profit before taxes		1,135			689			446			64.8
Tax on profit		(422	)		(176	)		(246	)		139.9
Underlying profit from continuing operations		713			513			200			39.1
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		713			513			200			39.1
Minority interests		79			52			27			51.2
Underlying attributable profit to the Group		634			460			174			37.7
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		634			460			174			37.7

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		76,522			73,662			2,859			3.9
Cash, central banks and credit institutions		40,441			38,310			2,130			5.6
Debt securities		42,078			41,228			850			2.1
o/w: available for sale		18,401			19,200			(799	)		(4.2	)
Other financial assets		9,106			5,247			3,858			73.5
Other assets		13,603			14,670			(1,067	)		(7.3	)
Total assets		181,749			173,118			8,631			5.0
Customer deposits		75,858			72,770			3,088			4.2
Central banks and credit institutions		25,841			26,164			(323	)		(1.2	)
Debt securities issued		29,075			32,242			(3,168	)		(9.8	)
Other financial liabilities		24,921			18,001			6,920			38.4
Other liabilities		7,836			7,222			615			8.5
Total liabilities		163,530			156,399			7,131			4.6
Total equity		18,218			16,719			1,499			9.0
Other managed and marketed customer funds		63,852			59,228			4,624			7.8
Mutual funds		59,638			55,657			3,982			7.2
Pension funds		—			—			—			—
Managed portfolios		4,214			3,572			642			18.0
Pro memoria:
Gross customer loans w/o repos		81,184			77,810			3,374			4.3
Funds (customer deposits w/o repos + mutual funds)		104,309			97,920			6,389			6.5

LOGO

Brazil

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		2,302			2,217			2,295			2,417			2,522
Net fee income		735			837			843			951			934
Gains (losses) on financial transactions		3			119			175			(24	)		247
Other operating income		17			28			(5	)		52			15
Gross income		3,057			3,200			3,308			3,396			3,717
Operating expenses		(1,216	)		(1,237	)		(1,275	)		(1,396	)		(1,314	)
General administrative expenses		(1,100	)		(1,114	)		(1,149	)		(1,270	)		(1,182	)
Personnel		(607	)		(619	)		(643	)		(710	)		(665	)
Other general administrative expenses		(494	)		(495	)		(505	)		(560	)		(517	)
Depreciation and amortisation		(116	)		(123	)		(126	)		(126	)		(132	)
Net operating income		1,841			1,963			2,033			2,000			2,403
Net loan-loss provisions		(924	)		(888	)		(1,038	)		(1,016	)		(910	)
Other income		(228	)		(228	)		(137	)		(205	)		(358	)
Underlying profit before taxes		689			847			858			780			1,135
Tax on profit		(176	)		(277	)		(266	)		(166	)		(422	)
Underlying profit from continuing operations		513			570			591			614			713
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		513			570			591			614			713
Minority interests		52			61			61			70			79
Underlying attributable profit to the Group		460			509			530			544			634
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		460			509			530			544			634

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		73,662			72,257			72,999			76,602			76,522
Cash, central banks and credit institutions		38,310			43,419			44,270			41,970			40,441
Debt securities		41,228			38,897			37,192			43,148			42,078
o/w: available for sale		19,200			18,314			18,559			16,518			18,401
Other financial assets		5,247			8,438			7,454			8,612			9,106
Other assets		14,670			13,371			13,699			13,881			13,603
Total assets		173,118			176,382			175,613			184,213			181,749
Customer deposits		72,770			72,935			73,888			73,561			75,858
Central banks and credit institutions		26,164			23,516			22,131			27,633			25,841
Debt securities issued		32,242			33,137			31,802			32,152			29,075
Other financial liabilities		18,001			21,909			21,887			25,347			24,921
Other liabilities		7,222			7,483			7,792			7,674			7,836
Total liabilities		156,399			158,979			157,500			166,366			163,530
Total equity		16,719			17,403			18,113			17,847			18,218
Other managed and marketed customer funds		59,228			59,378			60,741			60,522			63,852
Mutual funds		55,657			55,637			56,731			56,566			59,638
Pension funds		—			—			—			—			—
Managed portfolios		3,572			3,741			4,010			3,956			4,214
Pro memoria:
Gross customer loans w/o repos		77,810			76,571			77,537			81,505			81,184
Funds (customer deposits w/o repos + mutual funds)		97,920			97,187			100,006			101,262			104,309

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Brazil

R$ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		8,437			7,701			736			9.6
Net fee income		3,124			2,460			664			27.0
Gains (losses) on financial transactions		825			11			814			—
Other operating income		52			56			(4	)		(7.4	)
Gross income		12,438			10,227			2,210			21.6
Operating expenses		(4,397	)		(4,068	)		(329	)		8.1
General administrative expenses		(3,956	)		(3,682	)		(274	)		7.5
Personnel		(2,225	)		(2,030	)		(195	)		9.6
Other general administrative expenses		(1,731	)		(1,651	)		(79	)		4.8
Depreciation and amortisation		(441	)		(387	)		(55	)		14.1
Net operating income		8,041			6,159			1,881			30.5
Net loan-loss provisions		(3,045	)		(3,093	)		49			(1.6	)
Other income		(1,198	)		(762	)		(437	)		57.3
Underlying profit before taxes		3,798			2,304			1,494			64.8
Tax on profit		(1,412	)		(589	)		(823	)		139.9
Underlying profit from continuing operations		2,386			1,716			670			39.1
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,386			1,716			670			39.1
Minority interests		265			175			90			51.2
Underlying attributable profit to the Group		2,121			1,540			581			37.7
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		2,121			1,540			581			37.7

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		258,643			248,979			9,665			3.9
Cash, central banks and credit institutions		136,689			129,488			7,200			5.6
Debt securities		142,225			139,351			2,873			2.1
o/w: available for sale		62,195			64,895			(2,701	)		(4.2	)
Other financial assets		30,777			17,736			13,041			73.5
Other assets		45,977			49,584			(3,607	)		(7.3	)
Total assets		614,310			585,139			29,172			5.0
Customer deposits		256,399			245,962			10,437			4.2
Central banks and credit institutions		87,342			88,435			(1,093	)		(1.2	)
Debt securities issued		98,272			108,979			(10,707	)		(9.8	)
Other financial liabilities		84,232			60,843			23,389			38.4
Other liabilities		26,487			24,410			2,077			8.5
Total liabilities		552,733			528,629			24,104			4.6
Total equity		61,577			56,509			5,068			9.0
Other managed and marketed customer funds		215,821			200,192			15,630			7.8
Mutual funds		201,577			188,119			13,458			7.2
Pension funds		—			—			—			—
Managed portfolios		14,244			12,072			2,171			18.0
Pro memoria:
Gross customer loans w/o repos		274,402			262,999			11,403			4.3
Funds (customer deposits w/o repos + mutual funds)		352,564			330,968			21,596			6.5

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Brazil

R$ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		7,701			7,417			7,679			8,088			8,437
Net fee income		2,460			2,799			2,821			3,183			3,124
Gains (losses) on financial transactions		11			398			584			(81	)		825
Other operating income		56			94			(16	)		174			52
Gross income		10,227			10,708			11,067			11,364			12,438
Operating expenses		(4,068	)		(4,138	)		(4,266	)		(4,671	)		(4,397	)
General administrative expenses		(3,682	)		(3,727	)		(3,843	)		(4,249	)		(3,956	)
Personnel		(2,030	)		(2,072	)		(2,152	)		(2,376	)		(2,225	)
Other general administrative expenses		(1,651	)		(1,655	)		(1,691	)		(1,873	)		(1,731	)
Depreciation and amortisation		(387	)		(411	)		(423	)		(422	)		(441	)
Net operating income		6,159			6,570			6,801			6,693			8,041
Net loan-loss provisions		(3,093	)		(2,972	)		(3,473	)		(3,398	)		(3,045	)
Other income		(762	)		(763	)		(457	)		(686	)		(1,198	)
Underlying profit before taxes		2,304			2,835			2,870			2,609			3,798
Tax on profit		(589	)		(926	)		(891	)		(554	)		(1,412	)
Underlying profit from continuing operations		1,716			1,908			1,979			2,055			2,386
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		1,716			1,908			1,979			2,055			2,386
Minority interests		175			204			205			234			265
Underlying attributable profit to the Group		1,540			1,704			1,774			1,821			2,121
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		1,540			1,704			1,774			1,821			2,121

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		248,979			244,229			246,736			258,914			258,643
Cash, central banks and credit institutions		129,488			146,756			149,631			141,858			136,689
Debt securities		139,351			131,473			125,708			145,841			142,225
o/w: available for sale		64,895			61,900			62,731			55,832			62,195
Other financial assets		17,736			28,520			25,193			29,110			30,777
Other assets		49,584			45,194			46,302			46,918			45,977
Total assets		585,139			596,171			593,572			622,641			614,310
Customer deposits		245,962			246,520			249,741			248,635			256,399
Central banks and credit institutions		88,435			79,483			74,803			93,399			87,342
Debt securities issued		108,979			112,002			107,490			108,674			98,272
Other financial liabilities		60,843			74,052			73,979			85,672			84,232
Other liabilities		24,410			25,292			26,338			25,938			26,487
Total liabilities		528,629			537,348			532,351			562,318			552,733
Total equity		56,509			58,823			61,221			60,323			61,577
Other managed and marketed customer funds		200,192			200,697			205,304			204,565			215,821
Mutual funds		188,119			188,052			191,749			191,192			201,577
Pension funds		—			—			—			—			—
Managed portfolios		12,072			12,645			13,555			13,373			14,244
Pro memoria:
Gross customer loans w/o repos		262,999			258,811			262,075			275,488			274,402
Funds (customer deposits w/o repos + mutual funds)		330,968			328,491			338,021			342,265			352,564

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Mexico

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		624			594			30			5.1
Net fee income		180			173			7			3.9
Gains (losses) on financial transactions		33			34			(1	)		(2.6	)
Other operating income		(13	)		(9	)		(4	)		41.6
Gross income		824			792			32			4.0
Operating expenses		(319	)		(322	)		3			(0.8	)
General administrative expenses		(291	)		(293	)		2			(0.7	)
Personnel		(150	)		(152	)		3			(1.7	)
Other general administrative expenses		(141	)		(140	)		(1	)		0.4
Depreciation and amortisation		(29	)		(29	)		1			(2.0	)
Net operating income		505			470			34			7.3
Net loan-loss provisions		(233	)		(221	)		(12	)		5.4
Other income		(4	)		(6	)		2			(32.9	)
Underlying profit before taxes		267			243			25			10.1
Tax on profit		(56	)		(55	)		(1	)		2.2
Underlying profit from continuing operations		211			187			23			12.5
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		211			187			23			12.5
Minority interests		47			45			3			6.6
Underlying attributable profit to the Group		163			143			20			14.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		163			143			20			14.3

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		29,316			28,702			614			2.1
Cash, central banks and credit institutions		14,760			10,883			3,877			35.6
Debt securities		16,200			16,945			(746	)		(4.4	)
o/w: available for sale		6,978			5,627			1,351			24.0
Other financial assets		6,575			6,502			73			1.1
Other assets		2,958			2,604			354			13.6
Total assets		69,809			65,636			4,173			6.4
Customer deposits		33,971			28,214			5,757			20.4
Central banks and credit institutions		13,283			11,516			1,767			15.3
Debt securities issued		5,429			5,452			(23	)		(0.4	)
Other financial liabilities		9,785			12,606			(2,821	)		(22.4	)
Other liabilities		1,842			1,697			145			8.5
Total liabilities		64,311			59,485			4,826			8.1
Total equity		5,498			6,151			(653	)		(10.6	)
Other managed and marketed customer funds		10,905			11,628			(723	)		(6.2	)
Mutual funds		10,905			11,628			(723	)		(6.2	)
Pension funds		—			—			—			—
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		29,996			28,760			1,236			4.3
Funds (customer deposits w/o repos + mutual funds)		39,155			37,245			1,910			5.1
Ratios (%) and other data
RoTE		18.75			12.95			5.81 p.
Efficiency ratio (with amortisations)		38.8			40.7			(1.89 p.	)
NPL ratio		2.77			3.06			(0.29 p.	)
Coverage ratio		104.8			97.5			7.30 p.
Number of employees		17,580			17,869			(289	)		(1.6	)
Number of branches		1,389			1,386			3			0.2

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Mexico

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		594			579			598			615			624
Net fee income		173			190			169			179			180
Gains (losses) on financial transactions		34			23			38			54			33
Other operating income		(9	)		(5	)		(9	)		(19	)		(13	)
Gross income		792			786			796			828			824
Operating expenses		(322	)		(317	)		(311	)		(325	)		(319	)
General administrative expenses		(293	)		(289	)		(287	)		(300	)		(291	)
Personnel		(152	)		(159	)		(139	)		(156	)		(150	)
Other general administrative expenses		(140	)		(130	)		(148	)		(144	)		(141	)
Depreciation and amortisation		(29	)		(29	)		(24	)		(25	)		(29	)
Net operating income		470			469			486			503			505
Net loan-loss provisions		(221	)		(214	)		(194	)		(203	)		(233	)
Other income		(6	)		(11	)		(5	)		(8	)		(4	)
Underlying profit before taxes		243			244			288			293			267
Tax on profit		(55	)		(52	)		(65	)		(75	)		(56	)
Underlying profit from continuing operations		187			192			223			217			211
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		187			192			223			217			211
Minority interests		45			46			51			49			47
Underlying attributable profit to the Group		143			146			172			169			163
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		143			146			172			169			163

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		28,702			28,215			27,757			27,315			29,316
Cash, central banks and credit institutions		10,883			11,493			11,432			13,362			14,760
Debt securities		16,945			15,801			13,064			14,124			16,200
o/w: available for sale		5,627			6,734			6,590			7,088			6,978
Other financial assets		6,502			6,739			6,923			7,722			6,575
Other assets		2,604			2,379			2,477			2,590			2,958
Total assets		65,636			64,628			61,653			65,112			69,809
Customer deposits		28,214			27,497			25,982			28,910			33,971
Central banks and credit institutions		11,516			10,159			9,820			11,269			13,283
Debt securities issued		5,452			5,410			5,229			5,393			5,429
Other financial liabilities		12,606			14,195			13,216			12,648			9,785
Other liabilities		1,697			1,707			1,941			2,037			1,842
Total liabilities		59,485			58,967			56,188			60,257			64,311
Total equity		6,151			5,661			5,465			4,855			5,498
Other managed and marketed customer funds		11,628			11,359			10,937			10,242			10,905
Mutual funds		11,628			11,359			10,937			10,242			10,905
Pension funds		—			—			—			—			—
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		28,760			28,790			28,490			28,017			29,996
Funds (customer deposits w/o repos + mutual funds)		37,245			36,939			34,804			36,438			39,155
Other information
NPL ratio		3.06			3.01			2.95			2.76			2.77
Coverage ratio		97.5			102.3			101.9			103.8			104.8
Cost of credit		2.95			2.96			2.86			2.86			2.94

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Mexico

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		624			547			77			14.0
Net fee income		180			160			20			12.7
Gains (losses) on financial transactions		33			31			2			5.7
Other operating income		(13	)		(9	)		(5	)		53.7
Gross income		824			730			94			12.9
Operating expenses		(319	)		(297	)		(23	)		7.7
General administrative expenses		(291	)		(270	)		(21	)		7.8
Personnel		(150	)		(140	)		(9	)		6.7
Other general administrative expenses		(141	)		(129	)		(12	)		9.0
Depreciation and amortisation		(29	)		(27	)		(2	)		6.3
Net operating income		505			433			72			16.5
Net loan-loss provisions		(233	)		(204	)		(29	)		14.4
Other income		(4	)		(6	)		2			(27.1	)
Underlying profit before taxes		267			223			44			19.6
Tax on profit		(56	)		(51	)		(6	)		10.9
Underlying profit from continuing operations		211			173			38			22.1
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		211			173			38			22.1
Minority interests		47			41			6			15.7
Underlying attributable profit to the Group		163			132			32			24.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		163			132			32			24.1

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		29,316			28,090			1,227			4.4
Cash, central banks and credit institutions		14,760			10,651			4,109			38.6
Debt securities		16,200			16,583			(384	)		(2.3	)
o/w: available for sale		6,978			5,507			1,471			26.7
Other financial assets		6,575			6,363			212			3.3
Other assets		2,958			2,548			410			16.1
Total assets		69,809			64,235			5,573			8.7
Customer deposits		33,971			27,612			6,359			23.0
Central banks and credit institutions		13,283			11,270			2,013			17.9
Debt securities issued		5,429			5,336			94			1.8
Other financial liabilities		9,785			12,337			(2,552	)		(20.7	)
Other liabilities		1,842			1,661			181			10.9
Total liabilities		64,311			58,216			6,095			10.5
Total equity		5,498			6,019			(522	)		(8.7	)
Other managed and marketed customer funds		10,905			11,380			(475	)		(4.2	)
Mutual funds		10,905			11,380			(475	)		(4.2	)
Pension funds		—			—			—			—
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		29,996			28,146			1,850			6.6
Funds (customer deposits w/o repos + mutual funds)		39,155			36,450			2,705			7.4

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Mexico

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		547			548			579			607			624
Net fee income		160			179			164			177			180
Gains (losses) on financial transactions		31			22			37			52			33
Other operating income		(9	)		(5	)		(8	)		(19	)		(13	)
Gross income		730			744			772			818			824
Operating expenses		(297	)		(300	)		(301	)		(321	)		(319	)
General administrative expenses		(270	)		(273	)		(278	)		(296	)		(291	)
Personnel		(140	)		(150	)		(135	)		(154	)		(150	)
Other general administrative expenses		(129	)		(123	)		(143	)		(142	)		(141	)
Depreciation and amortisation		(27	)		(27	)		(23	)		(24	)		(29	)
Net operating income		433			444			470			497			505
Net loan-loss provisions		(204	)		(202	)		(188	)		(201	)		(233	)
Other income		(6	)		(11	)		(5	)		(7	)		(4	)
Underlying profit before taxes		223			231			278			289			267
Tax on profit		(51	)		(49	)		(62	)		(74	)		(56	)
Underlying profit from continuing operations		173			182			215			215			211
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		173			182			215			215			211
Minority interests		41			44			49			48			47
Underlying attributable profit to the Group		132			138			166			166			163
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		132			138			166			166			163

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		28,090			29,085			30,144			29,709			29,316
Cash, central banks and credit institutions		10,651			11,848			12,415			14,533			14,760
Debt securities		16,583			16,289			14,187			15,362			16,200
o/w: available for sale		5,507			6,941			7,157			7,709			6,978
Other financial assets		6,363			6,947			7,519			8,398			6,575
Other assets		2,548			2,452			2,690			2,817			2,958
Total assets		64,235			66,621			66,954			70,819			69,809
Customer deposits		27,612			28,345			28,216			31,444			33,971
Central banks and credit institutions		11,270			10,472			10,664			12,257			13,283
Debt securities issued		5,336			5,576			5,678			5,866			5,429
Other financial liabilities		12,337			14,632			14,353			13,756			9,785
Other liabilities		1,661			1,759			2,108			2,215			1,842
Total liabilities		58,216			60,785			61,020			65,538			64,311
Total equity		6,019			5,835			5,935			5,281			5,498
Other managed and marketed customer funds		11,380			11,709			11,877			11,140			10,905
Mutual funds		11,380			11,709			11,877			11,140			10,905
Pension funds		—			—			—			—			—
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		28,146			29,677			30,940			30,472			29,996
Funds (customer deposits w/o repos + mutual funds)		36,450			38,078			37,797			39,632			39,155

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Mexico

Million pesos


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		13,465			11,808			1,657			14.0
Net fee income		3,883			3,445			439			12.7
Gains (losses) on financial transactions		718			679			39			5.7
Other operating income		(286	)		(186	)		(100	)		53.7
Gross income		17,779			15,745			2,034			12.9
Operating expenses		(6,894	)		(6,402	)		(491	)		7.7
General administrative expenses		(6,271	)		(5,817	)		(454	)		7.8
Personnel		(3,233	)		(3,030	)		(203	)		6.7
Other general administrative expenses		(3,038	)		(2,787	)		(251	)		9.0
Depreciation and amortisation		(623	)		(586	)		(37	)		6.3
Net operating income		10,886			9,343			1,543			16.5
Net loan-loss provisions		(5,032	)		(4,399	)		(633	)		14.4
Other income		(90	)		(123	)		33			(27.1	)
Underlying profit before taxes		5,764			4,821			943			19.6
Tax on profit		(1,217	)		(1,097	)		(120	)		10.9
Underlying profit from continuing operations		4,548			3,724			824			22.1
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		4,548			3,724			824			22.1
Minority interests		1,025			886			139			15.7
Underlying attributable profit to the Group		3,523			2,839			684			24.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		3,523			2,839			684			24.1

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		586,841			562,286			24,555			4.4
Cash, central banks and credit institutions		295,456			213,208			82,248			38.6
Debt securities		324,275			331,959			(7,684	)		(2.3	)
o/w: available for sale		139,676			110,231			29,445			26.7
Other financial assets		131,618			127,371			4,248			3.3
Other assets		59,203			51,004			8,199			16.1
Total assets		1,397,394			1,285,828			111,566			8.7
Customer deposits		680,013			552,715			127,298			23.0
Central banks and credit institutions		265,900			225,602			40,299			17.9
Debt securities issued		108,677			106,804			1,873			1.8
Other financial liabilities		195,878			246,965			(51,087	)		(20.7	)
Other liabilities		36,878			33,251			3,627			10.9
Total liabilities		1,287,346			1,165,337			122,010			10.5
Total equity		110,047			120,491			(10,444	)		(8.7	)
Other managed and marketed customer funds		218,284			227,797			(9,513	)		(4.2	)
Mutual funds		218,284			227,797			(9,513	)		(4.2	)
Pension funds		—			—			—			—
Managed portfolios		—			—			—			—
Pro memoria:
Gross customer loans w/o repos		600,451			563,420			37,031			6.6
Funds (customer deposits w/o repos + mutual funds)		783,787			729,637			54,150			7.4

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Mexico

Million pesos


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		11,808			11,823			12,488			13,099			13,465
Net fee income		3,445			3,867			3,540			3,823			3,883
Gains (losses) on financial transactions		679			474			799			1,127			718
Other operating income		(186	)		(110	)		(180	)		(404	)		(286	)
Gross income		15,745			16,054			16,647			17,645			17,779
Operating expenses		(6,402	)		(6,479	)		(6,497	)		(6,922	)		(6,894	)
General administrative expenses		(5,817	)		(5,896	)		(6,001	)		(6,395	)		(6,271	)
Personnel		(3,030	)		(3,246	)		(2,905	)		(3,329	)		(3,233	)
Other general administrative expenses		(2,787	)		(2,650	)		(3,096	)		(3,065	)		(3,038	)
Depreciation and amortisation		(586	)		(583	)		(496	)		(527	)		(623	)
Net operating income		9,343			9,576			10,151			10,723			10,886
Net loan-loss provisions		(4,399	)		(4,364	)		(4,062	)		(4,337	)		(5,032	)
Other income		(123	)		(233	)		(98	)		(161	)		(90	)
Underlying profit before taxes		4,821			4,979			5,990			6,225			5,764
Tax on profit		(1,097	)		(1,060	)		(1,346	)		(1,596	)		(1,217	)
Underlying profit from continuing operations		3,724			3,919			4,643			4,629			4,548
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		3,724			3,919			4,643			4,629			4,548
Minority interests		886			939			1,067			1,040			1,025
Underlying attributable profit to the Group		2,839			2,979			3,577			3,589			3,523
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		2,839			2,979			3,577			3,589			3,523

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		562,286			582,206			603,403			594,704			586,841
Cash, central banks and credit institutions		213,208			237,163			248,519			290,915			295,456
Debt securities		331,959			326,059			283,998			307,500			324,275
o/w: available for sale		110,231			138,950			143,262			154,318			139,676
Other financial assets		127,371			139,064			150,504			168,114			131,618
Other assets		51,004			49,086			53,837			56,382			59,203
Total assets		1,285,828			1,333,578			1,340,261			1,417,615			1,397,394
Customer deposits		552,715			567,398			564,813			629,430			680,013
Central banks and credit institutions		225,602			209,625			213,469			245,346			265,900
Debt securities issued		106,804			111,627			113,669			117,418			108,677
Other financial liabilities		246,965			292,904			287,306			275,371			195,878
Other liabilities		33,251			35,217			42,204			44,344			36,878
Total liabilities		1,165,337			1,216,771			1,221,461			1,311,908			1,287,346
Total equity		120,491			116,807			118,800			105,707			110,047
Other managed and marketed customer funds		227,797			234,392			237,753			222,986			218,284
Mutual funds		227,797			234,392			237,753			222,986			218,284
Pension funds		—			—			—			—			—
Managed portfolios		—			—			—			—			—
Pro memoria:
Gross customer loans w/o repos		563,420			594,067			619,334			609,973			600,451
Funds (customer deposits w/o repos + mutual funds)		729,637			762,226			756,611			793,325			783,787

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Chile

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		485			421			64			15.1
Net fee income		107			88			20			22.3
Gains (losses) on financial transactions		49			48			1			1.4
Other operating income		4			(0	)		5			—
Gross income		645			556			89			16.0
Operating expenses		(264	)		(235	)		(29	)		12.2
General administrative expenses		(238	)		(216	)		(22	)		10.4
Personnel		(140	)		(128	)		(12	)		9.7
Other general administrative expenses		(98	)		(88	)		(10	)		11.3
Depreciation and amortisation		(26	)		(19	)		(6	)		32.4
Net operating income		381			321			60			18.7
Net loan-loss provisions		(122	)		(109	)		(13	)		11.7
Other income		2			1			1			41.9
Underlying profit before taxes		261			213			48			22.5
Tax on profit		(47	)		(40	)		(7	)		17.7
Underlying profit from continuing operations		214			173			41			23.6
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		214			173			41			23.6
Minority interests		67			52			15			29.6
Underlying attributable profit to the Group		147			122			26			21.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		147			122			26			21.1

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		38,137			33,350			4,787			14.4
Cash, central banks and credit institutions		5,755			5,299			457			8.6
Debt securities		4,494			3,721			773			20.8
o/w: available for sale		3,951			3,517			434			12.3
Other financial assets		2,501			2,620			(119	)		(4.5	)
Other assets		2,067			1,898			168			8.9
Total assets		52,954			46,888			6,066			12.9
Customer deposits		26,340			24,679			1,661			6.7
Central banks and credit institutions		6,678			6,287			391			6.2
Debt securities issued		10,258			7,282			2,976			40.9
Other financial liabilities		3,384			3,032			352			11.6
Other liabilities		1,218			1,159			59			5.1
Total liabilities		47,877			42,438			5,439			12.8
Total equity		5,077			4,450			627			14.1
Other managed and marketed customer funds		10,545			7,063			3,482			49.3
Mutual funds		7,974			5,079			2,895			57.0
Pension funds		—			—			—			—
Managed portfolios		2,571			1,984			587			29.6
Pro memoria:
Gross customer loans w/o repos		39,259			34,320			4,939			14.4
Funds (customer deposits w/o repos + mutual funds)		34,262			29,702			4,560			15.4
Ratios (%) and other data
RoTE		17.07			16.43			0.63 p.
Efficiency ratio (with amortisations)		40.9			42.3			(1.38 p.	)
NPL ratio		4.93			5.45			(0.52 p.	)
Coverage ratio		58.9			54.6			4.30 p.
Number of employees		11,858			12,468			(610	)		(4.9	)
Number of branches		416			471			(55	)		(11.7	)

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Chile

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		421			449			472			521			485
Net fee income		88			85			89			91			107
Gains (losses) on financial transactions		48			42			53			63			49
Other operating income		(0	)		1			2			(3	)		4
Gross income		556			577			616			672			645
Operating expenses		(235	)		(237	)		(249	)		(265	)		(264	)
General administrative expenses		(216	)		(216	)		(225	)		(238	)		(238	)
Personnel		(128	)		(139	)		(142	)		(148	)		(140	)
Other general administrative expenses		(88	)		(76	)		(83	)		(90	)		(98	)
Depreciation and amortisation		(19	)		(21	)		(23	)		(27	)		(26	)
Net operating income		321			339			368			407			381
Net loan-loss provisions		(109	)		(127	)		(146	)		(131	)		(122	)
Other income		1			(1	)		6			(35	)		2
Underlying profit before taxes		213			211			228			241			261
Tax on profit		(40	)		(31	)		(42	)		(46	)		(47	)
Underlying profit from continuing operations		173			181			187			195			214
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		173			181			187			195			214
Minority interests		52			55			58			58			67
Underlying attributable profit to the Group		122			126			129			137			147
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		122			126			129			137			147

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		33,350			35,322			35,883			37,662			38,137
Cash, central banks and credit institutions		5,299			6,290			5,327			5,955			5,755
Debt securities		3,721			3,767			4,197			5,348			4,494
o/w: available for sale		3,517			3,241			3,869			4,787			3,951
Other financial assets		2,620			2,722			2,580			2,474			2,501
Other assets		1,898			1,939			1,952			2,065			2,067
Total assets		46,888			50,041			49,939			53,505			52,954
Customer deposits		24,679			25,636			25,460			27,317			26,340
Central banks and credit institutions		6,287			7,305			6,783			7,172			6,678
Debt securities issued		7,282			8,419			9,165			10,174			10,258
Other financial liabilities		3,032			3,299			2,939			2,794			3,384
Other liabilities		1,159			1,112			1,107			1,226			1,218
Total liabilities		42,438			45,771			45,453			48,683			47,877
Total equity		4,450			4,270			4,486			4,822			5,077
Other managed and marketed customer funds		7,063			8,044			9,941			9,903			10,545
Mutual funds		5,079			5,603			7,449			7,321			7,974
Pension funds		—			—			—			—			—
Managed portfolios		1,984			2,441			2,492			2,582			2,571
Pro memoria:
Gross customer loans w/o repos		34,320			36,337			36,945			38,800			39,259
Funds (customer deposits w/o repos + mutual funds)		29,702			31,207			32,850			34,559			34,262
Other information
NPL ratio		5.45			5.28			5.12			5.05			4.93
Coverage ratio		54.6			55.5			58.1			59.1			58.9
Cost of credit		1.58			1.59			1.55			1.43			1.42

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Chile

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		485			466			19			4.0
Net fee income		107			97			10			10.5
Gains (losses) on financial transactions		49			53			(4	)		(8.4	)
Other operating income		4			(0	)		5			—
Gross income		645			616			29			4.8
Operating expenses		(264	)		(260	)		(4	)		1.3
General administrative expenses		(238	)		(239	)		1			(0.3	)
Personnel		(140	)		(142	)		1			(0.9	)
Other general administrative expenses		(98	)		(97	)		(1	)		0.5
Depreciation and amortisation		(26	)		(21	)		(4	)		19.6
Net operating income		381			355			26			7.3
Net loan-loss provisions		(122	)		(121	)		(1	)		0.9
Other income		2			2			0			28.2
Underlying profit before taxes		261			236			25			10.7
Tax on profit		(47	)		(44	)		(3	)		6.3
Underlying profit from continuing operations		214			192			22			11.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		214			192			22			11.7
Minority interests		67			57			10			17.1
Underlying attributable profit to the Group		147			135			13			9.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		147			135			13			9.4

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		38,137			35,820			2,317			6.5
Cash, central banks and credit institutions		5,755			5,691			64			1.1
Debt securities		4,494			3,996			498			12.5
o/w: available for sale		3,951			3,778			173			4.6
Other financial assets		2,501			2,814			(313	)		(11.1	)
Other assets		2,067			2,039			28			1.4
Total assets		52,954			50,360			2,593			5.1
Customer deposits		26,340			26,506			(167	)		(0.6	)
Central banks and credit institutions		6,678			6,752			(75	)		(1.1	)
Debt securities issued		10,258			7,821			2,437			31.2
Other financial liabilities		3,384			3,256			127			3.9
Other liabilities		1,218			1,245			(27	)		(2.2	)
Total liabilities		47,877			45,581			2,296			5.0
Total equity		5,077			4,779			297			6.2
Other managed and marketed customer funds		10,545			7,586			2,959			39.0
Mutual funds		7,974			5,455			2,519			46.2
Pension funds		—			—			—			—
Managed portfolios		2,571			2,131			440			20.6
Pro memoria:
Gross customer loans w/o repos		39,259			36,862			2,397			6.5
Funds (customer deposits w/o repos + mutual funds)		34,262			31,901			2,361			7.4

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Chile

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		466			493			500			538			485
Net fee income		97			93			94			94			107
Gains (losses) on financial transactions		53			46			56			65			49
Other operating income		(0	)		1			3			(4	)		4
Gross income		616			632			653			693			645
Operating expenses		(260	)		(260	)		(263	)		(273	)		(264	)
General administrative expenses		(239	)		(237	)		(238	)		(245	)		(238	)
Personnel		(142	)		(153	)		(150	)		(153	)		(140	)
Other general administrative expenses		(97	)		(84	)		(88	)		(93	)		(98	)
Depreciation and amortisation		(21	)		(24	)		(25	)		(28	)		(26	)
Net operating income		355			372			390			420			381
Net loan-loss provisions		(121	)		(140	)		(155	)		(135	)		(122	)
Other income		2			(1	)		7			(37	)		2
Underlying profit before taxes		236			232			242			248			261
Tax on profit		(44	)		(34	)		(44	)		(48	)		(47	)
Underlying profit from continuing operations		192			198			197			200			214
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		192			198			197			200			214
Minority interests		57			60			61			60			67
Underlying attributable profit to the Group		135			138			136			141			147
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		135			138			136			141			147

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		35,820			36,638			37,059			37,518			38,137
Cash, central banks and credit institutions		5,691			6,524			5,502			5,933			5,755
Debt securities		3,996			3,908			4,335			5,327			4,494
o/w: available for sale		3,778			3,362			3,996			4,769			3,951
Other financial assets		2,814			2,824			2,665			2,465			2,501
Other assets		2,039			2,011			2,016			2,057			2,067
Total assets		50,360			51,905			51,576			53,300			52,954
Customer deposits		26,506			26,591			26,295			27,212			26,340
Central banks and credit institutions		6,752			7,577			7,005			7,144			6,678
Debt securities issued		7,821			8,733			9,465			10,135			10,258
Other financial liabilities		3,256			3,422			3,035			2,783			3,384
Other liabilities		1,245			1,153			1,143			1,221			1,218
Total liabilities		45,581			47,476			46,943			48,496			47,877
Total equity		4,779			4,429			4,633			4,804			5,077
Other managed and marketed customer funds		7,586			8,344			10,266			9,865			10,545
Mutual funds		5,455			5,812			7,693			7,293			7,974
Pension funds		—			—			—			—			—
Managed portfolios		2,131			2,532			2,573			2,572			2,571
Pro memoria:
Gross customer loans w/o repos		36,862			37,691			38,156			38,651			39,259
Funds (customer deposits w/o repos + mutual funds)		31,901			32,370			33,926			34,426			34,262

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Chile

Ch$ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		338,397			325,329			13,068			4.0
Net fee income		74,713			67,614			7,099			10.5
Gains (losses) on financial transactions		33,923			37,034			(3,111	)		(8.4	)
Other operating income		3,104			(294	)		3,397			—
Gross income		450,136			429,684			20,453			4.8
Operating expenses		(184,039	)		(181,590	)		(2,449	)		1.3
General administrative expenses		(166,097	)		(166,585	)		488			(0.3	)
Personnel		(97,904	)		(98,758	)		854			(0.9	)
Other general administrative expenses		(68,193	)		(67,827	)		(366	)		0.5
Depreciation and amortisation		(17,942	)		(15,005	)		(2,937	)		19.6
Net operating income		266,097			248,094			18,004			7.3
Net loan-loss provisions		(85,110	)		(84,383	)		(728	)		0.9
Other income		1,438			1,122			316			28.2
Underlying profit before taxes		182,425			164,833			17,592			10.7
Tax on profit		(32,967	)		(31,008	)		(1,959	)		6.3
Underlying profit from continuing operations		149,458			133,824			15,634			11.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		149,458			133,824			15,634			11.7
Minority interests		46,662			39,853			6,809			17.1
Underlying attributable profit to the Group		102,796			93,971			8,824			9.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		102,796			93,971			8,824			9.4

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		27,090,035			25,444,315			1,645,720			6.5
Cash, central banks and credit institutions		4,088,243			4,042,699			45,545			1.1
Debt securities		3,192,349			2,838,770			353,578			12.5
o/w: available for sale		2,806,374			2,683,401			122,972			4.6
Other financial assets		1,776,298			1,998,612			(222,315	)		(11.1	)
Other assets		1,468,154			1,448,439			19,715			1.4
Total assets		37,615,078			35,772,836			1,842,243			5.1
Customer deposits		18,710,110			18,828,541			(118,431	)		(0.6	)
Central banks and credit institutions		4,743,311			4,796,453			(53,142	)		(1.1	)
Debt securities issued		7,286,791			5,555,623			1,731,167			31.2
Other financial liabilities		2,403,501			2,313,004			90,497			3.9
Other liabilities		865,297			884,425			(19,128	)		(2.2	)
Total liabilities		34,009,009			32,378,046			1,630,963			5.0
Total equity		3,606,069			3,394,789			211,279			6.2
Other managed and marketed customer funds		7,490,536			5,388,674			2,101,862			39.0
Mutual funds		5,664,324			3,874,931			1,789,393			46.2
Pension funds		—			—			—			—
Managed portfolios		1,826,212			1,513,743			312,469			20.6
Pro memoria:
Gross customer loans w/o repos		27,887,238			26,184,564			1,702,674			6.5
Funds (customer deposits w/o repos + mutual funds)		24,337,742			22,660,754			1,676,988			7.4

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Chile

Ch$ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		325,329			343,821			348,660			375,384			338,397
Net fee income		67,614			64,888			65,511			65,576			74,713
Gains (losses) on financial transactions		37,034			32,085			39,412			45,272			33,923
Other operating income		(294	)		480			1,831			(2,520	)		3,104
Gross income		429,684			441,275			455,415			483,712			450,136
Operating expenses		(181,590	)		(181,527	)		(183,568	)		(190,647	)		(184,039	)
General administrative expenses		(166,585	)		(165,096	)		(166,393	)		(171,048	)		(166,097	)
Personnel		(98,758	)		(106,658	)		(105,004	)		(106,459	)		(97,904	)
Other general administrative expenses		(67,827	)		(58,438	)		(61,389	)		(64,589	)		(68,193	)
Depreciation and amortisation		(15,005	)		(16,431	)		(17,175	)		(19,599	)		(17,942	)
Net operating income		248,094			259,748			271,847			293,065			266,097
Net loan-loss provisions		(84,383	)		(97,590	)		(107,930	)		(93,949	)		(85,110	)
Other income		1,122			(391	)		4,785			(25,975	)		1,438
Underlying profit before taxes		164,833			161,767			168,702			173,141			182,425
Tax on profit		(31,008	)		(23,567	)		(31,005	)		(33,290	)		(32,967	)
Underlying profit from continuing operations		133,824			138,200			137,697			139,851			149,458
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		133,824			138,200			137,697			139,851			149,458
Minority interests		39,853			41,760			42,527			41,620			46,662
Underlying attributable profit to the Group		93,971			96,441			95,170			98,231			102,796
Net capital gains and provisions		—			—			—			—			—
Attributable profit to the Group		93,971			96,441			95,170			98,231			102,796

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		25,444,315			26,025,341			26,324,073			26,650,173			27,090,035
Cash, central banks and credit institutions		4,042,699			4,634,225			3,908,055			4,214,140			4,088,243
Debt securities		2,838,770			2,775,866			3,079,143			3,784,281			3,192,349
o/w: available for sale		2,683,401			2,388,312			2,838,304			3,387,294			2,806,374
Other financial assets		1,998,612			2,005,901			1,892,773			1,750,803			1,776,298
Other assets		1,448,439			1,428,450			1,432,131			1,461,434			1,468,154
Total assets		35,772,836			36,869,784			36,636,175			37,860,830			37,615,078
Customer deposits		18,828,541			18,888,392			18,677,990			19,329,985			18,710,110
Central banks and credit institutions		4,796,453			5,382,135			4,975,999			5,074,896			4,743,311
Debt securities issued		5,555,623			6,203,020			6,723,315			7,199,090			7,286,791
Other financial liabilities		2,313,004			2,430,858			2,156,011			1,977,197			2,403,501
Other liabilities		884,425			819,257			811,973			867,395			865,297
Total liabilities		32,378,046			33,723,662			33,345,288			34,448,564			34,009,009
Total equity		3,394,789			3,146,121			3,290,887			3,412,267			3,606,069
Other managed and marketed customer funds		5,388,674			5,926,964			7,292,631			7,007,472			7,490,536
Mutual funds		3,874,931			4,128,341			5,464,596			5,180,724			5,664,324
Pension funds		—			—			—			—			—
Managed portfolios		1,513,743			1,798,623			1,828,035			1,826,748			1,826,212
Pro memoria:
Gross customer loans w/o repos		26,184,564			26,772,960			27,103,318			27,455,108			27,887,238
Funds (customer deposits w/o repos + mutual funds)		22,660,754			22,993,327			24,099,193			24,454,122			24,337,742

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USA

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		1,489			1,548			(59	)		(3.8	)
Net fee income		273			283			(10	)		(3.5	)
Gains (losses) on financial transactions		(5	)		20			(26	)		—
Other operating income		122			116			6			5.3
Gross income		1,879			1,968			(88	)		(4.5	)
Operating expenses		(837	)		(777	)		(60	)		7.8
General administrative expenses		(757	)		(703	)		(54	)		7.7
Personnel		(445	)		(416	)		(29	)		7.0
Other general administrative expenses		(312	)		(287	)		(25	)		8.7
Depreciation and amortisation		(80	)		(74	)		(6	)		8.2
Net operating income		1,042			1,191			(149	)		(12.5	)
Net loan-loss provisions		(811	)		(861	)		51			(5.9	)
Other income		(32	)		(66	)		33			(50.7	)
Underlying profit before taxes		199			264			(65	)		(24.5	)
Tax on profit		(61	)		(103	)		42			(40.6	)
Underlying profit from continuing operations		138			160			(23	)		(14.2	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		138			160			(23	)		(14.2	)
Minority interests		43			79			(36	)		(45.8	)
Underlying attributable profit to the Group		95			82			13			16.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		95			82			13			16.3

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		81,841			80,836			1,006			1.2
Cash, central banks and credit institutions		20,457			20,785			(328	)		(1.6	)
Debt securities		19,059			19,108			(48	)		(0.3	)
o/w: available for sale		16,704			17,383			(679	)		(3.9	)
Other financial assets		3,041			3,103			(61	)		(2.0	)
Other assets		13,269			12,037			1,232			10.2
Total assets		137,669			135,868			1,800			1.3
Customer deposits		63,101			59,526			3,575			6.0
Central banks and credit institutions		22,240			32,039			(9,798	)		(30.6	)
Debt securities issued		28,241			22,413			5,828			26.0
Other financial liabilities		3,032			2,613			419			16.0
Other liabilities		4,493			4,286			207			4.8
Total liabilities		121,108			120,877			231			0.2
Total equity		16,561			14,991			1,569			10.5
Other managed and marketed customer funds		18,423			18,293			129			0.7
Mutual funds		8,986			6,813			2,173			31.9
Pension funds		—			—			—			—
Managed portfolios		9,437			11,481			(2,044	)		(17.8	)
Pro memoria:
Gross customer loans w/o repos		85,906			84,897			1,009			1.2
Funds (customer deposits w/o repos + mutual funds)		71,818			65,983			5,835			8.8
Ratios (%) and other data
RoTE		2.81			2.70			0.11 p.
Efficiency ratio (with amortisations)		44.6			39.5			5.07 p.
NPL ratio		2.43			2.19			0.24 p.
Coverage ratio		202.4			221.1			(18.70 p.	)
Number of employees		17,679			18,229			(550	)		(3.0	)
Number of branches		764			773			(9	)		(1.2	)

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USA

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		1,548			1,462			1,456			1,451			1,489
Net fee income		283			293			268			257			273
Gains (losses) on financial transactions		20			8			10			(16	)		(5	)
Other operating income		116			126			133			117			122
Gross income		1,968			1,888			1,867			1,809			1,879
Operating expenses		(777	)		(774	)		(784	)		(864	)		(837	)
General administrative expenses		(703	)		(697	)		(706	)		(777	)		(757	)
Personnel		(416	)		(400	)		(406	)		(414	)		(445	)
Other general administrative expenses		(287	)		(297	)		(299	)		(363	)		(312	)
Depreciation and amortisation		(74	)		(77	)		(78	)		(87	)		(80	)
Net operating income		1,191			1,114			1,083			946			1,042
Net loan-loss provisions		(861	)		(704	)		(776	)		(867	)		(811	)
Other income		(66	)		(13	)		(3	)		(8	)		(32	)
Underlying profit before taxes		264			397			304			71			199
Tax on profit		(103	)		(143	)		(91	)		(17	)		(61	)
Underlying profit from continuing operations		160			253			213			54			138
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		160			253			213			54			138
Minority interests		79			95			72			40			43
Underlying attributable profit to the Group		82			159			141			14			95
Net capital gains and provisions*		—			—			—			(32	)		—
Attributable profit to the Group		82			159			141			(19	)		95

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		80,836			83,144			82,007			85,389			81,841
Cash, central banks and credit institutions		20,785			17,625			16,621			16,970			20,457
Debt securities		19,108			18,714			15,296			17,940			19,059
o/w: available for sale		17,383			16,957			13,776			15,437			16,704
Other financial assets		3,103			3,146			3,110			3,566			3,041
Other assets		12,037			12,576			12,733			13,526			13,269
Total assets		135,868			135,205			129,768			137,390			137,669
Customer deposits		59,526			59,382			60,166			64,460			63,101
Central banks and credit institutions		32,039			26,738			22,268			22,264			22,240
Debt securities issued		22,413			25,933			24,588			26,340			28,241
Other financial liabilities		2,613			2,867			2,377			2,907			3,032
Other liabilities		4,286			4,553			4,560			4,770			4,493
Total liabilities		120,877			119,473			113,959			120,740			121,108
Total equity		14,991			15,732			15,809			16,650			16,561
Other managed and marketed customer funds		18,293			19,212			19,699			18,827			18,423
Mutual funds		6,813			6,979			6,958			9,947			8,986
Pension funds		—			—			—			—			—
Managed portfolios		11,481			12,233			12,740			8,880			9,437
Pro memoria:
Gross customer loans w/o repos		84,897			87,467			86,042			89,638			85,906
Funds (customer deposits w/o repos + mutual funds)		65,983			66,113			66,824			74,166			71,818
Other information
NPL ratio		2.19			2.24			2.24			2.28			2.43
Coverage ratio		221.1			220.6			216.2			214.4			202.4
Cost of credit		3.85			3.77			3.80			3.68			3.63

(*).-In 4Q’16 restatement Santander Consumer USA.

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USA

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		1,489			1,602			(113	)		(7.0	)
Net fee income		273			293			(20	)		(6.8	)
Gains (losses) on financial transactions		(5	)		21			(27	)		—
Other operating income		122			120			2			1.7
Gross income		1,879			2,037			(157	)		(7.7	)
Operating expenses		(837	)		(804	)		(33	)		4.1
General administrative expenses		(757	)		(727	)		(30	)		4.1
Personnel		(445	)		(430	)		(15	)		3.4
Other general administrative expenses		(312	)		(297	)		(15	)		5.0
Depreciation and amortisation		(80	)		(77	)		(4	)		4.6
Net operating income		1,042			1,232			(190	)		(15.4	)
Net loan-loss provisions		(811	)		(891	)		81			(9.1	)
Other income		(32	)		(68	)		36			(52.4	)
Underlying profit before taxes		199			273			(74	)		(27.1	)
Tax on profit		(61	)		(107	)		46			(42.6	)
Underlying profit from continuing operations		138			166			(28	)		(17.1	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		138			166			(28	)		(17.1	)
Minority interests		43			81			(39	)		(47.6	)
Underlying attributable profit to the Group		95			85			10			12.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		95			85			10			12.4

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		81,841			86,083			(4,242	)		(4.9	)
Cash, central banks and credit institutions		20,457			22,134			(1,677	)		(7.6	)
Debt securities		19,059			20,348			(1,289	)		(6.3	)
o/w: available for sale		16,704			18,511			(1,807	)		(9.8	)
Other financial assets		3,041			3,304			(263	)		(7.9	)
Other assets		13,269			12,819			451			3.5
Total assets		137,669			144,688			(7,019	)		(4.9	)
Customer deposits		63,101			63,390			(289	)		(0.5	)
Central banks and credit institutions		22,240			34,119			(11,878	)		(34.8	)
Debt securities issued		28,241			23,868			4,373			18.3
Other financial liabilities		3,032			2,783			249			9.0
Other liabilities		4,493			4,564			(71	)		(1.6	)
Total liabilities		121,108			128,724			(7,616	)		(5.9	)
Total equity		16,561			15,964			596			3.7
Other managed and marketed customer funds		18,423			19,481			(1,058	)		(5.4	)
Mutual funds		8,986			7,255			1,731			23.9
Pension funds		—			—			—			—
Managed portfolios		9,437			12,226			(2,789	)		(22.8	)
Pro memoria:
Gross customer loans w/o repos		85,906			90,408			(4,502	)		(5.0	)
Funds (customer deposits w/o repos + mutual funds)		71,818			70,266			1,552			2.2

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USA

Constant € million


	1Q 16		2Q 16		3Q 16		4Q 16		1Q 17
Income statement
Net interest income	1,602		1,552		1,527		1,466		1,489
Net fee income	293		311		281		260		273
Gains (losses) on financial transactions	21		8		10		(17	)	(5	)
Other operating income	120		133		140		118		122
Gross income	2,037		2,004		1,958		1,827		1,879
Operating expenses	(804	)	(821	)	(822	)	(876	)	(837	)
General administrative expenses	(727	)	(739	)	(740	)	(788	)	(757	)
Personnel	(430	)	(424	)	(426	)	(419	)	(445	)
Other general administrative expenses	(297	)	(315	)	(314	)	(369	)	(312	)
Depreciation and amortisation	(77	)	(82	)	(82	)	(88	)	(80	)
Net operating income	1,232		1,183		1,136		951		1,042
Net loan-loss provisions	(891	)	(749	)	(814	)	(879	)	(811	)
Other income	(68	)	(15	)	(3	)	(8	)	(32	)
Underlying profit before taxes	273		419		319		65		199
Tax on profit	(107	)	(152	)	(95	)	(14	)	(61	)
Underlying profit from continuing operations	166		268		224		51		138
Net profit from discontinued operations	—		—		—		—		—
Underlying consolidated profit	166		268		224		51		138
Minority interests	81		100		76		40		43
Underlying attributable profit to the Group	85		167		148		11		95
Net capital gains and provisions*	—		—		—		(34	)	—
Attributable profit to the Group	85		167		148		(23	)	95


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17
Balance sheet
Customer loans	86,083		86,341		85,612		84,191		81,841
Cash, central banks and credit institutions	22,134		18,303		17,352		16,732		20,457
Debt securities	20,348		19,433		15,968		17,688		19,059
o/w: available for sale	18,511		17,609		14,381		15,221		16,704
Other financial assets	3,304		3,267		3,247		3,516		3,041
Other assets	12,819		13,060		13,293		13,336		13,269
Total assets	144,688		140,403		135,473		135,462		137,669
Customer deposits	63,390		61,665		62,811		63,555		63,101
Central banks and credit institutions	34,119		27,766		23,247		21,951		22,240
Debt securities issued	23,868		26,930		25,669		25,970		28,241
Other financial liabilities	2,783		2,977		2,482		2,866		3,032
Other liabilities	4,564		4,728		4,760		4,703		4,493
Total liabilities	128,724		124,066		118,969		119,046		121,108
Total equity	15,964		16,337		16,504		16,416		16,561
Other managed and marketed customer funds	19,481		19,951		20,565		18,563		18,423
Mutual funds	7,255		7,247		7,264		9,807		8,986
Pension funds	—		—		—		—		—
Managed portfolios	12,226		12,704		13,300		8,755		9,437
Pro memoria:
Gross customer loans w/o repos	90,408		90,830		89,824		88,381		85,906
Funds (customer deposits w/o repos + mutual funds)	70,266		68,654		69,762		73,125		71,818

(*).-In 4Q’16 restatement Santander Consumer USA.

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USA

US$ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		1,586			1,706			(120	)		(7.0	)
Net fee income		291			312			(21	)		(6.8	)
Gains (losses) on financial transactions		(6	)		23			(28	)		—
Other operating income		130			128			2			1.7
Gross income		2,001			2,168			(167	)		(7.7	)
Operating expenses		(891	)		(856	)		(35	)		4.1
General administrative expenses		(806	)		(775	)		(32	)		4.1
Personnel		(474	)		(458	)		(16	)		3.4
Other general administrative expenses		(333	)		(317	)		(16	)		5.0
Depreciation and amortisation		(85	)		(82	)		(4	)		4.6
Net operating income		1,109			1,312			(203	)		(15.4	)
Net loan-loss provisions		(863	)		(949	)		86			(9.1	)
Other income		(34	)		(72	)		38			(52.4	)
Underlying profit before taxes		212			291			(79	)		(27.1	)
Tax on profit		(65	)		(114	)		49			(42.6	)
Underlying profit from continuing operations		147			177			(30	)		(17.1	)
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		147			177			(30	)		(17.1	)
Minority interests		45			87			(41	)		(47.6	)
Underlying attributable profit to the Group		101			90			11			12.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		101			90			11			12.4


							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Customer loans		87,497			92,031			(4,535	)		(4.9	)
Cash, central banks and credit institutions		21,871			23,664			(1,793	)		(7.6	)
Debt securities		20,376			21,754			(1,378	)		(6.3	)
o/w: available for sale		17,858			19,790			(1,932	)		(9.8	)
Other financial assets		3,251			3,532			(281	)		(7.9	)
Other assets		14,186			13,705			482			3.5
Total assets		147,182			154,686			(7,504	)		(4.9	)
Customer deposits		67,461			67,771			(309	)		(0.5	)
Central banks and credit institutions		23,777			36,476			(12,699	)		(34.8	)
Debt securities issued		30,193			25,517			4,676			18.3
Other financial liabilities		3,242			2,975			267			9.0
Other liabilities		4,803			4,879			(76	)		(1.6	)
Total liabilities		129,477			137,618			(8,142	)		(5.9	)
Total equity		17,705			17,067			638			3.7
Other managed and marketed customer funds		19,696			20,827			(1,131	)		(5.4	)
Mutual funds		9,607			7,756			1,851			23.9
Pension funds		—			—			—			—
Managed portfolios		10,089			13,071			(2,982	)		(22.8	)
Pro memoria:
Gross customer loans w/o repos		91,842			96,656			(4,814	)		(5.0	)
Funds (customer deposits w/o repos + mutual funds)		76,781			75,122			1,659			2.2

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USA

US$ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		1,706			1,652			1,625			1,561			1,586
Net fee income		312			331			299			276			291
Gains (losses) on financial transactions		23			9			11			(18	)		(6	)
Other operating income		128			142			149			125			130
Gross income		2,168			2,133			2,085			1,945			2,001
Operating expenses		(856	)		(874	)		(875	)		(932	)		(891	)
General administrative expenses		(775	)		(787	)		(788	)		(839	)		(806	)
Personnel		(458	)		(452	)		(454	)		(446	)		(474	)
Other general administrative expenses		(317	)		(335	)		(334	)		(393	)		(333	)
Depreciation and amortisation		(82	)		(87	)		(87	)		(93	)		(85	)
Net operating income		1,312			1,259			1,210			1,013			1,109
Net loan-loss provisions		(949	)		(797	)		(867	)		(935	)		(863	)
Other income		(72	)		(16	)		(3	)		(8	)		(34	)
Underlying profit before taxes		291			446			340			69			212
Tax on profit		(114	)		(161	)		(102	)		(15	)		(65	)
Underlying profit from continuing operations		177			285			238			54			147
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		177			285			238			54			147
Minority interests		87			107			81			42			45
Underlying attributable profit to the Group		90			178			157			12			101
Net capital gains and provisions*		—			—			—			(36	)		—
Attributable profit to the Group		90			178			157			(24	)		101

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Customer loans		92,031			92,307			91,528			90,009			87,497
Cash, central banks and credit institutions		23,664			19,567			18,551			17,888			21,871
Debt securities		21,754			20,776			17,072			18,910			20,376
o/w: available for sale		19,790			18,826			15,375			16,273			17,858
Other financial assets		3,532			3,492			3,471			3,758			3,251
Other assets		13,705			13,962			14,211			14,257			14,186
Total assets		154,686			150,105			144,834			144,822			147,182
Customer deposits		67,771			65,926			67,151			67,947			67,461
Central banks and credit institutions		36,476			29,685			24,853			23,468			23,777
Debt securities issued		25,517			28,791			27,443			27,765			30,193
Other financial liabilities		2,975			3,183			2,653			3,064			3,242
Other liabilities		4,879			5,055			5,089			5,028			4,803
Total liabilities		137,618			132,639			127,189			127,272			129,477
Total equity		17,067			17,466			17,645			17,550			17,705
Other managed and marketed customer funds		20,827			21,330			21,986			19,845			19,696
Mutual funds		7,756			7,748			7,766			10,485			9,607
Pension funds		—			—			—			—			—
Managed portfolios		13,071			13,581			14,220			9,360			10,089
Pro memoria:
Gross customer loans w/o repos		96,656			97,106			96,031			94,488			91,842
Funds (customer deposits w/o repos + mutual funds)		75,122			73,398			74,583			78,178			76,781

(*).-In 4Q’16 restatement Santander Consumer USA.

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Corporate Centre

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		(194	)		(169	)		(25	)		15.1
Net fee income		(4	)		(5	)		0			(2.2	)
Gains (losses) on financial transactions		(119	)		(32	)		(87	)		270.1
Other operating income		(23	)		(18	)		(5	)		29.1
Gross income		(341	)		(223	)		(117	)		52.6
Operating expenses		(119	)		(126	)		7			(5.2	)
Net operating income		(460	)		(349	)		(111	)		31.7
Net loan-loss provisions		(5	)		1			(6	)		—
Other income		(32	)		(5	)		(27	)		525.3
Underlying profit before taxes		(497	)		(353	)		(144	)		40.7
Tax on profit		26			36			(10	)		(26.6	)
Underlying profit from continuing operations		(471	)		(317	)		(153	)		48.3
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		(471	)		(317	)		(153	)		48.3
Minority interests		(3	)		(6	)		3			(54.2	)
Underlying attributable profit to the Group		(468	)		(311	)		(157	)		50.3
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		(468	)		(311	)		(157	)		50.3

							Change
	31.03.17			31.03.16			Amount			%
Balance sheet
Debt securities		781			3,178			(2,397	)		(75.4	)
Goodwill		26,939			26,209			730			2.8
Capital assigned to Group areas		83,902			82,637			1,265			1.5
Other financial assets		10,661			9,470			1,191			12.6
Other assets		15,115			14,761			354			2.4
Total assets		137,398			136,255			1,144			0.8
Debt securities issued		30,740			32,459			(1,719	)		(5.3	)
Other financial liabilities		2,469			4,903			(2,434	)		(49.6	)
Other liabilities		12,299			13,410			(1,112	)		(8.3	)
Total liabilities		45,507			50,772			(5,264	)		(10.4	)
Total equity		91,891			85,483			6,408			7.5
Other managed and marketed customer funds		52			—			52			—
Mutual funds		52			—			52			—
Pension funds		—			—			—			—
Managed portfolios		—			—			—			—
Resources
Number of employees		1,720			1,974			(254	)		(12.9	)

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Corporate Centre

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		(169	)		(187	)		(194	)		(189	)		(194	)
Net fee income		(5	)		(5	)		(7	)		(14	)		(4	)
Gains (losses) on financial transactions		(32	)		(67	)		(97	)		(47	)		(119	)
Other operating income		(18	)		15			(18	)		(31	)		(23	)
Gross income		(223	)		(244	)		(316	)		(282	)		(341	)
Operating expenses		(126	)		(120	)		(104	)		(99	)		(119	)
Net operating income		(349	)		(365	)		(421	)		(381	)		(460	)
Net loan-loss provisions		1			(5	)		5			0			(5	)
Other income		(5	)		(55	)		(59	)		44			(32	)
Underlying profit before taxes		(353	)		(424	)		(474	)		(337	)		(497	)
Tax on profit		36			6			61			39			26
Underlying profit from continuing operations		(317	)		(418	)		(414	)		(299	)		(471	)
Net profit from discontinued operations		—			0			(0	)		0			—
Underlying consolidated profit		(317	)		(418	)		(414	)		(298	)		(471	)
Minority interests		(6	)		(0	)		(2	)		0			(3	)
Underlying attributable profit to the Group		(311	)		(418	)		(412	)		(299	)		(468	)
Net capital gains and provisions*		—			(186	)		—			0			—
Attributable profit to the Group		(311	)		(604	)		(412	)		(299	)		(468	)

	31.03.16			30.06.16			30.09.16			31.12.16			31.03.17
Balance sheet
Debt securities		3,178			3,287			1,259			1,374			781
Goodwill		26,209			26,536			26,143			26,724			26,939
Capital assigned to Group areas		82,637			79,973			78,615			78,537			83,902
Other financial assets		9,470			14,494			13,015			9,872			10,661
Other assets		14,761			15,654			15,416			15,648			15,115
Total assets		136,255			139,944			134,447			132,154			137,398
Debt securities issued		32,459			35,292			33,566			30,922			30,740
Other financial liabilities		4,903			4,877			3,731			4,042			2,469
Other liabilities		13,410			14,809			14,098			12,422			12,299
Total liabilities		50,772			54,978			51,394			47,387			45,507
Total equity		85,483			84,966			83,053			84,768			91,891
Other managed and marketed customer funds		—			—			—			—			52
Mutual funds		—			—			—			—			52
Pension funds		—			—			—			—			—
Managed portfolios		—			—			—			—			—

(*).- In 2Q’16, capital gains from the disposal of the stake in Visa Europe and restructuring costs.

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Retail Banking

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		7,948			7,187			761			10.6
Net fee income		2,448			2,056			392			19.1
Gains (losses) on financial transactions		225			182			43			23.6
Other operating income		185			175			10			5.7
Gross income		10,806			9,600			1,206			12.6
Operating expenses		(4,888	)		(4,498	)		(390	)		8.7
General administrative expenses		(4,434	)		(4,109	)		(325	)		7.9
Personnel		(2,397	)		(2,197	)		(200	)		9.1
Other general administrative expenses		(2,037	)		(1,912	)		(125	)		6.5
Depreciation and amortisation		(453	)		(389	)		(64	)		16.5
Net operating income		5,918			5,102			817			16.0
Net loan-loss provisions		(2,242	)		(2,161	)		(81	)		3.8
Other income		(686	)		(415	)		(270	)		65.1
Underlying profit before taxes		2,991			2,525			465			18.4
Tax on profit		(920	)		(684	)		(236	)		34.6
Underlying profit from continuing operations		2,070			1,842			229			12.4
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,070			1,842			229			12.4
Minority interests		276			255			21			8.1
Underlying attributable profit to the Group		1,795			1,586			208			13.1
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,795			1,586			208			13.1

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Retail Banking

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		7,187			7,220			7,348			7,588			7,948
Net fee income		2,056			2,182			2,269			2,297			2,448
Gains (losses) on financial transactions		182			86			130			303			225
Other operating income		175			136			206			36			185
Gross income		9,600			9,623			9,954			10,223			10,806
Operating expenses		(4,498	)		(4,556	)		(4,608	)		(4,847	)		(4,888	)
General administrative expenses		(4,109	)		(4,146	)		(4,199	)		(4,404	)		(4,434	)
Personnel		(2,197	)		(2,234	)		(2,262	)		(2,356	)		(2,397	)
Other general administrative expenses		(1,912	)		(1,912	)		(1,937	)		(2,048	)		(2,037	)
Depreciation and amortisation		(389	)		(410	)		(410	)		(442	)		(453	)
Net operating income		5,102			5,067			5,345			5,376			5,918
Net loan-loss provisions		(2,161	)		(1,957	)		(2,278	)		(2,299	)		(2,242	)
Other income		(415	)		(433	)		(314	)		(524	)		(686	)
Underlying profit before taxes		2,525			2,677			2,754			2,553			2,991
Tax on profit		(684	)		(770	)		(771	)		(661	)		(920	)
Underlying profit from continuing operations		1,842			1,906			1,982			1,892			2,070
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		1,842			1,906			1,982			1,892			2,070
Minority interests		255			301			289			258			276
Underlying attributable profit to the Group		1,586			1,605			1,694			1,634			1,795
Net capital gains and provisions		—			(4	)		—			(169	)		—
Attributable profit to the Group		1,586			1,601			1,694			1,465			1,795

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Retail Banking

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		7,948			7,592			356			4.7
Net fee income		2,448			2,180			268			12.3
Gains (losses) on financial transactions		225			152			73			48.1
Other operating income		185			180			4			2.5
Gross income		10,806			10,104			702			6.9
Operating expenses		(4,888	)		(4,707	)		(181	)		3.8
General administrative expenses		(4,434	)		(4,299	)		(135	)		3.1
Personnel		(2,397	)		(2,303	)		(94	)		4.1
Other general administrative expenses		(2,037	)		(1,996	)		(41	)		2.0
Depreciation and amortisation		(453	)		(408	)		(45	)		11.1
Net operating income		5,918			5,397			521			9.7
Net loan-loss provisions		(2,242	)		(2,373	)		131			(5.5	)
Other income		(686	)		(462	)		(224	)		48.5
Underlying profit before taxes		2,991			2,562			428			16.7
Tax on profit		(920	)		(687	)		(233	)		33.9
Underlying profit from continuing operations		2,070			1,875			196			10.4
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		2,070			1,875			196			10.4
Minority interests		276			264			12			4.5
Underlying attributable profit to the Group		1,795			1,611			184			11.4
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		1,795			1,611			184			11.4

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Retail Banking

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		7,592			7,556			7,577			7,754			7,948
Net fee income		2,180			2,295			2,342			2,363			2,448
Gains (losses) on financial transactions		152			73			145			308			225
Other operating income		180			143			211			35			185
Gross income		10,104			10,068			10,274			10,460			10,806
Operating expenses		(4,707	)		(4,731	)		(4,743	)		(4,958	)		(4,888	)
General administrative expenses		(4,299	)		(4,305	)		(4,320	)		(4,506	)		(4,434	)
Personnel		(2,303	)		(2,325	)		(2,330	)		(2,410	)		(2,397	)
Other general administrative expenses		(1,996	)		(1,980	)		(1,990	)		(2,096	)		(2,037	)
Depreciation and amortisation		(408	)		(426	)		(423	)		(452	)		(453	)
Net operating income		5,397			5,336			5,531			5,502			5,918
Net loan-loss provisions		(2,373	)		(2,107	)		(2,391	)		(2,382	)		(2,242	)
Other income		(462	)		(463	)		(314	)		(536	)		(686	)
Underlying profit before taxes		2,562			2,766			2,826			2,585			2,991
Tax on profit		(687	)		(802	)		(793	)		(666	)		(920	)
Underlying profit from continuing operations		1,875			1,965			2,032			1,919			2,070
Net profit from discontinued operations		—			0			(0	)		—			—
Underlying consolidated profit		1,875			1,965			2,032			1,919			2,070
Minority interests		264			315			297			262			276
Underlying attributable profit to the Group		1,611			1,649			1,735			1,656			1,795
Net capital gains and provisions		—			(14	)		3			(161	)		—
Attributable profit to the Group		1,611			1,635			1,738			1,495			1,795

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Global Corporate Banking

€ million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		656			618			38			6.2
Net fee income		399			345			54			15.7
Gains (losses) on financial transactions		467			354			113			31.8
Other operating income		43			38			5			13.5
Gross income		1,565			1,355			211			15.5
Operating expenses		(487	)		(479	)		(8	)		1.6
General administrative expenses		(460	)		(459	)		(1	)		0.1
Personnel		(286	)		(270	)		(17	)		6.2
Other general administrative expenses		(173	)		(189	)		16			(8.5	)
Depreciation and amortisation		(27	)		(20	)		(7	)		35.5
Net operating income		1,078			875			203			23.2
Net loan-loss provisions		(132	)		(223	)		91			(40.8	)
Other income		(14	)		(1	)		(13	)		—
Underlying profit before taxes		932			651			281			43.2
Tax on profit		(265	)		(189	)		(76	)		40.5
Underlying profit from continuing operations		667			462			205			44.3
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		667			462			205			44.3
Minority interests		57			41			16			39.0
Underlying attributable profit to the Group		610			421			189			44.8
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		610			421			189			44.8

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Global Corporate Banking

€ million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		618			547			657			706			656
Net fee income		345			373			334			355			399
Gains (losses) on financial transactions		354			348			408			147			467
Other operating income		38			97			31			123			43
Gross income		1,355			1,364			1,430			1,331			1,565
Operating expenses		(479	)		(496	)		(483	)		(459	)		(487	)
General administrative expenses		(459	)		(475	)		(460	)		(436	)		(460	)
Personnel		(270	)		(277	)		(274	)		(276	)		(286	)
Other general administrative expenses		(189	)		(198	)		(186	)		(159	)		(173	)
Depreciation and amortisation		(20	)		(21	)		(23	)		(23	)		(27	)
Net operating income		875			868			947			872			1,078
Net loan-loss provisions		(223	)		(192	)		(188	)		(55	)		(132	)
Other income		(1	)		(32	)		(6	)		(37	)		(14	)
Underlying profit before taxes		651			644			753			781			932
Tax on profit		(189	)		(186	)		(221	)		(192	)		(265	)
Underlying profit from continuing operations		462			458			532			589			667
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		462			458			532			589			667
Minority interests		41			38			46			48			57
Underlying attributable profit to the Group		421			420			486			541			610
Net capital gains and provisions		—			(58	)		—			—			—
Attributable profit to the Group		421			361			486			541			610

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Global Corporate Banking

Constant € million


							Change
	1Q 17			1Q 16			Amount			%
Income statement
Net interest income		656			668			(12	)		(1.9	)
Net fee income		399			360			39			10.8
Gains (losses) on financial transactions		467			380			86			22.7
Other operating income		43			39			4			10.5
Gross income		1,565			1,448			117			8.1
Operating expenses		(487	)		(489	)		2			(0.4	)
General administrative expenses		(460	)		(468	)		8			(1.7	)
Personnel		(286	)		(279	)		(8	)		2.8
Other general administrative expenses		(173	)		(189	)		16			(8.3	)
Depreciation and amortisation		(27	)		(22	)		(6	)		27.2
Net operating income		1,078			959			119			12.4
Net loan-loss provisions		(132	)		(243	)		111			(45.7	)
Other income		(14	)		(1	)		(13	)		—
Underlying profit before taxes		932			714			218			30.5
Tax on profit		(265	)		(208	)		(57	)		27.4
Underlying profit from continuing operations		667			506			161			31.7
Net profit from discontinued operations		—			—			—			—
Underlying consolidated profit		667			506			161			31.7
Minority interests		57			48			9			19.6
Underlying attributable profit to the Group		610			459			151			33.0
Net capital gains and provisions		—			—			—			—
Attributable profit to the Group		610			459			151			33.0

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Global Corporate Banking

Constant € million


	1Q 16			2Q 16			3Q 16			4Q 16			1Q 17
Income statement
Net interest income		668			571			684			726			656
Net fee income		360			387			342			360			399
Gains (losses) on financial transactions		380			376			416			133			467
Other operating income		39			100			31			131			43
Gross income		1,448			1,435			1,472			1,350			1,565
Operating expenses		(489	)		(504	)		(491	)		(467	)		(487	)
General administrative expenses		(468	)		(482	)		(468	)		(443	)		(460	)
Personnel		(279	)		(284	)		(280	)		(282	)		(286	)
Other general administrative expenses		(189	)		(198	)		(187	)		(161	)		(173	)
Depreciation and amortisation		(22	)		(22	)		(24	)		(24	)		(27	)
Net operating income		959			930			981			884			1,078
Net loan-loss provisions		(243	)		(221	)		(203	)		(53	)		(132	)
Other income		(1	)		(31	)		(6	)		(38	)		(14	)
Underlying profit before taxes		714			678			772			792			932
Tax on profit		(208	)		(196	)		(227	)		(190	)		(265	)
Underlying profit from continuing operations		506			482			545			602			667
Net profit from discontinued operations		—			—			—			—			—
Underlying consolidated profit		506			482			545			602			667
Minority interests		48			42			48			50			57
Underlying attributable profit to the Group		459			440			497			552			610
Net capital gains and provisions		—			(58	)		—			—			—
Attributable profit to the Group		459			382			497			552			610

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NPL ratio


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17

Continental Europe		7.08		6.84		6.43		5.92		5.62
Spain		6.36		6.06		5.82		5.41		5.22
Santander Consumer Finance		3.28		2.95		2.86		2.68		2.62
Poland		5.93		5.84		5.71		5.42		5.20
Portugal		8.55		10.46		9.40		8.81		8.47
United Kingdom		1.49		1.47		1.47		1.41		1.31
Latin America		4.88		4.98		4.94		4.81		4.50
Brazil		5.93		6.11		6.12		5.90		5.36
Mexico		3.06		3.01		2.95		2.76		2.77
Chile		5.45		5.28		5.12		5.05		4.93
USA		2.19		2.24		2.24		2.28		2.43
Operating Areas		4.36		4.32		4.19		3.95		3.77
Total Group		4.33		4.29		4.15		3.93		3.74

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Coverage ratio


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17

Continental Europe		65.4		61.3		61.3		60.0		60.6
Spain		50.2		47.6		47.6		48.3		49.1
Santander Consumer Finance		111.9		110.6		110.7		109.1		108.9
Poland		67.0		65.8		68.9		61.0		61.2
Portugal		87.7		61.9		57.8		63.7		61.7
United Kingdom		36.5		36.5		36.0		32.9		33.8
Latin America		79.7		81.4		84.5		87.3		90.5
Brazil		83.7		85.3		89.3		93.1		98.1
Mexico		97.5		102.3		101.9		103.8		104.8
Chile		54.6		55.5		58.1		59.1		58.9
USA		221.1		220.6		216.2		214.4		202.4
Operating Areas		73.3		72.0		72.8		73.5		74.6
Total Group		74.0		72.5		72.7		73.8		74.6

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Cost of credit


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17

Continental Europe		0.60		0.51		0.46		0.44		0.38
Spain		0.54		0.45		0.41		0.37		0.33
Santander Consumer Finance		0.64		0.55		0.49		0.47		0.39
Poland		0.82		0.75		0.76		0.70		0.66
Portugal		0.28		0.21		0.17		0.18		0.07
United Kingdom		0.01		0.03		0.05		0.02		0.03
Latin America		3.39		3.41		3.42		3.37		3.36
Brazil		4.63		4.71		4.87		4.89		4.84
Mexico		2.95		2.96		2.86		2.86		2.94
Chile		1.58		1.59		1.55		1.43		1.42
USA		3.85		3.77		3.80		3.68		3.63
Operating Areas		1.24		1.20		1.20		1.19		1.18
Total Group		1.22		1.19		1.19		1.18		1.17

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Risk-weighted assets

€ million


	31.03.16		30.06.16		30.09.16		31.12.16		31.03.17

Continental Europe		218,694		222,774		223,678		222,365		223,129
Spain		101,302		102,302		101,364		102,896		104,189
Santander Consumer Finance		57,186		60,068		62,094		63,226		62,954
Poland		17,653		17,617		17,810		17,430		18,153
Portugal		19,654		19,250		18,778		18,963		19,063
Spain’s real estate activity		15,328		15,865		15,693		11,837		9,911
United Kingdom		111,321		108,624		104,057		98,789		100,348
Latin America		144,179		155,925		154,706		163,016		174,334
Brazil		75,500		86,059		84,898		90,217		94,336
Mexico		26,717		25,780		25,007		25,299		28,148
Chile		28,805		30,397		30,671		32,661		33,510
USA		83,938		85,334		83,124		86,374		84,278
Operating Areas		558,132		572,657		565,565		570,544		582,089
Corporate Centre		13,827		13,363		15,258		17,545		15,034
Total Group		571,959		586,020		580,823		588,089		597,123

Item 4

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26th April 2017 1Q’17 Earnings Presentation José Antonio Álvarez, CEO José García Cantera, CFO

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Important information Banco Santander, S.A. (“Santander”) cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the “SEC”) could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; 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 person’s own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. 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. 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 my differ materially from those of such subsidiaries. 2

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Content Group performance 1Q’17 Business areas performance 1Q’17 Concluding remarks Appendix Glossary

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1Q’17 Financial Highlights Chg. 1Q’17 / 1Q’16 Attributable €1,867 mill.;+14% Strong profit growth profit +10% (constant euros) Revenues increase consistent with our Net interest income1 +4% commercial strategy 1 Fee income +12% Improved capital adequacy and profitability level FL CET1 10.66% RoTE 12.1% Committed to generate value for shareholders EPS €0.122; +14% TNAV/share €4.26 4 (1) % change in constant euros

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1Q’17 Business Highlights Chg. Mar’17 / Mar’16 Selective growth: Loans +1% —Retail banking lending (+2%) Customer funds +5% —Demand deposits (+12%); mutual funds (+11%) Enhanced balance sheet quality NPL ratio 3.74% and lower cost of credit Cost of credit 1.17% Loyal customers: 15.5 million Individuals +1.3 mill. +10% —Individuals: 14.1 million Companies +189k +16% —Companies: 1.4 million Digital customers: 22.1 million Digital +4.2 mill. +24% —Mobile: 12.0 million Mobile +4.4 mill. +59% 5 Note: Loans excluding repos. Customer funds: deposits excluding repos + marketed mutual funds. % change in constant euros

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Attributable profit rose based on positive revenues, efficiency and loan-loss provisions dynamics € million 1Q’17 % /1Q’16% /1Q’16 Constant euros Higher customer revenues Gross income 12,029 12.1 6.2 Operating expenses -5,543 7.5 3.1 Efficiency improvement driven by costs growing below inflation rate and revenues growth Net op. Income 6,486 16.4 8.9 Loan-loss provisions -2,400 -0.4 -9.1 Lower loan-loss provisions and cost of credit PBT 3,311 21.2 16.8 Taxes -1,125 38.8 35.0 Strong profit growth Attributable profit 1,867 14.3 10.0 6

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Group profit growth driven by most markets Group attributable profit Attributable profit in core markets 1Q’17 € million € million and % Chg. / 1Q’16 in constant euros Brazil 634 +38% UK 416 +3% +10% +14% Spain 362 +18% 1,867 1,751 SCF SCF 314 +23% 1,697 1,639 Mexico 163 +24% 1,331 Chile 147 +9% Portugal 125 +4% Argentina 108 +69% USA 95 +12% 1Q’16 2Q 3Q 4Q 1Q’17 Poland 59 -9% 7 Note: Constant euros

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Revenues rose in 7 of 10 markets driven by strong recurring customer revenues Gross income € million Net interest income 8,402 8,080 307 70 12,029 11,330 322 7,634 +12% +10% +4% Fee income 2,844 2,373 2,536 +6% Other income* 862 784 713 1Q’16 Net Fee income Other 1Q’17 1Q’15 2Q 3Q 4Q 1Q’16 2Q 3Q 4Q 1Q’17 Gross income interest income* Gross income income 8 (*) Other income includes gains on financial transactions, income from equity accounted method, dividends and other operating results. Including in 4Q’15 and 4Q’16 contribution to the DGF Note: Constant euros

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Positive and balanced business volumes performance Loan portfolio: growth supported by developing markets Customer funds: growth in all markets Mature markets Developing markets Mature markets Developing markets Mar’17 € Billion YoY Chg. Mar’17 € Billion YoY Chg. Mar’17 € Billion YoY Chg. Mar’17 € Billion YoY Chg. Spain 151 -3% Poland 22 6% Spain 229 4% Poland 26 7% UK 243 0% Brazil 81 4% UK 213 6% Brazil 104 7% USA 86 -5% Mexico 30 7% USA 72 2% Mexico 39 7% SCF 87 10% Chile 39 7% SCF 36 7% Chile 34 7% Portugal 29 -4% Argentina 8 53% Portugal 31 2% Argentina 14 68% Other individuals, 12% Individuals demand deposits, 39% GCB, 8% GCB, 12% Home mortgages, 36% Loan portfolio Corporates, 14% Cu Corporates, 15% by businesses SMEs, 9% Individuals time deposits, 11% SMEs, 9% Consumer, 4% Consumer, 16% Individuals mutual funds, 15% 9 Note: Loans excluding repos. Customer funds: deposits excluding repos + marketed mutual funds. % change in constant euros

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Higher fee income driven by rise in loyal and digital customers, with value added, personalised, digital and transparent customer strategies +250bps YoY revenue mkt. share Acquiring platform Deeper and more valuable relationships BRL1bn monthly production Payroll +113k new accounts in 1Q’17 +400k customers in 1Q’17 +70k credit cards in 1Q’17 100 large corporate customers NeoClick Loans in 3 clicks +40k loans, $200MM ), GCB: 14% (+11% YoY) 10

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Committed to improve efficiency and operational excellence. Cost-to-income ratio: 46% Active cost management 8 markets with costs flat or below inflation rate1 € million 1Q’17 / 1Q’16, % Nominal In real terms1 +3.1% Brazil 8.1 0.6 UK 1.8 0.7 5,543 SCF 3.0 -1.4 5,377 -1.6% 1 Spain -4.6 -5.3 excl. inflation Mexico 7.7 4.3 Chile 1.3 -2.0 Portugal -9.9 -10.8 USA 4.1 2.5 Argentina 28.7 -9.8 Poland -0.3 -0.5 1Q’16 1Q’17 Corporate Centre -5.2 -5.9 Total Operating Total Operating Group 3.1 -1.6 expenses expenses 11 Note: Constant euros. (1) In real terms and excluding perimeter

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Enhanced credit quality in most markets Lower loan-loss provisions Positive trends in all metrics € million M’16 M’17 -9% 2,640 2,400 NPL ratio 4.33% 3.74% Coverage ratio 74% 75% Cost of credit 1.22% 1.17% Cost of credit 0.88% 0.83% excl. SC USA 1Q’16 1Q’17 LLPs LLPs 12 Note: constant euros

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Progress on reaching our target of fully-loaded CET1 >11% in 2018 FL CET1 (%) March’17 YTD Chg. Total capital ratio: 14.10% +23 bps +0.07 +0.07 10.66 10.55 -0.03 Leverage ratio: 5.0%— RWA/Assets: 44% +25 bps Committed to organically generate c.40 bps FL CET1 per year after paying dividends and growing loans CET1 Organic Corporate Market & CET1 D’16 generation transactions Other (AFS) M’17 (Citi Argentina) 13

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We made good headway in our recently announced funding plan to enhance the Group’s TLAC position and optimise its cost of capital Key liquidity ratios Funding plan—issuances March’17 Jan-Apr’17 Net Loan-to-Deposit ratio (LTD): 113% Group issuances: €12.8bn (~€8.8bn TLAC-eligible) Deposits + M/LT funding / net loans: 114% Diversified issuers Parent bank, SCF, UK and USA Liquidity Coverage Ratio (LCR)1: 136% Diversified currencies EUR, USD, GBP Comfortable liquidity position Focus on TLAC-eligible instruments, following (Group and subsidiaries) our decentralised liquidity and funding model 14 (1) Provisional data

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Delivering on our commitments: shareholder value creation RoRWA (%) RoTE (%) +100 bps +15 bps 11.1 12.1 11.3 1.48 1.33 1.38 1Q’16 4Q’16 1Q’17 1Q’16 4Q’16 1Q’17 EPS (euros) TNAV per share (euros) +5% +14% 4.22 4.26 0.122 4.07 0.108 0.104 1Q’16 4Q’16 1Q’17 M’16 D’16 M’17 15

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Content Group performance 1Q’17 Business areas performance 1Q’17 Concluding remarks Appendix Glossary

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Well diversified results between Europe and the Americas Attributable profit 1Q’17* Americas Europe Argentina, 5% 48% UK, 17% 52% Chile, 6% Spain, 15% Brazil, 26% SCF, 13% Mexico, 7% USA, 4% Portugal, 5% Poland, 2% 17 (*) Excluding Corporate Centre and Spain Real State activities

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BRAZIL KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 2,522 4.3 9.6 Loyal customers (millions) 3.3 3.7 Fee income 934 -1.9 27.0 Digital customers (millions) 4.6 6.9 Gross income 3,717 9.5 21.6 NPL ratio (%) 5.93 5.36 Operating expenses -1,314 -5.9 8.1 Cost of credit (%) 4.63 4.84 LLPs -910 -10.4 -1.6 Efficiency ratio (%) 39.8 35.4 PBT 1,135 45.5 64.8 RoTE (%) 13.5 16.5 Attributable profit 634 16.5 37.7 (*) € million and % change in constant euros ACTIVITY Commercial and digital strategies behind profitability improvement Volumes in € billion Yield on loans 104 NII growth underpinned by larger volumes and higher spreads. Fee income 16.22% 16.72% 16.73% 16.63% 16.57% up backed by increased customer loyalty 81 +3% -0.4% QoQ Focus on efficiency and enhanced customer experience QoQ Cost of deposits +4% +7% Improving credit quality trends: lower NPL ratio and cost of credit QoQ. 9.10% 9.37% 9.30% 8.86% 8.19% YoY YoY NPL ratio lower than private sector banks Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 18 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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UNITED KINGDOM KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 1,096 1.5 6.0 Loyal customers (millions) 3.9 4.1 Fee income 254 6.5 1.1 Digital customers (millions) 4.2 4.7 Gross income 1,432 -0.2 5.6 NPL ratio (%) 1.49 1.31 Operating expenses -723 4.7 1.8 Cost of credit (%) 0.01 0.03 LLPs -15 — 162.1 Efficiency ratio (%) 52.4 50.5 PBT 588 -13.2 0.4 RoTE (%) 10.1 11.3 Attributable profit 416 20.7 2.6 (*) € million and % change in constant euros ACTIVITY Volumes in € billion 1l2l3 customers rose (total retail C/A balances: +Ł1bn YTD). Lending to UK Yield on loans companies up Ł900mill. Mortgage lending reflects management pricing actions 243 213 Revenues up: lower cost of deposits (1l2l3 World interest rate change) 3.36% 3.30% 3.20% 3.08% 3.01% offsetting SVR attrition and new asset margins pressure 0% +1% QoQ QoQ Digitalisation and product simplification supporting cost discipline Cost of deposits Strong credit quality in all loan books, reflected very low LLPs and cost of credit +0.2% +6% 1.22% 1.20% 1.17% 0.87% 0.69% Quarterly results impacted by Ł32mill. conduct costs and Ł25mill. banking YoY YoY reform costs Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 19 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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SPAIN KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 747 0.0 -8.9 Loyal customers (millions) 1.1 1.4 Fee income 459 1.8 8.3 Digital customers (millions) 2.6 2.8 Gross income 1,539 16.2 -0.3 NPL ratio (%) 6.36 5.22 Operating expenses -798 -0.5 -4.6 Cost of credit (%) 0.54 0.33 LLPs -163 91.2 -29.4 Efficiency ratio (%) 54.2 51.8 PBT 514 50.9 17.2 RoTE (%) 10.6 12.7 Attributable profit 362 52.4 17.7 (*) € million ACTIVITY Volumes in € billion Ongoing 1l2l3 strategy: customer loyalty (+28%), 50% of new loans linked to 1I2I3 customers and higher cards turnover (credit: +34% and debit: +13%) 229 Yield on loans 2.25% In companies, launch of the new commercial campaign leveraging on the 2.14% 2.06% 2.10% 2.04% Group’s strength. Remaining as the leading bank in GCB 151 +2% QoQ Attributable profit up YoY backed by higher fee income, cost control, lower -0.2% Cost of deposits QoQ provisions and strong credit quality improvement -3% +4% More stable NII QoQ, although still affected YoY by low interest rates and YoY YoY 0.46% 0.44% 0.49% 0.47% 0.46% mortgage repricing Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 20 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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SANTANDER CONSUMER FINANCE KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 1 NII 889 2.3 8.4 Active customers (millions) 17.4 19.5 Fee income 232 25.6 0.2 NPL ratio (%) 3.28 2.62 Gross income 1,118 5.3 5.9 Cost of credit (%) 0.64 0.39 Operating expenses -502 3.1 3.0 Efficiency ratio (%) 46.2 44.9 LLPs -61 -30.0 -47.3 PBT 518 19.0 25.0 RoTE (%) 12.8 17.1 Attributable profit 314 16.3 23.4 (*) € million and % change in constant euros ACTIVITY High diversification and leadership in Europe produced market share gain Volumes in € billion Yield on loans Higher new lending in all countries, driven by auto loans (+14%) 87 -1% 5.61% 5.59% Profit up underpinned by higher revenues and lower LLPs 10 5.44% QoQ 5.33% 5.32% +3% QoQ Best-in-class profitability, and historically low NPLs and cost of credit +10% +10% Main countries profit: Germany (€79 mill.); Nordic countries (€74 mill.) YoY YoY and Spain (€63 mill) Loans New 1Q’16 2Q 3Q 4Q 1Q’17 lending 21 Note: % change in constant euros. Loans excluding repos. (1) Including PSA customers (*) Excluding Santander Consumer UK profit, recorded in Santander UK results. Including it, 1Q’17 attributable profit: €344 mill. (+19% / 1Q’16 and +14% / 4Q’16)

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ATTRIBUTABLE PROFIT (DETAIL BY MARKETS IN THE APPENDIX) Good performance of other markets: larger customer base, higher profits and better credit quality ? Focus on strategic commercial initiatives (Santander Plus & Aeroméxico) and significant investment in Mexico €163 mill.; +24% IT systems and infrastructure. Strong rise in deposits (+13%) ? Profit up driven by NII, fuelled by volumes growth and higher interest rates ? Accelerating the branch network transformation (WorkCafé) and enhancing mobile banking (1l2l3 Chile €147 mill.; +9% Click) and market share gains in loans and deposits ? Higher profit driven by commercial revenues, cost control and better credit quality ? Continued focus on market share gains (of note, new corporate loans) and enhanced customer loyalty (rise in the 1|2|3 customer base) Portugal €125 mill.; +4% ? Profit growth based on lower cost of credit and cost control offsetting the impact in revenues because of the ALCO portfolio sales in 2016 ? Incorporation of Citibank’s retail portfolio into balance sheet on March 31st (P&L in 2Q17) Argentina €108 mill.; +69% ? Market share gain in loans. Deposits driven by demand deposits and mix change ? Profit fuelled by revenues and cost control. Lower cost of credit ? SBNA: core deposits up 6% and loans down (GCB). Profit growth: NII rise (interest rate hike US and lower cost of deposits), more stable costs and lower LLPs (Oil & Gas in 1Q’16) €95 mill.; +12% ? SC USA: volumes and revenues impacted by mix change towards a lower risk profile (higher FICO). Improving cost of credit YoY and QoQ. Costs still high (investments in IT) ? Growth in loans driven by SMEs and individuals. Strong demand deposit growth €59 mill.;-9% Poland ? Good management of NII, cost control and credit quality improvement. PBT excl. tax on assets: +18% Profit affected by regulatory on BGF, etc.) ? impacts (tax assets, extraordinary contribution to 22 Note: % change over 1Q’16 in constant euros

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CORPORATE CENTRE Higher losses due to cost of FX hedging and greater cost of funding. Headquarters expenses down 5% YoY Corporate Centre / Total Group (%) P&L € million Operating expenses Attrib. profit % change 1Q’17/1Q’16 1Q’16 4Q’16 1Q’17 25% NII -169 -189 -194 -5% Gains/Losses Gains/Losses on FT -32 -47 -119 19% on FT 2.4% Operating expenses -126 -99 -119 2.2% 19% Provisions -4 44 -37 17% Tax and minority interests 42 38 29 Attributable profit -311 -299 -468 1Q’16 1Q’17 1Q’16 1Q’17 Higher losses in NII because of more issuances Financial transactions fell due to cost of hedging, offset by the positive FX impact in business areas Lower operating expenses YoY 23

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Content Group performance 1Q’17 Business areas performance 1Q’17 Concluding remarks Appendix Glossary

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Delivering on our commitments with a story of profitable growth … FY2016 1Q17 2017 targets Loyal customers (Million) 15.2 15.5 17 Digital customers (Million) 20.9 22.1 25 Fee income1 8.1% 12.1% Increase Cost of credit 1.18% 1.17% Improve Cost to income 48.1% 46.1% Broadly stable 0.122 EPS (€) 0.41 (1st quarter) Increase DPS2 (€) 0.21 0.22 Increase FL CET1 10.55% 10.66% +40 bps organic per year 25 (1) % change (constant euros), (2) Dividends charged to 2017 profit to be submitted to the AGM for approval

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… in a more favourable macroeconomic and financial environment, … Synchronisation of economic growth rates in most regions and expectations of interest rate hikes IMF 2017 GDP Outlook1 World Output 3.5% Euro Area 1.7% Economic growth in all UK 2.0% of our core Latin America 1.1% markets United States 2.3% Asia 6.4% 2017 interest rates market estimates Santander well-positioned Euro zone, UK, USA, Brazil for growth Mexico and Poland 26 (1) World Economic Outlook, April 2017

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… with a clear strategy in commercial transformation, enabling the improvement of our loyal and digital customers, higher fee income and cost savings Growing revenues and increasing cost savings Loyal customers (million) Fee income growth Best-in-class in efficiency C/I, % +12% Digitalisation 18.6 66% is key to 15.5 17.0 13.8 15.2 growing 12.6 +7% 46% +4% revenues and reducing costs 1Q’15 / 1Q’16 / 1Q’17 / Santander Peers* 2014 2015 2016 Mar’17 2017 2018 1Q’14 1Q’15 1Q’16 Digital customers (million) And operational excellence Customer satisfaction (# countries Top 3) 30.0 25.0 c. 80% 22.1 20.9 of our pre-tax 14.1 16.6 8 profit is Top 3 5 in customer satisfaction 2014 2015 2016 Mar’17 2017 2018 2015 2016 27 (*) Peer Group: BBVA, BNP Paribas, Citigroup, Deutsche, HSBC, Intesa Sanpaolo, Itaú, JPMorgan Chase, Lloyds, Société Générale, UBS, UniCredit, Bank of America, Wells Fargo, Barclays, Standard Chartered and ING Group. Source: Bloomberg, FY2016 results.

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… and allowing us to generate value for shareholders 2017 dividend Total dividend (€ per share) Cash dividend (€ per share) proposal +5%1 +5% +9% 2017 +5% +8% 0.22 Dividend 0.21 0.19 Yield1: 0.17 0.20 0.16 approx.4% 2015 2016 2017(e)1 2015 2016 2017(e)1 TSR above market in the short, medium and long term 28 (1) Dividends charged to 2017 profit to be submitted to the AGM for approval

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Save the date Group Strategy Update New York 10th October 2017 29

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Content Group performance 1Q’17 Business areas performance 1Q’17 Concluding remarks Appendix Glossary

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Appendix Other geographic markets results Global segments results Liquidity NPL and coverage ratios, and cost of credit Quarterly income statements 31

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Other geographic markets results 32

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MEXICO KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 624 2.8 14.0 Loyal customers (thousands) 1,418 1,663 Fee income 180 1.6 12.7 Digital customers (thousands) 951 1,528 Gross income 824 0.8 12.9 NPL ratio (%) 3.06 2.77 Operating expenses -319 -0.4 7.7 Cost of credit (%) 2.95 2.94 LLPs -233 16.0 14.4 Efficiency ratio (%) 40.7 38.8 PBT 267 -7.4 19.6 RoTE (%) 12.9 18.8 Attributable profit 163 -1.8 24.1 (*) € million and % change in constant euros ACTIVITY Focus on strategic commercial initiatives (Santander Plus & Aeroméxico) and Volumes in € billion 39 Yield on loans significant investment in systems and infrastructure 30 Volumes growth, improving deposit structure 10.67% 11.28% 9.81% 10.22% 10.21% -2% -1% Efforts made to attract payrolls from large companies QoQ QoQ Cost of deposits Profit up driven by NII (fuelled by loans and demand deposit growth, and higher interest rates) and fee income +7% +7% YoY YoY 2.30% 2.67% Higher LLPs due to volumes growth and the sale of a non-performing 1.60% 1.76% 1.97% portfolio. Cost of credit broadly stable Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 33 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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CHILE KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 485 -9.9 4.0 Loyal customers (thousands) 561 609 Fee income 107 13.9 10.5 Digital customers (thousands) 931 979 Gross income 645 -6.9 4.8 NPL ratio (%) 5.45 4.93 Operating expenses -264 -3.5 1.3 Cost of credit (%) 1.58 1.42 LLPs -122 -9.4 0.9 Efficiency ratio (%) 42.3 40.9 PBT 261 5.4 10.7 RoTE (%) 16.4 17.1 Attributable profit 147 4.6 9.4 (*) € million and % change in constant euros ACTIVITY Focus on improving customer satisfaction, mainly in medium-high income Volumes in € billion Yield on loans and SMEs segments 39 Accelerating the branch network transformation (WorkCafé) and enhancing 34 7.89% 8.36% 7.86% mobile banking (1l2l3 Click) 7.51% 7.53% +2% -0.5% Good performance in volumes, gaining market share in loans and deposits QoQ QoQ Cost of deposits Attributable profit up YoY driven by commercial revenues and cost control. +7% +7% NII down QoQ due to seasonality and higher than average in 4Q’16 YoY YoY 2.19% 2.18% 2.15% 2.21% 2.10% Improvement of all credit quality ratios Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 34 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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PORTUGAL KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 172 -5.7 -6.1 Loyal customers (thousands) 528 660 Fee income 89 29.2 -1.2 Digital customers (thousands) 393 524 Gross income 294 -3.5 -12.9 NPL ratio (%) 8.55 8.47 Operating expenses -139 -3.4 -9.9 Cost of credit (%) 0.28 0.07 LLPs 10 — — Efficiency ratio (%) 45.7 47.2 PBT 151 3.2 -4.7 RoTE (%) 17.2 15.3 Attributable profit 125 18.4 3.8 (*) € million ACTIVITY Continued focus on gaining market share (of note, new corporate loans) Volumes in € billion and improving customer loyalty (rise in the 1|2|3 customer base) 31 29 Yield on loans Revenues and profit impacted by ALCO portfolio sales in 2016 -1% -0.4% 2.10% 2.01% 1.94% 2.01% 1.97% QoQ QoQ Better efficiency reflected in lower costs Cost of deposits -4% +2% Loan portfolio management behind the improved cost of credit and lower YoY YoY 0.68% 0.51% NPL ratio, after it peaked at 10.46% following Banif’s integration 0.41% 0.35% 0.30% Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 35 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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ARGENTINA KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 222 5.2 47.6 Loyal customers (thousands) 1,080 1,162 Fee income 152 18.7 49.0 Digital customers (thousands) 1,368 1,600 Gross income 405 7.6 39.0 NPL ratio (%) 1.21 1.82 Operating expenses -221 15.1 28.7 Cost of credit (%) 2.04 1.68 LLPs -29 -7.4 34.7 Efficiency ratio (%) 58.9 54.5 PBT 156 7.2 64.9 RoTE (%) 29.3 36.8 Attributable profit 108 -1.1 69.0 (*) € million and % change in constant euros ACTIVITY Incorporation of Citibank’s retail portfolio into the balance sheet on Volumes in € billion March 31st (P&L in 2Q17) 14 Yield on loans 22.09% 22.23% Market share gain in loans. Deposits driven by demand deposits 20.54% 19.01% 18.44% +22% and mix change 8 QoQ +14% Cost of deposits Profit fuelled by the increase of all revenue lines and cost reduction in QoQ real terms, offsetting the expansion plan +68% 10.45% 10.80% +53% YoY 8.33% YoY 5.53% Lower cost of credit. Comfortable NPL and coverage ratio (134%) 4.72% Loans Funds 1Q’16 2Q 3Q 4Q 1Q’17 36 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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UNITED STATES KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 1,489 1.6 -7.0 Loyal customers (thousands) 281 280 Fee income 273 5.2 -6.8 Digital customers (thousands) 683 801 Gross income 1,879 2.9 -7.7 NPL ratio (%) 2.19 2.43 Operating expenses -837 -4.4 4.1 Cost of credit (%) 3.85 3.63 LLPs -811 -7.7 -9.1 Efficiency ratio (%) 39.5 44.6 PBT 199 — -27.1 RoTE (%) 2.7 2.8 Attributable profit 95 — 12.4 (*) € million and % change in constant euros ACTIVITY Santander Bank (SBNA): core deposits up 6% and loans down (GCB) Volumes in € billion Santander Bank Santander ConsumerUSA Profit growth: revenues rise (interest rate hike and lower cost of deposits), 53 49 more stable costs and lower LLPs (Oil & Gas in 1Q’16) 49 -0.2% -1% SC USA: volumes and revenues impacted by mix change towards a lower -4% QoQ QoQ risk profile (higher FICO) QoQ 28 -1% QoQ Improving cost of credit YoY and QoQ -8% -0.4% -5% -4% YoY YoY YoY Costs still high due to investments in IT YoY Loans Funds Loans Managed assets 37 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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POLAND KEY DATA 1Q’16 1Q’17 P&L* 1Q’17 %4Q’16 %1Q’16 NII 218 -3.2 9.5 Loyal customers (thousands) 1,269 1,327 Fee income 101 -1.6 4.1 Digital customers (thousands) 1,924 2,018 Gross income 321 -3.8 2.2 NPL ratio (%) 5.93 5.20 Operating expenses -146 3.4 -0.3 Cost of credit (%) 0.82 0.66 LLPs -27 -24.1 -19.4 Efficiency ratio (%) 46.6 45.5 PBT 125 -4.9 11.6 RoTE (%) 10.7 9.7 Attributable profit 59 -7.4 -8.5 (*) € million and % change in constant euros ACTIVITY Volumes in € billion Benchmark bank in innovation and digital channels Yield on loans Growth in loans fuelled by SMEs and individuals. Strong demand deposit 26 4.02% 4.06% 3.97% 3.99% 4.00% growth 22 -2% Profit affected by regulatory impacts (tax on assets, extraordinary +1% QoQ QoQ Cost of deposits contribution to BGF). PBT excluding tax on assets: +18% YoY Good management of NII, backed by larger volumes. Fee income hit by +6% +7% 1.03% 0.95% 0.84% 0.83% new bank insurance regulation (better evolution vs. sector) YoY YoY 0.80% 1Q’16 2Q 3Q 4Q 1Q’17 Credit quality improvement: lower NPL ratio and cost of credit Loans Funds 38 Note: % change in constant euros. Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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OTHER LATIN AMERICAN COUNTRIES Attributable profit € million Uruguay Peru +11% +5% 28 8 8 25 1Q’16 1Q’17 1Q’16 1Q’17 Focusing on loyalty, transactions and target segments Profit driven by higher revenues, cost control and lower provisions 39 Note: Constant euros.

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Global segments results

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RETAIL BANKING ACTIVITY P&L* 1Q’17 %4Q’16 %1Q’16 € billion and % change in constant euros NII 7,948 2.5 4.7 Fee income 2,448 3.6 12.3 695 743 +1% Gross income 10,806 3.3 6.9 +0,1% QoQ QoQ Operating expenses -4,888 -1.4 3.8 LLPs -2,242 -5.9 -5.5 +2% +6% YoY YoY PBT 2,991 15.7 16.7 Loans Funds Attributable profit 1,795 20.0 11.4 (*) € million and % change in constant euros The retail banking model continued to be transformed into an increasingly Simple, Personal and Fair model Focused on three main priorities: customer loyalty, digital transformation and operational excellence Further development of the multi-channel model, centred on digital channels Progress in achieving our targets. 15.5 million loyal customers (+10% from March 2016) and 22,1 million digital customers (+24% from March 2016 41 Note: Loans excluding repos. Funds: deposits excluding repos + marketed mutual funds.

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GLOBAL CORPORATE BANKING GROSS INCOME P&L* 1Q’17 %4Q’16 %1Q’16 Constant € million NII 656 -9,7 -1,9 1,565 Fee income 399 10,9 10,8 +8% TOTAL 1,448 Gross income 1.565 15,9 8,1 218 Capital & Other 175 Operating expenses -487 4,3 -0,4 Global Markets 459 +18% 541 LLPs -132 147,3 -45,7 Financing Customers 335 +1% 337 +6% Solutions & Advisory PBT 932 17,7 30,5 Global Transaction 479 -2% 469 Banking Attributable profit 610 10,5 33,0 1Q’16 1Q’17 (*) € million and % change in constant euros Customer-centred strategy, underpinned by the Division’s global capacities and their interconnection with local units Benchmark positions in cash management, export finance, trade, corporate lending and structured financing, among other, in Europe and Latin America Attributable profit up 33% (in constant euros), driven by strong and diversified customer revenues and lower LLPs 42

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REAL ESTATE ACTIVITY IN SPAIN ACTIVITY P&L € million 1Q’16 4Q’16 1Q’17 Balance sheet Coverage ratio € billion Mar’17 and change / Dec’16 Gross income -1 16 -1 11.0 10.2 Operating expenses -54 -48 -49 2.7 Sareb and +1 p.p. -1 p.p. 2.5 Other Provisions -36 -126 -65 1.3 1.6 Metrovacesa 57% 57% 1.6 1.2 Rentals Tax recovery 27 48 35 3.5 3.4 Net foreclosures Attributable profit -63 -109 -70 1.9 1.5 Net loans Loans Net Dec’16 Mar’17 Foreclosures Reduction of non-core exposure continued at a pace above 15% (loans: -37%) Coverage ratio already adapted to the requirements of Appendix IX Deconsolidation of assets from the Metrovacesa / Merlín merger Lower losses in the quarter due provision needs 43

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Liquidity

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Well-funded balance sheet with high structural liquidity surplus Liquidity balance sheet (Mar’17) € billion Commercial Gap: €89 bill. Net loans to 795 706 Deposits customers Structural liquidity surplus1: €151 bill. (14% net liabilities) 55 Securitisations Fixed assets 144 Funding M/LP & other 92 Financial Equity (105) and other (28) assets 176 133 25 Funding CP Assets Liabilities 45 Note: Liquidity balance sheet for management purposes (net of trading derivatives and interbank balances). Provisional (1) Financial assets – short term wholesale funding markets

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NPL, coverage ratios and cost of credit

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NPL ratio % 31.03.16 30.06.16 30.09.16 31.12.16 31.03.17 Continental Europe 7.08 6.84 6.43 5.92 5.62 Spain 6.36 6.06 5.82 5.41 5.22 Santander Consumer Finance 3.28 2.95 2.86 2.68 2.62 Poland 5.93 5.84 5.71 5.42 5.20 Portugal 8.55 10.46 9.40 8.81 8.47 United Kingdom 1.49 1.47 1.47 1.41 1.31 Latin America 4.88 4.98 4.94 4.81 4.50 Brazil 5.93 6.11 6.12 5.90 5.36 Mexico 3.06 3.01 2.95 2.76 2.77 Chile 5.45 5.28 5.12 5.05 4.93 USA 2.19 2.24 2.24 2.28 2.43 Operating Areas 4.36 4.32 4.19 3.95 3.77 Total Group 4.33 4.29 4.15 3.93 3.74 47

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Coverage ratio % 31.03.16 30.06.16 30.09.16 31.12.16 31.03.17 Continental Europe 65.4 61.3 61.3 60.0 60.6 Spain 50.2 47.6 47.6 48.3 49.1 Santander Consumer Finance 111.9 110.6 110.7 109.1 108.9 Poland 67.0 65.8 68.9 61.0 61.2 Portugal 87.7 61.9 57.8 63.7 61.7 United Kingdom 36.5 36.5 36.0 32.9 33.8 Latin America 79.7 81.4 84.5 87.3 90.5 Brazil 83.7 85.3 89.3 93.1 98.1 Mexico 97.5 102.3 101.9 103.8 104.8 Chile 54.6 55.5 58.1 59.1 58.9 USA 221.1 220.6 216.2 214.4 202.4 Operating Areas 73.3 72.0 72.8 73.5 74.6 Total Group 74.0 72.5 72.7 73.8 74.6 48

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Non-performing loans and loan-loss allowances. March 2017 Non-performing loans Loan-loss allowances 100%: €32,158 mill. 100%: €24,835 mill. Other, 12% Other, 10% Spain, 18% Spain, 28% USA, 7% USA, 18% Chile, 6% Mexico, 3% SCF*, 10% Chile, 5% SCF*, 7% Poland, 3% Brazil, 15% Mexico, 4% Portugal, Poland, 4% 7% Portugal, Brazil, 20% UK, 10% UK, 5% 8% Percentage over Group’s total (*) Excluding SCF UK 49

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Cost of credit % 31.03.16 30.06.16 30.09.16 31.12.16 31.03.17 Continental Europe 0.60 0.51 0.46 0.44 0.38 Spain 0.54 0.45 0.41 0.37 0.33 Santander Consumer Finance 0.64 0.55 0.49 0.47 0.39 Poland 0.82 0.75 0.76 0.70 0.66 Portugal 0.28 0.21 0.17 0.18 0.07 United Kingdom 0.01 0.03 0.05 0.02 0.03 Latin America 3.39 3.41 3.42 3.37 3.36 Brazil 4.63 4.71 4.87 4.89 4.84 Mexico 2.95 2.96 2.86 2.86 2.94 Chile 1.58 1.59 1.55 1.43 1.42 USA 3.85 3.77 3.80 3.68 3.63 Operating Areas 1.24 1.20 1.20 1.19 1.18 Total Group 1.22 1.19 1.19 1.18 1.17 50 Note: Cost of credit = 12 month loan-loss provisions / average lending. Calculated in current euros

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Real Estate Activity in Spain Exposure and coverage ratios Coverage by borrowers’ situation Total coverage (March 2017) (problematic assets+performing loans) € million Provisions / exposure (%) 57% Gross Coverage Net risk fund risk Total real estate Non-performing 3,419 1,996 1,423 exposure Special monitoring1 87 7 80 Mar’17 Foreclosed real estate 8,094 4,604 3,490 Non-performing 58% Special monitoring1 8% Total problematic loans 11,600 6,607 4,993 Foreclosed real estate 57% Performing loans2 17 0 17 Problematic loans 57% Real estate exposure 11,617 6,607 5,010 Performing loans2 0% 51 (1) 100% up-to-date with payments (2) Performing loans: loans up-to-date with payments

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Real Estate Activity in Spain Loans and foreclosures LOANS Foreclosed REAL ESTATE € million € million Mar’17 Mar’16 Var Mar’17 Mar’16 Var Finished buildings 1,938 2,533 -595 Finished buildings 2,218 2,268 -50 Buildings under construction 75 157 -82 Buildings under construction 800 870 -70 Developed land 1,014 1,438 -424 Developed land 2,656 2,671 -15 Building and other land 231 743 -512 Building and other land 2,420 2,414 6 Non mortgage guarantee 266 696 -430 Other land 0 52 -52 Total 3,523 5,567 -2,044 Total 8,094 8,275 -181 52

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Quarterly income statements

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Grupo Santander € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 10,021 10,119 10,395 10,734 11,246 Gross income 10,730 10,755 11,080 11,288 12,029 Operating expenses (5,158) (5,227) (5,250) (5,453) (5,543) Net operating income 5,572 5,528 5,831 5,835 6,486 Net loan-loss provisions (2,408) (2,205) (2,499) (2,406) (2,400) Other (433) (544) (392) (591) (775) Underlying profit before taxes 2,732 2,779 2,940 2,838 3,311 Underlying consolidated profit 1,922 1,864 2,036 2,072 2,186 Underlying attributable profit 1,633 1,526 1,695 1,766 1,867 Net capital gains and provisions* — (248) — (169) —Attributable profit 1,633 1,278 1,695 1,598 1,867 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs in 4Q16 PPI and restatement Santander Consumer USA 54

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Grupo Santander Constant € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 10,616 10,607 10,729 10,992 11,246 Gross income 11,330 11,268 11,442 11,544 12,029 Operating expenses (5,377) (5,410) (5,393) (5,572) (5,543) Net operating income 5,953 5,858 6,049 5,972 6,486 Net loan-loss provisions (2,640) (2,384) (2,627) (2,487) (2,400) Other (479) (573) (392) (604) (775) Underlying profit before taxes 2,834 2,900 3,031 2,880 3,311 Underlying consolidated profit 2,001 1,944 2,099 2,111 2,186 Underlying attributable profit 1,697 1,589 1,748 1,800 1,867 Net capital gains and provisions* — (258) 3 (161) —Attributable profit 1,697 1,331 1,751 1,639 1,867 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs in 4Q16 PPI and restatement Santander Consumer USA 55

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Spain € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,243 1,232 1,185 1,198 1,206 Gross income 1,543 1,343 1,398 1,324 1,539 Operating expenses (837) (834) (824) (802) (798) Net operating income 706 509 574 522 741 Net loan-loss provisions (231) (129) (140) (85) (163) Other (37) (82) (51) (97) (64) Underlying profit before taxes 438 298 382 340 514 Underlying consolidated profit 312 213 274 243 367 Underlying attributable profit 307 208 270 237 362 Net capital gains and provisions* — (216) — — —Attributable profit 307 (8) 270 237 362 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs 56

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Santander Consumer Finance € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,041 1,061 1,099 1,052 1,121 Gross income 1,045 1,051 1,106 1,060 1,118 Operating expenses (483) (468) (467) (486) (502) Net operating income 562 583 639 574 616 Net loan-loss provisions (114) (70) (116) (87) (61) Other (39) (41) (36) (52) (37) Underlying profit before taxes 410 472 487 434 518 Underlying consolidated profit 293 324 346 319 370 Underlying attributable profit 251 282 291 269 314 Net capital gains and provisions* — 25 — — —Attributable profit 251 307 291 269 314 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe 57

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Santander Consumer Finance Constant € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,052 1,069 1,105 1,054 1,121 Gross income 1,056 1,058 1,111 1,062 1,118 Operating expenses (488) (471) (469) (487) (502) Net operating income 569 587 643 575 616 Net loan-loss provisions (116) (71) (117) (87) (61) Other (39) (42) (36) (53) (37) Underlying profit before taxes 414 475 490 435 518 Underlying consolidated profit 296 327 348 320 370 Underlying attributable profit 255 284 293 270 314 Net capital gains and provisions* — 26 (0) (0) —Attributable profit 255 310 293 270 314 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe 58

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Poland € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 292 298 321 323 318 Gross income 311 345 330 329 321 Operating expenses (145) (146) (149) (139) (146) Net operating income 166 199 181 190 175 Net loan-loss provisions (33) (34) (43) (35) (27) Other (22) (29) (6) (25) (23) Underlying profit before taxes 111 136 132 129 125 Underlying consolidated profit 88 108 100 91 86 Underlying attributable profit 64 75 69 63 59 Net capital gains and provisions* — 29 — — —Attributable profit 64 104 69 63 59 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs 59

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Poland PLN million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,275 1,301 1,391 1,412 1,374 Gross income 1,357 1,507 1,430 1,440 1,386 Operating expenses (632) (638) (647) (609) (630) Net operating income 724 869 783 831 756 Net loan-loss provisions (144) (149) (186) (153) (116) Other (97) (126) (25) (111) (100) Underlying profit before taxes 483 593 573 566 539 Underlying consolidated profit 384 471 434 399 372 Underlying attributable profit 281 327 300 277 257 Net capital gains and provisions* — 128 (0) 0 —Attributable profit 281 455 300 277 257 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs 60

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Portugal € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 273 262 260 251 261 Gross income 337 281 287 304 294 Operating expenses (154) (149) (142) (143) (139) Net operating income 183 132 145 161 155 Net loan-loss provisions (22) (6) (16) (9) 10 Other (2) (21) (5) (5) (14) Underlying profit before taxes 158 104 124 146 151 Underlying consolidated profit 122 81 93 106 126 Underlying attributable profit 121 80 92 106 125 Net capital gains and provisions — — — — —Attributable profit 121 80 92 106 125 61

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United Kingdom € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,434 1,393 1,302 1,307 1,349 Gross income 1,513 1,501 1,377 1,425 1,432 Operating expenses (794) (788) (703) (683) (723) Net operating income 719 713 675 742 709 Net loan-loss provisions (7) (68) (44) 61 (15) Other (59) (71) (85) (124) (105) Underlying profit before taxes 654 574 545 679 588 Underlying consolidated profit 462 401 370 483 423 Underlying attributable profit 453 390 364 474 416 Net capital gains and provisions* — 107 — (137) —Attributable profit 453 497 364 338 416 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe and restructuring costs in 4Q16 PPI 62

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United Kingdom Ł million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,105 1,096 1,108 1,133 1,160 Gross income 1,166 1,180 1,172 1,234 1,231 Operating expenses (611) (619) (599) (594) (622) Net operating income 554 561 573 640 609 Net loan-loss provisions (5) (53) (37) 48 (13) Other (45) (56) (71) (104) (90) Underlying profit before taxes 504 452 465 583 506 Underlying consolidated profit 356 316 316 414 364 Underlying attributable profit 349 307 311 407 358 Net capital gains and provisions* — 83 2 (110) —Attributable profit 349 390 313 297 358 (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe and restructuring costs in 4Q16 PPI 63

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Brazil € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 2,365 2,583 2,899 3,155 3,455 Gross income 2,381 2,703 3,050 3,187 3,717 Operating expenses (947) (1,046) (1,177) (1,305) (1,314) Net operating income 1,434 1,657 1,873 1,882 2,403 Net loan-loss provisions (720) (753) (951) (953) (910) Other (177) (193) (134) (193) (358) Underlying profit before taxes 536 711 788 736 1,135 Underlying consolidated profit 399 481 544 575 713 Underlying attributable profit 359 429 488 510 634 Net capital gains and provisions — — — — —Attributable profit 359 429 488 510 634 64

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Brazil R$ million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 10,161 10,216 10,500 11,271 11,561 Gross income 10,227 10,708 11,067 11,364 12,438 Operating expenses (4,068) (4,138) (4,266) (4,671) (4,397) Net operating income 6,159 6,570 6,801 6,693 8,041 Net loan-loss provisions (3,093) (2,972) (3,473) (3,398) (3,045) Other (762) (763) (457) (686) (1,198) Underlying profit before taxes 2,304 2,835 2,870 2,609 3,798 Underlying consolidated profit 1,716 1,908 1,979 2,055 2,386 Underlying attributable profit 1,540 1,704 1,774 1,821 2,121 Net capital gains and provisions — — — — —Attributable profit 1,540 1,704 1,774 1,821 2,121 65

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Mexico € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 767 768 767 794 804 Gross income 792 786 796 828 824 Operating expenses (322) (317) (311) (325) (319) Net operating income 470 469 486 503 505 Net loan-loss provisions (221) (214) (194) (203) (233) Other (6) (11) (5) (8) (4) Underlying profit before taxes 243 244 288 293 267 Underlying consolidated profit 187 192 223 217 211 Underlying attributable profit 143 146 172 169 163 Net capital gains and provisions — — — — —Attributable profit 143 146 172 169 163 66

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Mexico Million pesos 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 15,253 15,690 16,028 16,922 17,348 Gross income 15,745 16,054 16,647 17,645 17,779 Operating expenses (6,402) (6,479) (6,497) (6,922) (6,894) Net operating income 9,343 9,576 10,151 10,723 10,886 Net loan-loss provisions (4,399) (4,364) (4,062) (4,337) (5,032) Other (123) (233) (98) (161) (90) Underlying profit before taxes 4,821 4,979 5,990 6,225 5,764 Underlying consolidated profit 3,724 3,919 4,643 4,629 4,548 Underlying attributable profit 2,839 2,979 3,577 3,589 3,523 Net capital gains and provisions — — — — —Attributable profit 2,839 2,979 3,577 3,589 3,523 67

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Chile € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 509 534 561 613 592 Gross income 556 577 616 672 645 Operating expenses (235) (237) (249) (265) (264) Net operating income 321 339 368 407 381 Net loan-loss provisions (109) (127) (146) (131) (122) Other 1 (1) 6 (35) 2 Underlying profit before taxes 213 211 228 241 261 Underlying consolidated profit 173 181 187 195 214 Underlying attributable profit 122 126 129 137 147 Net capital gains and provisions — — — — —Attributable profit 122 126 129 137 147 68

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Chile Ch$ billion 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 393 409 414 441 413 Gross income 430 441 455 484 450 Operating expenses (182) (182) (184) (191) (184) Net operating income 248 260 272 293 266 Net loan-loss provisions (84) (98) (108) (94) (85) Other 1 (0) 5 (26) 1 Underlying profit before taxes 165 162 169 173 182 Underlying consolidated profit 134 138 138 140 149 Underlying attributable profit 94 96 95 98 103 Net capital gains and provisions — — — — —Attributable profit 94 96 95 98 103 69

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United States € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 1,831 1,755 1,724 1,708 1,763 Gross income 1,968 1,888 1,867 1,809 1,879 Operating expenses (777) (774) (784) (864) (837) Net operating income 1,191 1,114 1,083 946 1,042 Net loan-loss provisions (861) (704) (776) (867) (811) Other (66) (13) (3) (8) (32) Underlying profit before taxes 264 397 304 71 199 Underlying consolidated profit 160 253 213 54 138 Underlying attributable profit 82 159 141 14 95 Net capital gains and provisions* — — — (32) —Attributable profit 82 159 141 (19) 95 (*).- Including: in 4Q16 restatement Santander Consumer USA 70

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United States $ million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income 2,018 1,983 1,925 1,838 1,877 Gross income 2,168 2,133 2,085 1,945 2,001 Operating expenses (856) (874) (875) (932) (891) Net operating income 1,312 1,259 1,210 1,013 1,109 Net loan-loss provisions (949) (797) (867) (935) (863) Other (72) (16) (3) (8) (34) Underlying profit before taxes 291 446 340 69 212 Underlying consolidated profit 177 285 238 54 147 Underlying attributable profit 90 178 157 12 101 Net capital gains and provisions* — — — (36) —Attributable profit 90 178 157 (24) 101 (*).- Including: in 4Q16 restatement Santander Consumer USA 71

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Corporate Centre € million 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 NII + Fee income (173) (192) (201) (204) (198) Gross income (223) (244) (316) (282) (341) Operating expenses (126) (120) (104) (99) (119) Net operating income (349) (365) (421) (381) (460) Net loan-loss provisions 1 (5) 5 0 (5) Other (5) (55) (59) 44 (32) Underlying profit before taxes (353) (424) (474) (337) (497) Underlying consolidated profit (317) (418) (414) (298) (471) Underlying attributable profit (311) (418) (412) (299) (468) Net capital gains and provisions* — (186) — — —Attributable profit (311) (604) (412) (299) (468) (*).- Including: in 2Q16 capital gains from the disposal of the stake in Visa Europe, and restructuring costs 72

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Content Group performance 1Q’17 Business areas performance 1Q’17 Concluding remarks Appendix Glossary

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Glossary -Acronyms AFS: Available for sale Bn: Billion CET1: Common equity tier 1 C&I: Commercial and Industrial DGF: Deposit guarantee fund FL: Fully-loaded EPS: Earning per share GoFT: Gains on financial transactions LTV: Loan to Value LLPs: Loan-loss provisions MXN: Mexican Pesos NII: Net interest income NIM: Net interest margin NPL: Non-performing loans n.m.: Non meaningful PBT: Profit before tax P&L: Profit and loss RoRWA: Return on risk-weighted assets RWA: Risk-weighted assets RoTE: Return on tangible equity SCF: Santander Consumer Finance SC USA: Santander Consumer USA SGCB: Santander Global Corporate Banking SMEs: Small and Medium Enterprises SRF: Single Resolution Fund ST: Short term SVR: Standard variable rate TNAV: Tangible net asset value UF: Unidad de fomento (Chile) y-o-y: Year on Year UK: United Kingdom US: United States 74

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Glossary – definitions PROFITABILITY AND EFFICIENCY RoTE: Return on tangible equity: Group’s attributable profit / average of: capital + reserves + retained profit + accumulated other comprehensive income -goodwill—intangible assets 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: Loans and advances to customers and non-performing contingent liabilities (excluding country-risk) / total lending. Lending defined as total loans and advances to customers and contingent liabilities (excluding country-risk) NPL coverage ratio: Provisions to cover losses due to impairment of loans and advances to customers and contingent liabilities (excluding country-risk) / total loans and advances to customers and non-performing contingent liabilities (excluding country-risk) Cost of credit: 12 month loan-loss provisions / 12 month average lending 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 income—goodwill—intangible assets Notes: 1) The average figures to calculate RoE, RoTE, RoA and RoRWA, include in the denominators, are calculated considering the four months from December to March, when relating to the first quarter data 2) In periods under a year, and when there are non-recurring results, the profit used to calculate the RoE and RoTE, is the annualised underlying attributable profit (excluding non-recurring results), to which the non-recurring results without annualising are added 3) In periods under a year, and where there are non-recurring results, the profit used to calculate the RoA and RoRWA, is the annualised consolidated profit (excluding non-recurring results), to which the non-recurring results without annualising are added 4) The risk-weighted assets included in the RoRWA denominator are calculated according to the criteria defined in the CRR (Capital Requirements Regulation) 75

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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.


Commercial activity Santander UK is well positioned to succeed despite the changeable macro environment. • Leverage the 1\|2\|3 World strategy, which has transformed our business. 1\|2\|3 World customers increased by 21,000 to 5.1 million since the end of 2016. Retail current account balances were up by £1,000 million, and continue to show positive net inflows • We continue to develop our digital proposition: self-service investment platform (Investment Hub), online mortgage application process and the expansion of mobile payment capabilities to include Android Pay. • Loyal customers increased since December 2016, and digital customers reached 4.7 million (+4% in the quarter). As regards banking reform, our implementation is well advanced, with the chosen model minimising the impact on customers and maintaining long-term flexibility in the changeable macro environment.

Business evolution • Customer lending was broadly flat since the end of 2016, with good evolution in lending to companies, (+3%, in both quarter-on-quarter and year-on-year terms). • New gross mortgage lending was £5,300 million, including 4,570 first- time home buyers. It was lower than in the first quarter of 2016, which saw a spike in buy-to-let mortgages ahead of the April 2016 stamp duty increase. • Customer deposits excluding repos increased 6% driven by 1\|2\|3 World. The strategy of reducing time deposits and growing current accounts continues.

Results Attributable profit for the quarter was €416 million, up 3% year-on-year. • Net interest income was up 6% year-on-year, driven by the lower cost of the 1\|2\|3 account, partially offset by SVR attrition and new asset margin pressures. • Operating expenses were broadly flat, as efficiency improvements absorbed investments in business growth, the continued enhancements to our digital channels and the banking reform costs of £25 million. • Credit quality remained strong in all loan portfolios. The NPL ratio improved to 1.31%, and the cost of credit remained low. • Provisions of £32 million for PPI to respond to the Financial Conduct Authority (FCA) guidance published in March 2017. Attributable profit rose 21% over the fourth quarter of 2016, due to lower one-off items.

		Detailed financial information on page 47