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 January, 2019
Commission File Number: 001-12518
Banco Santander, S.A.
(Exact name of registrant as specified in its charter)
Ciudad Grupo Santander
28660 Boadilla del Monte (Madrid) Spain
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
Banco Santander, S.A.
Item |
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1 | Press Release regarding January December 2018 Results | |
2 | January December 2018 Financial Report | |
3 | January December 2018 Earnings Presentation |
Santander attributable profit for 2018 reaches 7,810 million - up 18%
In the fourth quarter alone, attributable profit was up 34% to 2,068 million, compared to Q4 2017
The Group has achieved its target of increasing earnings per share by double digits in 2018 with EPS increasing to 0.449, up 11.2% compared with 2017
Madrid, 30 January 2019 - PRESS RELEASE
∎ | The Group has successfully completed its three year strategic plan based on customer loyalty, and as a result remains one of the most profitable and efficient banks among its peers, with a return on tangible equity (RoTE) of 11.7%, and a cost-to-income ratio of 47%. |
∎ | It continued to help people and businesses prosper during the year, earning the loyalty of a further 2.6 million customers and increasing lending and customer funds by 4% in constant euros. |
∎ | The number of customers using digital services increased by 6.6 million to 32 million as the Groups digital transformation continued to deliver new and improved services for customers, helping the bank achieve a top three ranking for customer satisfaction in seven core markets. |
∎ | Attributable profit increased in eight of the Groups ten core markets year-on-year in constant euros (i.e. excluding movement in exchange rates), with particularly strong growth in the US (+74%), Spain (+28%), Brazil (+22%), and Mexico (+14%). |
∎ | Credit quality improved further during the year with the Groups non-performing loan (NPL) ratio now at 3.73%, 35 basis points lower than 31 December 2017, while the cost of credit has fallen 7 basis points in the same period to 1.00%. |
∎ | The Groups fully loaded CET1 ratio reached 11.30% at 31 December 2018, up from 10.84% at 31 December 2017, surpassing its 11% goal for 2018 due to strong organic capital generation. |
Banco Santander Group Executive Chairman, Ana Botín, said:
2018 has been an excellent year for the Group. We have successfully completed our three year strategic plan, and our focus on earning customer loyalty and digital transformation has been central to our success. As a result we remain among the most profitable and efficient banks in our peer group.
Weve added more than two and half million loyal customers in the year and over six million digital customers by investing in technology and developing better ways to meet the needs of the people and businesses we serve. We are seeing better customer engagement, stronger relationships, and higher quality earnings as a result, with a third of sales now made through digital channels.
Latin America has remained an important engine for growth within the Group, with especially strong progress in Brazil and Mexico. In Spain, the integration of Popular is progressing ahead of plan, while the turnaround of our business in the US continues to build positive momentum.
Corporate Communications | 1 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Our balance sheet is even stronger, with credit quality improving, and the Group CET 1 capital ratio now 11.30%, ahead of target for 2018, in spite of external and regulatory headwinds.
We have achieved a lot, but I am confident in our capacity as a team to seize the potential for significant further organic profitable growth. We serve over 144 million customers with a balanced presence across developed and high growth potential markets where we have strong leadership. This creates huge opportunity for our business and is what sets us apart from our peers. We will be giving our next strategic update to investors in April this year.
Results Summary - 2018
FY18 (m)
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FY18 v FY17
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FY18 v FY17 (EX FX)
|
Q418 (m)
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Q418 v Q417
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Q418 v Q417 (EX FX)
| |||||||||
Gross income | 48,424 | 0% | +9% | 12,542 | +4% | +8% | ||||||||
Operating expenses | -22,779 | -1% | +7% | -5,936 | 0% | +3% | ||||||||
Net operating income | 25,645 | +1% | +11% | 6,606 | +8% | +14% | ||||||||
Net loan-loss provisions | -8,873 | -3% | +7% | -2,455 | +13% | +17% | ||||||||
Profit before tax | 14,776 | +9% | +20% | 3,546 | +5% | +12% | ||||||||
Tax | -5,230 | +14% | +25% | -1,177 | +8% | +15% | ||||||||
Underlying Profit | 8,064 | +7% | +18% | 2,022 | +5% | +12% | ||||||||
Net capital gains & provisions | -254 | -72% | -72% | 46 | | | ||||||||
Attributable profit | 7,810 | +18% | +32% | 2,068 | +34% | +45% |
Banco Santander increased attributable profit during 2018 by 18% to 7,810 million (+32% in constant euros), as strong growth in customer revenues in several markets, including Brazil, Spain, Mexico and the US, combined with improvements in credit quality, more than offset the impact of exchange rate depreciation against the euro in certain currencies, including the Argentine peso.
Underlying profit increased by 18% year-on-year in constant euros to 8,064 million.
In the fourth quarter alone, attributable profit was 2,068 million, 34% higher than Q4 2017. Profit before tax for the fourth quarter was up 12% year-on-year in constant euros.
Gross income in 2018 increased by 9% in constant euros to 48,424 million, the highest level on record for the Group, with the Group increasing lending and customer funds by 4% in constant euros, while increasing the number of loyal customers (people who see Santander as their main bank) by 2.6 million to 19.9 million. Total customer numbers increased by 11 million in the year to 144 million.
Ongoing investment in commercial transformation and digitalisation led to a 7% increase in operating expenses in constant euros, however, the Groups cost/income ratio, a key measure of efficiency, remained among the lowest of our peer group at 47% (compared to a peer average of over 63%).
Corporate Communications | 2 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
During 2018, the number of customers using digital services increased by 6.6 million in the year to 32 million, with ongoing investment in technology driving an increase in digital service adoption and improving the customer experience. 48% of active customers now use digital services regularly.
The Group ranks among the top three banks for customer satisfaction in seven core markets. Openbank, which launched several new services in 2018, has increased mortgage balances by 370% after the first full year of mortgage sales, as well as increasing deposits by 19%. In April 2018, we launched One Pay FX, the first blockchain-based retail payment solution, in four countries leading to a 55% increase in foreign exchange transactions in Spain since launch.
Credit quality improved during the year, reflecting the strength of the Groups loan book. The Groups non-performing loan (NPL) ratio is now 3.73%, down 35 basis points since 31 December 2017. Cost of credit, a good indicator of credit quality, fell to 1.00%, down seven basis points since 31 December 2017, the lowest annual level since 2008.
A balanced presence across both mature and emerging markets remains one of Banco Santanders key strengths. Attributable profit increased in eight of the Groups ten core markets in constant euros.
During 2018, Europe contributed 52% of Group profit and the Americas, 48%. Brazil was the largest contributor to Group earnings, with 26% of total underlying profit, followed by Spain with 17%, and the UK and Santander Consumer Finance with 13% each. The lending book also remains well diversified across business segments and geographies.
1. Excluding corporate centre, and Spain Real Estate Activity. 2. Loans excluding repos.
During the year Santander generated 46 basis points in capital, bringing the Groups fully loaded CET1 ratio to 11.30% at 31 December 2018, significantly exceeding its 2018 target of 11%. This ratio does not include the impact of the full application of IFRS 9 (-27 basis points) which is subject to a five year transitional period before full implementation is required in 2022.
Over the last 12 months Return on Tangible Equity (RoTE), a key measure of profitability, has increased by 129 basis points to 11.7%, while underlying RoTE increased by 26 basis points to 12.1%, making Santander one of the most profitable banks among its peers.
Corporate Communications | 3 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
The Group has achieved its target to deliver double-digit Earnings Per Share (EPS) growth in 2018, with EPS increasing by 11.2% in the year to 0.449. Tangible net asset value per share was 1% higher than 2017 at 4.19, while cash dividend per share is 9% higher at 0.20 (subject to Board and 2019 AGM approval).
Three year plan achievements: 2016 - 2018
In 2018, the Group successfully completed its three year strategic plan. During the period Santander has undergone a significant commercial and digital transformation:
∎ | Redefining its strategy with a focus on customer loyalty, digital excellence and organic growth. |
∎ | Embedding a common culture across our 200,000 employees, reinforcing governance and teams, and improving employee engagement. |
∎ | While continuously increasing shareholder value - growing earnings per share and tangible net asset value per share. |
Since 31 December 2015, the number of loyal customers has increased by 44% to 19.9 million, improving the quality and recurrence of the Groups earnings, with higher revenues per customer and lower customer attrition.
The Groups digital transformation has led to a 93% increase in digital customers to 32 million, with nearly a third of total sales now made through digital channels, and 48% of active customers using digital services (up from 30% in 2015). Investment in digital, as well as improving customer satisfaction, has allowed the Bank to maintain its position among the most efficient banks in the world, with a cost-to-income ratio of 47%.
Corporate Communications | 4 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
This, in turn, has led to a significant increase in returns, with RoTE now 171 basis points higher than 31 December 2015 at 11.7%, and earnings per share growing by double digits in 2018.
The Group fully loaded CET1 capital ratio is now 125 basis points higher than 31 December 2015 at 11.30%, while cash dividend per share has increased by 31% over the same period (subject to Board and 2019 AGM approval).
Country Summary (FY18)
In Brazil, attributable profit increased by 2% to 2,605 million (+22% in constant euros) as a focus on customer experience allowed the business to attract an additional one million loyal customers during the year, with loans and funds increasing year-on-year by 13% and 15% respectively in constant euros. Santander Brazil now ranks first for customer satisfaction. The business continued to gain market share in key segments, while maintaining asset quality; with the non-performing loan ratio falling four basis points in 12 months to 5.25% and cost of credit reducing by 30 basis points to 4.06%.
In Spain, attributable profit increased by 28%, to 1,458 million, as the planned integration of Popular was supported by ongoing growth in revenues (+15% YoY). Santander Spain made significant progress in its digital transformation and implementation of the customer relationship model, including the launch of 1|2|3 professional. New lending to SMEs increased 17% and 30% in private banking. Credit quality also improved, with the NPL ratio falling 13 basis points since 31 December 2017 to 6.19%.
In the UK, the business continued to grow current account balances and mortgages, while making further improvements to the customer experience, with Santander UK now ranked second for retail customer satisfaction. While a highly competitive landscape placed pressure on revenues, credit quality remained extremely strong, with a cost of credit at 0.07%. Attributable profit was 9% lower than 2017 at 1,362 million (-8% in constant euros), reflecting an increase in operating costs due to ongoing investment in digital transformation and regulatory projects, as well as other provisions.
Santander Consumer Finance increased attributable profit by 11% in 2018, to 1,296 million (+12% in constant euros), with new lending increasing in most geographies due to increasing auto and consumer finance lending and strengthening digital channels. SCF maintained best-in-class profitability with a RoTE of 16% while the NPL ratio remained at a historic low of 2.29%, down 21 basis points in the year.
In Mexico, attributable profit increased by 7% to 760 million (+14% in constant euros) as the bank continued to strengthen its distribution model, through the transformation of the branch network, an improved mobile platform, and the launch of new product lines such as auto finance. This helped attract new customers and increase both volumes and profitability. As a result, total income increased by 9% YoY in constant euros, while credit quality remained solid, with the NPL ratio falling 26 basis points in the year to 2.43%.
In Chile, attributable profit increased by 5% to 614 million (+8% in constant euros) as business volumes grew at a higher pace in core segments, leading to a 4% increase in gross income in constant euros. The transformation of the branch network, ongoing digitalisation, and improved products and services, led to a 7% growth in loyal customers and digital customers. Credit quality also improved with the NPL ratio falling by 30 basis points to 4.66% over the period.
Corporate Communications | 5 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
In the US, attributable profit increased by 66% to 552 million (+74% in constant euros) as strengthened business performance and the achievement of several significant regulatory milestones led to a very positive year for the business. Lending increased year-on-year at both Santander Bank (+9%) and SC USA (+5%), with the number of loyal customers increase by 12%, while the cost of credit fell 15 basis points to 3.27% in the year.
In Portugal, attributable profit increased by 15% to 500 million, driven by improved efficiency and a significant improvement in credit quality, with NPLs falling by 157 basis points in the year to 5.94%. The operational and technological integration of Banco Popular Portugal, which completed in October 2018, strengthened Santanders position as the countrys largest privately owned bank by assets and loans in domestic activity.
In Poland attributable profit increased by 14% to 343 million (+14% in constant euros) as the business achieved year-on-year organic growth across all key products and segments. The Group strengthened its position with the integration of the retail and SME businesses acquired from Deutsche Bank Polska. In September Bank Zachodni WBK successfully completed a rebrand to Santander.
As Argentina, which represents c.1% of the Groups attributable profit, is considered a high-inflation economy, international accounting standards dictate that the results and balance sheet for the country must be adjusted. This had a negative P&L impact of 239 million for 2018. As a result, despite strong growth in revenues, attributable profit in Argentina fell by 77% to 84 million in 2018 (-54% in constant euros). The agreement with the IMF allows Argentina to meet its financial obligations for 2018 and 2019, while the adjustment in currency should create greater FX stability going forward.
About Banco Santander
Banco Santander is the largest bank in the eurozone with a market capitalisation of 64,508 million at 31 December 2018. It has a strong and focused presence in 10 core markets across Europe and the Americas with more than four million shareholders and 200,000 employees serving 144 million customers.
Corporate Communications | 6 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Key Consolidated Data (from Financial Report)
∎ BALANCE SHEET (EUR million) | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Total assets |
1,459,271 | 1,444,687 | 1.0 | 1,459,271 | 1,444,305 | 1.0 | 1,339,125 | |||||||||||||||||||||
Loans and advances to customers |
882,921 | 866,226 | 1.9 | 882,921 | 848,914 | 4.0 | 790,470 | |||||||||||||||||||||
Customer deposits |
780,496 | 778,751 | 0.2 | 780,496 | 777,730 | 0.4 | 691,111 | |||||||||||||||||||||
Total funds |
980,562 | 986,199 | (0.6 | ) | 980,562 | 985,703 | (0.5 | ) | 873,618 | |||||||||||||||||||
Total equity |
107,361 | 105,668 | 1.6 | 107,361 | 106,832 | 0.5 | 102,699 | |||||||||||||||||||||
Note: Total funds includes customer deposits, mutual funds, pension funds and managed portfolios
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∎ INCOME STATEMENT (EUR million) | Q418 | Q318 | % | 2018 | 2017 | % | 2016 | |||||||||||||||||||||
Net interest income |
9,061 | 8,349 | 8.5 | 34,341 | 34,296 | 0.1 | 31,089 | |||||||||||||||||||||
Gross income |
12,542 | 11,720 | 7.0 | 48,424 | 48,392 | 0.1 | 43,853 | |||||||||||||||||||||
Net operating income |
6,606 | 6,359 | 3.9 | 25,645 | 25,473 | 0.7 | 22,766 | |||||||||||||||||||||
Underlying profit before tax(1) |
3,546 | 3,750 | (5.4 | ) | 14,776 | 13,550 | 9.0 | 11,288 | ||||||||||||||||||||
Underlying attributable profit to the Group(1) |
2,022 | 1,990 | 1.6 | 8,064 | 7,516 | 7.3 | 6,621 | |||||||||||||||||||||
Attributable profit to the Group |
2,068 | 1,990 | 3.9 | 7,810 | 6,619 | 18.0 | 6,204 | |||||||||||||||||||||
Variations in constant euros: Q418 / Q318: NII: +3.0%; Gross income: +0.7%; Net operating income: -1.8%; Underlying attributable profit: -3.3%; Attributable profit: -1.1% 2018 / 2017: NII: +8.7%; Gross income: +8.9%; Net operating income: +10.6%; Underlying attributable profit: +18.5%; Attributable profit: +32.1%.
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∎ EPS(2), PROFITABILITY AND EFFICIENCY (%) | Q418 | Q318 | % | 2018 | 2017 | % | 2016 | |||||||||||||||||||||
Underlying EPS (euro) (1) |
0.116 | 0.115 | 1.1 | 0.465 | 0.463 | 0.6 | 0.429 | |||||||||||||||||||||
EPS (euro) |
0.119 | 0.115 | 3.6 | 0.449 | 0.404 | 11.2 | 0.401 | |||||||||||||||||||||
RoE |
8.46 | 8.43 | 8.21 | 7.14 | 6.99 | |||||||||||||||||||||||
Underlying RoTE (1) |
11.93 | 11.95 | 12.08 | 11.82 | 11.08 | |||||||||||||||||||||||
RoTE |
12.00 | 11.95 | 11.70 | 10.41 | 10.38 | |||||||||||||||||||||||
RoA |
0.65 | 0.66 | 0.64 | 0.58 | 0.56 | |||||||||||||||||||||||
Underlying RoRWA (1) |
1.60 | 1.59 | 1.59 | 1.48 | 1.36 | |||||||||||||||||||||||
RoRWA |
1.60 | 1.59 | 1.55 | 1.35 | 1.29 | |||||||||||||||||||||||
Efficiency ratio (with amortisations) |
47.3 | 45.7 | 47.0 | 47.4 | 48.1 | |||||||||||||||||||||||
∎ SOLVENCY AND NPL RATIOS (%) | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Fully loaded CET1 (3) |
11.30 | 11.11 | 11.30 | 10.84 | 10.55 | |||||||||||||||||||||||
Phased-in CET1 (3) |
11.47 | 11.29 | 11.47 | 12.26 | 12.53 | |||||||||||||||||||||||
NPL ratio |
3.73 | 3.87 | 3.73 | 4.08 | 3.93 | |||||||||||||||||||||||
Coverage ratio |
67.4 | 67.9 | 67.4 | 65.2 | 73.8 | |||||||||||||||||||||||
∎ MARKET CAPITALISATION AND SHARES | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Shares (millions) |
16,237 | 16,136 | 0.6 | 16,237 | 16,136 | 0.6 | 14,582 | |||||||||||||||||||||
Share price (euros) (2) |
3.973 | 4.336 | (8.4 | ) | 3.973 | 5.479 | (27.5 | ) | 4.877 | |||||||||||||||||||
Market capitalisation (EUR million) |
64,508 | 69,958 | (7.8 | ) | 64,508 | 88,410 | (27.0 | ) | 72,314 | |||||||||||||||||||
Tangible book value per share (euro)(2) |
4.19 | 4.16 | 4.19 | 4.15 | 4.15 | |||||||||||||||||||||||
Price / Tangible book value per share (X) (2) |
0.95 | 1.04 | 0.95 | 1.32 | 1.17 | |||||||||||||||||||||||
P/E ratio (X) (2) |
8.84 | 9.83 | 8.84 | 13.56 | 12.18 | |||||||||||||||||||||||
∎ OTHER DATA | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Number of shareholders |
4,131,489 | 4,190,808 | (1.4 | ) | 4,131,489 | 4,029,630 | 2.5 | 3,928,950 | ||||||||||||||||||||
Number of employees |
202,713 | 201,101 | 0.8 | 202,713 | 202,251 | 0.2 | 188,492 | |||||||||||||||||||||
Number of branches |
13,217 | 13,414 | (1.5 | ) | 13,217 | 13,697 | (3.5 | ) | 12,235 |
(1) | In this document we present the figures related to underlying results, which exclude non-recurring items, as they are recorded in the separate line of Net capital gains and provisions above the line of attributable profit to the Group. Further details on that line are provided in pages 10 and 11 as well as in the Alternative Performance Measures section as follows below. |
(2) | 2016 data adjusted for the capital increase in July, for like-on-like comparisons with 2017 and 2018 data. |
(3) | 2018 data applying the IFRS 9 transitional arrangements. |
Note: The financial information in this report was approved by the Board of Directors, following a favourable report from the Audit Committee.
In accordance with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority on 5 October 2015 (Guidelines on Alternative Performance Measures, ESMA/2015/1415en), we are attaching herewith a glossary with the definitions and the conciliation with the items presented in the income statement of certain alternative performance measures used in this document. Please refer to Alternative Performance Measures Glossary on page 60.
Corporate Communications | 7 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Important Information
In addition to the financial information prepared under International Financial Reporting Standards (IFRS), this press release includes certain alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415es) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see 2018 4Q Financial Report, published as Relevant Fact on [fecha publicación del trimestral], Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santander website (www.bancosantander.com).
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Santander cautions that this press release contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RORAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this press release and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, industry, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. Numerous factors, including those reflected in the Form 20-Funder Key Information-Risk Factors- and in the Share Registration Document under Factores de Riesgo- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this press release and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise
The information contained in this press release is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the press release. No investment activity should be undertaken only on the basis of the information contained in this press release. In making this press release available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this press release nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this press release is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.
Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this press release should be construed as a profit forecast.
Corporate Communications | 8 | |||
Ciudad Grupo Santander, edificio Arrecife, planta 2 | ||||
28660 Boadilla del Monte (Madrid). Tel. +34 91 2895211 | ||||
[email protected] | ||||
www.santander.com - Twitter: @bancosantander |
Financial Report 2018
JANUARYDECEMBER
January - December 2018 FINANCIAL REPORT 3 Key consolidated data 4 Santander aim 6 Group performance 9 General background 10 Income statement and balance sheet 17 Solvency ratios 19 Risk management 22 Business information 39 Corporate Governance 40 Sustainability 41 The Santander share 42 Financial information. Appendix 60 Alternative Performance Measures All customers. shareholders and the general public can use Santanders official social network channels in all the countries in which the Bank operates,
JANUARY - DECEMBER Key consolidated data |
GRUPO SANTANDER. KEY CONSOLIDATED DATA
∎ BALANCE SHEET (EUR million) | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Total assets |
1,459,271 | 1,444,687 | 1.0 | 1,459,271 | 1,444,305 | 1.0 | 1,339,125 | |||||||||||||||||||||
Loans and advances to customers |
882,921 | 866,226 | 1.9 | 882,921 | 848,914 | 4.0 | 790,470 | |||||||||||||||||||||
Customer deposits |
780,496 | 778,751 | 0.2 | 780,496 | 777,730 | 0.4 | 691,111 | |||||||||||||||||||||
Total funds |
980,562 | 986,199 | (0.6) | 980,562 | 985,703 | (0.5) | 873,618 | |||||||||||||||||||||
Total equity |
107,361 | 105,668 | 1.6 | 107,361 | 106,832 | 0.5 | 102,699 | |||||||||||||||||||||
Note: Total funds includes customer deposits, mutual funds, pension funds and managed portfolios |
|
|||||||||||||||||||||||||||
∎ INCOME STATEMENT (EUR million) | Q418 | Q318 | % | 2018 | 2017 | % | 2016 | |||||||||||||||||||||
Net interest income |
9,061 | 8,349 | 8.5 | 34,341 | 34,296 | 0.1 | 31,089 | |||||||||||||||||||||
Gross income |
12,542 | 11,720 | 7.0 | 48,424 | 48,392 | 0.1 | 43,853 | |||||||||||||||||||||
Net operating income |
6,606 | 6,359 | 3.9 | 25,645 | 25,473 | 0.7 | 22,766 | |||||||||||||||||||||
Underlying profit before tax (1) |
3,546 | 3,750 | (5.4) | 14,776 | 13,550 | 9.0 | 11,288 | |||||||||||||||||||||
Underlying attributable profit to the Group (1) |
2,022 | 1,990 | 1.6 | 8,064 | 7,516 | 7.3 | 6,621 | |||||||||||||||||||||
Attributable profit to the Group |
2,068 | 1,990 | 3.9 | 7,810 | 6,619 | 18.0 | 6,204 | |||||||||||||||||||||
Variations in constant euros: Q418 / Q318: NII: +3.0%; Gross income: +0.7%; Net operating income: -1.8%; Underlying attributable profit: -3.3%; Attributable profit: -1.1% |
| |||||||||||||||||||||||||||
2018 / 2017: NII: +8.7%; Gross income: +8.9%; Net operating income: +10.6%; Underlying attributable profit: +18.5%; Attributable profit: +32.1%. |
| |||||||||||||||||||||||||||
∎ EPS (2), PROFITABILITY AND EFFICIENCY (%) | Q418 | Q318 | % | 2018 | 2017 | % | 2016 | |||||||||||||||||||||
Underlying EPS (euro) (1) |
0.116 | 0.115 | 1.1 | 0.465 | 0.463 | 0.6 | 0.429 | |||||||||||||||||||||
EPS (euro) |
0.119 | 0.115 | 3.6 | 0.449 | 0.404 | 11.2 | 0.401 | |||||||||||||||||||||
RoE |
8.46 | 8.43 | 8.21 | 7.14 | 6.99 | |||||||||||||||||||||||
Underlying RoTE (1) |
11.93 | 11.95 | 12.08 | 11.82 | 11.08 | |||||||||||||||||||||||
RoTE |
12.00 | 11.95 | 11.70 | 10.41 | 10.38 | |||||||||||||||||||||||
RoA |
0.65 | 0.66 | 0.64 | 0.58 | 0.56 | |||||||||||||||||||||||
Underlying RoRWA (1) |
1.60 | 1.59 | 1.59 | 1.48 | 1.36 | |||||||||||||||||||||||
RoRWA |
1.60 | 1.59 | 1.55 | 1.35 | 1.29 | |||||||||||||||||||||||
Efficiency ratio (with amortisations) |
47.3 | 45.7 | 47.0 | 47.4 | 48.1 | |||||||||||||||||||||||
∎ SOLVENCY AND NPL RATIOS (%) | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Fully loaded CET1 (3) |
11.30 | 11.11 | 11.30 | 10.84 | 10.55 | |||||||||||||||||||||||
Phased-in CET1 (3) |
11.47 | 11.29 | 11.47 | 12.26 | 12.53 | |||||||||||||||||||||||
NPL ratio |
3.73 | 3.87 | 3.73 | 4.08 | 3.93 | |||||||||||||||||||||||
Coverage ratio |
67.4 | 67.9 | 67.4 | 65.2 | 73.8 | |||||||||||||||||||||||
∎ MARKET CAPITALISATION AND SHARES | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Shares (millions) |
16,237 | 16,136 | 0.6 | 16,237 | 16,136 | 0.6 | 14,582 | |||||||||||||||||||||
Share price (euros) (2) |
3.973 | 4.336 | (8.4) | 3.973 | 5.479 | (27.5) | 4.877 | |||||||||||||||||||||
Market capitalisation (EUR million) |
64,508 | 69,958 | (7.8) | 64,508 | 88,410 | (27.0) | 72,314 | |||||||||||||||||||||
Tangible book value per share (euro) (2) |
4.19 | 4.16 | 4.19 | 4.15 | 4.15 | |||||||||||||||||||||||
Price / Tangible book value per share (X) (2) |
0.95 | 1.04 | 0.95 | 1.32 | 1.17 | |||||||||||||||||||||||
P/E ratio (X) (2) |
8.84 | 9.83 | 8.84 | 13.56 | 12.18 | |||||||||||||||||||||||
∎ OTHER DATA | Dec-18 | Sep-18 | % | Dec-18 | Dec-17 | % | Dec-16 | |||||||||||||||||||||
Number of shareholders |
4,131,489 | 4,190,808 | (1.4) | 4,131,489 | 4,029,630 | 2.5 | 3,928,950 | |||||||||||||||||||||
Number of employees |
202,713 | 201,101 | 0.8 | 202,713 | 202,251 | 0.2 | 188,492 | |||||||||||||||||||||
Number of branches |
13,217 | 13,414 | (1.5) | 13,217 | 13,697 | (3.5) | 12,235 |
(1) In this document we present the figures related to underlying results, which exclude non-recurring items, as they are recorded in the separate line of Net capital gains and provisions, above the line of attributable profit to the Group. Further details on that line are provided in pages 10 and 11 as well as in the Alternative Performance Measures section as follows below.
(2) 2016 data adjusted for the capital increase in July, for like-on-like comparisons with 2017 and 2018 data.
(3) 2018 data applying the IFRS 9 transitional arrangements.
Note: The financial information in this report was approved by the Board of Directors, following a favourable report from the Audit Committee.
In accordance with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority on 5 October 2015 (Guidelines on Alternative Performance Measures, ESMA/2015/1415en), we are attaching herewith a glossary with the definitions and the conciliation with the items presented in the income statement of certain alternative performance measures used in this document. Please refer to Alternative Performance Measures Glossary on page 60.
Financial Report 2018 3
JANUARY - DECEMBER Santander aim |
SANTANDER AIM
Helping people and businesses prosper 83% 82% 19.9 (+15%(1)) 32.0 (+26%(1)) of employees engaged million loyal million digital perceive that employees customers customers their colleagues behave in a more Simple, Personal and Fair way ...ma o s ke a d d o a i v n ur o d t . . . sati c m e e s s s u t o e fi st s a d y ed o i v l t o i a m t p e n m People o d e Customers m s m l r oe o o s d r e p d y o a r e a l m e g m o l r 144 202,713 M p g c a o e million E m n y e a d . . . d r l i e i n s a e u a bb l l y t t i i n i n i l n i n e e v i g ib r t e n r n t a a h s l t s t i h a fi o Communities(3) h e i g r l s o w s Shareholders n h p u r o c e er g p t o nl in i m n n g ma ve r e i v l e msu st . q d u a i b m 2.3 on ci men . . l o . . i e n c 4.1 t eyd.a t . s l t c a r million people d. s y u e million helped in 2018 > 72,000 ~ 1,200 11.30%(2) +5% scholarships agreements with Fully loaded dividend per granted universities CET1 ratio share growth in 2018 and academic institutions expected for in 21 countries 2018 (1) Year-on-year % change (2) Calculated using the IFRS 9 transitional arrangements (3) Provisional data
4 Financial Report 2018
JANUARY - DECEMBER Santander aim |
SANTANDER AIM
(*) | Final dividend charge to 2018 earnings is subject to the Board of Directors and 2019 AGM approval. |
People 82% of employees showed their commitment to the Group (six percentage points more than the financial industrys average), and in seven countries we were among the best three banks to work for, according to the GPTW ranking. The 360 assessment process, in which employees are evaluated by their peers, direct subordinates and line managers, became widespread. Progress was made in installing the Workday platform, which enables teams and people to be managed globally in a homogeneous way. Once the pilot phase of the Strategic Workforce Planning in the UK, Mexico and the corporate centre was concluded, action plans were launched in the rest of countries. A new campaign to strengthen the Groups image and make it more attractive to capture talent was developed (Efecto Santander). We launched initiatives to attract digital talents (Digital Cellar) and launched a programme that identified 280 employees for their youth (younger than 35 years old) and potential to contribute to the Groups future evolution (Young Leaders). Customers Various strategies continued to be developed under the commercial transformation programme in order to improve customer loyalty and the customer experience. The number of loyal customers rose by 2.6 million in 2018 and digital ones by 6.6 million, and in seven of our core countries we were in the Top 3 in customer satisfaction. Of note among the commercial actions was the launch of various current accounts (Conta SIM in Portugal, 1|2|3 business for SME in the UK, 1|2|3 Profesional in Spain) and the first digital account for SME with SAS (Sociedad por Acciones Simplificadas) status in Mexico, together with other products and services such as mortgages, investment products, services and advice. We continued to strengthen our traditional branches, as well as developing new ones (SMART, Super gil y Work Caf), while investing in new generation ATMs and our contact centres. As regards digitalisation, progress in all countries with apps, platforms, products and services. Of note globally was the expansion of Openbank, our fully digital bank, the launch of OnePay Fx, a blockchain-based service and the development of Superdigital, an alternative solution to traditional banking mainly focused on the unbanked population of Latin America. Shareholders The total dividend per share charged to 2018s earnings was scheduled at EUR 0.23 via a scrip dividend and three payments in cash, 4.5% more than that for 2017*. We continued to strengthen measures that increased and enhanced communication with our shareholders and fostered transparency through the use of new technologies. Of note was the creation of a new personal service channel via video conference. Santander was recognised as one of the best companies and European banks in the area of investor relations, corporate events, website and multimedia use by Institutional Investor, IR Magazine and Global Capital and by the Extel survey, conducted among more than 11,000 investment professionals. Banco Santander is ranked the worlds third best bank and the first in Europe in the Dow Jones Sustainability Community Index (DJSI), the reference index in which Santander has been present for 18 straight years, and which measures companies performance in sustainability matters, in its three dimensions (economic, social and environmental). The magazine Fortune included Santander in its 2018 Change the World ranking, which includes a small group of companies that combine success with their contribution to society by generating a positive social impact with initiatives that form part of their business strategy. Santander Universities held its fourth international meeting of rectors, a reference event in academic world and launched the new Santander Scholarships portal. A record number of scholarships (almost 55,000) were granted in 2018 and close to 19,000 entrepreneurs were supported by Santander X (*) Final dividend charge to 2018 earnings is subject to the Board of Directors and 2019 AGM approval.
Financial Report 2018 5
JANUARY - DECEMBER Consolidated financial report |
GROUP PERFORMANCE
6 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
GROUP PERFORMANCE
Financial Report 2018 7
JANUARY - DECEMBER Consolidated financial report |
MAIN BUSINESS AREAS PERFORMANCE
(Greater detail on pages 22 to 38 and in the appendix)
(Changes in constant euros)
8 Financial Report 2018
JANUARY - DECEMBER General background |
GENERAL BACKGROUND
Grupo Santander developed its business in 2018 in a generally dynamic economic environment. However, as the year advanced so it became clearer that the peak of the expansive cycle had been reached, giving rise to instability in the markets. The countries where the Group conducts its business performed in a less similar fashion although they are generally growing.
Trade tensions, despite the agreement reached in the renegotiation of NAFTA, and the tightening of US monetary policy were the main causes of greater uncertainty, which triggered tensions of varying intensity, particularly in developing markets such as Argentina and Turkey and, to a lesser extent, in Brazil and Mexico, also affected by the electoral cycle in most of the year.
Other factors such as the Brexit negotiations and the shape of Italys fiscal policy also weighed on the tone of the markets.
Country | GDP1 change |
Economic performance | ||||
|
Eurozone |
+1.9% |
Economic activity could not maintain the strong rhythm of 2017. Yet growth in 2018 was above the potential. The jobless rate came down to 7.9%. After the hike in inflation because of energy prices, it eased at the end of the year (1.6%).
| |||
|
Spain |
+2.5% |
The economy slowed in 2018, although Spain remained one of the euro zones most dynamic economies. Job creation was very strong and the unemployment rate continued to fall. Inflation ended the year at 1.2%.
| |||
|
Poland |
+5.1% |
Growth remained strong, mainly due to consumption and the lack of imbalances. The unemployment rate was below 4% (an historic low) and inflation (1.0%) remained below the central banks 2.5% target. The central bank held its key interest rate at 1.5%.
| |||
|
Portugal |
+2.2% |
The economy slowed a little, but growth was still solid. Robust domestic demand was fueled by consumption and investment, while exports fell. The jobless rate was below 7% and inflation ended the year at 0.7%.
| |||
|
United Kingdom |
+1.3% |
The economy lost strength in 2018 because of the uncertainty over Brexit, whose ups and downs were reflected in sterling (GBP 0.9/Euro). Inflation (2.1%) eased and the unemployment rate of 4% was effectively full employment. The Bank of Englands base rate ended the year at 0.75%.
| |||
|
Brazil |
+1.3% |
Growth picked up a little, despite the impact of the transport strike. Investment recovered after four years of falling and private consumption and exports accelerated. Inflation was 3.75% in December 2018, below the central banks 4.5% target and the Selic remained at an historic low (6.5%).
| |||
|
Mexico |
+2.1% |
The economy grew by around 2%, spurred by a recovery in investment and exports. The central bank raised its key rate by 100 bps in order to prevent the effects of the pesos depreciation and moderate inflation. Mexico, the US and Canada reached a new trade agreement, which has yet to be ratified.
| |||
|
Chile |
+4.0% |
The economy was strong, spurred by private consumption, investment and exports. Inflation rose to 2.6% (below the 3% target) and the central bank began to normalise its monetary policy, with a rise of 25 bps in its key rate to 2.75%.
| |||
|
Argentina |
-2.4% |
Thanks to financial aid from the IMF, the economy began to show signs of stabilising, with an easing of inflation, a significant fiscal consolidation and relative exchange rate stability. The economy shrank 2.4% and is expected to gradually recover in 2019.
| |||
|
United States |
+3.0% |
GDP grew at a faster pace (3%) and the jobless rate was down to 3.7% at the end of the year. Inflationary pressures increased, aligning underlying inflation with the target of the Fed, which raised interest rate by 100 bps.
|
(1) Year-on-year change 2018 (estimated)
∎ EXCHANGE RATES: 1 EURO / CURRENCY PARITY |
| |||||||||||||||||||||||
Average (income statement) | Period-end (balance sheet) | |||||||||||||||||||||||
2018 | 2017 | Dec-18 | Sep-18 | Dec-17 | ||||||||||||||||||||
US dollar |
1.180 | 1.127 | 1.145 | 1.158 | 1.199 | |||||||||||||||||||
Pound sterling |
0.885 | 0.876 | 0.895 | 0.887 | 0.887 | |||||||||||||||||||
Brazilian real |
4.294 | 3.594 | 4.444 | 4.654 | 3.973 | |||||||||||||||||||
Mexican peso |
22.688 | 21.291 | 22.492 | 21.780 | 23.661 | |||||||||||||||||||
Chilean peso |
756.661 | 731.538 | 794.630 | 765.301 | 736.922 | |||||||||||||||||||
Argentine peso |
31.164 | 18.566 | 43.121 | 47.635 | 22.637 | |||||||||||||||||||
Polish zloty |
4.261 | 4.256 | 4.301 | 4.277 | 4.177 |
Financial Report 2018 9
JANUARY - DECEMBER Consolidated financial report |
GRUPO SANTANDER RESULTS
Fourth quarter attributable profit of EUR 2,068 million, affected by the contribution to the Deposit Guarantee Fund in Spain. Excluding this charge, the profit would have been 12% higher quarter-on-quarter (7% in constant euros)
|
Attributable profit for the full year was 18% higher at EUR 7,810 million (+32% in constant euros), after recording extraordinary results of EUR -254 million (EUR -897 million in 2017). Earnings per share increased 11%
|
Underlying attributable profit was EUR 8,064 million, 7% more than in 2017 and 18% more in constant euros. These results reflect solid customer revenue, an efficiency ratio of 47.0%, among the best of our peers, and an improved cost of credit at 1.00%
|
RoTE of 11.7% (underlying RoTE of 12.1%), and RoRWA of 1.55% (underlying RoRWA of 1.59%). Both were better than in 2017
|
∎ GRUPO SANTANDER. INCOME STATEMENT |
|
|||||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||||||
Q418 | Q318 | % | % excl. FX | 2018 | 2017 | % | % excl. FX | |||||||||||||||||||||||||
Net interest income |
9,061 | 8,349 | 8.5 | 3.0 | 34,341 | 34,296 | 0.1 | 8.7 | ||||||||||||||||||||||||
Net fee income |
2,956 | 2,640 | 12.0 | 3.0 | 11,485 | 11,597 | (1.0) | 8.5 | ||||||||||||||||||||||||
Gains (losses) on financial transactions |
438 | 505 | (13.3) | (25.5) | 1,797 | 1,703 | 5.5 | 18.0 | ||||||||||||||||||||||||
Other operating income |
87 | 226 | (61.5) | (54.0) | 801 | 796 | 0.6 | 4.9 | ||||||||||||||||||||||||
Dividends |
78 | 28 | 178.6 | 165.8 | 370 | 384 | (3.7) | (1.0) | ||||||||||||||||||||||||
Income from equity-accounted method |
205 | 178 | 15.2 | 7.8 | 737 | 704 | 4.7 | 14.2 | ||||||||||||||||||||||||
Other operating income/expenses |
(196) | 20 | | | (306) | (291) | 5.0 | 19.8 | ||||||||||||||||||||||||
Gross income |
12,542 | 11,720 | 7.0 | 0.7 | 48,424 | 48,392 | 0.1 | 8.9 | ||||||||||||||||||||||||
Operating expenses |
(5,936) | (5,361) | 10.7 | 3.7 | (22,779) | (22,918) | (0.6) | 7.0 | ||||||||||||||||||||||||
General administrative expenses |
(5,285) | (4,804) | 10.0 | 3.0 | (20,354) | (20,325) | 0.1 | 8.0 | ||||||||||||||||||||||||
Personnel |
(3,068) | (2,837) | 8.1 | 2.1 | (11,865) | (11,972) | (0.9) | 6.2 | ||||||||||||||||||||||||
Other general administrative expenses |
(2,217) | (1,967) | 12.7 | 4.1 | (8,489) | (8,353) | 1.6 | 10.6 | ||||||||||||||||||||||||
Depreciation and amortisation |
(651) | (557) | 16.9 | 9.8 | (2,425) | (2,593) | (6.5) | (0.8) | ||||||||||||||||||||||||
Net operating income |
6,606 | 6,359 | 3.9 | (1.8) | 25,645 | 25,473 | 0.7 | 10.6 | ||||||||||||||||||||||||
Net loan-loss provisions |
(2,455) | (2,121) | 15.7 | 8.7 | (8,873) | (9,111) | (2.6) | 7.2 | ||||||||||||||||||||||||
Impairment losses on other assets |
(100) | (49) | 104.1 | 89.7 | (207) | (414) | (50.0) | (46.7) | ||||||||||||||||||||||||
Other income |
(505) | (439) | 15.0 | 4.6 | (1,789) | (2,398) | (25.4) | (17.7) | ||||||||||||||||||||||||
Underlying profit before tax |
3,546 | 3,750 | (5.4) | (9.7) | 14,776 | 13,550 | 9.0 | 19.7 | ||||||||||||||||||||||||
Tax on profit |
(1,177) | (1,394) | (15.6) | (19.8) | (5,230) | (4,587) | 14.0 | 25.2 | ||||||||||||||||||||||||
Underlying profit from continuing operations |
2,369 | 2,356 | 0.6 | (3.7) | 9,546 | 8,963 | 6.5 | 16.9 | ||||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | | | ||||||||||||||||||||||||
Underlying consolidated profit |
2,369 | 2,356 | 0.6 | (3.7) | 9,546 | 8,963 | 6.5 | 16.9 | ||||||||||||||||||||||||
Minority interests |
347 | 366 | (5.2) | (6.2) | 1,482 | 1,447 | 2.4 | 9.1 | ||||||||||||||||||||||||
Underlying attributable profit to the Group |
2,022 | 1,990 | 1.6 | (3.3) | 8,064 | 7,516 | 7.3 | 18.5 | ||||||||||||||||||||||||
Net capital gains and provisions* |
46 | | | | (254) | (897) | (71.7) | (71.6) | ||||||||||||||||||||||||
Attributable profit to the Group |
2,068 | 1,990 | 3.9 | (1.1) | 7,810 | 6,619 | 18.0 | 32.1 | ||||||||||||||||||||||||
Underlying EPS (euros) |
0.116 | 0.115 | 1.1 | 0.465 | 0.463 | 0.6 | ||||||||||||||||||||||||||
Underlying diluted EPS (euros) |
0.116 | 0.114 | 1.1 | 0.464 | 0.461 | 0.6 | ||||||||||||||||||||||||||
EPS (euros) |
0.119 | 0.115 | 3.6 | 0.449 | 0.404 | 11.2 | ||||||||||||||||||||||||||
Diluted EPS (euros) |
0.118 | 0.114 | 3.7 | 0.448 | 0.403 | 11.2 | ||||||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||||||
Average total assets |
1,459,756 | 1,431,897 | 1.9 | 1,442,861 | 1,407,681 | 2.5 | ||||||||||||||||||||||||||
Average stockholders equity |
96,187 | 94,391 | 1.9 | 95,071 | 92,638 | 2.6 |
(*) | In 2018, costs associated to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 million), Corporate Centre (EUR -40 million) and Portugal (EUR 20 million) and badwill in Poland for the integration of Deutsche Bank Polska (EUR 45 million). In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million), charges for equity stakes and intangible assets (EUR -130 million), capital gains from the disposal of the stake in Allfunds Bank (EUR 297 million), USA fiscal reform (EUR 73 million), goodwill charges (EUR -603 million) and in the US provisions for hurricanes, increased stake in Santander Consumer USA and other (EUR -149 million). |
10 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
∎ QUARTERLY INCOME STATEMENT |
||||||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||||||
Q117 | Q217 | Q317 | Q417 | Q118 | Q218 | Q318 | Q418 | |||||||||||||||||||||||||
Net interest income |
8,402 | 8,606 | 8,681 | 8,607 | 8,454 | 8,477 | 8,349 | 9,061 | ||||||||||||||||||||||||
Net fee income |
2,844 | 2,916 | 2,888 | 2,949 | 2,955 | 2,934 | 2,640 | 2,956 | ||||||||||||||||||||||||
Gains (losses) on financial transactions |
573 | 286 | 422 | 421 | 493 | 361 | 505 | 438 | ||||||||||||||||||||||||
Other operating income |
211 | 240 | 260 | 85 | 249 | 239 | 226 | 87 | ||||||||||||||||||||||||
Dividends |
41 | 238 | 31 | 75 | 35 | 229 | 28 | 78 | ||||||||||||||||||||||||
Income from equity-accounted method |
133 | 160 | 188 | 223 | 178 | 176 | 178 | 205 | ||||||||||||||||||||||||
Other operating income/expenses |
37 | (157) | 42 | (213) | 36 | (166) | 20 | (196) | ||||||||||||||||||||||||
Gross income |
12,029 | 12,049 | 12,252 | 12,062 | 12,151 | 12,011 | 11,720 | 12,542 | ||||||||||||||||||||||||
Operating expenses |
(5,543) | (5,648) | (5,766) | (5,961) | (5,764) | (5,718) | (5,361) | (5,936) | ||||||||||||||||||||||||
General administrative expenses |
(4,915) | (4,983) | (5,161) | (5,267) | (5,151) | (5,114) | (4,804) | (5,285) | ||||||||||||||||||||||||
Personnel |
(2,912) | (2,943) | (3,000) | (3,116) | (3,000) | (2,960) | (2,837) | (3,068) | ||||||||||||||||||||||||
Other general administrative expenses |
(2,002) | (2,039) | (2,161) | (2,151) | (2,151) | (2,154) | (1,967) | (2,217) | ||||||||||||||||||||||||
Depreciation and amortisation |
(629) | (665) | (605) | (694) | (613) | (604) | (557) | (651) | ||||||||||||||||||||||||
Net operating income |
6,486 | 6,401 | 6,486 | 6,101 | 6,387 | 6,293 | 6,359 | 6,606 | ||||||||||||||||||||||||
Net loan-loss provisions |
(2,400) | (2,280) | (2,250) | (2,181) | (2,282) | (2,015) | (2,121) | (2,455) | ||||||||||||||||||||||||
Impairment losses on other assets |
(68) | (63) | (54) | (230) | (24) | (34) | (49) | (100) | ||||||||||||||||||||||||
Other income |
(707) | (785) | (591) | (315) | (392) | (453) | (439) | (505) | ||||||||||||||||||||||||
Underlying profit before tax |
3,311 | 3,273 | 3,591 | 3,375 | 3,689 | 3,791 | 3,750 | 3,546 | ||||||||||||||||||||||||
Tax on profit |
(1,125) | (1,129) | (1,243) | (1,090) | (1,280) | (1,379) | (1,394) | (1,177) | ||||||||||||||||||||||||
Underlying profit from continuing operations |
2,186 | 2,144 | 2,347 | 2,285 | 2,409 | 2,412 | 2,356 | 2,369 | ||||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | | | ||||||||||||||||||||||||
Underlying consolidated profit |
2,186 | 2,144 | 2,347 | 2,285 | 2,409 | 2,412 | 2,356 | 2,369 | ||||||||||||||||||||||||
Minority interests |
319 | 395 | 371 | 362 | 355 | 414 | 366 | 347 | ||||||||||||||||||||||||
Underlying attributable profit to the Group |
1,867 | 1,749 | 1,976 | 1,924 | 2,054 | 1,998 | 1,990 | 2,022 | ||||||||||||||||||||||||
Net capital gains and provisions* |
| | (515) | (382) | | (300) | | 46 | ||||||||||||||||||||||||
Attributable profit to the Group |
1,867 | 1,749 | 1,461 | 1,542 | 2,054 | 1,698 | 1,990 | 2,068 | ||||||||||||||||||||||||
Underlying EPS (euros) ** |
0.120 | 0.112 | 0.118 | 0.113 | 0.120 | 0.115 | 0.115 | 0.116 | ||||||||||||||||||||||||
Underlying diluted EPS (euros) ** |
0.120 | 0.111 | 0.119 | 0.111 | 0.119 | 0.115 | 0.114 | 0.116 | ||||||||||||||||||||||||
EPS (euros) ** |
0.120 | 0.112 | 0.084 | 0.088 | 0.120 | 0.096 | 0.115 | 0.119 | ||||||||||||||||||||||||
Diluted EPS (euros) ** |
0.120 | 0.111 | 0.085 | 0.087 | 0.119 | 0.096 | 0.114 | 0.118 |
(*) Including the following amounts, net of tax:
| In Q317, integration costs (Banco Popular EUR -300 million, Germany EUR -85 million) and charge for equity stakes and intangible assets (EUR -130 million). |
| In Q417, capital gains from the disposal of the stake in Allfunds Bank (EUR 297 million), tax reform in the US (EUR 73 million), goodwill charges (EUR -603 million) and provisions for hurricanes, repurchase of a minority stake in Santander Consumer USA and others in the US (EUR -149 million). |
| In Q218, charges associated with integrations (mainly restructuring costs) net of tax impact in Spain (EUR -280 million), Corporate Centre (EUR -40 million) and Portugal (EUR 20 million). |
| In Q418, recording of badwill from DBPs integration in Poland (EUR 45 million). |
(**) | The figures for the first and second quarters of 2017 are adjusted to the July 2017 capital increase in order to make them comparable with the rest of quarters. |
Financial Report 2018 11
JANUARY - DECEMBER Consolidated financial report |
Fourth quarter results compared to the third quarter of 2018
The fourth quarter attributable profit was 4% higher than the third quarters at EUR 2,068 million. Eliminating the exchange rate impact, it was 1% lower. The evolution was affected by the contribution in the fourth quarter to the Deposit Guarantee Fund in Spain (EUR 226 million or EUR 158 million after tax). Without this impact, profit would have risen 12% and without the exchange rate impact it would have been 7% higher, with the following detail:
| Net interest income increased for the seventh consecutive quarter, backed by Spain and benefiting from the change in methodology in the recording of TDRs in the US already mentioned, and which meant an increase in both this line as well as in loan-loss provisions. Fee income grew 3%, with a positive seasonal impact from Brazil. Gains on financial transactions were lower than in the third quarter when they were the highest for the year. |
| Operating expenses were up 4%, affected by the seasonality that is usually registered in the fourth quarter in some countries such as Brazil (marketing campaigns, applying the salary agreement), the US and SCF. |
| Provisions rose mainly in the US because there was a sharp rise in new loans in the quarter, both at SBNA and SC USA and some seasonality in the latter. The aforementioned change in methodology in net interest income should also be taken into account. |
| In addition, badwill was recorded in the fourth quarter for DBPs retail and SME business integration in Poland and some charges, mainly related to restructuring costs. |
Evolution of results compared to 2017
The attributable profit of EUR 7,810 million in 2018 was 18% higher in euros and 32% in constant euros.
The results reflect the favourable impact of the acquisition of Banco Popular, the larger stake in Santander Asset Management (SAM) and the negative impact of exchange rates and of the still low interest rates in mature markets. In addition, profit was affected in 2018 and 2017 by the results included in the Net capital gains and provisions item (net of taxes), which are set out on pages 10 and 11 of this report.
Excluding these results, underlying attributable profit was EUR 8,064 million (+7% in euros and +18% in constant euros). The P&L performance by line was as follows. To facilitate analysis and comparisons of management actions, all changes exclude exchange rate impacts.
Gross income
| The structure of our gross income, where net interest income and fee income accounted for 95% of total revenue in 2018, well above the average of our competitors, continues to enable us to grow in a consistent and recurring way, limiting the impact that periods of high volatility can have on gains on financial transactions. Gross income increased 9%, as follows: |
| Net interest income rose 9%, due to greater lending and deposit volumes, mainly in developing countries which overall grew at double-digit rate in local currency, and management of spreads. |
By countries, all units increased except for the United Kingdom, affected by pressure on spreads on new mortgages and standard variable rate (SVR) balances.
| Fee income was up 9%, reflecting greater activity and customer loyalty, in addition to our strategy of growth in services and higher value-added products, and in areas of low capital consumption. Growth in fee income from Retail Banking (+6%), Corporate & Investment Banking (+0.3%) and Wealth Management (+63%). |
| Gains on financial transactions, which account for less than 4% of gross income, increased 18%, while the sum of dividends, equity-accounted income and other income rose 5%, due to higher income from leasing in the United States and by the equity accounted method. |
12 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
Operating expenses
| Operating expenses rose 7% as a result of higher inflation in some countries, investments in transformation and digitalisation, and the perimeter effect. In real terms (excluding inflation and perimeter effect), costs were 0.5% lower. Of note by units was the fall in costs in the United States, mainly due to lower depreciation, and in Spain, Portugal and SCF, all of them related to integration processes. |
The main rises were in Mexico and Chile, due to investments in infrastructure, and Poland, because of transformation projects and pressure on salaries.
The measures to optimise costs, as part of the ongoing integration processes, will be reflected in greater synergies in the future. This evolution is enabling us to combine the investments made to enhance the customer experience with an operational efficiency that continues to be the sectors reference.
Loan-loss provisions
| Good evolution of credit quality ratios. The NPL ratio, as well as the coverage ratio and the cost of credit, improved in the last 12 months. |
| By countries, provisions fell in the US and Mexico, in Brazil they rose at a slower pace than lending, while the UK and Portugal maintained a cost of credit below 10 bps. |
The main rises in provisions were in Spain, due to the greater perimeter, in SCF, because of higher releases and portfolio sales in 2017, although it maintained a cost of credit below the standards for its business, and Argentina due to higher provisions for individual borrowers and the impact of the pesos depreciation on dollar balances.
| The cost of credit dropped from 1.07% in 2017 to 1.00% in 2018. |
Other results and provisions
| Other results and provisions were EUR -1,996 million, 22% lower than in 2017. This item records different kinds of provisions, as well as capital gains, capital losses and asset impairment. |
| The improvement over 2017 was largely due to lower provisions for legal and labour claims (trabalhistas) recorded in Brazil, lower charges in the UK stemming from potential customer complaints, and at SCF because in 2017 provisions for legal claims, customer complaints and restructuring in some countries were higher. |
Profit and profitability
| Underlying attributable profit rose 18% (+7% in euros). Underlying RoTE rose to 12.1% and underlying RoRWA to 1.59%. |
| Considering the results included in the Net capital gains and provisions item, attributable profit increased 32% (+18% in euros), and earnings per share were EUR 0.449 (+11% year-on-year in euros). RoTE was 11.7% and RoRWA 1.55%, in both cases higher than in 2017. |
Financial Report 2018 13
JANUARY - DECEMBER Consolidated financial report |
∎ GRUPO SANTANDER. BALANCE SHEET |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Assets | Dec-18 | Dec-17 | Absolute change |
% | Dec-16 | |||||||||||||||
Cash, cash balances at central banks and other demand deposits |
113,663 | 110,995 | 2,668 | 2.4 | 76,454 | |||||||||||||||
Financial assets held for trading |
92,879 | 125,458 | (32,579) | (26.0) | 148,187 | |||||||||||||||
Debt securities |
27,800 | 36,351 | (8,551) | (23.5) | 48,922 | |||||||||||||||
Equity instruments |
8,938 | 21,353 | (12,415) | (58.1) | 14,497 | |||||||||||||||
Loans and advances to customers |
202 | 8,815 | (8,613) | (97.7) | 9,504 | |||||||||||||||
Loans and advances to central banks and credit institutions |
| 1,696 | (1,696) | (100.0) | 3,221 | |||||||||||||||
Derivatives |
55,939 | 57,243 | (1,304) | (2.3) | 72,043 | |||||||||||||||
Financial assets designated at fair value through profit or loss |
68,190 | 34,781 | 33,409 | 96.1 | 31,609 | |||||||||||||||
Loans and advances to customers |
23,796 | 20,475 | 3,321 | 16.2 | 17,596 | |||||||||||||||
Loans and advances to central banks and credit institutions |
32,325 | 9,889 | 22,436 | 226.9 | 10,069 | |||||||||||||||
Other (debt securities an equity instruments) |
12,069 | 4,417 | 7,652 | 173.2 | 3,944 | |||||||||||||||
Financial assets at fair value through other comprehensive income |
121,091 | 133,271 | (12,180) | (9.1) | 116,774 | |||||||||||||||
Debt securities |
116,819 | 128,481 | (11,662) | (9.1) | 111,287 | |||||||||||||||
Equity instruments |
2,671 | 4,790 | (2,119) | (44.2) | 5,487 | |||||||||||||||
Loans and advances to customers |
1,601 | | 1,601 | | | |||||||||||||||
Loans and advances to central banks and credit institutions |
| | | | | |||||||||||||||
Financial assets measured at amortised cost |
946,099 | 916,504 | 29,595 | 3.2 | 854,472 | |||||||||||||||
Debt securities |
37,696 | 31,034 | 6,662 | 21.5 | 27,705 | |||||||||||||||
Loans and advances to customers |
857,322 | 819,625 | 37,697 | 4.6 | 763,370 | |||||||||||||||
Loans and advances to central banks and credit institutions |
51,081 | 65,845 | (14,764) | (22.4) | 63,397 | |||||||||||||||
Investments in subsidiaries, joint ventures and associates |
7,588 | 6,184 | 1,404 | 22.7 | 4,836 | |||||||||||||||
Tangible assets |
26,157 | 22,975 | 3,182 | 13.9 | 23,286 | |||||||||||||||
Intangible assets |
28,560 | 28,683 | (123) | (0.4) | 29,421 | |||||||||||||||
Goodwill |
25,466 | 25,769 | (303) | (1.2) | 26,724 | |||||||||||||||
Other intangible assets |
3,094 | 2,914 | 180 | 6.2 | 2,697 | |||||||||||||||
Other assets |
55,044 | 65,454 | (10,410) | (15.9) | 54,086 | |||||||||||||||
Total assets |
1,459,271 | 1,444,305 | 14,966 | 1.0 | 1,339,125 | |||||||||||||||
Liabilities and shareholders equity | ||||||||||||||||||||
Financial liabilities held for trading |
70,343 | 107,624 | (37,281) | (34.6) | 108,765 | |||||||||||||||
Customer deposits |
| 28,179 | (28,179) | (100.0) | 9,996 | |||||||||||||||
Debt securities issued |
| | | | | |||||||||||||||
Deposits by central banks and credit institutions |
| 574 | (574) | (100.0) | 1,395 | |||||||||||||||
Derivatives |
55,341 | 57,892 | (2,551) | (4.4) | 74,369 | |||||||||||||||
Other |
15,002 | 20,979 | (5,977) | (28.5) | 23,005 | |||||||||||||||
Financial liabilities designated at fair value through profit or loss |
68,058 | 59,617 | 8,441 | 14.2 | 40,263 | |||||||||||||||
Customer deposits |
39,597 | 28,945 | 10,652 | 36.8 | 23,345 | |||||||||||||||
Debt securities issued |
2,305 | 3,056 | (751) | (24.6) | 2,791 | |||||||||||||||
Deposits by central banks and credit institutions |
25,707 | 27,027 | (1,320) | (4.9) | 14,127 | |||||||||||||||
Other |
449 | 589 | (140) | (23.7) | | |||||||||||||||
Financial liabilities measured at amortized cost |
1,171,630 | 1,126,069 | 45,561 | 4.0 | 1,044,240 | |||||||||||||||
Customer deposits |
740,899 | 720,606 | 20,293 | 2.8 | 657,770 | |||||||||||||||
Debt securities issued |
244,314 | 214,910 | 29,404 | 13.7 | 226,078 | |||||||||||||||
Deposits by central banks and credit institutions |
162,202 | 162,714 | (512) | (0.3) | 133,876 | |||||||||||||||
Other |
24,215 | 27,839 | (3,624) | (13.0) | 26,516 | |||||||||||||||
Liabilities under insurance contracts |
765 | 1,117 | (352) | (31.5) | 652 | |||||||||||||||
Provisions |
13,225 | 14,490 | (1,265) | (8.7) | 14,459 | |||||||||||||||
Other liabilities |
27,889 | 28,556 | (667) | (2.3) | 28,047 | |||||||||||||||
Total liabilities |
1,351,910 | 1,337,472 | 14,438 | 1.1 | 1,236,426 | |||||||||||||||
Shareholders equity |
118,613 | 116,265 | 2,348 | 2.0 | 105,977 | |||||||||||||||
Capital stock |
8,118 | 8,068 | 50 | 0.6 | 7,291 | |||||||||||||||
Reserves |
104,922 | 103,608 | 1,314 | 1.3 | 94,149 | |||||||||||||||
Attributable profit to the Group |
7,810 | 6,619 | 1,191 | 18.0 | 6,204 | |||||||||||||||
Less: dividends |
(2,237) | (2,029) | (208) | 10.2 | (1,667) | |||||||||||||||
Other comprehensive income |
(22,141) | (21,777) | (364) | 1.7 | (15,039) | |||||||||||||||
Minority interests |
10,889 | 12,344 | (1,455) | (11.8) | 11,761 | |||||||||||||||
Total equity |
107,361 | 106,832 | 529 | 0.5 | 102,699 | |||||||||||||||
Total liabilities and equity |
1,459,271 | 1,444,305 | 14,966 | 1.0 | 1,339,125 |
NOTE: Due to the application of IFRS 9 from 1 January 2018 and the decision to not restate the accounts, as permitted in the regulation, the balance sheet from December 2018 is not comparable with previous reporting periods. As such, for comparative purposes, and given the portfolio reclassification and the corresponding nomenclature changes were not significant, the 2017 accounts have been reorganised in accordance with the new aims and valuation methods. The initial impact as of 1 January 2018 was a 1.8% increase in fair value portfolios and a 0.8% decrease in portfolios valued at amortised cost, including a EUR 2 billion increase in impairment losses. The resulting decrease in equity was just under EUR 1.5 billion.
14 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
GRUPO SANTANDER BALANCE SHEET
|
Lending increased 4% in 2018 (excluding exchange rate impact) in eight of the ten core units, particularly in developing countries (+14%)
|
Customer funds rose 4% (excluding exchange rate impact), with growth in eight of the ten core units (basically flat in the other two). Demand and time deposits, in particular, grew. Mutual funds remained virtually unchanged because of the market environment
|
The evolution of exchange rates in the fourth quarter had no impact. In year-on-year terms, there was a negative impact of 2 pp on loans and funds. Slight positive impact from the consolidation of Deutsche Bank Polskas retail and SME business balances
|
Gross customer loans and advances (excluding reverse repos)
Gross customer loans and advances excluding reverse repos remained evenly balanced: individuals (45%), consumer credit (17%), SME and companies (27%) and SCIB (11%).
| Quarter-on-quarter, and excluding the exchange rate impact, loans increased 1%, with the following performance by country: |
- | Increase of 5% in balances of developing countries, with growth of 4% in Brazil, 1% in Mexico and Chile and 20% in Poland, and a fall of 13% in Argentina, partly due to the impact of the pesos appreciation on dollar balances. |
- | Balances in mature countries increased 1%, very conditioned by Spain (-2%), due to wholesale balances and institutions. |
| Compared to December 2017, there was a 4% increase (eliminating the exchange rate impact), with the following performance by country: |
- | There were rises in eight of the ten core countries. Of note were all the developing markets which grew 14%: Argentina (+40%), due to balances in pesos as well as the impact of the pesos depreciation on dollar balances, Poland (+30%), partially due to perimeter effect, Brazil (+13%), and Mexico and Chile (both +10%). |
- | More moderate growth in the US and the UK (+6% and +1%, respectively). |
- | Portugal and Spains banking sector continued to deleverage with a credit decreased around 3%. In this context, we recorded declines. In Portugal, down 2%, because of the sale of non-productive portfolios and Spain by 4% because it was affected by the already commented evolution in the quarter. |
Financial Report 2018 15
JANUARY - DECEMBER Consolidated financial report |
Customer funds
Customer funds are well diversified by products: 61% are demand deposits, 22% time deposits and 17% mutual funds.
| In the fourth quarter, total deposits excluding repos and mutual funds increased slightly (+1%) excluding exchange rate impacts. By countries: |
| In developing markets, there was a 19% rise in Poland, in part due to the consolidation of Deutsche Bank Polska, and 6% in Chile. Brazil and Mexico declined 1% . |
| In mature markets, they grew 2% in the US and the UK. Portugal was virtually unchanged, and there was a fall of 1% in Spain, where the strategy of combining a reduction in the expensive balances (the cost of deposits was 1 bps lower in the fourth quarter and 21 bps since the end of 2017) with a rise in demand deposits continued. |
| Compared to December 2017, year-on-year growth was 4% excluding the exchange rate impact. |
| Demand deposits were up 6% with growth in almost all countries. Time deposits rose 2% due to Latin American countries, particularly Brazil, which increased 29% as part of the strategy of replacing letras financeiras with customer deposits in order to optimise the cost of funds. These rises offset the falls in the UK and, above all, in Spain. On the other hand, mutual funds were virtually stable (-0.4%) impacted by the falls in the markets. |
| By units, total funds rose in eight of the ten core units. The largest increases were in Argentina (+51%), Poland (+32%), Brazil (+15%), Portugal and Chile (both +8%). |
| More moderate growth of around 3%-4% in Santander Consumer Finance, Mexico and the US. |
| Balances in Spain and the UK hardly changed, because of the sharp fall in time deposits (and savings in the UKs case), which cancelled out the 8% growth in demand deposits in Spain and the 2% rise in demand deposits in the UK. |
As well as capturing customer deposits, Grupo Santander, for strategic reasons, maintains a selective policy of issuing securities in the international fixed income markets and strives to adapt the frequency and volume of its market operations to the structural liquidity needs of each unit, as well as to the receptiveness of each market.
| In 2018, the Group issued: |
| Medium- and long-term senior debt amounting to EUR 17,585 million and covered bonds placed in the market of EUR 6,376 million. |
| Issuances to meet the TLAC (Total Loss-Absorbing Capacity) requirement amounting to EUR 13,544 million, in order to strengthen the Groups situation, consisting of senior non-preferred: EUR 10,284 million; subordinated debt: EUR 1,760 million and preferred: EUR 1,500 million. |
| Maturities of medium- and long-term debt of EUR 21,711 million. |
| Additionally, there were EUR 20,554 million of securitisations placed in the market, and extended the maturity of others for EUR 2,069 million. Total securitisations amounted EUR 22,623 million. |
| The net loan-to-deposit ratio was 113% (109% in December 2017). The ratio of deposits plus medium- and long-term funding to the Groups loans was 114%, underscoring the comfortable funding structure. |
16 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
SOLVENCY RATIOS
|
The fully loaded CET1 ratio reached 11.30%, up 19 bps in the quarter and 46 bps in the year
|
Tangible equity per share was EUR 4.19, an increase of 1% in the quarter after the payment of dividends
|
The fully loaded leverage ratio was 5.1% (5.0% in December 2017) |
At the end of 2018, the total phased-in capital ratio stood at 14.99% and the phased-in CET1 ratio at 11.47%, comfortably meeting the minimum levels required by the European Central Bank on a consolidated basis (12.315% for the total capital ratio and 8.815% for the CET1 ratio).
On 1 January 2018 the IFRS 9 came into force, which implied several accounting changes affecting the capital ratios. Santander chose to apply the phased-in under a dynamic approach, which means a five-year transition period. Applying this criteria, the fully loaded CET1 was 11.30% at the end of 2018.
The fourth quarter generated 19 bps (11 bps organically) and the favourable impact of WiZink (8 bps).
After this increase, the fully loaded CET1 rose 46 bps in 2018, with a notable 64 bps generated organically, which was partially offset by the net negative impact among corporate operations (+21 bps mainly Blackstone and WiZink), regulatory effects/one-offs (-25 bps mainly SC USA minority interests and restructuring costs) and markets and others (-14 bps, AFS, intangible assets).
Had the IFRS 9 transitional arrangement not been applied, the total impact on the fully loaded CET1 at end December would have been -27 bps.
In accordance with the TLAC issuance plan, there were three issuances in 2018, with impact on the capital ratios. In February we issued EUR 1.25 billion of subordinated (Tier 2) debt maturing in 2028. In March we completed a EUR 1.5 billion issuance of contingent convertible capital securities (CoCos), which contribute towards additional tier 1 (AT1) capital levels, and in April 10-year PLN 1 billion of subordinated debt (Tier 2) was issued in Poland.
Lastly, as a result of the implementation of the IFRS 16, which came into force in January 2019, the Group estimated an impact on the CET1 ratio of around -20 bps.
NOTE: All 2018 data calculated using the IFRS 9 transitional arrangements, unless otherwise indicated.
Financial Report 2018 17
JANUARY - DECEMBER Consolidated financial report |
STRESS TEST
In November, the European Banking Authority (EBA) published the results of the stress test for the European Unions 48 main banks.
This stress exercise presented two macroeconomic scenarios (baseline and adverse), taking as a starting point the banks balance sheet at the end of 2017 and a three-year time frame ending in 2020. This time, there was no minimum capital threshold to meet.
The adverse scenario, very unlikely to occur, sets out a sharp macroeconomic and financial markets downturn, both in Europe and in other countries where Banco Santander operates. For example, the fall in the euro zones GDP was put at 2.7%, the unemployment rate rose to 9.7% in 2020 and house prices plummeted by 19.1%.
Since 2008, Grupo Santander has been submitted to seven stress tests in all of which it has demonstrated its strength and solvency in the face of the most extreme and severe macroeconomic scenarios. In all of them, thanks to its business model and geographic diversification, it showed itself capable of generating profits for its shareholders and meeting the most demanding regulatory requirements.
In the latest stress test:
| Under the adverse scenario, Santander was the bank with the least capital destroyed (-141 bps) among its peers and also less so than in the test in 2016. |
| In the baseline scenario, the Group was the bank that generated the most capital among its peers. |
| Lastly, in both scenarios, Santander generated the largest net profit among its peers. |
Peers: BBVA, Intesa San Paolo, Nordea, BNP, Unicredit, Commerzbank, Société Générale, ING, C.Agricole, HSBC, Deutsche Bank, RBS, Barclays and Lloyds.
18 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
RISK MANAGEMENT
The Groups NPL ratio continued to show a positive trend (14 bps lower in the fourth quarter) and ended the year at 3.73%
|
The cost of credit also improved, falling 7 bps in the year to 1.00%
|
In 2018 loan-loss provisions amounted to EUR 8,873 million and coverage was 67% |
NON-PERFORMING LOANS BY QUARTER |
|
|||||||||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||||||||||
Q117 |
Q217 |
Q317 | Q417 | Q118 | Q218 | Q318 | Q418 | |||||||||||||||||||||||||
Balance at beginning of period |
33,643 | 32,158 | 50,714 | 39,442 | 37,596 | 37,407 | 36,654 | 36,332 | ||||||||||||||||||||||||
Net additions |
1,583 | 2,255 | 2,499 | 1,933 | 2,340 | 2,906 | 2,528 | 3,136 | ||||||||||||||||||||||||
Increase in scope of consolidation |
18 | 20,969 | (10,954) | | | | | 177 | ||||||||||||||||||||||||
Exchange rate differences and other |
536 | (854) | (150) | (358) | 361 | (409) | (140) | (130) | ||||||||||||||||||||||||
Write-offs |
(3,623) | (3,813) | (2,667) | (3,420) | (2,890) | (3,250) | (2,710) | (3,823) | ||||||||||||||||||||||||
Balance at period-end |
32,158 | 50,714 | 39,442 | 37,596 | 37,407 | 36,654 | 36,332 | 35,692 |
Financial Report 2018 19
JANUARY - DECEMBER Consolidated financial report |
The following table sets out the NPL and coverage ratios of the main countries where the Group operates:
∎ CREDIT RISK MANAGEMENT. DECEMBER 2018 |
|
|||||||||||||||
% |
||||||||||||||||
NPL | Change (bps) | Coverage | ||||||||||||||
ratio | QoQ | YoY | ratio | |||||||||||||
Spain |
6.19 | (4) | (13) | 45.0 | ||||||||||||
Spains real estate activity |
97.05 | 147 | 652 | 33.7 | ||||||||||||
Santander Consumer Finance |
2.29 | (16) | (21) | 106.4 | ||||||||||||
Poland |
4.28 | 5 | (29) | 67.1 | ||||||||||||
Portugal |
5.94 | (149) | (157) | 50.5 | ||||||||||||
United Kingdom |
1.05 | (5) | (28) | 33.0 | ||||||||||||
Brazil |
5.25 | (1) | (4) | 106.9 | ||||||||||||
Mexico |
2.43 | 2 | (26) | 119.7 | ||||||||||||
Chile |
4.66 | (12) | (30) | 60.6 | ||||||||||||
Argentina |
3.17 | 70 | 67 | 135.0 | ||||||||||||
USA |
2.92 | (8) | 13 | 142.8 |
Spains NPL ratio fell slightly in the fourth quarter, mainly due to the better performance of retail portfolios and the improvements in the financial situation of companies. |
Santander Consumer Finances NPL ratio decreased thanks to the good performance of new loans. |
Polands NPL ratio remained virtually unchanged in the fourth quarter, once the integration of DB Polskas retail and SME business portfolio was completed. |
Portugals NPL ratio continued to decline following the integration of Populars portfolios into Santander Tottas usual management and also driven by the sales of distressed portfolios. |
The favourable evolution in the UK observed in previous quarters continued. |
Brazils NPL ratio remained unchanged, thanks to preventive management of the non-performing loan portfolio entries and growth in lending, focused on individuals and consumer finance as well as on singular transactions with companies and SCIB. |
Mexicos NPL ratio was stable in the quarter and was 26 bps lower year-on-year due to the good performance of the portfolio of individuals (mainly cards and consumer loans). |
Chiles NPL ratio decreased again in the quarter driven by the good performance of the main portfolios. |
Argentinas NPL ratio rose due to the deterioration observed in the individuals portfolio, and to a lesser extent companies portfolio, both of which were affected by the macroeconomic environment. Lending slowed because of lower demand following a hike in interest rates. |
In the US, the increase in investment and credit quality of new lending contributed to the NPL ratio improvement in the quarter. |
Foreign exchange rate structural risk
Santander covers approximately 100% of its core capital ratio in order to hedge from exchange rate movements.
20 Financial Report 2018
JANUARY - DECEMBER Consolidated financial report |
Market risk
| The global corporate banking trading activitys risk, measured in daily VaR terms at a 99% confidence level, fluctuated between EUR 14.6 million and EUR 6.5 million. These figures are low compared to the size of the Groups balance sheet and activity. The average VaR was slightly higher in the second part of the quarter due to market volatility, temporarily increasing the exposure to interest rate and FX risks, although they always remained within the established limits. |
| 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 2018 was EUR 11.8 million. |
| The fourth quarter was marked by increased market volatility. A positive impact was generated in the structural debt portfolio, mainly in Brazil, as a result of the strong positive market reaction to the general election results. |
Financial Report 2018 21
JANUARY - DECEMBER Business information |
DESCRIPTION OF BUSINESS
In 2018 Grupo Santander maintained the same general criteria applied in 2017, as well as the business segments, with the following exceptions:
| Banco Populars financial results and balance sheet have been allocated to the corresponding geographic areas. In 2017, starting from the integration date, Banco Popular was reported separately. The main affected areas are: Spain, Portugal and Spain Real Estate Activity. |
| The Wealth Management unit, created at the end of 2017, is reported independently as a global business. This unit was previously included in Retail Banking. This change has no impact on the geographic segments. |
| Annual adjustment of the Global Customer Relationship Models perimeter, between Retail Banking and Corporate and Investment Banking, with no impact on the geographic businesses. |
These changes have no impact on the Groups figures. However, for comparative purposes, the figures of previous periods have been restated including changes in the affected geographic and global businesses.
Moreover, the balance sheets have been adjusted to the new IFRS 9 regulation. Since retroactive application of this rule is not mandatory, certain lines of the 2018 balance sheet are not comparable with previously reported periods. For comparative purposes, and given the scant significance of portfolio reclassifications and their nomenclature changes, the 2017 accounts have been reorganised in accordance with their purpose and valuation method.
The financial statements of each business unit have been drawn up by aggregating the Groups basic operating units. The information relates to both the accounting data of the units integrated in each segment, as well as that provided by the management information systems. In all cases, the same general principles as those used in the Group are applied.
The operating business areas are structured into two levels:
Geographic businesses. The operating units are segmented by geographical areas. This coincides with the Groups first level of management and reflects Santanders positioning in the worlds three main currency areas (euro, sterling and dollar). The segments reported on are: |
| Continental Europe. This covers all businesses in the area. Detailed financial information is provided on Spain, Portugal, Poland and Santander Consumer Finance (which incorporates all the regions business, including the three countries mentioned herewith). |
| United Kingdom. This includes the businesses developed by the Groups various units and branches in the country. |
| Latin America. This embraces all the Groups financial activities conducted via its banks and subsidiaries in the region. The financial statements of Brazil, Mexico, Chile and Argentina are set out. |
| United States. Includes the holding Santander Holdings USA (SHUSA) and its subsidiaries Santander Bank, Banco Santander Puerto Rico, Santander Consumer USA, Banco Santander International, Santander Investment Securities and the New York branch. |
Global businesses. The activity of the operating units is distributed by the type of business: Retail Banking, Santander Corporate and Investment Banking, Wealth Management and Spain Real Estate Activity. |
| Retail Banking. This covers all customer banking businesses, including consumer finance, except those of corporate banking, which are managed through the SCIB, and asset management and private banking, which are managed by Wealth Management. The results of the hedging positions in each country are also included, conducted within the sphere of each ones Assets and Liabilities Committee. |
| Santander Corporate and Investment Banking (SCIB). This business reflects the revenues from global corporate banking, investment banking and markets worldwide including treasuries managed globally (always after the appropriate distribution with Retail Banking customers), as well as equities business. |
| Wealth Management. Includes the asset management business (Santander Asset Management), the new corporate unit of Private Banking and International Private Banking in Miami and Switzerland. |
In addition to these operating units, which report by geographic area and by businesses, the Group continues to maintain the area of Corporate Centre. This area incorporates the centralised activities relating to equity stakes in financial companies, financial management of the structural exchange rate position, assumed within the sphere of the Groups Assets and Liabilities Committee, as well as management of liquidity and of shareholders equity via issuances.
As the Groups holding entity, this area manages all capital and reserves and allocations of capital and liquidity with the rest of businesses. It also incorporates amortisation of goodwill but not the costs related to the Groups central services (charged to the areas), except for corporate and institutional expenses related to the Groups functioning.
The figures of the Groups various units have been drawn up in accordance with these criteria, and so do not coincide individually with those published by each unit. |
22 Financial Report 2018
JANUARY - DECEMBER Business information |
∎ NET OPERATING INCOME | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
1,940 | (4.5) | (4.5) | 7,604 | 12.6 | 12.9 | ||||||||||||||||||||||||||
o/w: Spain |
770 | (23.9) | (23.9) | 3,414 | 21.1 | 21.1 | ||||||||||||||||||||||||||
Santander Consumer Finance |
693 | 1.7 | 1.7 | 2,625 | 4.8 | 5.3 | ||||||||||||||||||||||||||
Poland |
225 | 6.7 | 6.6 | 851 | 4.5 | 4.7 | ||||||||||||||||||||||||||
Portugal |
172 | 3.9 | 3.9 | 702 | 11.3 | 11.3 | ||||||||||||||||||||||||||
United Kingdom |
593 | (6.9) | (7.4) | 2,426 | (15.0) | (14.2) | ||||||||||||||||||||||||||
Latin America |
3,324 | 7.8 | (3.0) | 13,204 | (4.3) | 12.7 | ||||||||||||||||||||||||||
o/w: Brazil |
2,205 | 2.6 | (2.7) | 8,863 | (3.6) | 15.2 | ||||||||||||||||||||||||||
Mexico |
521 | (4.8) | (2.6) | 2,064 | (0.7) | 5.8 | ||||||||||||||||||||||||||
Chile |
364 | (2.8) | (2.2) | 1,491 | (0.5) | 3.0 | ||||||||||||||||||||||||||
Argentina |
149 | | (19.9) | 460 | (40.8) | 15.8 | ||||||||||||||||||||||||||
USA |
1,172 | 18.7 | 17.1 | 3,934 | 4.6 | 9.5 | ||||||||||||||||||||||||||
Operating areas |
7,029 | 4.3 | (1.1) | 27,168 | (0.0) | 9.2 | ||||||||||||||||||||||||||
Corporate Centre |
(423) | 11.3 | 11.3 | (1,523) | (10.2) | (10.2) | ||||||||||||||||||||||||||
Total Group |
6,606 | 3.9 | (1.8) | 25,645 | 0.7 | 10.6 | ||||||||||||||||||||||||||
∎ ATTRIBUTABLE PROFIT TO THE GROUP | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe* |
946 | (4.4) | (4.4) | 3,642 | 13.7 | 14.1 | ||||||||||||||||||||||||||
o/w: Spain* |
432 | (18.0) | (18.0) | 1,738 | 20.8 | 20.8 | ||||||||||||||||||||||||||
Santander Consumer Finance* |
296 | (10.8) | (10.7) | 1,296 | 3.4 | 4.1 | ||||||||||||||||||||||||||
Poland* |
62 | (23.4) | (23.2) | 298 | (0.7) | (0.6) | ||||||||||||||||||||||||||
Portugal* |
136 | 18.9 | 18.9 | 480 | 10.3 | 10.3 | ||||||||||||||||||||||||||
United Kingdom |
286 | (25.7) | (26.1) | 1,362 | (9.1) | (8.2) | ||||||||||||||||||||||||||
Latin America |
1,068 | 12.8 | 2.4 | 4,228 | (1.6) | 16.5 | ||||||||||||||||||||||||||
o/w: Brazil |
663 | 7.1 | 1.4 | 2,605 | 2.4 | 22.3 | ||||||||||||||||||||||||||
Mexico |
206 | 5.5 | 8.0 | 760 | 7.0 | 14.0 | ||||||||||||||||||||||||||
Chile |
153 | 0.6 | 1.2 | 614 | 4.9 | 8.5 | ||||||||||||||||||||||||||
Argentina |
17 | | | 84 | (76.7) | (54.5) | ||||||||||||||||||||||||||
USA* |
92 | (26.4) | (28.9) | 552 | 35.4 | 41.7 | ||||||||||||||||||||||||||
Operating areas* |
2,391 | (2.2) | (6.1) | 9,785 | 4.0 | 12.5 | ||||||||||||||||||||||||||
Corporate Centre* |
(369) | (18.9) | (18.9) | (1,721) | (8.9) | (8.9) | ||||||||||||||||||||||||||
Total Group* |
2,022 | 1.6 | (3.3) | 8,064 | 7.3 | 18.5 | ||||||||||||||||||||||||||
Net capital gains and provisions |
46 | | | (254) | (71.7) | (71.6) | ||||||||||||||||||||||||||
Total Group |
2,068 | 3.9 | (1.1) | 7,810 | 18.0 | 32.1 | ||||||||||||||||||||||||||
(*) In the units, underlying attributable profit (excluding net capital gains and provisions) |
|
|||||||||||||||||||||||||||||||
∎ GROSS LOANS AND ADVANCES TO CUSTOMERS EX. REV. REPOS | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
390,794 | 1.5 | 1.7 | 390,794 | 1.7 | 1.9 | ||||||||||||||||||||||||||
o/w: Spain |
209,630 | (2.2) | (2.2) | 209,630 | (4.1) | (4.1) | ||||||||||||||||||||||||||
Santander Consumer Finance |
97,707 | 3.4 | 4.1 | 97,707 | 5.7 | 6.0 | ||||||||||||||||||||||||||
Poland |
29,033 | 19.2 | 19.9 | 29,033 | 26.4 | 30.1 | ||||||||||||||||||||||||||
Portugal |
36,568 | (1.4) | (1.4) | 36,568 | (2.5) | (2.5) | ||||||||||||||||||||||||||
United Kingdom |
235,753 | (0.6) | 0.2 | 235,753 | (0.0) | 0.8 | ||||||||||||||||||||||||||
Latin America |
157,022 | 3.3 | 2.4 | 157,022 | 2.4 | 11.9 | ||||||||||||||||||||||||||
o/w: Brazil |
75,282 | 8.8 | 3.9 | 75,282 | 1.3 | 13.3 | ||||||||||||||||||||||||||
Mexico |
31,192 | (2.1) | 1.1 | 31,192 | 15.7 | 10.0 | ||||||||||||||||||||||||||
Chile |
39,019 | (2.8) | 1.0 | 39,019 | 2.0 | 10.0 | ||||||||||||||||||||||||||
Argentina |
5,574 | (3.9) | (13.0) | 5,574 | (26.7) | 39.5 | ||||||||||||||||||||||||||
USA |
83,696 | 3.7 | 2.6 | 83,696 | 11.0 | 6.0 | ||||||||||||||||||||||||||
Operating areas |
867,264 | 1.4 | 1.5 | 867,264 | 2.2 | 3.7 | ||||||||||||||||||||||||||
Total Group |
873,916 | 1.4 | 1.4 | 873,916 | 2.3 | 3.8 | ||||||||||||||||||||||||||
∎ CUSTOMER FUNDS (CUSTOMER DEP. EX. REPOS + MUTUAL FUNDS) | QoQ | YoY | ||||||||||||||||||||||||||||||
EUR million | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||||||
Continental Europe |
436,913 | 0.6 | 0.7 | 436,913 | 2.7 | 2.9 | ||||||||||||||||||||||||||
o/w: Spain |
315,351 | (1.1) | (1.1) | 315,351 | (0.5) | (0.5) | ||||||||||||||||||||||||||
Santander Consumer Finance |
36,531 | (0.3) | 0.5 | 36,531 | 3.2 | 3.5 | ||||||||||||||||||||||||||
Poland |
35,554 | 18.5 | 19.1 | 35,554 | 27.9 | 31.7 | ||||||||||||||||||||||||||
Portugal |
39,143 | (0.1) | (0.1) | 39,143 | 8.4 | 8.4 | ||||||||||||||||||||||||||
United Kingdom |
206,630 | 0.7 | 1.5 | 206,630 | (1.7) | (0.9) | ||||||||||||||||||||||||||
Latin America |
197,598 | 1.8 | (0.0) | 197,598 | 1.3 | 11.8 | ||||||||||||||||||||||||||
o/w: Brazil |
110,243 | 3.4 | (1.3) | 110,243 | 3.1 | 15.3 | ||||||||||||||||||||||||||
Mexico |
38,630 | (4.4) | (1.3) | 38,630 | 8.7 | 3.3 | ||||||||||||||||||||||||||
Chile |
33,279 | 2.5 | 6.4 | 33,279 | 0.5 | 8.4 | ||||||||||||||||||||||||||
Argentina |
10,191 | 9.9 | (0.5) | 10,191 | (20.7) | 51.0 | ||||||||||||||||||||||||||
USA |
64,239 | 3.6 | 2.5 | 64,239 | 8.3 | 3.4 | ||||||||||||||||||||||||||
Operating areas |
905,380 | 1.1 | 0.9 | 905,380 | 1.7 | 3.8 | ||||||||||||||||||||||||||
Total Group |
905,624 | 1.1 | 0.9 | 905,624 | 1.7 | 3.8 |
Financial Report 2018 23
JANUARY - DECEMBER Business information |
SPAIN |
EUR 1,458 Mn | |
Highlights
|
Attributable profit |
Banco Populars integration is progressing as scheduled: the legal integration was completed, central services and regional teams unified and a single technological platform put in place where we started the migration of customers
|
Progress was made on digital transformation and the customer relationship model (4.8 million digital customers, launch of the first Work Café in Spain and reinforcement of Santander Personal)
|
Strong growth in SME and companies: New lending increased 17% in 2018 and the stock by EUR 1,800 million
|
Underlying attributable profit rose 21% in 2018, with better efficiency, a cost of credit at around 30 bps and a favourable perimeter impact |
24 Financial Report 2018
JANUARY - DECEMBER Business information |
SANTANDER CONSUMER FINANCE |
EUR 1,296 Mn | |
Highlights (changes in constant euros) |
Attributable profit |
Santander is the European leader in consumer finance
|
The main focal points were: to remain leader in the auto finance, supporting producers and dealers in their digital transformation process, and to increase consumer finance
|
Underlying attributable profit rose 4% in 2018 in constant euros. High profitability (RoTE of 16%; RoRWA at 2.3%), cost of credit at historic lows and high geographic diversification with critical mass in markets
|
Financial Report 2018 25
JANUARY - DECEMBER Business information |
POLAND |
EUR 343 Mn | |
Highlights (changes in constant euros)
|
Attributable profit |
The Group strengthened its position in Poland with the integration of the retail and SME businesses acquired from Deutsche Bank Polska (DBP). BZ WBK was renamed Santander Bank Polska S.A.
|
Strong growth in volumes reflected in market share gains in a very competitive environment
|
Third bank in Poland in customer satisfaction and also leading positions in employee satisfaction
|
Underlying attributable profit fell slightly (-1%) due to the sale of portfolios in 2017, the cost of rebranding in 2018 and the charges associated with the integration in November of Deutsche Bank Polska. Including badwill (EUR 45 million), attributable profit rose 14% |
26 Financial Report 2018
JANUARY - DECEMBER Business information |
PORTUGAL |
EUR 500 Mn Attributable profit
| |
Highlights
| ||
The operational and technological integration of Banco Popular Portugal completed in October 2018 strengthened Santander Tottas position as the countrys largest privately owned bank by assets and loans in domestic activity
| ||
The digital and commercial transformation continued, boosting sales via digital channels and spurring growth in loyal and digital customers
| ||
Underlying attributable profit increased 10% due to the improvement in efficiency and lower provisions. The NPL ratio improved significantly and the cost of credit was only 9 bps
|
Financial Report 2018 27
JANUARY - DECEMBER Business information |
UNITED KINGDOM |
EUR 1,362 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
In an uncertain environment, we continued to prioritise growth in lower risk areas whilst actively managing costs in order to improve operational efficiency and the customer experience
| ||
Good business evolution: growth in retail current account balances and mortgages in a highly competitive market, while further reducing commercial real estate exposure
| ||
Our results reflect competitive income pressures and higher regulatory, risk and control costs, as well as strategic investment in business transformation and digital enhancement. Cost of credit at just 7 basis points
|
28 Financial Report 2018
JANUARY - DECEMBER Business information |
BRAZIL |
EUR 2,605 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Santander Brasil is the third largest privately owned bank and the largest foreign bank in the country
| ||
We are leaders in customer satisfaction in all segments. In less than four years, we have succeeded in strategically repositioning retail banking, and there is still potential to improve further
| ||
Prudent risk management underscored by the growth in lending. Profitable market share gains, compatible with lower NPL ratio and cost of credit
| ||
Underlying attributable profit rose 22% and profitability improved (RoTE of 19.8%), reflecting greater productivity and the best efficiency ratio of recent years |
Financial Report 2018 29
JANUARY - DECEMBER Business information |
MEXICO |
EUR 760 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
The strategy continued to focus on the transformation of the branch network and the launch of new business such as auto finance, reflected in greater customer attraction and increased loyalty
| ||
In volume terms, growth in lending, notably to companies (+12%) and SME (8%). In customer funds, growth continued to be driven by deposits from individuals and SME
| ||
Good trend in profit. Underlying attributable profit rose 14% in 2018, driven by the good performance of net interest income, fee income and loan-loss provisions
|
30 Financial Report 2018
JANUARY - DECEMBER Business information |
CHILE |
EUR 614 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
We continued the transformation of the branch network, driving digitalisation and increasing our value offer with new products and services
| ||
Growth in business volumes, at a faster pace in some segments. Of note the rise in loans to companies and the growth in fee-generating businesses in SCIB
| ||
Underlying attributable profit increased 8% in 2018, driven by net interest income and fee income
|
Financial Report 2018 31
JANUARY - DECEMBER Business information |
ARGENTINA |
EUR 84 Mn | |
Highlights (changes in constant euros) |
Attributable profit
| |
Santander Río consolidated itself as the leading privately owned bank in Argentina by banking business
| ||
The business focus was on digital transformation, customer experience and key segments: Select and Pymes Advance, reflected in growth in loyal and digital customers and in high levels of digital penetration
| ||
Underlying attributable profit was EUR 84 million, affected by the impact of the high inflation adjustment and the pesos depreciation
|
32 Financial Report 2018
JANUARY - DECEMBER Business information |
URUGUAY |
Highlights (changes in constant euros)
|
Banco Santander continued to be the leading privately owned bank in the country, focused on growing in retail banking and improving efficiency and the quality of service
|
Underlying attributable profit rose 43% spurred by the good performance of customer revenue
|
Commercial activity
| Santander continued to focus on increasing loyalty and improving customer satisfaction, where we are ranked second. |
| We continued to advance in our digital transformation strategy: the number of digital customers increased 30% and digital penetration was 58% (49% in 2017). Consumer finance companies increased lending via digital channels. At Creditel they already account for 30% of new loans. Santander is also the leading private sector bank in the business of families and mortgages, thanks to the specialised home and car centre. |
| Loans up 25%, driven by growth in target segments, products and currencies: +20% in consumer credit and cards and +18% in the national currency portfolio. Deposits rose 13%, with peso balances up 12% and foreign currency ones 1%. |
Results
The underlying attributable profit was 43% higher in 2018 at EUR 132 million. High RoTE of 27.0%.
| Gross income rose 17%, driven by net interest income and in general, by the main revenue lines. The efficiency ratio was 44.6%, 3.9 pp better than in 2017. |
| Despite the rise in provisions because of the entry into force of IFRS 9 regulation and other impacts, the NPL ratio remained at a low level (3.4%), coverage was high (112%) and the cost of credit was 2.80%. |
PERU
Highlights (changes in constant euros)
| We expanded the base of products and customers in all business segments, diversified funding sources and increased treasury services for customers through exchange rate operations, forwards and other derivatives. |
| Santander continued to contribute to the development of public infrastructure and participated in a USD 2 billion international bond issue of the Peruvian state. |
| Lending rose 43% in 2018 and deposits 16%. |
| Underlying attributable profit in the year was 8% higher at EUR 41 million (RoTE of 22.2%). The good performance of fee income, net interest income and gains on financial transactions more than offset the rise in costs from the incorporation of corporate projects. The efficiency ratio was 33.1% and coverage remained high (224%). |
COLOMBIA
Highlights (changes in constant euros)
| Business activity in Colombia remained focus on SCIB customers, large companies and corporates, contributing solutions in treasury, risk hedging, foreign trade and confirming, and developing investment banking products and supporting the countrys infrastructure plan. In order to fulfill this offer, Santander Securities Services Colombia already has all the authorisations needed to begin to offer custody services in 2019. |
| We continued the strategy to consolidate the auto financing business. This will enable us to have the critical mass needed to position ourselves in this market. |
| Lending increased 107% in 2018 with a good evolution of peso loans, while deposits rose 46% thanks to demand and especially time deposits (+116%). |
| Attributable profit was EUR 9 million in 2018 (+61%). Of note was the good performance of gross income (+67%), driven by growth in net interest income, fee income and gains on financial transactions. |
Financial Report 2018 33
JANUARY - DECEMBER Business information |
UNITED STATES |
EUR 552 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
The Federal Reserve terminated the 2015 Written Agreement with Santander Holdings USA, demonstrating the significant improvements the US has made to the way it operates. SHUSA also passed the Federal Reserves capital stress test for the second consecutive year
| ||
Lending increased year-on-year both at Santander Bank (9%) and SC USA (5%)
| ||
Santander US underlying attributable profit amounted to EUR 552 million, 42% higher than in 2017 excluding exchange rate impact, driven by higher income from leasing and loans, lower costs and improved cost of credit |
34 Financial Report 2018
JANUARY - DECEMBER Business information |
CORPORATE CENTRE |
EUR -1,761 Mn | |
Highlights
|
Attributable profit | |
The Corporate Centres objective is to aid the operating units by contributing value-added and carrying out the corporate function of oversight and control. It also develops functions related to financial and capital management
| ||
The underlying attributable loss was 9% lower in 2018, due to the reduced cost of hedging exchange rates
|
Strategy and functions
The Corporate Centre contributes value to the Group in various ways:
| It makes the Groups governance more solid, through global control frameworks and supervision. |
| Fostering the exchange of best practices in management of costs and economies of scale. This enables us to be one of the most efficient banks in the sector. |
| The Corporate Centre contributes to the Groups revenue growth, by sharing the best commercial practices, launching global commercial initiatives and accelerating the digital transformation simultaneously in all countries. |
It also coordinates the relationship with the European regulators and develops functions related to financial and capital management, as follows:
| Financial Management functions: |
| Structural management of liquidity risk associated with funding the Groups recurring activity, stakes of a financial nature and management of net liquidity related to the needs of some business units. |
| This activity is carried out by diversifying the different funding sources (issuances and other), maintaining an adequate profile at each moment in volumes, maturities and costs. The price at which these operations are made with other Group units is the market rate (euribor or swap) plus the premium, which in the concept of liquidity, the Group supports by immobilising funds during the term of the operation. |
| Interest rate risk is also actively managed in order to soften the impact of interest rate changes on net interest income, conducted via high credit quality, very liquid and low capital consumption derivatives. |
| Strategic management of the exposure to exchange rates on equity and dynamic on the countervalue of the units results in euros for the next 12 months. Net investments in equity are currently covered by EUR 23,025 million (mainly Brazil, UK, Mexico, Chile, US, Poland and Norway) with different instruments (spot, fx, forwards). |
| Management of total capital and reserves: capital allocated to each of the units. |
Results
Attributable loss in the year of EUR 1,761 million (net of tax), down from a loss of EUR 2,326 million in 2017. 2018 included restructuring costs and 2017 writedown of stakes and intangible assets, the capital gain from the sale of Allfunds Bank and writedown of goodwill.
Excluding these impacts, loss of EUR 1,721 million in 2018 compared to EUR 1,889 million in 2017. This improvement was mainly due to lower costs of hedging exchange rates.
On the other hand, net interest income was hit by the volume of issuances made under the funding plan, largely focused on eligible TLAC instruments, and costs related to the greater liquidity buffer requirements.
Operating expenses increased 4% as a result of two effects that offset each other: the streamlining and simplification measures and the investment in global projects for the Groups digital transformation.
∎ CORPORATE CENTRE |
||||||||||||||||||||||||
EUR million | Q418 | Q318 | Chg. % | 2018 | 2017 | Chg. % | ||||||||||||||||||
Gross income |
(295) | (257) | 14.7 | (1,028) | (1,220) | (15.7) | ||||||||||||||||||
Net operating income |
(423) | (380) | 11.3 | (1,523) | (1,696) | (10.2) | ||||||||||||||||||
Underlying attributable profit to the Group |
(369) | (456) | (18.9) | (1,721) | (1,889) | (8.9) | ||||||||||||||||||
Attributable profit to the Group |
(369) | (456) | (18.9) | (1,761) | (2,326) | (24.3) | ||||||||||||||||||
Detailed financial information on page 57 |
Financial Report 2018 35
JANUARY - DECEMBER Business information |
RETAIL BANKING |
EUR 7,579 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
The Group continued to focus on customer loyalty and digital transformation, with new products and services that cover the current needs of our customers
| ||
At the end of 2018, the Group had almost 20 million loyal customers and 32 million digital customers
| ||
Underlying attributable profit of EUR 7,793 million, boosted by the good dynamics of customer revenue, improved efficiency and the perimeter effect of Banco Populars incorporation
|
36 Financial Report 2018
JANUARY - DECEMBER Business information |
CORPORATE & INVESTMENT BANKING |
EUR 1,705 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Strategy focused on the expansion of our product offer and development of our franchises in the United Kingdom and the United States, the consolidation of Continental Europe as a single business unit and the implementation of the Multinational Coverage Model (MNC)
| ||
Good progress in the Global Infrastructure Programme (GIP) and completion of the banking structural reform project in the UK. The retail banking network integration and enhanced offer of value-added products drove business growth (+21%)
| ||
Underlying attributable profit was 8% higher in 2018, due to higher customer revenue and lower provisions
|
Financial Report 2018 37
JANUARY - DECEMBER Business information |
WEALTH MANAGEMENT |
||
Asset Management and Private Banking |
EUR 528 Mn | |
Highlights (changes in constant euros)
|
Attributable profit | |
Total contribution to profit (net profit + fee income) amounted to EUR 1,015 million, 13% more than that estimated for 2017
| ||
The volumes of collaboration among countries grew 19% in 2018 to EUR 3,727 million
| ||
Lending rose 12%, spurred by development of the Private Wealth segment, which offers a differential service to the Groups largest clients
|
38 Financial Report 2018
JANUARY - DECEMBER Corporate Governance |
CORPORATE GOVERNANCE
A responsible bank has a solid governance model with well-defined functions, it manages risks and opportunities prudently and defines its long-term strategy watching out for the interests of all its stakeholders and society in general.
Balanced | Respect for | Maximum | At the forefront of best | |||
composition of | shareholders | transparency | corporate governance | |||
the Board | rights | in remuneration | practices |
The changes in the Board of Directors and in the organisational structure of the Groups senior management agreed in the fourth quarter are set out below:
∎ | Changes in the boards composition |
} | There were no changes in the board in the fourth quarter of 2018. |
} | The change already announced and effective after the end of the year is set out below: |
| As of 1 January 2019, Mr. Juan Miguel Villar Mir ceased to be a member of Banco Santanders board. |
} | The following changes were agreed by the board and announced on 15 January 2019: |
| The appointment of Mr. Andrea Orcel as a new member of the board and as chief executive officer of Banco Santander, S.A., agreed on 25 September 2018, was left without effect. |
| Mr. José Antonio Álvarez Álvarez will continue to be the CEO of Banco Santander, S.A., and has also been appointed vice chairman of the board, leaving without effect his appointment as chairman of Santander Spain, also agreed on 25 September 2018. |
| Mr. Rodrigo Echenique Gordillo, who was scheduled to stop being chairman of Santander Spain as of March, will continue in the post until his successor is appointed and will remain vice chairman of Banco Santanders board. |
| Mr. Guillermo de la Dehesa Romero will remain director of the Bank but is no longer vice chairman. |
∎ | Changes in the composition of the boards committees |
} | There were no changes in the Groups senior management in the fourth quarter of 2018. |
} | Changes effective after the end of the year are set out below: |
| Mr. Enrique Álvarez Labiano, Global Head of Strategy and of the Executive Chairmans Office, has been appointed head of Strategy, Corporate Development and Development of New Businesses at Santander UK, a post he will take up on 15 February 2019. |
| Mr. José Luis de Mora Gil-Gallardo, head of Corporate Development and Planning, will also assume as of 15 February 2019 the function of the Groups Strategy, becoming responsible for Corporate Development and Strategy. |
| As of 1 January 2019, Mr. Javier San Félix García, the former head of Retail and Commercial Banking at Santander UK, became head of Global Strategic Initiatives within the Groups Technology and Operations division. |
Financial Report 2018 39
JANUARY - DECEMBER Sustainability |
SUSTAINABILITY
We develop our activity in a responsible way, contributing to the economic and social progress of the communities in which we operate, taking into account our impact on the environment and fostering stable relationships with our main stakeholders.
Grupo Santander continued to develop new measures within its corporate social responsibility commitment. The main ones in the fourth quarter were:
∎ | Sustainable governance |
} | Santander supports the Responsible Banking Principles, together with 27 other large banks from five continents, in order to adapt the financial sector to the UNs Sustainable Development Goals and to the Paris agreement on climate change. The principles are currently in a phase of public consultation. As of their signing in September 2019, banks will commit to publically assume them. |
∎ | Indexes and analysts |
} | Banco Santander is ranked the third bank in the world and the first in Europe in the Dow Jones Sustainability Index (DJSI), the reference international index that measures companies performance in the sphere of sustainability in the economic, social and environmental dimensions. |
} | The DJSI accorded Santander the maximum score (100) in aspects such as financial inclusion and energy efficiency, among other sustainability management elements. The bank has formed part of the index for 18 consecutive years, and for the eighth year running Santander was in first place among Spanish banks. |
∎ | Investment in communities |
} | Santander Asset Management launched Santander Equality Acciones, the first mutual fund in Spain in favour of gender equality. |
} | Santander took part in the International Day of Persons with Disabilities through various initiatives and programmes that promote education, entrepreneurship, employability and the social wellbeing of this collective. In 2018, more than 4,800 people with disabilities benefited from the programmes that Santander promotes via the Universia Foundation. |
} | Santander celebrated International Volunteer Day, with many initiatives in the countries where it operates. In Spain alone, and at the Corporate Centre, more than 1,000 employees participated in various solidarity activities. |
} | The Global Compact Network Spain recognised Santander X, the international university entrepreneurial project, promoted by Santander Universities, as one of the best good practices for its contribution to the 2030 Sustainable Development Goals. |
∎ | Environment and climate change |
} | Santander is participating in advising and funding various renewable energy projects, including the transaction under which Atlantica Yield acquired 50 MW of wind-power in Uruguay, financing the Moray East wind-power park, one of the largest in the high seas, and leading ENCE Energías mega project, as well as being the only bookrunner in the green financing for building a new 46MW biomass plant, both in Puertollano. |
} | SCIB was also joint bookrunner in the launch of the sustainable Italian EUR 500 million bond issued by Cassa Depositi e Prestiti, the first Italian sustainable bond in accordance with the guidelines of the International Capital Markets Association (IMCA) and the UNs Sustainable Development Goals in matters of clean water and sanitation. |
40 Financial Report 2018
JANUARY - DECEMBER The Santander share |
SANTANDER SHARE
∎ | Shareholder remuneration |
} | Shareholders in November were able to opt to receive, under the Santander Scrip Dividend programme for 2018, the second interim dividend of EUR 0.035 per share in cash or the equivalent amount in shares. Some 76.55% of the capital chose the latter option. |
} | The board agreed to pay, as of 1 February, the third interim dividend of EUR 0.065 per share charged to 2018s earnings. |
(*) The options, time periods and procedures indicated can present particularities for holders of Santander shares on foreign stock markets where the Bank is listed. |
∎ | Share price performance |
} | Markets ended 2018 much lower, after a start to the year with rises driven by the positive impact of the USs tax reform. This positive environment, however, dissipated in the following months because of greater volatility in stock markets mainly due to: (i) the political uncertainty in Italy and Brazil; (ii) the lack of agreement over Brexit, (iii) the increase in financial tensions in developing countries because of the dollars appreciation, after the Fed raised its interest rates and the ECB continued its policy of monetary normalisation and announced the end of quantitative easing, and (iv) the escalation of trade tensions between the US and China and its possible impact on confidence and the global economy. Fears of slowdown in the global economy, coupled with the partial shutdown of the US government, intensified the fall in shares in the last part of the year. |
} | In this context, the main indices and the Santander share ended lower. The Santander share was down 27.5% at EUR 3.973, while Euro Stoxx Banks and Stoxx Banks fell 33.3% and 28.0%, respectively. The Ibex 35 benchmark index of the Madrid Stock Exchange declined 15.0%, the DJ Stoxx 50 13.1% and the MSCI World Banks 19.7%. |
} | Santanders total shareholder return was 24.3% lower. |
} | The share price as we went to press was EUR 4.344 up 9.3% in the month. |
∎ | Market capitalisation and trading |
} | As of 31 December, Santander was the largest bank in the eurozone by market capitalisation (EUR 64,508 million) and the 16th in the world. |
} | The shares weighting in the DJ Stoxx 50 was 1.94%, 7.98% in the DJ Stoxx Banks and 14.52% in the Ibex 35. |
} | A total of 19,040 million Santander shares were traded in 2018 for an effective value of EUR 95,501 million, the largest amount among the shares that comprise the EuroStoxx (liquidity ratio of 118%). The average daily trading volume was EUR 375 million (75 million shares on average). |
∎ | Shareholder base |
} | The total number of Santander shareholders at the end of 2018 was 4,131,489 of which 3,857,687 were European (77.3% of the capital stock) and 256,366 from the Americas (21.6%). |
} | At the end of the year, excluding the board of Grupo Santander, which represents 1.1% of the Banks capital stock, retail shareholders hold 39.8% and institutional shareholders 59.1%. |
Financial Report 2018 41
42 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ NET FEE INCOME. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q418 | Q318 | Chg. % | 2018 | 2017 | Chg. % | |||||||||||||||||||
Fees from services |
1,829 | 1,605 | 14.0 | 7,037 | 7,350 | (4.2) | ||||||||||||||||||
Wealth management and marketing of customer funds |
940 | 874 | 7.4 | 3,654 | 3,406 | 7.3 | ||||||||||||||||||
Securities and custody |
187 | 161 | 16.1 | 794 | 841 | (5.6) | ||||||||||||||||||
Net fee income |
2,956 | 2,640 | 12.0 | 11,485 | 11,597 | (1.0) | ||||||||||||||||||
∎ OPERATING EXPENSES. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q418 | Q318 | Chg. % | 2018 | 2017 | Chg. % | |||||||||||||||||||
Personnel expenses |
3,068 | 2,837 | 8.1 | 11,865 | 11,972 | (0.9) | ||||||||||||||||||
General expenses |
2,217 | 1,967 | 12.7 | 8,489 | 8,353 | 1.6 | ||||||||||||||||||
Information technology |
441 | 347 | 27.2 | 1,550 | 1,257 | 23.4 | ||||||||||||||||||
Communications |
145 | 120 | 20.0 | 527 | 529 | (0.5) | ||||||||||||||||||
Advertising |
193 | 143 | 35.3 | 646 | 757 | (14.6) | ||||||||||||||||||
Buildings and premises |
492 | 427 | 15.2 | 1,846 | 1,798 | 2.7 | ||||||||||||||||||
Printed and office material |
33 | 28 | 19.4 | 122 | 133 | (8.2) | ||||||||||||||||||
Taxes (other than tax on profits) |
152 | 118 | 28.6 | 557 | 583 | (4.5) | ||||||||||||||||||
Other expenses |
761 | 784 | (2.9) | 3,240 | 3,296 | (1.7) | ||||||||||||||||||
Personnel and general expenses |
5,285 | 4,804 | 10.0 | 20,354 | 20,325 | 0.1 | ||||||||||||||||||
Depreciation and amortisation |
651 | 557 | 16.9 | 2,425 | 2,593 | (6.5) | ||||||||||||||||||
Operating expenses |
5,936 | 5,361 | 10.7 | 22,779 | 22,918 | (0.6) |
∎ OPERATING MEANS |
||||||||||||||||||||||||||||
Employees | Branches | |||||||||||||||||||||||||||
Dec-18 | Dec-17 | Chg. | Dec-18 | Dec-17 | Chg. | |||||||||||||||||||||||
Continental Europe |
67,572 | 67,922 | (350) | 5,998 | 6,298 | (300) | ||||||||||||||||||||||
o/w: Spain |
32,313 | 33,271 | (958) | 4,366 | 4,485 | (119) | ||||||||||||||||||||||
Santander Consumer Finance |
14,865 | 15,131 | (266) | 438 | 546 | (108) | ||||||||||||||||||||||
Poland |
12,515 | 11,572 | 943 | 611 | 576 | 35 | ||||||||||||||||||||||
Portugal |
6,705 | 6,822 | (117) | 572 | 681 | (109) | ||||||||||||||||||||||
United Kingdom |
25,872 | 25,971 | (99) | 756 | 808 | (52) | ||||||||||||||||||||||
Latin America |
90,196 | 89,014 | 1,182 | 5,803 | 5,908 | (105) | ||||||||||||||||||||||
o/w: Brazil |
46,914 | 47,135 | (221) | 3,438 | 3,465 | (27) | ||||||||||||||||||||||
Mexico |
19,859 | 18,557 | 1,302 | 1,418 | 1,401 | 17 | ||||||||||||||||||||||
Chile |
12,008 | 11,675 | 333 | 381 | 439 | (58) | ||||||||||||||||||||||
Argentina |
9,324 | 9,277 | 47 | 468 | 482 | (14) | ||||||||||||||||||||||
USA |
17,309 | 17,560 | (251) | 660 | 683 | (23) | ||||||||||||||||||||||
Operating areas |
200,949 | 200,467 | 482 | 13,217 | 13,697 | (480) | ||||||||||||||||||||||
Corporate Centre |
1,764 | 1,784 | (20) | |||||||||||||||||||||||||
Total Group |
202,713 | 202,251 | 462 | 13,217 | 13,697 | (480) |
∎ NET LOAN-LOSS PROVISIONS. CONSOLIDATED |
||||||||||||||||||||||||
EUR million |
||||||||||||||||||||||||
Q418 | Q318 | Chg. % | 2018 | 2017 | Chg. % | |||||||||||||||||||
Non-performing loans |
2,919 | 2,395 | 21.9 | 10,426 | 10,726 | (2.8) | ||||||||||||||||||
Country-risk |
(5) | 1 | | 5 | 5 | (7.6) | ||||||||||||||||||
Recovery of written-off assets |
(460) | (275) | 67.2 | (1,558) | (1,621) | (3.9) | ||||||||||||||||||
Net loan-loss provisions |
2,455 | 2,121 | 15.7 | 8,873 | 9,111 | (2.6) |
Financial Report 2018 43
JANUARY - DECEMBER Appendix |
∎ LOANS AND ADVANCES TO CUSTOMERS. CONSOLIDATED |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Dec-18 | Dec-17 | Absolute change |
% | Dec-16 | ||||||||||||||||
Commercial bills |
33,301 | 29,287 | 4,014 | 13.7 | 23,894 | |||||||||||||||
Secured loans |
478,067 | 473,935 | 4,132 | 0.9 | 454,676 | |||||||||||||||
Other term loans |
265,680 | 257,441 | 8,239 | 3.2 | 232,289 | |||||||||||||||
Finance leases |
30,758 | 28,511 | 2,247 | 7.9 | 25,357 | |||||||||||||||
Receivable on demand |
8,794 | 6,721 | 2,073 | 30.8 | 8,102 | |||||||||||||||
Credit cards receivable |
23,076 | 21,809 | 1,267 | 5.8 | 21,363 | |||||||||||||||
Impaired assets |
34,241 | 36,280 | (2,039) | (5.6) | 32,573 | |||||||||||||||
Gross loans and advances to customers (excl. reverse repos) |
873,917 | 853,985 | 19,932 | 2.3 | 798,254 | |||||||||||||||
Reverse repos |
32,310 | 18,864 | 13,446 | 71.3 | 16,609 | |||||||||||||||
Gross loans and advances to customers |
906,227 | 872,848 | 33,379 | 3.8 | 814,863 | |||||||||||||||
Loan-loss allowances |
23,306 | 23,934 | (628) | (2.6) | 24,393 | |||||||||||||||
Loans and advances to customers |
882,921 | 848,914 | 34,007 | 4.0 | 790,470 | |||||||||||||||
∎ TOTAL FUNDS. CONSOLIDATED |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Dec-18 | Dec-17 | Absolute change |
% | Dec-16 | ||||||||||||||||
Demand deposits |
548,711 | 525,072 | 23,639 | 4.5 | 467,261 | |||||||||||||||
Time deposits |
199,025 | 199,650 | (625) | (0.3) | 181,089 | |||||||||||||||
Mutual funds |
157,888 | 165,413 | (7,525) | (4.5) | 147,416 | |||||||||||||||
Customer deposits excl. repos + Mutual funds |
905,624 | 890,135 | 15,489 | 1.7 | 795,766 | |||||||||||||||
Pension funds |
15,393 | 16,166 | (773) | (4.8) | 11,298 | |||||||||||||||
Managed portfolios |
26,785 | 26,393 | 392 | 1.5 | 23,793 | |||||||||||||||
Subtotal |
947,802 | 932,694 | 15,108 | 1.6 | 830,858 | |||||||||||||||
Repos |
32,760 | 53,009 | (20,249) | (38.2) | 42,761 | |||||||||||||||
Total funds |
980,562 | 985,703 | (5,141) | (0.5) | 873,618 | |||||||||||||||
∎ ELIGIBLE CAPITAL (FULLY LOADED) |
||||||||||||||||||||
EUR million |
||||||||||||||||||||
Dec-18 | Dec-17 | Absolute change |
% | Dec-16 | ||||||||||||||||
Capital stock and reserves |
114,148 | 111,362 | 2,786 | 2.5 | 101,437 | |||||||||||||||
Attributable profit |
7,810 | 6,619 | 1,191 | 18.0 | 6,204 | |||||||||||||||
Dividends |
(3,292) | (2,998) | (295) | 9.8 | (2,469) | |||||||||||||||
Other retained earnings |
(23,606) | (23,108) | (498) | 2.2 | (16,116) | |||||||||||||||
Minority interests |
6,892 | 7,228 | (336) | (4.6) | 6,784 | |||||||||||||||
Goodwill and intangible assets |
(28,644) | (28,537) | (107) | 0.4 | (28,405) | |||||||||||||||
Other deductions |
(6,404) | (5,004) | (1,400) | 28.0 | (5,368) | |||||||||||||||
Core CET1 |
66,904 | 65,563 | 1,341 | 2.0 | 62,068 | |||||||||||||||
Preferred shares and other eligible T1 |
8,923 | 7,730 | 1,193 | 15.4 | 5,767 | |||||||||||||||
Tier 1 |
75,826 | 73,293 | 2,534 | 3.5 | 67,834 | |||||||||||||||
Generic funds and eligible T2 instruments |
11,743 | 14,295 | (2,552) | (17.9) | 13,749 | |||||||||||||||
Eligible capital |
87,569 | 87,588 | (19) | (0.0) | 81,584 | |||||||||||||||
Risk-weighted assets |
592,319 | 605,064 | (12,745) | (2.1) | 588,088 | |||||||||||||||
|
||||||||||||||||||||
CET1 capital ratio |
11.30 | 10.84 | 0.46 | 10.55 | ||||||||||||||||
T1 capital ratio |
12.80 | 12.11 | 0.69 | 11.53 | ||||||||||||||||
Total capital ratio |
14.78 | 14.48 | 0.30 | 13.87 |
44 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ CONTINENTAL EUROPE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
2,609 | 2.7 | 2.7 | 10,107 | 9.5 | 9.8 | ||||||||||||||||||||||
Net fee income |
1,073 | (2.2) | (2.2) | 4,419 | 6.1 | 6.2 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
276 | (1.1) | (1.2) | 916 | 46.4 | 47.0 | ||||||||||||||||||||||
Other operating income |
44 | (70.1) | (70.1) | 440 | 11.5 | 11.8 | ||||||||||||||||||||||
Gross income |
4,002 | (1.5) | (1.5) | 15,881 | 10.2 | 10.4 | ||||||||||||||||||||||
Operating expenses |
(2,061) | 1.6 | 1.5 | (8,278) | 8.0 | 8.3 | ||||||||||||||||||||||
General administrative expenses |
(1,933) | 3.4 | 3.4 | (7,658) | 7.9 | 8.1 | ||||||||||||||||||||||
Personnel |
(1,074) | 6.0 | 5.9 | (4,158) | 12.9 | 13.2 | ||||||||||||||||||||||
Other general administrative expenses |
(860) | 0.3 | 0.3 | (3,500) | 2.4 | 2.6 | ||||||||||||||||||||||
Depreciation and amortisation |
(128) | (19.9) | (19.9) | (620) | 10.0 | 10.3 | ||||||||||||||||||||||
Net operating income |
1,940 | (4.5) | (4.5) | 7,604 | 12.6 | 12.9 | ||||||||||||||||||||||
Net loan-loss provisions |
(262) | (31.1) | (31.1) | (1,399) | 26.2 | 26.4 | ||||||||||||||||||||||
Other income |
(280) | 95.7 | 95.5 | (704) | (5.7) | (5.6) | ||||||||||||||||||||||
Underlying profit before tax |
1,398 | (7.3) | (7.3) | 5,501 | 12.3 | 12.6 | ||||||||||||||||||||||
Tax on profit |
(361) | (12.2) | (12.2) | (1,461) | 11.1 | 11.3 | ||||||||||||||||||||||
Underlying profit from continuing operations |
1,037 | (5.5) | (5.5) | 4,040 | 12.7 | 13.1 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
1,037 | (5.5) | (5.5) | 4,040 | 12.7 | 13.1 | ||||||||||||||||||||||
Minority interests |
91 | (15.3) | (15.3) | 397 | 4.1 | 4.2 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
946 | (4.4) | (4.4) | 3,642 | 13.7 | 14.1 | ||||||||||||||||||||||
Net capital gains and provisions* |
46 | | | (214) | (44.4) | (44.4) | ||||||||||||||||||||||
Attributable profit to the Group |
992 | 0.3 | 0.3 | 3,428 | 21.7 | 22.2 | ||||||||||||||||||||||
(*) In 2018, charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 million) and Portugal (EUR 20 million) and badwill in Poland (EUR 45 million). In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million)
|
| |||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
383,020 | 1.4 | 1.6 | 383,020 | 0.8 | 1.0 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
142,813 | 3.9 | 3.9 | 142,813 | 24.2 | 24.2 | ||||||||||||||||||||||
Debt securities |
89,030 | (1.5) | (1.4) | 89,030 | (10.7) | (10.6) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
61,855 | 2.8 | 2.9 | 61,855 | (14.7) | (14.5) | ||||||||||||||||||||||
Other financial assets |
36,012 | 5.0 | 5.0 | 36,012 | (9.8) | (9.8) | ||||||||||||||||||||||
Other assets |
31,011 | (14.6) | (14.6) | 31,011 | (28.6) | (28.6) | ||||||||||||||||||||||
Total assets |
681,887 | 0.9 | 1.0 | 681,887 | 0.6 | 0.7 | ||||||||||||||||||||||
Customer deposits |
369,730 | 2.4 | 2.5 | 369,730 | 4.9 | 5.1 | ||||||||||||||||||||||
Central banks and credit institutions |
158,761 | (2.1) | (2.0) | 158,761 | (0.6) | (0.8) | ||||||||||||||||||||||
Debt securities issued |
62,018 | 7.7 | 8.1 | 62,018 | 1.3 | 1.5 | ||||||||||||||||||||||
Other financial liabilities |
37,142 | (10.1) | (10.1) | 37,142 | (19.1) | (19.1) | ||||||||||||||||||||||
Other liabilities |
14,827 | (3.5) | (3.4) | 14,827 | (14.3) | (14.2) | ||||||||||||||||||||||
Total liabilities |
642,479 | 0.8 | 0.9 | 642,479 | 0.9 | 1.0 | ||||||||||||||||||||||
Total equity |
39,408 | 2.1 | 2.4 | 39,408 | (4.7) | (4.4) | ||||||||||||||||||||||
Other managed and marketed customer funds |
97,774 | (6.0) | (6.0) | 97,774 | (4.2) | (4.2) | ||||||||||||||||||||||
Mutual funds |
70,562 | (6.7) | (6.7) | 70,562 | (4.7) | (4.5) | ||||||||||||||||||||||
Pension funds |
15,295 | (3.2) | (3.2) | 15,295 | (5.4) | (5.4) | ||||||||||||||||||||||
Managed portfolios |
11,917 | (5.4) | (5.4) | 11,917 | 0.0 | (0.3) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
390,794 | 1.5 | 1.7 | 390,794 | 1.7 | 1.9 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
436,913 | 0.6 | 0.7 | 436,913 | 2.7 | 2.9 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
10.94 | (0.54) | 10.64 | 0.82 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
51.5 | 1.5 | 52.1 | (1.0) | ||||||||||||||||||||||||
NPL ratio |
5.25 | (0.32) | 5.25 | (0.57) | ||||||||||||||||||||||||
NPL coverage |
52.2 | (2.2) | 52.2 | (2.2) | ||||||||||||||||||||||||
Number of employees |
67,572 | 1.5 | 67,572 | (0.5) | ||||||||||||||||||||||||
Number of branches |
5,998 | (0.6) | 5,998 | (4.8) |
Financial Report 2018 45
JANUARY - DECEMBER Appendix |
∎ SPAIN |
||||||||||||||||
(EUR million) |
||||||||||||||||
Income statement | Q418 | % QoQ | 2018 | % YoY | ||||||||||||
Net interest income |
1,150 | 3.0 | 4,360 | 15.2 | ||||||||||||
Net fee income |
634 | (3.0) | 2,631 | 12.8 | ||||||||||||
Gains (losses) on financial transactions |
95 | (58.1) | 560 | 28.4 | ||||||||||||
Other operating income |
1 | (99.2) | 343 | 11.8 | ||||||||||||
Gross income |
1,880 | (11.1) | 7,894 | 15.1 | ||||||||||||
Operating expenses |
(1,110) | 0.7 | (4,480) | 10.9 | ||||||||||||
General administrative expenses |
(1,061) | 3.2 | (4,191) | 11.1 | ||||||||||||
Personnel |
(629) | 9.9 | (2,371) | 19.9 | ||||||||||||
Other general administrative expenses |
(432) | (5.2) | (1,820) | 1.4 | ||||||||||||
Depreciation and amortisation |
(49) | (34.6) | (289) | 7.4 | ||||||||||||
Net operating income |
770 | (23.9) | 3,414 | 21.1 | ||||||||||||
Net loan-loss provisions |
(129) | (34.7) | (728) | 20.7 | ||||||||||||
Other income |
(70) | (31.6) | (362) | 68.3 | ||||||||||||
Underlying profit before tax |
571 | (19.9) | 2,325 | 16.1 | ||||||||||||
Tax on profit |
(139) | (25.2) | (586) | 7.3 | ||||||||||||
Underlying profit from continuing operations |
432 | (18.0) | 1,739 | 19.4 | ||||||||||||
Net profit from discontinued operations |
| | | | ||||||||||||
Underlying consolidated profit |
432 | (18.0) | 1,739 | 19.4 | ||||||||||||
Minority interests |
0 | (67.8) | 1 | (96.8) | ||||||||||||
Underlying attributable profit to the Group |
432 | (18.0) | 1,738 | 20.8 | ||||||||||||
Net capital gains and provisions* |
| | (280) | (6.8) | ||||||||||||
Attributable profit to the Group |
432 | (18.0) | 1,458 | 28.1 | ||||||||||||
(*) In 2018, restructuring costs (EUR -280 million). In 2017, integration costs (EUR -300 million) |
||||||||||||||||
Balance sheet | ||||||||||||||||
Loans and advances to customers |
206,776 | (2.6) | 206,776 | (6.2) | ||||||||||||
Cash, central banks and credit institutions |
117,215 | 2.8 | 117,215 | 28.3 | ||||||||||||
Debt securities |
60,720 | (5.0) | 60,720 | (20.9) | ||||||||||||
o/w: designated at fair value through other comprehensive income |
44,020 | (1.3) | 44,020 | (22.8) | ||||||||||||
Other financial assets |
32,727 | 5.4 | 32,727 | (10.9) | ||||||||||||
Other assets |
16,644 | (21.7) | 16,644 | (36.8) | ||||||||||||
Total assets |
434,082 | (1.9) | 434,082 | (3.9) | ||||||||||||
Customer deposits |
255,402 | 0.9 | 255,402 | 1.0 | ||||||||||||
Central banks and credit institutions |
93,854 | (7.4) | 93,854 | (6.8) | ||||||||||||
Debt securities issued |
24,608 | 4.5 | 24,608 | (6.4) | ||||||||||||
Other financial liabilities |
35,054 | (10.7) | 35,054 | (19.5) | ||||||||||||
Other liabilities |
8,878 | (1.7) | 8,878 | (20.9) | ||||||||||||
Total liabilities |
417,796 | (2.0) | 417,796 | (3.9) | ||||||||||||
Total equity |
16,286 | 0.8 | 16,286 | (5.1) | ||||||||||||
Other managed and marketed customer funds |
85,973 | (6.7) | 85,973 | (4.8) | ||||||||||||
Mutual funds |
61,406 | (7.5) | 61,406 | (5.2) | ||||||||||||
Pension funds |
14,142 | (3.5) | 14,142 | (5.6) | ||||||||||||
Managed portfolios |
10,425 | (5.9) | 10,425 | (1.2) | ||||||||||||
Pro memoria: |
||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
209,630 | (2.2) | 209,630 | (4.1) | ||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
315,351 | (1.1) | 315,351 | (0.5) | ||||||||||||
Ratios (%) and operating means | ||||||||||||||||
Underlying RoTE |
10.83 | (2.37) | 10.81 | 0.51 | ||||||||||||
Efficiency ratio (with amortisations) |
59.1 | 6.9 | 56.8 | (2.1) | ||||||||||||
NPL ratio |
6.19 | (0.04) | 6.19 | (0.13) | ||||||||||||
NPL coverage |
45.0 | (2.7) | 45.0 | (1.8) | ||||||||||||
Number of employees |
32,313 | (0.3) | 32,313 | (2.9) | ||||||||||||
Number of branches |
4,366 | (0.7) | 4,366 | (2.7) |
46 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ SANTANDER CONSUMER FINANCE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
943 | 0.6 | 0.7 | 3,723 | 4.3 | 4.9 | ||||||||||||||||||||||
Net fee income |
189 | (8.5) | (8.5) | 798 | (9.1) | (9.0) | ||||||||||||||||||||||
Gains (losses) on financial transactions |
35 | | | 55 | | | ||||||||||||||||||||||
Other operating income |
21 | 66.4 | 65.5 | 34 | 6.8 | 8.3 | ||||||||||||||||||||||
Gross income |
1,187 | 2.7 | 2.7 | 4,610 | 2.8 | 3.3 | ||||||||||||||||||||||
Operating expenses |
(494) | 4.1 | 4.1 | (1,985) | 0.4 | 0.9 | ||||||||||||||||||||||
General administrative expenses |
(456) | 5.5 | 5.5 | (1,817) | 1.1 | 1.6 | ||||||||||||||||||||||
Personnel |
(221) | 5.7 | 5.8 | (870) | 2.6 | 3.1 | ||||||||||||||||||||||
Other general administrative expenses |
(235) | 5.3 | 5.3 | (948) | (0.3) | 0.1 | ||||||||||||||||||||||
Depreciation and amortisation |
(39) | (10.0) | (9.9) | (168) | (6.7) | (6.2) | ||||||||||||||||||||||
Net operating income |
693 | 1.7 | 1.7 | 2,625 | 4.8 | 5.3 | ||||||||||||||||||||||
Net loan-loss provisions |
(47) | (62.5) | (62.4) | (360) | 35.4 | 36.1 | ||||||||||||||||||||||
Other income |
(166) | | | (125) | (20.4) | (20.5) | ||||||||||||||||||||||
Underlying profit before tax |
480 | (14.6) | (14.5) | 2,140 | 2.8 | 3.3 | ||||||||||||||||||||||
Tax on profit |
(122) | (22.1) | (22.0) | (577) | (1.9) | (1.4) | ||||||||||||||||||||||
Underlying profit from continuing operations |
358 | (11.7) | (11.6) | 1,564 | 4.6 | 5.2 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
358 | (11.7) | (11.6) | 1,564 | 4.6 | 5.2 | ||||||||||||||||||||||
Minority interests |
62 | (15.8) | (15.8) | 268 | 10.9 | 10.9 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
296 | (10.8) | (10.7) | 1,296 | 3.4 | 4.1 | ||||||||||||||||||||||
Net capital gains and provisions* |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Attributable profit to the Group |
296 | (10.8) | (10.7) | 1,296 | 10.9 | 11.7 | ||||||||||||||||||||||
(*) In 2017, integration costs (EUR -85 million) |
||||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
95,366 | 3.6 | 4.3 | 95,366 | 5.9 | 6.1 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
6,096 | 5.4 | 6.5 | 6,096 | 24.5 | 24.9 | ||||||||||||||||||||||
Debt securities |
3,325 | (3.5) | (2.6) | 3,325 | 3.2 | 4.0 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
1,898 | (0.7) | (0.5) | 1,898 | (41.1) | (40.6) | ||||||||||||||||||||||
Other financial assets |
31 | 56.8 | 58.4 | 31 | 44.8 | 45.2 | ||||||||||||||||||||||
Other assets |
2,890 | (6.4) | (5.9) | 2,890 | (17.6) | (17.3) | ||||||||||||||||||||||
Total assets |
107,708 | 3.2 | 3.9 | 107,708 | 5.9 | 6.2 | ||||||||||||||||||||||
Customer deposits |
36,579 | (0.3) | 0.5 | 36,579 | 3.2 | 3.5 | ||||||||||||||||||||||
Central banks and credit institutions |
24,966 | (1.0) | (0.4) | 24,966 | 7.0 | 7.2 | ||||||||||||||||||||||
Debt securities issued |
31,281 | 13.6 | 14.5 | 31,281 | 9.0 | 9.3 | ||||||||||||||||||||||
Other financial liabilities |
771 | (11.8) | (11.6) | 771 | (22.6) | (22.4) | ||||||||||||||||||||||
Other liabilities |
3,520 | (6.9) | (6.5) | 3,520 | (3.2) | (3.0) | ||||||||||||||||||||||
Total liabilities |
97,117 | 3.2 | 4.0 | 97,117 | 5.4 | 5.7 | ||||||||||||||||||||||
Total equity |
10,591 | 2.5 | 3.5 | 10,591 | 10.1 | 10.5 | ||||||||||||||||||||||
Other managed and marketed customer funds |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Mutual funds |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Pension funds |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
97,707 | 3.4 | 4.1 | 97,707 | 5.7 | 6.0 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
36,531 | (0.3) | 0.5 | 36,531 | 3.2 | 3.5 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
13.70 | (2.18) | 15.86 | (0.58) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
41.6 | 0.6 | 43.1 | (1.1) | ||||||||||||||||||||||||
NPL ratio |
2.29 | (0.16) | 2.29 | (0.21) | ||||||||||||||||||||||||
NPL coverage |
106.4 | | 106.4 | 5.0 | ||||||||||||||||||||||||
Number of employees |
14,865 | 0.0 | 14,865 | (1.8) | ||||||||||||||||||||||||
Number of branches |
438 | (0.7) | 438 | (19.8) |
Financial Report 2018 47
JANUARY - DECEMBER Appendix |
∎ POLAND |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
265 | 9.0 | 8.8 | 996 | 7.3 | 7.4 | ||||||||||||||||||||||
Net fee income |
115 | 3.4 | 3.2 | 453 | 2.2 | 2.3 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
9 | (37.3) | (37.0) | 44 | (15.4) | (15.3) | ||||||||||||||||||||||
Other operating income |
0 | | | (4) | 35.8 | 36.0 | ||||||||||||||||||||||
Gross income |
390 | 6.1 | 6.0 | 1,488 | 4.8 | 4.9 | ||||||||||||||||||||||
Operating expenses |
(165) | 5.3 | 5.1 | (636) | 5.2 | 5.3 | ||||||||||||||||||||||
General administrative expenses |
(151) | 6.2 | 6.0 | (578) | 5.6 | 5.8 | ||||||||||||||||||||||
Personnel |
(90) | 8.2 | 8.1 | (338) | 5.9 | 6.0 | ||||||||||||||||||||||
Other general administrative expenses |
(61) | 3.2 | 3.1 | (241) | 5.2 | 5.4 | ||||||||||||||||||||||
Depreciation and amortisation |
(14) | (3.1) | (3.2) | (58) | 0.6 | 0.7 | ||||||||||||||||||||||
Net operating income |
225 | 6.7 | 6.6 | 851 | 4.5 | 4.7 | ||||||||||||||||||||||
Net loan-loss provisions |
(41) | 24.4 | 23.8 | (161) | 17.3 | 17.4 | ||||||||||||||||||||||
Other income |
(61) | 132.3 | 131.1 | (135) | 40.0 | 40.2 | ||||||||||||||||||||||
Underlying profit before tax |
123 | (18.9) | (18.8) | 555 | (4.4) | (4.3) | ||||||||||||||||||||||
Tax on profit |
(34) | (7.9) | (7.8) | (131) | (11.3) | (11.2) | ||||||||||||||||||||||
Underlying profit from continuing operations |
88 | (22.5) | (22.4) | 424 | (2.0) | (1.9) | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
88 | (22.5) | (22.4) | 424 | (2.0) | (1.9) | ||||||||||||||||||||||
Minority interests |
27 | (20.5) | (20.4) | 126 | (4.8) | (4.7) | ||||||||||||||||||||||
Underlying attributable profit to the Group |
62 | (23.4) | (23.2) | 298 | (0.7) | (0.6) | ||||||||||||||||||||||
Net capital gains and provisions* |
45 | | | 45 | | | ||||||||||||||||||||||
Attributable profit to the Group |
107 | 32.8 | 32.4 | 343 | 14.4 | 14.5 | ||||||||||||||||||||||
(*) In 2018, badwill (EUR 45 million) |
||||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
28,164 | 19.1 | 19.8 | 28,164 | 26.8 | 30.5 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
3,260 | 53.2 | 54.1 | 3,260 | 96.3 | 102.2 | ||||||||||||||||||||||
Debt securities |
10,570 | 8.8 | 9.4 | 10,570 | 55.8 | 60.4 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
8,239 | 11.8 | 12.4 | 8,239 | 38.3 | 42.4 | ||||||||||||||||||||||
Other financial assets |
534 | 15.2 | 15.8 | 534 | 8.7 | 12.0 | ||||||||||||||||||||||
Other assets |
1,140 | 5.3 | 5.9 | 1,140 | 12.4 | 15.8 | ||||||||||||||||||||||
Total assets |
43,669 | 17.9 | 18.6 | 43,669 | 35.7 | 39.8 | ||||||||||||||||||||||
Customer deposits |
33,417 | 19.2 | 19.9 | 33,417 | 37.8 | 41.9 | ||||||||||||||||||||||
Central banks and credit institutions |
2,163 | 31.8 | 32.6 | 2,163 | 127.2 | 134.0 | ||||||||||||||||||||||
Debt securities issued |
1,789 | 17.2 | 17.8 | 1,789 | 117.9 | 124.4 | ||||||||||||||||||||||
Other financial liabilities |
558 | 22.1 | 22.8 | 558 | 6.8 | 10.0 | ||||||||||||||||||||||
Other liabilities |
809 | 10.3 | 10.9 | 809 | 18.3 | 21.8 | ||||||||||||||||||||||
Total liabilities |
38,736 | 19.6 | 20.3 | 38,736 | 42.2 | 46.5 | ||||||||||||||||||||||
Total equity |
4,933 | 6.1 | 6.7 | 4,933 | (0.1) | 2.9 | ||||||||||||||||||||||
Other managed and marketed customer funds |
4,384 | 12.5 | 13.1 | 4,384 | 9.4 | 12.7 | ||||||||||||||||||||||
Mutual funds |
4,012 | 5.6 | 6.2 | 4,012 | 2.9 | 5.9 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
373 | 277.6 | 279.7 | 373 | 246.0 | 256.3 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
29,033 | 19.2 | 19.9 | 29,033 | 26.4 | 30.1 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
35,554 | 18.5 | 19.1 | 35,554 | 27.9 | 31.7 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
8.20 | (3.00) | 10.29 | (1.27) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
42.2 | (0.3) | 42.8 | 0.1 | ||||||||||||||||||||||||
NPL ratio |
4.28 | 0.05 | 4.28 | (0.29) | ||||||||||||||||||||||||
NPL coverage |
67.1 | (4.5) | 67.1 | (1.1) | ||||||||||||||||||||||||
Number of employees |
12,515 | 10.9 | 12,515 | 8.1 | ||||||||||||||||||||||||
Number of branches |
611 | 17.7 | 611 | 6.1 |
48 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ PORTUGAL |
||||||||||||||||
(EUR million) |
||||||||||||||||
Income statement | Q418 | % QoQ | 2018 | % YoY | ||||||||||||
Net interest income |
211 | 0.1 | 858 | 8.9 | ||||||||||||
Net fee income |
96 | 4.5 | 377 | 4.7 | ||||||||||||
Gains (losses) on financial transactions |
12 | 112.8 | 75 | (1.0) | ||||||||||||
Other operating income |
14 | 2.4 | 34 | 61.4 | ||||||||||||
Gross income |
334 | 3.5 | 1,344 | 8.0 | ||||||||||||
Operating expenses |
(162) | 3.0 | (642) | 4.5 | ||||||||||||
General administrative expenses |
(151) | 2.8 | (600) | 4.4 | ||||||||||||
Personnel |
(94) | 2.4 | (372) | 6.1 | ||||||||||||
Other general administrative expenses |
(57) | 3.4 | (228) | 1.8 | ||||||||||||
Depreciation and amortisation |
(11) | 5.9 | (42) | 5.5 | ||||||||||||
Net operating income |
172 | 3.9 | 702 | 11.3 | ||||||||||||
Net loan-loss provisions |
(12) | 7.9 | (32) | 160.6 | ||||||||||||
Other income |
36 | 186.6 | 18 | | ||||||||||||
Underlying profit before tax |
196 | 17.3 | 688 | 19.8 | ||||||||||||
Tax on profit |
(59) | 14.1 | (205) | 50.5 | ||||||||||||
Underlying profit from continuing operations |
137 | 18.8 | 483 | 10.3 | ||||||||||||
Net profit from discontinued operations |
| | | | ||||||||||||
Underlying consolidated profit |
137 | 18.8 | 483 | 10.3 | ||||||||||||
Minority interests |
1 | (4.5) | 2 | 9.5 | ||||||||||||
Underlying attributable profit to the Group |
136 | 18.9 | 480 | 10.3 | ||||||||||||
Net capital gains and provisions* |
| | 20 | | ||||||||||||
Attributable profit to the Group |
136 | 18.9 | 500 | 14.9 | ||||||||||||
(*) In 2018, provisions and restructuring costs associated with inorganic operations, net of tax impacts (EUR 20 million) |
| |||||||||||||||
Balance sheet | ||||||||||||||||
Loans and advances to customers |
35,470 | (0.4) | 35,470 | (0.6) | ||||||||||||
Cash, central banks and credit institutions |
3,454 | 8.2 | 3,454 | 14.5 | ||||||||||||
Debt securities |
12,303 | 3.7 | 12,303 | 4.2 | ||||||||||||
o/w: designated at fair value through other comprehensive income |
5,904 | 14.2 | 5,904 | 6.8 | ||||||||||||
Other financial assets |
1,877 | (3.3) | 1,877 | 2.6 | ||||||||||||
Other assets |
1,904 | (17.2) | 1,904 | (32.1) | ||||||||||||
Total assets |
55,007 | 0.2 | 55,007 | (0.2) | ||||||||||||
Customer deposits |
37,217 | 0.2 | 37,217 | 9.5 | ||||||||||||
Central banks and credit institutions |
8,007 | 2.5 | 8,007 | (20.1) | ||||||||||||
Debt securities issued |
4,259 | (1.1) | 4,259 | (21.3) | ||||||||||||
Other financial liabilities |
257 | 5.8 | 257 | (21.6) | ||||||||||||
Other liabilities |
1,197 | (13.4) | 1,197 | (4.8) | ||||||||||||
Total liabilities |
50,937 | 0.1 | 50,937 | (0.1) | ||||||||||||
Total equity |
4,070 | 1.4 | 4,070 | (1.2) | ||||||||||||
Other managed and marketed customer funds |
3,541 | (7.1) | 3,541 | (6.4) | ||||||||||||
Mutual funds |
1,926 | (5.8) | 1,926 | (9.6) | ||||||||||||
Pension funds |
1,154 | 0.7 | 1,154 | (1.7) | ||||||||||||
Managed portfolios |
462 | (25.5) | 462 | (4.1) | ||||||||||||
Pro memoria: |
||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
36,568 | (1.4) | 36,568 | (2.5) | ||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
39,143 | (0.1) | 39,143 | 8.4 | ||||||||||||
Ratios (%) and operating means | ||||||||||||||||
Underlying RoTE |
13.50 | 1.91 | 12.06 | 0.41 | ||||||||||||
Efficiency ratio (with amortisations) |
48.5 | (0.2) | 47.8 | (1.6) | ||||||||||||
NPL ratio |
5.94 | (1.49) | 5.94 | (1.57) | ||||||||||||
NPL coverage |
50.5 | (2.9) | 50.5 | (11.6) | ||||||||||||
Number of employees |
6,705 | (3.0) | 6,705 | (1.7) | ||||||||||||
Number of branches |
572 | (14.2) | 572 | (16.0) |
Financial Report 2018 49
JANUARY - DECEMBER Appendix |
∎ UNITED KINGDOM |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
1,033 | (0.0) | (0.6) | 4,136 | (5.2) | (4.3) | ||||||||||||||||||||||
Net fee income |
257 | (0.3) | (0.9) | 1,023 | 2.0 | 2.9 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
16 | (75.0) | (75.0) | 199 | (29.4) | (28.7) | ||||||||||||||||||||||
Other operating income |
26 | 95.9 | 94.6 | 62 | (7.9) | (7.0) | ||||||||||||||||||||||
Gross income |
1,332 | (2.6) | (3.2) | 5,420 | (5.2) | (4.3) | ||||||||||||||||||||||
Operating expenses |
(738) | 1.2 | 0.5 | (2,995) | 4.7 | 5.7 | ||||||||||||||||||||||
General administrative expenses |
(618) | (7.8) | (8.4) | (2,604) | 3.6 | 4.6 | ||||||||||||||||||||||
Personnel |
(403) | (0.9) | (1.5) | (1,628) | 19.9 | 21.1 | ||||||||||||||||||||||
Other general administrative expenses |
(214) | (18.6) | (19.0) | (976) | (15.6) | (14.8) | ||||||||||||||||||||||
Depreciation and amortisation |
(121) | 102.6 | 99.7 | (391) | 12.4 | 13.5 | ||||||||||||||||||||||
Net operating income |
593 | (6.9) | (7.4) | 2,426 | (15.0) | (14.2) | ||||||||||||||||||||||
Net loan-loss provisions |
(44) | 73.1 | 70.4 | (173) | (15.3) | (14.5) | ||||||||||||||||||||||
Other income |
(155) | 148.8 | 147.2 | (327) | (30.0) | (29.3) | ||||||||||||||||||||||
Underlying profit before tax |
394 | (28.3) | (28.6) | 1,926 | (11.8) | (11.0) | ||||||||||||||||||||||
Tax on profit |
(103) | (35.2) | (35.4) | (539) | (18.6) | (17.8) | ||||||||||||||||||||||
Underlying profit from continuing operations |
291 | (25.5) | (25.9) | 1,387 | (8.9) | (8.0) | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
291 | (25.5) | (25.9) | 1,387 | (8.9) | (8.0) | ||||||||||||||||||||||
Minority interests |
5 | (12.5) | (13.1) | 25 | 0.7 | 1.6 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
286 | (25.7) | (26.1) | 1,362 | (9.1) | (8.2) | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
286 | (25.7) | (26.1) | 1,362 | (9.1) | (8.2) | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
257,284 | 0.7 | 1.5 | 257,284 | 5.6 | 6.5 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
39,843 | (3.5) | (2.7) | 39,843 | (29.8) | (29.2) | ||||||||||||||||||||||
Debt securities |
29,190 | 8.5 | 9.3 | 29,190 | 11.5 | 12.4 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
14,789 | (0.7) | 0.1 | 14,789 | 49.6 | 50.8 | ||||||||||||||||||||||
Other financial assets |
13,397 | (35.2) | (34.7) | 13,397 | (45.7) | (45.3) | ||||||||||||||||||||||
Other assets |
9,638 | 4.9 | 5.8 | 9,638 | (3.4) | (2.6) | ||||||||||||||||||||||
Total assets |
349,353 | (1.2) | (0.4) | 349,353 | (3.3) | (2.5) | ||||||||||||||||||||||
Customer deposits |
210,388 | (2.8) | (2.0) | 210,388 | (8.7) | (8.0) | ||||||||||||||||||||||
Central banks and credit institutions |
33,430 | 7.8 | 8.6 | 33,430 | 20.1 | 21.1 | ||||||||||||||||||||||
Debt securities issued |
67,556 | (0.5) | 0.3 | 67,556 | 10.5 | 11.5 | ||||||||||||||||||||||
Other financial liabilities |
16,583 | (7.5) | (6.8) | 16,583 | (21.7) | (21.0) | ||||||||||||||||||||||
Other liabilities |
4,181 | 6.3 | 7.1 | 4,181 | (3.0) | (2.2) | ||||||||||||||||||||||
Total liabilities |
332,137 | (1.5) | (0.7) | 332,137 | (3.7) | (2.9) | ||||||||||||||||||||||
Total equity |
17,216 | 4.5 | 5.4 | 17,216 | 5.6 | 6.5 | ||||||||||||||||||||||
Other managed and marketed customer funds |
7,672 | (9.6) | (8.8) | 7,672 | (11.4) | (10.7) | ||||||||||||||||||||||
Mutual funds |
7,576 | (9.5) | (8.8) | 7,576 | (11.3) | (10.6) | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
96 | (12.8) | (12.0) | 96 | (16.2) | (15.5) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
235,753 | (0.6) | 0.2 | 235,753 | (0.0) | 0.8 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
206,630 | 0.7 | 1.5 | 206,630 | (1.7) | (0.9) | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
7.70 | (2.77) | 9.32 | (0.94) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
55.4 | 2.1 | 55.2 | 5.2 | ||||||||||||||||||||||||
NPL ratio |
1.05 | (0.05) | 1.05 | (0.28) | ||||||||||||||||||||||||
NPL coverage |
33.0 | (0.1) | 33.0 | 1.0 | ||||||||||||||||||||||||
Number of employees |
25,872 | 0.3 | 25,872 | (0.4) | ||||||||||||||||||||||||
Number of branches |
756 | (1.4) | 756 | (6.4) |
50 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ LATIN AMERICA |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
4,115 | 11.8 | 0.4 | 15,654 | (2.1) | 15.1 | ||||||||||||||||||||||
Net fee income |
1,436 | 30.3 | 8.5 | 5,253 | (4.4) | 15.7 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
140 | 6.0 | (35.7) | 600 | (40.8) | (28.5) | ||||||||||||||||||||||
Other operating income |
(154) | 53.5 | 22.1 | (306) | | | ||||||||||||||||||||||
Gross income |
5,537 | 15.0 | 0.6 | 21,201 | (5.9) | 11.6 | ||||||||||||||||||||||
Operating expenses |
(2,213) | 27.9 | 6.7 | (7,996) | (8.3) | 9.9 | ||||||||||||||||||||||
General administrative expenses |
(2,002) | 28.2 | 7.0 | (7,237) | (8.4) | 9.9 | ||||||||||||||||||||||
Personnel |
(1,061) | 19.2 | 1.3 | (3,989) | (9.0) | 8.6 | ||||||||||||||||||||||
Other general administrative expenses |
(941) | 40.1 | 14.2 | (3,249) | (7.7) | 11.5 | ||||||||||||||||||||||
Depreciation and amortisation |
(212) | 25.1 | 3.9 | (759) | (7.3) | 10.1 | ||||||||||||||||||||||
Net operating income |
3,324 | 7.8 | (3.0) | 13,204 | (4.3) | 12.7 | ||||||||||||||||||||||
Net loan-loss provisions |
(1,183) | 14.0 | 1.7 | (4,567) | (8.2) | 7.1 | ||||||||||||||||||||||
Other income |
(160) | 0.7 | (23.4) | (666) | (49.9) | (38.8) | ||||||||||||||||||||||
Underlying profit before tax |
1,981 | 5.0 | (3.6) | 7,971 | 6.3 | 25.3 | ||||||||||||||||||||||
Tax on profit |
(695) | (5.8) | (13.9) | (2,904) | 21.7 | 45.3 | ||||||||||||||||||||||
Underlying profit from continuing operations |
1,286 | 11.9 | 3.0 | 5,067 | (0.8) | 16.1 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
1,286 | 11.9 | 3.0 | 5,067 | (0.8) | 16.1 | ||||||||||||||||||||||
Minority interests |
218 | 7.9 | 6.1 | 840 | 3.2 | 14.2 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
1,068 | 12.8 | 2.4 | 4,228 | (1.6) | 16.5 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
1,068 | 12.8 | 2.4 | 4,228 | (1.6) | 16.5 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
150,544 | 2.9 | 2.1 | 150,544 | 1.8 | 11.3 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
60,721 | 5.8 | 2.9 | 60,721 | 8.3 | 20.9 | ||||||||||||||||||||||
Debt securities |
59,367 | 7.1 | 5.0 | 59,367 | 2.7 | 9.9 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
30,351 | 10.7 | 8.7 | 30,351 | (7.8) | (1.1) | ||||||||||||||||||||||
Other financial assets |
14,994 | 10.5 | 10.7 | 14,994 | 5.4 | 9.5 | ||||||||||||||||||||||
Other assets |
17,731 | 6.3 | 3.6 | 17,731 | 2.6 | 13.2 | ||||||||||||||||||||||
Total assets |
303,356 | 4.8 | 3.3 | 303,356 | 3.4 | 12.8 | ||||||||||||||||||||||
Customer deposits |
142,576 | 0.3 | (1.2) | 142,576 | (0.5) | 9.3 | ||||||||||||||||||||||
Central banks and credit institutions |
48,104 | 7.1 | 5.5 | 48,104 | 21.4 | 30.6 | ||||||||||||||||||||||
Debt securities issued |
37,698 | 8.1 | 7.1 | 37,698 | 9.5 | 18.4 | ||||||||||||||||||||||
Other financial liabilities |
36,851 | 17.7 | 15.4 | 36,851 | 2.1 | 10.9 | ||||||||||||||||||||||
Other liabilities |
10,867 | 9.5 | 7.0 | 10,867 | (1.4) | 7.6 | ||||||||||||||||||||||
Total liabilities |
276,095 | 4.9 | 3.4 | 276,095 | 4.4 | 13.9 | ||||||||||||||||||||||
Total equity |
27,261 | 4.1 | 2.5 | 27,261 | (5.8) | 3.0 | ||||||||||||||||||||||
Other managed and marketed customer funds |
78,322 | 0.2 | (2.4) | 78,322 | (3.0) | 7.1 | ||||||||||||||||||||||
Mutual funds |
71,568 | (0.2) | (2.9) | 71,568 | (3.9) | 6.1 | ||||||||||||||||||||||
Pension funds |
98 | | | 98 | | | ||||||||||||||||||||||
Managed portfolios |
6,657 | 3.9 | 2.5 | 6,657 | 5.7 | 16.4 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
157,022 | 3.3 | 2.4 | 157,022 | 2.4 | 11.9 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
197,598 | 1.8 | (0.0) | 197,598 | 1.3 | 11.8 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
19.08 | 1.15 | 19.12 | 1.18 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
40.0 | 4.0 | 37.7 | (1.0) | ||||||||||||||||||||||||
NPL ratio |
4.34 | 0.01 | 4.34 | (0.12) | ||||||||||||||||||||||||
NPL coverage |
97.3 | 0.2 | 97.3 | 12.3 | ||||||||||||||||||||||||
Number of employees |
90,196 | 0.7 | 90,196 | 1.3 | ||||||||||||||||||||||||
Number of branches |
5,803 | (2.4) | 5,803 | (1.8) |
Financial Report 2018 51
JANUARY - DECEMBER Appendix |
∎ BRAZIL |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
2,475 | 4.1 | (1.2) | 9,758 | (3.2) | 15.7 | ||||||||||||||||||||||
Net fee income |
929 | 19.8 | 12.7 | 3,497 | (3.9) | 14.8 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
21 | (32.0) | (36.0) | 136 | (73.4) | (68.2) | ||||||||||||||||||||||
Other operating income |
(29) | 613.9 | 549.1 | (46) | | | ||||||||||||||||||||||
Gross income |
3,396 | 6.8 | 1.2 | 13,345 | (6.5) | 11.7 | ||||||||||||||||||||||
Operating expenses |
(1,191) | 15.5 | 9.1 | (4,482) | (11.8) | 5.4 | ||||||||||||||||||||||
General administrative expenses |
(1,091) | 16.6 | 10.2 | (4,065) | (11.1) | 6.3 | ||||||||||||||||||||||
Personnel |
(576) | 6.6 | 0.9 | (2,277) | (11.2) | 6.0 | ||||||||||||||||||||||
Other general administrative expenses |
(515) | 30.3 | 22.9 | (1,789) | (10.8) | 6.5 | ||||||||||||||||||||||
Depreciation and amortisation |
(101) | 5.1 | (0.9) | (417) | (18.2) | (2.3) | ||||||||||||||||||||||
Net operating income |
2,205 | 2.6 | (2.7) | 8,863 | (3.6) | 15.2 | ||||||||||||||||||||||
Net loan-loss provisions |
(726) | 9.3 | 2.8 | (2,963) | (12.7) | 4.2 | ||||||||||||||||||||||
Other income |
(198) | 13.6 | 8.3 | (697) | (41.2) | (29.7) | ||||||||||||||||||||||
Underlying profit before tax |
1,281 | (2.2) | (7.0) | 5,203 | 12.8 | 34.8 | ||||||||||||||||||||||
Tax on profit |
(529) | (13.6) | (17.3) | (2,264) | 31.2 | 56.7 | ||||||||||||||||||||||
Underlying profit from continuing operations |
752 | 7.7 | 2.0 | 2,940 | 1.8 | 21.7 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
752 | 7.7 | 2.0 | 2,940 | 1.8 | 21.7 | ||||||||||||||||||||||
Minority interests |
89 | 12.5 | 6.6 | 335 | (2.2) | 16.8 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
663 | 7.1 | 1.4 | 2,605 | 2.4 | 22.3 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
663 | 7.1 | 1.4 | 2,605 | 2.4 | 22.3 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
70,850 | 9.0 | 4.1 | 70,850 | 0.6 | 12.5 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
37,015 | 3.1 | (1.6) | 37,015 | 6.0 | 18.6 | ||||||||||||||||||||||
Debt securities |
40,718 | 16.3 | 11.1 | 40,718 | 5.2 | 17.7 | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
19,221 | 15.5 | 10.3 | 19,221 | (9.9) | 0.8 | ||||||||||||||||||||||
Other financial assets |
6,133 | 18.3 | 13.0 | 6,133 | 5.8 | 18.3 | ||||||||||||||||||||||
Other assets |
11,320 | 1.6 | (3.0) | 11,320 | (4.3) | 7.1 | ||||||||||||||||||||||
Total assets |
166,036 | 9.0 | 4.1 | 166,036 | 2.7 | 14.9 | ||||||||||||||||||||||
Customer deposits |
68,306 | (1.1) | (5.5) | 68,306 | (2.5) | 9.0 | ||||||||||||||||||||||
Central banks and credit institutions |
29,758 | 19.5 | 14.2 | 29,758 | 26.1 | 41.1 | ||||||||||||||||||||||
Debt securities issued |
21,218 | 16.8 | 11.6 | 21,218 | 5.8 | 18.3 | ||||||||||||||||||||||
Other financial liabilities |
24,241 | 24.2 | 18.6 | 24,241 | 1.9 | 14.0 | ||||||||||||||||||||||
Other liabilities |
7,237 | 14.4 | 9.3 | 7,237 | (4.0) | 7.4 | ||||||||||||||||||||||
Total liabilities |
150,760 | 9.3 | 4.4 | 150,760 | 3.9 | 16.3 | ||||||||||||||||||||||
Total equity |
15,276 | 6.8 | 2.0 | 15,276 | (8.3) | 2.6 | ||||||||||||||||||||||
Other managed and marketed customer funds |
57,174 | 2.0 | (2.6) | 57,174 | (2.2) | 9.4 | ||||||||||||||||||||||
Mutual funds |
52,811 | 1.2 | (3.3) | 52,811 | (3.6) | 7.8 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
4,363 | 12.4 | 7.3 | 4,363 | 17.9 | 31.9 | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
75,282 | 8.8 | 3.9 | 75,282 | 1.3 | 13.3 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
110,243 | 3.4 | (1.3) | 110,243 | 3.1 | 15.3 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
19.30 | (0.68) | 19.77 | 2.86 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
35.1 | 2.7 | 33.6 | (2.0) | ||||||||||||||||||||||||
NPL ratio |
5.25 | (0.01) | 5.25 | (0.04) | ||||||||||||||||||||||||
NPL coverage |
106.9 | (2.2) | 106.9 | 14.3 | ||||||||||||||||||||||||
Number of employees |
46,914 | 0.5 | 46,914 | (0.5) | ||||||||||||||||||||||||
Number of branches |
3,438 | (3.2) | 3,438 | (0.8) |
52 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ MEXICO |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
733 | 0.7 | 3.0 | 2,763 | 6.2 | 13.2 | ||||||||||||||||||||||
Net fee income |
181 | (8.9) | (6.6) | 756 | 0.9 | 7.5 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
2 | (93.4) | (93.6) | 101 | (32.5) | (28.0) | ||||||||||||||||||||||
Other operating income |
(20) | (16.9) | (14.6) | (94) | 135.3 | 150.7 | ||||||||||||||||||||||
Gross income |
897 | (3.7) | (1.4) | 3,527 | 1.9 | 8.6 | ||||||||||||||||||||||
Operating expenses |
(376) | (2.0) | 0.3 | (1,462) | 5.8 | 12.8 | ||||||||||||||||||||||
General administrative expenses |
(339) | (3.4) | (1.1) | (1,329) | 5.6 | 12.5 | ||||||||||||||||||||||
Personnel |
(176) | (2.4) | (0.2) | (679) | 4.1 | 10.9 | ||||||||||||||||||||||
Other general administrative expenses |
(163) | (4.4) | (2.2) | (649) | 7.2 | 14.3 | ||||||||||||||||||||||
Depreciation and amortisation |
(37) | 13.5 | 16.5 | (134) | 8.0 | 15.1 | ||||||||||||||||||||||
Net operating income |
521 | (4.8) | (2.6) | 2,064 | (0.7) | 5.8 | ||||||||||||||||||||||
Net loan-loss provisions |
(215) | (5.4) | (3.3) | (830) | (8.2) | (2.2) | ||||||||||||||||||||||
Other income |
17 | | | (3) | (91.3) | (90.8) | ||||||||||||||||||||||
Underlying profit before tax |
323 | 2.5 | 5.1 | 1,230 | 8.5 | 15.6 | ||||||||||||||||||||||
Tax on profit |
(61) | (5.9) | (3.5) | (255) | 10.9 | 18.2 | ||||||||||||||||||||||
Underlying profit from continuing operations |
262 | 4.7 | 7.3 | 975 | 7.9 | 14.9 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
262 | 4.7 | 7.3 | 975 | 7.9 | 14.9 | ||||||||||||||||||||||
Minority interests |
56 | 2.1 | 4.7 | 215 | 11.1 | 18.4 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
206 | 5.5 | 8.0 | 760 | 7.0 | 14.0 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
206 | 5.5 | 8.0 | 760 | 7.0 | 14.0 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
30,632 | (2.6) | 0.6 | 30,632 | 15.8 | 10.0 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
12,403 | 8.2 | 11.7 | 12,403 | 24.6 | 18.4 | ||||||||||||||||||||||
Debt securities |
14,142 | (9.2) | (6.3) | 14,142 | 3.4 | (1.7) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
6,868 | 3.6 | 7.0 | 6,868 | (1.5) | (6.3) | ||||||||||||||||||||||
Other financial assets |
5,683 | 2.4 | 5.8 | 5,683 | 1.0 | (4.0) | ||||||||||||||||||||||
Other assets |
3,016 | 3.7 | 7.1 | 3,016 | 21.6 | 15.5 | ||||||||||||||||||||||
Total assets |
65,876 | (1.6) | 1.6 | 65,876 | 13.2 | 7.6 | ||||||||||||||||||||||
Customer deposits |
34,327 | 0.1 | 3.3 | 34,327 | 12.9 | 7.4 | ||||||||||||||||||||||
Central banks and credit institutions |
9,536 | (16.3) | (13.6) | 9,536 | 15.6 | 9.9 | ||||||||||||||||||||||
Debt securities issued |
6,194 | (0.8) | 2.4 | 6,194 | 19.9 | 13.9 | ||||||||||||||||||||||
Other financial liabilities |
8,281 | 13.1 | 16.8 | 8,281 | 7.8 | 2.5 | ||||||||||||||||||||||
Other liabilities |
2,168 | 6.9 | 10.4 | 2,168 | 21.9 | 15.9 | ||||||||||||||||||||||
Total liabilities |
60,507 | (1.3) | 1.9 | 60,507 | 13.6 | 8.0 | ||||||||||||||||||||||
Total equity |
5,369 | (5.0) | (1.9) | 5,369 | 8.8 | 3.4 | ||||||||||||||||||||||
Other managed and marketed customer funds |
10,022 | (10.8) | (7.9) | 10,022 | 1.0 | (3.9) | ||||||||||||||||||||||
Mutual funds |
9,925 | (11.6) | (8.8) | 9,925 | 0.1 | (4.9) | ||||||||||||||||||||||
Pension funds |
98 | | | 98 | | | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
31,192 | (2.1) | 1.1 | 31,192 | 15.7 | 10.0 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
38,630 | (4.4) | (1.3) | 38,630 | 8.7 | 3.3 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
21.33 | 1.32 | 20.35 | 0.85 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
41.9 | 0.7 | 41.5 | 1.5 | ||||||||||||||||||||||||
NPL ratio |
2.43 | 0.02 | 2.43 | (0.26) | ||||||||||||||||||||||||
NPL coverage |
119.7 | (0.8) | 119.7 | 22.2 | ||||||||||||||||||||||||
Number of employees |
19,859 | 1.9 | 19,859 | 7.0 | ||||||||||||||||||||||||
Number of branches |
1,418 | 0.6 | 1,418 | 1.2 |
Financial Report 2018 53
JANUARY - DECEMBER Appendix |
∎ CHILE |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
477 | (0.7) | (0.1) | 1,944 | 1.9 | 5.4 | ||||||||||||||||||||||
Net fee income |
95 | (6.2) | (5.6) | 424 | 8.3 | 12.0 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
46 | 3.6 | 4.5 | 149 | (30.1) | (27.7) | ||||||||||||||||||||||
Other operating income |
3 | (33.7) | (32.5) | 19 | 62.3 | 67.8 | ||||||||||||||||||||||
Gross income |
622 | (1.5) | (0.9) | 2,535 | 0.5 | 3.9 | ||||||||||||||||||||||
Operating expenses |
(258) | 0.4 | 1.0 | (1,045) | 1.9 | 5.4 | ||||||||||||||||||||||
General administrative expenses |
(229) | (0.8) | (0.2) | (937) | 2.1 | 5.6 | ||||||||||||||||||||||
Personnel |
(136) | (7.0) | (6.2) | (573) | (0.2) | 3.3 | ||||||||||||||||||||||
Other general administrative expenses |
(93) | 10.0 | 10.3 | (364) | 6.0 | 9.6 | ||||||||||||||||||||||
Depreciation and amortisation |
(28) | 11.1 | 11.5 | (107) | (0.3) | 3.1 | ||||||||||||||||||||||
Net operating income |
364 | (2.8) | (2.2) | 1,491 | (0.5) | 3.0 | ||||||||||||||||||||||
Net loan-loss provisions |
(120) | 2.5 | 3.1 | (473) | 2.5 | 6.0 | ||||||||||||||||||||||
Other income |
31 | 63.2 | 61.6 | 103 | 345.6 | 360.9 | ||||||||||||||||||||||
Underlying profit before tax |
275 | (0.6) | (0.0) | 1,121 | 5.8 | 9.5 | ||||||||||||||||||||||
Tax on profit |
(49) | (13.1) | (12.3) | (220) | 10.0 | 13.7 | ||||||||||||||||||||||
Underlying profit from continuing operations |
226 | 2.5 | 3.0 | 901 | 4.9 | 8.5 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
226 | 2.5 | 3.0 | 901 | 4.9 | 8.5 | ||||||||||||||||||||||
Minority interests |
73 | 6.9 | 7.3 | 287 | 4.9 | 8.5 | ||||||||||||||||||||||
Underlying attributable profit to the Group |
153 | 0.6 | 1.2 | 614 | 4.9 | 8.5 | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
153 | 0.6 | 1.2 | 614 | 4.9 | 8.5 | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
37,908 | (2.7) | 1.0 | 37,908 | 2.0 | 10.0 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
4,247 | 10.9 | 15.2 | 4,247 | (1.7) | 6.0 | ||||||||||||||||||||||
Debt securities |
3,106 | (17.4) | (14.2) | 3,106 | (25.0) | (19.2) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
3,009 | (7.6) | (4.0) | 3,009 | (13.8) | (7.0) | ||||||||||||||||||||||
Other financial assets |
3,164 | 12.4 | 16.8 | 3,164 | 13.4 | 22.3 | ||||||||||||||||||||||
Other assets |
2,486 | 33.5 | 38.7 | 2,486 | 27.6 | 37.5 | ||||||||||||||||||||||
Total assets |
50,911 | (0.6) | 3.2 | 50,911 | 1.1 | 9.0 | ||||||||||||||||||||||
Customer deposits |
25,908 | 1.9 | 5.8 | 25,908 | (0.5) | 7.3 | ||||||||||||||||||||||
Central banks and credit institutions |
5,867 | (5.1) | (1.5) | 5,867 | 6.8 | 15.2 | ||||||||||||||||||||||
Debt securities issued |
9,806 | (2.4) | 1.3 | 9,806 | 9.4 | 17.9 | ||||||||||||||||||||||
Other financial liabilities |
3,535 | (5.9) | (2.3) | 3,535 | (1.8) | 5.9 | ||||||||||||||||||||||
Other liabilities |
919 | (13.1) | (9.8) | 919 | (24.8) | (18.9) | ||||||||||||||||||||||
Total liabilities |
46,035 | (1.0) | 2.8 | 46,035 | 1.6 | 9.5 | ||||||||||||||||||||||
Total equity |
4,876 | 2.6 | 6.5 | 4,876 | (3.1) | 4.4 | ||||||||||||||||||||||
Other managed and marketed customer funds |
9,712 | 1.1 | 5.0 | 9,712 | (0.5) | 7.3 | ||||||||||||||||||||||
Mutual funds |
7,419 | 4.7 | 8.7 | 7,419 | 3.6 | 11.7 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
2,294 | (9.0) | (5.6) | 2,294 | (11.7) | (4.8) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
39,019 | (2.8) | 1.0 | 39,019 | 2.0 | 10.0 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
33,279 | 2.5 | 6.4 | 33,279 | 0.5 | 8.4 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
18.29 | (0.74) | 18.39 | 0.50 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
41.5 | 0.8 | 41.2 | 0.6 | ||||||||||||||||||||||||
NPL ratio |
4.66 | (0.12) | 4.66 | (0.30) | ||||||||||||||||||||||||
NPL coverage |
60.6 | 1.0 | 60.6 | 2.4 | ||||||||||||||||||||||||
Number of employees |
12,008 | 0.0 | 12,008 | 2.9 | ||||||||||||||||||||||||
Number of branches |
381 | (6.6) | 381 | (13.2) |
54 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ ARGENTINA |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
327 | | 8.8 | 768 | (22.0) | 52.5 | ||||||||||||||||||||||
Net fee income |
192 | | 12.3 | 448 | (24.8) | 47.0 | ||||||||||||||||||||||
Gains (losses) on financial transactions |
60 | 258.6 | (45.1) | 170 | 15.2 | 125.3 | ||||||||||||||||||||||
Other operating income |
(106) | 41.5 | 2.5 | (177) | | | ||||||||||||||||||||||
Gross income |
472 | | 0.6 | 1,209 | (30.8) | 35.4 | ||||||||||||||||||||||
Operating expenses |
(323) | | 10.7 | (749) | (22.8) | 51.0 | ||||||||||||||||||||||
General administrative expenses |
(283) | | 12.1 | (662) | (26.4) | 43.9 | ||||||||||||||||||||||
Personnel |
(139) | | 17.5 | (324) | (27.3) | 42.1 | ||||||||||||||||||||||
Other general administrative expenses |
(144) | | 7.4 | (338) | (25.5) | 45.6 | ||||||||||||||||||||||
Depreciation and amortisation |
(41) | 304.7 | 2.0 | (87) | 23.7 | 141.8 | ||||||||||||||||||||||
Net operating income |
149 | | (19.9) | 460 | (40.8) | 15.8 | ||||||||||||||||||||||
Net loan-loss provisions |
(99) | | 2.7 | (231) | 45.4 | 184.4 | ||||||||||||||||||||||
Other income |
9 | 101.0 | | (45) | (51.5) | (5.2) | ||||||||||||||||||||||
Underlying profit before tax |
58 | | 183.8 | 185 | (64.9) | (31.4) | ||||||||||||||||||||||
Tax on profit |
(41) | | 2.6 | (100) | (39.0) | 19.2 | ||||||||||||||||||||||
Underlying profit from continuing operations |
17 | | | 84 | (76.7) | (54.4) | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
17 | | | 84 | (76.7) | (54.4) | ||||||||||||||||||||||
Minority interests |
(0) | (76.9) | | 1 | (71.9) | (45.2) | ||||||||||||||||||||||
Underlying attributable profit to the Group |
17 | | | 84 | (76.7) | (54.5) | ||||||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||||||
Attributable profit to the Group |
17 | | | 84 | (76.7) | (54.5) | ||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
5,334 | (10.5) | (18.9) | 5,334 | (31.7) | 30.1 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
5,096 | 26.3 | 14.3 | 5,096 | 6.9 | 103.7 | ||||||||||||||||||||||
Debt securities |
825 | 72.4 | 56.1 | 825 | 498.9 | | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
806 | 86.2 | 68.5 | 806 | 569.6 | | ||||||||||||||||||||||
Other financial assets |
6 | (64.8) | (68.2) | 6 | (9.7) | 72.1 | ||||||||||||||||||||||
Other assets |
742 | 25.6 | 13.7 | 742 | 1.4 | 93.2 | ||||||||||||||||||||||
Total assets |
12,003 | 8.3 | (1.9) | 12,003 | (10.8) | 70.0 | ||||||||||||||||||||||
Customer deposits |
8,809 | 9.4 | (1.0) | 8,809 | (13.9) | 64.0 | ||||||||||||||||||||||
Central banks and credit institutions |
848 | (20.8) | (28.3) | 848 | 41.4 | 169.4 | ||||||||||||||||||||||
Debt securities issued |
422 | 12.4 | 1.7 | 422 | 105.0 | 290.4 | ||||||||||||||||||||||
Other financial liabilities |
743 | 11.9 | 1.3 | 743 | (24.3) | 44.3 | ||||||||||||||||||||||
Other liabilities |
307 | 16.5 | 5.5 | 307 | 26.0 | 139.9 | ||||||||||||||||||||||
Total liabilities |
11,130 | 6.7 | (3.4) | 11,130 | (9.3) | 72.8 | ||||||||||||||||||||||
Total equity |
872 | 34.2 | 21.5 | 872 | (26.3) | 40.5 | ||||||||||||||||||||||
Other managed and marketed customer funds |
1,382 | 13.5 | 2.8 | 1,382 | (47.3) | 0.4 | ||||||||||||||||||||||
Mutual funds |
1,382 | 13.5 | 2.8 | 1,382 | (47.3) | 0.4 | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
5,574 | (3.9) | (13.0) | 5,574 | (26.7) | 39.5 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
10,191 | 9.9 | (0.5) | 10,191 | (20.7) | 51.0 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
1.43 | n.s. | 11.83 | (20.19) | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
68.5 | n.s. | 61.9 | 6.4 | ||||||||||||||||||||||||
NPL ratio |
3.17 | 0.70 | 3.17 | 0.67 | ||||||||||||||||||||||||
NPL coverage |
135.0 | 11.0 | 135.0 | 34.9 | ||||||||||||||||||||||||
Number of employees |
9,324 | (0.4) | 9,324 | 0.5 | ||||||||||||||||||||||||
Number of branches |
468 | (2.7) | 468 | (2.9) |
Financial Report 2018 55
JANUARY - DECEMBER Appendix |
∎ UNITED STATES |
||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||
Net interest income |
1,553 | 16.1 | 14.5 | 5,391 | (3.2) | 1.3 | ||||||||||||||||||||||
Net fee income |
217 | 4.7 | 2.9 | 859 | (11.6) | (7.4) | ||||||||||||||||||||||
Gains (losses) on financial transactions |
11 | (48.7) | (51.3) | 72 | 669.2 | 705.0 | ||||||||||||||||||||||
Other operating income |
185 | 9.9 | 8.0 | 628 | 53.1 | 60.3 | ||||||||||||||||||||||
Gross income |
1,967 | 13.4 | 11.6 | 6,949 | (0.1) | 4.5 | ||||||||||||||||||||||
Operating expenses |
(795) | 6.3 | 4.5 | (3,015) | (5.7) | (1.3) | ||||||||||||||||||||||
General administrative expenses |
(742) | 7.9 | 6.1 | (2,787) | (3.0) | 1.5 | ||||||||||||||||||||||
Personnel |
(402) | 1.1 | (0.7) | (1,580) | (5.1) | (0.6) | ||||||||||||||||||||||
Other general administrative expenses |
(340) | 17.1 | 15.5 | (1,208) | (0.3) | 4.4 | ||||||||||||||||||||||
Depreciation and amortisation |
(53) | (12.1) | (14.2) | (228) | (29.6) | (26.3) | ||||||||||||||||||||||
Net operating income |
1,172 | 18.7 | 17.1 | 3,934 | 4.6 | 9.5 | ||||||||||||||||||||||
Net loan-loss provisions |
(945) | 45.5 | 44.0 | (2,618) | (5.8) | (1.4) | ||||||||||||||||||||||
Other income |
(57) | (17.6) | (19.7) | (199) | 122.1 | 132.5 | ||||||||||||||||||||||
Underlying profit before tax |
170 | (36.6) | (39.2) | 1,117 | 25.2 | 31.0 | ||||||||||||||||||||||
Tax on profit |
(47) | (49.3) | (52.1) | (347) | 35.5 | 41.9 | ||||||||||||||||||||||
Underlying profit from continuing operations |
123 | (29.8) | (32.3) | 770 | 21.1 | 26.7 | ||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||
Underlying consolidated profit |
123 | (29.8) | (32.3) | 770 | 21.1 | 26.7 | ||||||||||||||||||||||
Minority interests |
31 | (38.1) | (40.8) | 218 | (4.5) | (0.0) | ||||||||||||||||||||||
Underlying attributable profit to the Group |
92 | (26.4) | (28.9) | 552 | 35.4 | 41.7 | ||||||||||||||||||||||
Net capital gains and provisions* |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||
Attributable profit to the Group |
92 | (26.4) | (28.9) | 552 | 66.2 | 74.0 | ||||||||||||||||||||||
(*) In 2017, fiscal reform, provisions for hurricanes, increased stake in Santander Consumer USA and other (EUR 76 million) |
| |||||||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Loans and advances to customers |
85,564 | 7.1 | 5.9 | 85,564 | 18.9 | 13.5 | ||||||||||||||||||||||
Cash, central banks and credit institutions |
16,442 | 15.0 | 13.7 | 16,442 | 23.6 | 18.0 | ||||||||||||||||||||||
Debt securities |
13,160 | (0.7) | (1.8) | 13,160 | (4.9) | (9.2) | ||||||||||||||||||||||
o/w: designated at fair value through other comprehensive income |
9,822 | (0.0) | (1.1) | 9,822 | (16.6) | (20.4) | ||||||||||||||||||||||
Other financial assets |
4,291 | (15.9) | (16.8) | 4,291 | 27.4 | 21.6 | ||||||||||||||||||||||
Other assets |
15,585 | 6.4 | 5.3 | 15,585 | 30.8 | 24.9 | ||||||||||||||||||||||
Total assets |
135,043 | 6.2 | 5.0 | 135,043 | 18.1 | 12.7 | ||||||||||||||||||||||
Customer deposits |
57,568 | (2.3) | (3.3) | 57,568 | 12.5 | 7.4 | ||||||||||||||||||||||
Central banks and credit institutions |
16,505 | 25.5 | 24.1 | 16,505 | 3.9 | (0.8) | ||||||||||||||||||||||
Debt securities issued |
37,564 | 22.3 | 21.0 | 37,564 | 43.5 | 37.0 | ||||||||||||||||||||||
Other financial liabilities |
3,098 | (29.8) | (30.6) | 3,098 | 23.8 | 18.2 | ||||||||||||||||||||||
Other liabilities |
3,798 | (0.6) | (1.7) | 3,798 | 10.5 | 5.5 | ||||||||||||||||||||||
Total liabilities |
118,532 | 6.8 | 5.6 | 118,532 | 19.5 | 14.1 | ||||||||||||||||||||||
Total equity |
16,511 | 2.0 | 0.9 | 16,511 | 8.6 | 3.7 | ||||||||||||||||||||||
Other managed and marketed customer funds |
16,291 | (2.9) | (3.9) | 16,291 | (0.9) | (5.3) | ||||||||||||||||||||||
Mutual funds |
8,176 | (3.3) | (4.3) | 8,176 | (2.3) | (6.7) | ||||||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||||||
Managed portfolios |
8,115 | (2.5) | (3.6) | 8,115 | 0.6 | (3.9) | ||||||||||||||||||||||
Pro memoria: |
||||||||||||||||||||||||||||
Gross loans and advances to customers excl. reverse repos |
83,696 | 3.7 | 2.6 | 83,696 | 11.0 | 6.0 | ||||||||||||||||||||||
Funds (customer deposits excl. repos + mutual funds) |
64,239 | 3.6 | 2.5 | 64,239 | 8.3 | 3.4 | ||||||||||||||||||||||
Ratios (%) and operating means | ||||||||||||||||||||||||||||
Underlying RoTE |
2.58 | (1.04) | 4.12 | 0.99 | ||||||||||||||||||||||||
Efficiency ratio (with amortisations) |
40.4 | (2.7) | 43.4 | (2.6) | ||||||||||||||||||||||||
NPL ratio |
2.92 | (0.08) | 2.92 | 0.13 | ||||||||||||||||||||||||
NPL coverage |
142.8 | (2.7) | 142.8 | (27.4) | ||||||||||||||||||||||||
Number of employees |
17,309 | 0.0 | 17,309 | (1.4) | ||||||||||||||||||||||||
Number of branches |
660 | (0.6) | 660 | (3.4) |
56 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ CORPORATE CENTRE |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
Income statement | Q418 | Q318 | % | 2018 | 2017 | % | ||||||||||||||||||
Net interest income |
(249) | (241) | 3.5 | (947) | (851) | 11.3 | ||||||||||||||||||
Net fee income |
(28) | (24) | 14.6 | (69) | (38) | 82.4 | ||||||||||||||||||
Gains (losses) on financial transactions |
(4) | 10 | | 11 | (227) | | ||||||||||||||||||
Other operating income |
(14) | (2) | 497.4 | (23) | (104) | (78.1) | ||||||||||||||||||
Gross income |
(295) | (257) | 14.7 | (1,028) | (1,220) | (15.7) | ||||||||||||||||||
Operating expenses |
(128) | (123) | 4.2 | (495) | (476) | 3.9 | ||||||||||||||||||
Net operating income |
(423) | (380) | 11.3 | (1,523) | (1,696) | (10.2) | ||||||||||||||||||
Net loan-loss provisions |
(21) | (28) | (24.9) | (115) | (45) | 154.9 | ||||||||||||||||||
Other income |
47 | (55) | | (101) | (181) | (44.5) | ||||||||||||||||||
Underlying profit before tax |
(397) | (463) | (14.2) | (1,739) | (1,923) | (9.6) | ||||||||||||||||||
Tax on profit |
29 | 7 | 308.2 | 20 | 32 | (36.8) | ||||||||||||||||||
Underlying profit from continuing operations |
(368) | (456) | (19.2) | (1,718) | (1,890) | (9.1) | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
(368) | (456) | (19.2) | (1,718) | (1,890) | (9.1) | ||||||||||||||||||
Minority interests |
1 | (0) | | 2 | (1) | | ||||||||||||||||||
Underlying attributable profit to the Group |
(369) | (456) | (18.9) | (1,721) | (1,889) | (8.9) | ||||||||||||||||||
Net capital gains and provisions* |
| | | (40) | (436) | (90.8) | ||||||||||||||||||
Attributable profit to the Group |
(369) | (456) | (18.9) | (1,761) | (2,326) | (24.3) | ||||||||||||||||||
(*) In 2018, restructuring costs (EUR -40 million). In 2017, charges for equity stakes and intangible assets (EUR -130 million) |
| |||||||||||||||||||||||
Balance sheet | ||||||||||||||||||||||||
Debt securities |
377 | 330 | 14.5 | 377 | 1,768 | (78.7) | ||||||||||||||||||
Goodwill |
25,466 | 24,956 | 2.0 | 25,466 | 25,769 | (1.2) | ||||||||||||||||||
Capital assigned to Group areas |
81,112 | 81,336 | (0.3) | 81,112 | 81,791 | (0.8) | ||||||||||||||||||
Other financial assets |
14,763 | 20,307 | (27.3) | 14,763 | 7,841 | 88.3 | ||||||||||||||||||
Other assets |
17,917 | 14,417 | 24.3 | 17,917 | 14,929 | 20.0 | ||||||||||||||||||
Total assets |
139,634 | 141,346 | (1.2) | 139,634 | 132,099 | 5.7 | ||||||||||||||||||
Debt securities issued |
41,783 | 42,948 | (2.7) | 41,783 | 35,030 | 19.3 | ||||||||||||||||||
Other financial liabilities |
1,568 | 916 | 71.2 | 1,568 | 2,127 | (26.3) | ||||||||||||||||||
Other liabilities |
8,206 | 7,922 | 3.6 | 8,206 | 8,092 | 1.4 | ||||||||||||||||||
Total liabilities |
51,557 | 51,786 | (0.4) | 51,557 | 45,248 | 13.9 | ||||||||||||||||||
Total equity |
88,077 | 89,561 | (1.7) | 88,077 | 86,850 | 1.4 | ||||||||||||||||||
Other managed and marketed customer funds |
7 | 7 | 0.6 | 7 | 2 | 239.5 | ||||||||||||||||||
Mutual funds |
7 | 7 | 0.6 | 7 | 2 | 239.5 | ||||||||||||||||||
Pension funds |
| | | | | | ||||||||||||||||||
Managed portfolios |
| | | | | | ||||||||||||||||||
Resources | ||||||||||||||||||||||||
Number of employees |
1,764 | 1,805 | (2.3) | 1,764 | 1,784 | (1.1) |
Financial Report 2018 57
JANUARY - DECEMBER Appendix |
∎ RETAIL BANKING |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||
Net interest income |
8,500 | 7.3 | 2.4 | 32,522 | 0.6 | 8.8 | ||||||||||||||||||
Net fee income |
2,334 | 12.9 | 3.1 | 8,946 | (3.9) | 6.0 | ||||||||||||||||||
Gains (losses) on financial transactions |
238 | 8.9 | 0.9 | 720 | 6.0 | 11.0 | ||||||||||||||||||
Other operating income |
34 | (83.4) | (76.7) | 644 | 11.0 | 15.7 | ||||||||||||||||||
Gross income |
11,106 | 6.7 | 1.2 | 42,832 | (0.2) | 8.3 | ||||||||||||||||||
Operating expenses |
(5,025) | 12.0 | 4.4 | (19,255) | (2.1) | 5.8 | ||||||||||||||||||
Net operating income |
6,081 | 2.6 | (1.4) | 23,577 | 1.5 | 10.5 | ||||||||||||||||||
Net loan-loss provisions |
(2,354) | 15.7 | 8.6 | (8,461) | 2.2 | 13.0 | ||||||||||||||||||
Other income |
(608) | 59.2 | 42.4 | (1,707) | (28.7) | (20.7) | ||||||||||||||||||
Underlying profit before tax |
3,119 | (11.1) | (12.4) | 13,408 | 6.8 | 14.6 | ||||||||||||||||||
Tax on profit |
(960) | (19.4) | (21.6) | (4,329) | 12.6 | 22.2 | ||||||||||||||||||
Underlying profit from continuing operations |
2,159 | (6.8) | (7.7) | 9,080 | 4.2 | 11.3 | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
2,159 | (6.8) | (7.7) | 9,080 | 4.2 | 11.3 | ||||||||||||||||||
Minority interests |
296 | (7.8) | (8.5) | 1,287 | 2.4 | 8.4 | ||||||||||||||||||
Underlying attributable profit to the Group |
1,863 | (6.7) | (7.5) | 7,793 | 4.5 | 11.7 | ||||||||||||||||||
Net capital gains and provisions* |
46 | | | (214) | (51.6) | (51.3) | ||||||||||||||||||
Attributable profit to the Group |
1,909 | (4.4) | (5.3) | 7,579 | 8.1 | 16.0 | ||||||||||||||||||
(*)In 2018, charges related to integrations (mainly restructuring costs), net of tax impacts, in Spain (EUR -280 million) and Portugal (EUR 20 million) and Badwill in Poland (EUR 45 million). In 2017, integration costs (Popular: EUR -300 million and Germany: EUR -85 million), USA fiscal reform (EUR 73 million) and in the US provisions for hurricanes, increased stake in Santander Consumer USA and other (EUR -149 million) |
|
∎ CORPORATE & INVESTMENT BANKING |
||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||
Net interest income |
713 | 24.4 | 12.2 | 2,378 | (2.6) | 7.6 | ||||||||||||||||||
Net fee income |
379 | 14.8 | 7.1 | 1,512 | (7.1) | 0.3 | ||||||||||||||||||
Gains (losses) on financial transactions |
179 | (31.8) | (46.0) | 1,004 | (17.2) | (5.8) | ||||||||||||||||||
Other operating income |
72 | 153.0 | 144.1 | 194 | (12.6) | (11.1) | ||||||||||||||||||
Gross income |
1,343 | 12.5 | 0.3 | 5,087 | (7.6) | 1.7 | ||||||||||||||||||
Operating expenses |
(551) | 5.1 | (1.3) | (2,105) | 3.8 | 10.7 | ||||||||||||||||||
Net operating income |
792 | 18.2 | 1.4 | 2,982 | (14.2) | (3.7) | ||||||||||||||||||
Net loan-loss provisions |
(56) | 33.9 | 21.0 | (217) | (68.5) | (66.1) | ||||||||||||||||||
Other income |
(43) | 78.7 | 76.3 | (108) | 49.2 | 64.8 | ||||||||||||||||||
Underlying profit before tax |
693 | 14.7 | (2.6) | 2,657 | (2.0) | 11.1 | ||||||||||||||||||
Tax on profit |
(205) | 12.1 | (5.5) | (792) | 5.6 | 21.8 | ||||||||||||||||||
Underlying profit from continuing operations |
488 | 15.9 | (1.3) | 1,865 | (5.0) | 7.2 | ||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||
Underlying consolidated profit |
488 | 15.9 | (1.3) | 1,865 | (5.0) | 7.2 | ||||||||||||||||||
Minority interests |
41 | 11.1 | 6.8 | 160 | (12.2) | (2.8) | ||||||||||||||||||
Underlying attributable profit to the Group |
447 | 16.3 | (2.0) | 1,705 | (4.2) | 8.2 | ||||||||||||||||||
Net capital gains and provisions |
| | | | | | ||||||||||||||||||
Attributable profit to the Group |
447 | 16.3 | (2.0) | 1,705 | (4.2) | 8.2 |
58 Financial Report 2018
JANUARY - DECEMBER Appendix |
∎ WEALTH MANAGEMENT |
||||||||||||||||||||||||||||||||
(EUR million) |
||||||||||||||||||||||||||||||||
QoQ | YoY | |||||||||||||||||||||||||||||||
Income statement | Q418 | % | % excl. FX | 2018 | % | % excl. FX | ||||||||||||||||||||||||||
Net interest income |
109 | 4.7 | (1.6) | 420 | 4.0 | 11.9 | ||||||||||||||||||||||||||
Net fee income |
271 | 1.8 | (1.8) | 1,097 | 56.7 | 62.7 | ||||||||||||||||||||||||||
Gains (losses) on financial transactions |
25 | 90.6 | 74.0 | 62 | 64.5 | 74.2 | ||||||||||||||||||||||||||
Other operating income |
(11) | 23.2 | 17.8 | (36) | | | ||||||||||||||||||||||||||
Gross income |
393 | 5.2 | 0.5 | 1,543 | 27.3 | 34.1 | ||||||||||||||||||||||||||
Operating expenses |
(181) | 0.8 | (1.9) | (730) | 38.3 | 45.6 | ||||||||||||||||||||||||||
Net operating income |
212 | 9.2 | 2.7 | 813 | 18.8 | 25.3 | ||||||||||||||||||||||||||
Net loan-loss provisions |
(5) | | | (9) | (4.9) | (1.6) | ||||||||||||||||||||||||||
Other income |
2 | | | (8) | (5.3) | (2.7) | ||||||||||||||||||||||||||
Underlying profit before tax |
209 | 10.2 | 3.5 | 797 | 19.5 | 26.0 | ||||||||||||||||||||||||||
Tax on profit |
(64) | 19.3 | 12.0 | (234) | 41.9 | 49.5 | ||||||||||||||||||||||||||
Underlying profit from continuing operations |
145 | 6.6 | 0.2 | 563 | 12.1 | 18.3 | ||||||||||||||||||||||||||
Net profit from discontinued operations |
| | | | | | ||||||||||||||||||||||||||
Underlying consolidated profit |
145 | 6.6 | 0.2 | 563 | 12.1 | 18.3 | ||||||||||||||||||||||||||
Minority interests |
9 | 5.3 | 3.4 | 35 | 42.0 | 54.0 | ||||||||||||||||||||||||||
Underlying attributable profit to the Group |
136 | 6.7 | (0.0) | 528 | 10.6 | 16.5 | ||||||||||||||||||||||||||
Net capital gains and provisions* |
| | | | (100.0) | (100.0) | ||||||||||||||||||||||||||
Attributable profit to the Group |
136 | 6.7 | (0.0) | 528 | 15.1 | 21.3 |
(*) Tax reform in the US in 2017
Financial Report 2018 59
JANUARY - DECEMBER Alternative performance measures |
ALTERNATIVE PERFORMANCE MEASURES (APM)
Below we set out information on alternative performance measures in order to comply with the Guidelines on Alternative Performance Measures published by the European Securities and Markets Authority, ESMA, on 5 October 2015 (Guidelines on Alternative Performance Measures, ESMA/2015/1415en).
| The Group uses the following indicators for managing its business. They enable profitability and efficiency, credit portfolio quality, the volume of tangible equity per share and the net loan-to-deposit ratio to be measured, analysing their evolution over time and comparing them with those of our competitors. |
| The purpose of the profitability and efficiency ratios is to measure the ratio of profit to capital, to tangible capital, to assets and to risk weighted assets, while the efficiency ratio measures how much general administrative expenses (personnel and other) and amortisation costs are needed to generate revenue. |
| The credit risk indicators measure the quality of the credit portfolio and the percentage of non-performing loans covered by provisions. |
| The capitalisation indicator provides information on the volume of tangible equity per share. |
| Other indicators are also included. The loan-to-deposit ratio (LTD) identifies the relationship between net customer loans and advances and customer deposits, assessing the proportion of loans and advances granted by the Group that are funded by customer deposits. The Group also uses gross customer loan magnitudes excluding reverse repurchase agreements (repos) and customer deposits excluding repos. In order to analyse the evolution of the traditional commercial banking business of granting loans and capturing deposits, repos and reverse repos are excluded, as they are mainly treasury business products and highly volatile. |
| Impact of exchange rate movements on profit and loss accounts |
The Group presents, at both the Group level as well as the business unit level, the real changes in the income statement as well as the changes excluding the exchange rate effect, as it considers the latter facilitates analysis, since it enables businesses movements to be identified without taking into account the impact of converting each local currency into euros.
Said variations, excluding the impact of exchange rate movements, are calculated by converting P&L lines for the different business units comprising the Group into our presentation currency, the euro, applying the average exchange rate of 2018 to all periods contemplated in the analysis. The average exchange rates for the main currencies in which the Group operates are set out on page 9.
| Impact of exchange rate movements on the balance sheet |
The Group presents, at both the Group level as well as the business unit level, the real changes in the balance sheet as well as the changes excluding the exchange rate effect for loans and advances to customers excluding reverse repos and customer funds (which comprise deposits and mutual funds) excluding repos. As with the income statement, the reason is to facilitate analysis by isolating the changes in the balance sheet that are not caused by converting each local currency into euros.
These changes excluding the impact of exchange rate movements are calculated by converting loans and advances to customers excluding reverse repos and customer funds excluding repos, into our presentation currency, the euro, applying the closing exchange rate on the last working day of December 2018 to all periods contemplated in the analysis. The end-of-period exchange rates for the main currencies in which the Group operates are set out on page 9.
| Impact of non-recurring items on the consolidated profit and loss accounts |
With regard to the results, a summary of the consolidated profit and loss accounts for 2018 and 2017 can be found on page 66. In these accounts, results are included in their corresponding accounting item, even when, in the Groups opinion, they distort the comparison between periods.
Therefore, summarised profit and loss accounts for 2018 and of 2017 and for the previous two quarters of 2018 on page 10. In these accounts, results, including those of said items, net of tax and minority interests, are included in a separate line which the Group names net capital gains and provisions just above the Groups attributable profit. The Group believes that this statement explains more clearly the changes in the income statement. Those capital gains and provisions considered as non-recurring are subtracted from each of the income statement lines where they were naturally recorded.
60 Financial Report 2018
JANUARY - DECEMBER Alternative performance measures |
Additionally, for informational purposes, the following table reconciles attributable profit by isolating the non-recurring impacts in the given periods. Further information on net capital gains and provisions is included on pages 10 and 11.
∎ ADJUSTED ATTRIBUTABLE PROFIT TO THE GROUP |
||||||||||||||||||||||||
EUR Million |
||||||||||||||||||||||||
Q418 | Q318 | Chg. (%) | 2018 | 2017 | Chg. (%) | |||||||||||||||||||
Unadjusted attributable profit to the Santander Group |
2,068 | 1,990 | +4 | % | 7,810 | 6,619 | +18 | % | ||||||||||||||||
(-) Net capital gains and provisions |
46 | | | (254) | (897) | (72 | %) | |||||||||||||||||
Adjusted attributable profit to the Santander Group |
2,022 | 1,990 | +2 | % | 8,064 | 7,516 | +7 | % |
The definitions of each of the previously-mentioned indicators and how they are calculated are given below:
Profitability and Efficiency |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
RoE (Return on equity) |
Groups attributable profit Average stockholders equity* (excl. minority interests) |
This ratio measures the return that shareholders obtain on the funds invested in the entity and as such measures the companys ability to pay shareholders. | ||
RoTE (Return on tangible equity) |
Groups attributable profit Average stockholders equity* (excl. minority interests) - intangible assets |
This is a very common indicator, used to evaluate the profitability of the company as a percentage of a its tangible equity. Its measured as the return that shareholders receive as a percentage of the funds invested in the entity less intangible assets. | ||
Underlying RoTE | Groups underlying attributable profit Average stockholders equity* (excl. minority interests) - intangible assets |
This indicator measures the profitability of the tangible equity of a company arising from ordinary activities, i.e. excluding net capital gains and provisions. | ||
RoA (Return on assets) |
Consolidated profit Average total assets |
This metric, commonly used by analysts, measures the profitability of a company as a percentage of its total assets. It is an indicator that reflects the efficiency of the companys total funds in generating profit over a given period. | ||
RoRWA (Return on risk weighted assets) |
Consolidated profit Average risk weighted assets |
The return adjusted for risk is an derivative of the RoA metric. The difference is that RoRWA measures profit in relation to the banks risk weighted assets. | ||
Underlying RoRWA | Underlying consolidated profit Average risk weighted assets |
This relates the underlying profit (excluding net capital gains and provisions) to the banks risk weighted assets. | ||
Efficiency | Operating expenses** Gross income |
One of the most commonly used indicators when comparing productivity of different financial entities. It measures the amount of funds used to generate the banks operating income. |
Financial Report 2018 61
JANUARY - DECEMBER Alternative performance measures |
Credit risk |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
NPL ratio (Non-performing loans ratio) |
Non-performing loans and advances to customers, customer guarantees and customer commitments granted
Total Risk*** |
The NPL ratio is an important variable regarding financial institutions activity since it gives an indication of the level of risk the entities are exposed to. It calculates risks that are, in accounting terms, declared to be non-performing as a percentage of the total outstanding amount of customer credit and contingent liabilities. | ||
Coverage ratio | Provisions to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted Non-performing loans and advances to customers, customer guarantees and customer commitments granted |
The coverage ratio is a fundamental metric in the financial sector. It reflects the level of provisions as a percentage of the non-performing assets (credit risk). Therefore it is a good indicator of the entitys solvency against client defaults both present and future. | ||
Cost of Credit | Allowances for loan-loss provisions over the last 12 months Average loans and advances to customers over the last 12 months |
This ratio quantifies loan-loss provisions arising from credit risk over a defined period of time for a given loan portfolio. As such, it acts as an indicator of credit quality. | ||
Market Capitalisation |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
TNAV per share (Tangible net asset value per share) |
Tangible book value**** Number of shares excluding treasury stock Formula |
This is a very commonly used ratio used to measure the companys accounting value per share having deducted the intangible assets. It is useful in evaluating the amount each shareholder would receive if the company were to enter into liquidation and had to sell all the companys tangible assets. | ||
Other indicators |
||||
Ratio |
Formula | Relevance of the metric | ||
|
|
| ||
LtD (Loan-to-deposit) |
Net loans and advances to customers Customer deposits |
This is an indicator of the banks liquidity. It measures the total (net) loans and advances to customers as a percentage of customer funds. | ||
Loans and advances (excl. reverse repos) | Gross loans and advances to customers excluding reverse repos | In order to aid analysis of the commercial banking activity, reverse repos are excluded as they are highly volatile treasury products. | ||
Deposits (excl. repos) | Customer deposits excluding repos | In order to aid analysis of the commercial banking activity, repos are excluded as they are highly volatile treasury products. | ||
PAT + After tax fees paid to SAN (in Wealth Management) | Net profit + Fees paid from Santander Asset Management to Santander, net of taxes, excluding Private Banking customers | Metric to assess Wealth Managements total contribution to Grupo Santander profits |
(*) Stockholders equity = Capital and Reserves + Accumulated other comprehensive income + Group attributable profit + Dividends
(**) Operating expenses: General administrative expenses + Depreciation and amortisation
(***) Total risk = Total loans & advances and guarantees to customers (performing and non-performing) + non-performing contingent liabilities
(****) Tangible book value = Stockholders equityintangible assets
62 Financial Report 2018
JANUARY - DECEMBER Alternative performance measures |
Finally, below the numerical value of each indicator is given for each period.
Profitability and efficiency | Q418 | Q318 | 2018 | 2017 | ||||||||||||
RoE |
8.46 | % | 8.43 | % | 8.21 | % | 7.14 | % | ||||||||
Attributable profit to the Group |
8,138 | 7,957 | 7,810 | 6,619 | ||||||||||||
Average stockholders equity (excluding minority interests) |
96,187 | 94,391 | 95,071 | 92,638 | ||||||||||||
RoTE |
12.00 | % | 11.95 | % | 11.70 | % | 10.41 | % | ||||||||
Attributable profit to the Group |
8,138 | 7,957 | 7,810 | 6,619 | ||||||||||||
Average stockholders equity (excl. minority interests) - intangible assets |
67,815 | 66,578 | 66,740 | 63,594 | ||||||||||||
Underlying RoTE |
11.93 | % | 11.95 | % | 12.08 | % | 11.82 | % | ||||||||
Underlying attributable profit to the Group |
8,092 | 7,957 | 8,064 | 7,516 | ||||||||||||
Average stockholders equity (excl. minority interests) - intangible assets |
67,815 | 66,578 | 66,740 | 63,594 | ||||||||||||
RoA |
0.65 | % | 0.66 | % | 0.64 | % | 0.58 | % | ||||||||
Consolidated profit |
9,522 | 9,424 | 9,292 | 8,205 | ||||||||||||
Average total assets |
1,459,756 | 1,431,897 | 1,442,861 | 1,407,681 | ||||||||||||
RoRWA |
1.60 | % | 1.59 | % | 1.55 | % | 1.35 | % | ||||||||
Consolidated profit |
9,522 | 9,424 | 9,292 | 8,205 | ||||||||||||
Average risk weighted assets |
593,562 | 592,061 | 598,741 | 606,308 | ||||||||||||
Underlying RoRWA |
1.60 | % | 1.59 | % | 1.59 | % | 1.48 | % | ||||||||
Underlying consolidated profit |
9,476 | 9,424 | 9,546 | 8,963 | ||||||||||||
Average risk weighted assets |
593,562 | 592,061 | 598,741 | 606,308 | ||||||||||||
Efficiency ratio |
47.3 | % | 45.7 | % | 47.0 | % | 47.4 | % | ||||||||
Operating expenses |
5,936 | 5,361 | 22,779 | 22,918 | ||||||||||||
Gross income |
12,542 | 11,720 | 48,424 | 48,392 | ||||||||||||
Credit risk | Dec-18 | Sep-18 | Dec-18 | Dec-17 | ||||||||||||
NPL ratio |
3.73 | % | 3.87 | % | 3.73 | % | 4.08 | % | ||||||||
Non-performing loans and advances to customers customer guarantees and customer commitments granted |
35,692 | 36,332 | 35,692 | 37,596 | ||||||||||||
Total risk |
958,153 | 939,685 | 958,153 | 920,968 | ||||||||||||
Coverage ratio |
67.4 | % | 67.9 | % | 67.4 | % | 65.2 | % | ||||||||
Provisions to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted |
24,061 | 24,685 | 24,061 | 24,529 | ||||||||||||
Non-performing loans and advances to customers customer guarantees and customer commitments granted |
35,692 | 36,332 | 35,692 | 37,596 | ||||||||||||
Cost of credit |
1.00 | % | 0.98 | % | 1.00 | % | 1.07 | % | ||||||||
Allowances for loan-loss provisions over the last 12 months |
8,873 | 8,600 | 8,873 | 9,111 | ||||||||||||
Average loans and advances to customers over the last 12 months |
887,028 | 879,772 | 887,028 | 853,479 | ||||||||||||
Market capitalization | Dec-18 | Sep-18 | Dec-18 | Dec-17 | ||||||||||||
TNAV (tangible book value) per share |
4.19 | 4.16 | 4.19 | 4.15 | ||||||||||||
Tangible book value |
67,912 | 67,122 | 67,912 | 66,985 | ||||||||||||
Number of shares excl. treasury stock (million) |
16,224 | 16,125 | 16,224 | 16,132 | ||||||||||||
Other | Dec-18 | Sep-18 | Dec-18 | Dec-17 | ||||||||||||
Loan-to-deposit ratio |
113 | % | 111 | % | 113 | % | 109 | % | ||||||||
Net loans and advances to customers |
882,921 | 866,226 | 882,921 | 848,914 | ||||||||||||
Customer deposits |
780,496 | 778,751 | 780,496 | 777,730 | ||||||||||||
Q418 | Q318 | 2018 | 2017 | |||||||||||||
PAT + After tax fees paid to SAN (in Wealth Management) (Constant EUR million) |
253 | 255 | 1,015 | 902 | ||||||||||||
Profit after taxes |
143 | 142 | 563 | 476 | ||||||||||||
Net fee income net of tax |
111 | 113 | 452 | 426 |
Notes:
(1) | Averages included in the RoE, RoTE, RoA and RoRWA denominators are calculated using 4 months worth of data in the case of quarterly figures (from September to December in Q4 and June to September in Q3) and 13 months in the case of annual figures (December to December). |
(2) | For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoE and RoTE is the annualised underlying attributable profit to which said results are added without annualising. |
(3) | For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoA and RoRWA is the annualised underlying consolidated profit, to which said results are added without annualising. |
(4) | The risk weighted assets included in the denominator of the RoRWA metric are calculated in line with the criteria laid out in the CRR (Capital Requirements Regulation). |
Financial Report 2018 63
JANUARY - DECEMBER Condensed consolidated financial statements |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
CONSOLIDATED INCOME STATEMENT
NOTE: | The financial information for 2018 and 2017 (attached herewith) corresponds to that included in the consolidated summarised financial statements at these dates, drawn up in accordance with the International Accounting Standards (IAS) 34, Interim Financial Information. The accounting policies and methods used are those established by the International Financial Reporting Standards adopted by the European Union (IFRS-EU), Circular 4/2017 of the Bank of Spain, which replaces Circular 4/2004 for those years starting as of 1 January 2018, and the International Financial Reporting Standards issued by the International Accounting Standards Board (IFRS-IASB). |
∎ CONDENSED CONSOLIDATED BALANCE SHEET (EUR million) |
||||||||
Assets | Dec-18 | Dec-17 | ||||||
Cash, cash balances at central banks and other deposits on demand |
113,663 | 110,995 | ||||||
Financial assets held for trading |
92,879 | 125,458 | ||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
23,495 | 50,891 | ||||||
Non-trading financial assets mandatorily at fair value through profit or loss |
10,730 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
| |||||||
Financial assets designated at fair value through profit or loss |
57,460 | 34,782 | ||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
6,477 | 5,766 | ||||||
Financial assets at fair value through other comprehensive income |
121,091 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
35,558 | |||||||
Financial assets available-for-sale |
133,271 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
43,079 | |||||||
Financial assets at amortised cost |
946,099 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
18,271 | |||||||
Loans and receivables |
903,013 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
8,147 | |||||||
Investments held-to-maturity |
13,491 | |||||||
Memorandum items:lent or delivered as guarantee with disposal or pledge rights |
6,996 | |||||||
Hedging derivatives |
8,607 | 8,537 | ||||||
Changes in the fair value of hedged items in portfolio hedges of interest risk |
1,088 | 1,287 | ||||||
Investments |
7,588 | 6,184 | ||||||
Joint ventures companies |
979 | 1,987 | ||||||
Associated entities |
6,609 | 4,197 | ||||||
Assets under insurance or reinsurance contracts |
324 | 341 | ||||||
Tangible assets |
26,157 | 22,974 | ||||||
Property, plant and equipment |
24,594 | 20,650 | ||||||
For own-use |
8,150 | 8,279 | ||||||
Leased out under an operating lease |
16,444 | 12,371 | ||||||
Investment property |
1,563 | 2,324 | ||||||
Of which Leased out under an operating lease |
1,195 | 1,332 | ||||||
Memorandum ítems:acquired in financial lease |
98 | 96 | ||||||
Intangible assets |
28,560 | 28,683 | ||||||
Goodwill |
25,466 | 25,769 | ||||||
Other intangible assets |
3,094 | 2,914 | ||||||
Tax assets |
30,251 | 30,243 | ||||||
Current tax assets |
6,993 | 7,033 | ||||||
Deferred tax assets |
23,258 | 23,210 | ||||||
Other assets |
9,348 | 9,766 | ||||||
Insurance contracts linked to pensions |
210 | 239 | ||||||
Inventories |
147 | 1,964 | ||||||
Other |
8,991 | 7,563 | ||||||
Non-current assets held for sale |
5,426 | 15,280 | ||||||
TOTAL ASSETS |
1,459,271 | 1,444,305 |
64 Financial Report 2018
JANUARY - DECEMBER Condensed consolidated financial statements |
∎ CONDENSED CONSOLIDATED BALANCE SHEET (EUR million) |
||||||||
Liabilities | Dec-18 | Dec-17 | ||||||
Financial liabilities held for trading |
70,343 | 107,624 | ||||||
Financial liabilities designated at fair value through profit or loss |
68,058 | 59,616 | ||||||
Memorandum ítems:subordinated liabilities |
| | ||||||
Financial liabilities at amortised cost |
1,171,630 | 1,126,069 | ||||||
Memorandum ítems:subordinated liabilities |
23,820 | 21,510 | ||||||
Hedging derivatives |
6,363 | 8,044 | ||||||
Changes in the fair value of hedged items in portfolio hedges of interest rate risk |
303 | 330 | ||||||
Liabilities under insurance or reinsurance contracts |
765 | 1,117 | ||||||
Provisions |
13,225 | 14,489 | ||||||
Pensions and other post-retirement obligations |
5,558 | 6,345 | ||||||
Other long term employee benefits |
1,239 | 1,686 | ||||||
Taxes and other legal contingencies |
3,174 | 3,181 | ||||||
Contingent liabilities and commitments |
779 | 617 | ||||||
Other provisions |
2,475 | 2,660 | ||||||
Tax liabilities |
8,135 | 7,592 | ||||||
Current tax liabilities |
2,567 | 2,755 | ||||||
Deferred tax liabilities |
5,568 | 4,837 | ||||||
Other liabilities |
13,088 | 12,591 | ||||||
Liabilities associated with non-current assets held for sale |
| | ||||||
TOTAL LIABILITIES |
1,351,910 | 1,337,472 | ||||||
Equity |
||||||||
Shareholders equity |
118,613 | 116,265 | ||||||
Capital |
8,118 | 8,068 | ||||||
Called up paid capital |
8,118 | 8,068 | ||||||
Unpaid capital which has been called up |
| | ||||||
Share premium |
50,992 | 51,053 | ||||||
Equity instruments issued other than capital |
565 | 525 | ||||||
Equity component of the compound financial instrument |
| | ||||||
Other equity instruments issued |
565 | 525 | ||||||
Other equity |
234 | 216 | ||||||
Accumulated retained earnings |
56,756 | 53,437 | ||||||
Revaluation reserves |
| | ||||||
Other reserves |
(3,566) | (1,602) | ||||||
(-) Own shares |
(59) | (22) | ||||||
Profit attributable to shareholders of the parent |
7,810 | 6,619 | ||||||
(-) Interim dividends |
(2,237) | (2,029) | ||||||
Other comprehensive income |
(22,141) | (21,776) | ||||||
Items not reclassified to profit or loss |
(2,936) | (4,034) | ||||||
Items that may be reclassified to profit or loss |
(19,205) | (17,742) | ||||||
Non-controlling interest |
10,889 | 12,344 | ||||||
Other comprehensive income |
(1,292) | (1,436) | ||||||
Other elements |
12,181 | 13,780 | ||||||
TOTAL EQUITY |
107,361 | 106,833 | ||||||
TOTAL LIABILITIES AND EQUITY |
1,459,271 | 1,444,305 | ||||||
MEMORANDUM ITEMS |
||||||||
Loans commitment granted |
218,083 | 207,671 | ||||||
Financial guarantees granted |
11,723 | 14,499 | ||||||
Other commitments granted |
74,389 | 64,917 |
Financial Report 2018 65
JANUARY - DECEMBER Condensed consolidated financial statements |
∎ CONDENSED CONSOLIDATED INCOME STATEMENT (EUR million) |
||||||||
2018 | 2017 | |||||||
Interest income |
54,325 | 56,041 | ||||||
Financial assets at fair value through other comprehensive income |
4,481 | 4,384 | ||||||
Financial assets at amortised cost |
47,560 | 49,096 | ||||||
Other interest income |
2,284 | 2,561 | ||||||
Interest expense |
(19,984) | (21,745) | ||||||
Net interest income |
34,341 | 34,296 | ||||||
Dividend income |
370 | 384 | ||||||
Share of results of entities accounted for using the equity method |
737 | 704 | ||||||
Commission income |
14,664 | 14,579 | ||||||
Commission expense |
(3,179) | (2,982) | ||||||
Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net |
604 | 404 | ||||||
Financial assets at amortised cost |
39 | |||||||
Other financial assets and liabilities |
565 | |||||||
Gain or losses on financial assets and liabilities held for trading, net |
1,515 | 1,252 | ||||||
Reclassification of financial assets at fair value through other comprehensive income |
| |||||||
Reclassification of financial assets at amortised cost |
| |||||||
Other gains (losses) |
1,515 | |||||||
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value through profit or loss |
331 | |||||||
Reclassification of financial assets at fair value through other comprehensive income |
| |||||||
Reclassification of financial assets at amortised cost |
| |||||||
Other gains (losses) |
331 | |||||||
Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net |
(57) | (85) | ||||||
Gain or losses from hedge accounting, net |
83 | (11) | ||||||
Exchange differences, net |
(679) | 105 | ||||||
Other operating income |
1,643 | 1,618 | ||||||
Other operating expenses |
(2,000) | (1,966) | ||||||
Income from assets under insurance and reinsurance contracts |
3,175 | 2,546 | ||||||
Expenses from liabilities under insurance and reinsurance contracts |
(3,124) | (2,489) | ||||||
Gross income |
48,424 | 48,355 | ||||||
Administrative expenses |
(20,354) | (20,400) | ||||||
Staff costs |
(11,865) | (12,047) | ||||||
Other general administrative expenses |
(8,489) | (8,353) | ||||||
Depreciation and amortisation cost |
(2,425) | (2,593) | ||||||
Provisions or reversal of provisions, net |
(2,223) | (3,058) | ||||||
Impairment or reversal of impairment at financial assets not measured at fair value through profit or loss, net |
(8,986) | (9,259) | ||||||
Financial assets at fair value with changes in other comprehensive income |
(1) | |||||||
Financial assets at amortized cost |
(8,985) | |||||||
Financial assets measured at cost |
(8) | |||||||
Financial assets available-for-sale |
(10) | |||||||
Loans and receivables |
(9,241) | |||||||
Held-to-maturity investments |
| |||||||
Impairment of investments in subsidiaries, joint ventures and associates, net |
(17) | (13) | ||||||
Impairment on non-financial assets, net |
(190) | (1,260) | ||||||
Tangible assets |
(83) | (72) | ||||||
Intangible assets |
(117) | (1,073) | ||||||
Others |
10 | (115) | ||||||
Gain or losses on non financial assets and investments, net |
28 | 522 | ||||||
Negative goodwill recognised in results |
67 | | ||||||
Gains or losses on non-current assets held for sale not classified as discontinued operations |
(123) | (203) | ||||||
Profit or loss before tax from continuing operations |
14,201 | 12,091 | ||||||
Tax expense or income from continuing operations |
(4,886) | (3,884) | ||||||
Profit for the period from continuing operations |
9,315 | 8,207 | ||||||
Profit or loss after tax from discontinued operations |
| | ||||||
Profit for the period |
9,315 | 8,207 | ||||||
Profit attributable to non-controlling interests |
1,505 | 1,588 | ||||||
Profit attributable to the parent |
7,810 | 6,619 | ||||||
Earnings per share |
||||||||
Basic |
0.449 | 0.404 | ||||||
Diluted |
0.448 | 0.403 |
66 Financial Report 2018
JANUARY - DECEMBER |
NOTE
i. Important information
In addition to the financial information prepared under International Financial Reporting Standards (IFRS), this report certain alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415en) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please also see Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santanders website (www.santander.com).
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Santander cautions that this financial report contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RoRAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this report and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, industry, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. Numerous factors, including those reflected in the Form
20-F under Key Information-Risk Factors- and in the Share Registration Documentunder Risk Factors- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this report and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
The information contained in this report is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in this report. No investment activity should be undertaken on the basis of the information contained in this report. In making this report available Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this report nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this report is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.
Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this report should be construed as a profit forecast.
Financial Report 2018 67
Investor Relations
Ciudad Grupo Santander Edificio Pereda, 2nd floor Avda de Cantabria s/n 28660 Boadilla del Monte Madrid (Spain) Tel: +34 (91) 259 65 14 / +34 (91) 259 65 20 Fax: +34 (91) 257 02 45 e-mail: [email protected]
Legal Head Office: Paseo Pereda 9-12, Santander (Spain) Tel: +34 (942) 20 61 00
Operational Head Office: Ciudad Grupo Santander Avda. de Cantabria s/n 28660 Boadilla del Monte, Madrid (Spain)
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www.santander.com |
30 January 2019 2018 Earnings Presentation Ana Botín Group Executive Chairman José Antonio Álvarez Group CEO
Information In addition to the financial information prepared under International Financial Reporting Standards (IFRS), this presentation certain alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415en) as well as non-IFRS measures (Non-IFRS Measures). The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. For further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see Q4 2018 Financial Report, published as Relevant Fact on 30 January 2019, Section 26 of the Documento de Registro de Acciones for Banco Santander, S.A. (Santander) filed with the Spanish Securities Exchange Commission (the CNMV) on 28 June 2018 (the Share Registration Document) and Item 3A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission of the United States of America (the SEC) on 28 March 2018 (the Form 20-F). These documents are available on Santanders website (www.santander.com). The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries. Santander cautions that this presentation contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RoRAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, industry, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. Numerous factors, including those reflected in the Form 20-F under Key Information-Risk Factors- and in the Share Registration Documentunder Risk Factors- could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Important Information Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in this presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation available Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000. Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.
2018 performance ahead of plan as we continued to invest for our customers Accelerating the implementation of our commercial & digital transformation for our 144 Mn customers Group & Business areas review Key takeaways & mid-term targets
2018 was an excellent year Change vs.2017 EUR mn 2018 % % constant € Net interest income 34,341 0 9 Fee income 11,485 -1 9 Customer revenues 45,826 0 9 ROF and other 2,598 4 14 Gross income 48,424 0 9 Operating expenses -22,779 -1 7 Net operating income 25,645 1 11 Net loan-loss provisions -8,873 -3 7 PBT 14,776 9 20 Underlying attributable profit 8,064 7 18 Attributable profit 7,810 18 32
we delivered strong results in a sustainable way 2018 (vs. 2017) Growth Profitability Strength Loyal customers Underlying RoTE FL CET1 19.9 Mn (+15%) 12.1 % (+26 bps) 11.30 % (+46 bps) Customer revenues Cost-to-income NPL ratio €45.8 Bn (+9%1) 47 % (-40 bps) 3.73 % (-35 bps)
and we have successfully completed our 3 year plan 2015 2018 Loyal customers (Mn) 13.8 19.9 Digital customers (Mn) 16.6 32.0 Fee income1 - ~10% Cost of credit 1.25% 1.12%2 Cost-to-income 48% 47% EPS growth - 11.2% DPS (€) 0.20 0.233 FL CET1 10.05% 11.30% RoTE4 10.0% 11.7% (1) % change (constant euros), 2018 figure relates to 2015-18 CAGR (2) 2018 figure relates to 2015-18 average (3) Total dividend charged to 2018 earnings is subject to the Board and 2019 AGM approval (4) Underlying RoTE 2015: 11.0%. Underlying RoTE 2018 12.1% Note: 2015 metrics have been re-stated to reflect the capital increase
3 year plan achievements Our loyalty strategy is built around a virtuous cycle in which a committed team generates
customer loyalty leading to strong financial results Team engagement Loyal customers (Mn) Fee income RoTE1 (Constant €Bn) +7pp +44% +31% +171bps 82% 19.9 11.5 11.7% 8.7 13.8 75% 10.0% 2015 2018 2015 2018 2015 2018 2015 2018 Growth Profitability
Strength (1) Underlying RoTE 2015: 11.0%. Underlying RoTE 2018 12.1%
3 year plan achievements Growth Increasing loyal and digital customers Loyal customers Higher returns x3.4 Revenue per customer 1 (€) Lower -churn 66% Attrition rate (%) Digital activity Digital customers x2 32.0Mn 16.6Mn 2015 2018 Digital sales over total sales x2 32% 15% 2015 2018 (1) Individuals and SMEs in retail franchises
3 year plan achievements Growth allows us to generate superior profitable growth Group customer revenues increased by 24% NII + Fees (Constant €Bn) +24% 45.8 37.0 2015 2018 In 2 countries representing 25% of Groups TNAV, RoTE increased to 20% RoTE 20% 20% 14% 13% 2015 2018 2015 2018 Digital customers x2.6 x3.3 Loyal customers +65% +81%
3 year plan achievements Profitability We have reached double digit EPS growth in 2018 as committed RoTE +171bps 11.7% 10.0% 2015 2018 RoRWA +35bps 1.55% 1.20% 2015 2018 Earnings per share Double digit growth 11.2% (2018 vs.2017) Cash dividend per share +31% Increase since 2015 Note: 2015 metrics have been re-stated to reflect the capital increase
3 year plan achievements Profitability Improvement across most of our geographies with strong focus on capital allocation RoRWAs 2015 2018 0.93% 1.32% 2.01% 2.28% 2.40% 2.10% 1.79% 2.19% 1.88% 1.46% 1.94% 3.70% 2.94% 3.77% 2.17% 2.73% 1.99% 1.04% In 2015 In 2018 Only SBNA1 (c.10% c.60% of TNAV with of Group´s TNAV) RoTE < CoE with adjusted RoTE2 of 7.1% < CoE all other countries are above 20.6% adjusted RoTE2 SCUSA SBNA excluding US HoldCo. Adjusted RoTE for 11.30% CET1
3 year plan achievements Strength Weve become even more resilient, while growing our business and increasing dividends, generating €25.3Bn of capital organically Capital generation 2015-2018 (bps) +435 -35 -214 +118 +304 +186 Organic capital Organic capital generation Perimeter Dividends generation 2015 capital Total capital exc. Popular + AT1 after dividends increase accumulated +€25.3Bn -€2.3Bn -€12.8Bn +€10.2Bn +€7.5Bn +€17.7Bn
Delivering our plan through our digital transformation while building a responsible bank Digital transformation Responsible bank
The digital transformation of our core banks (Supertankers) is customer focused with two key priorities Two key priorities for digital transformation of the core banks to continue to deliver the best customer service All our products & services through E2E digital channels More digital customers Increased customer engagement Stronger loyal relationships Deliver all products & services in a fast and efficient way Best-in-class in operational excellence C/I as of 9M´18 Top 3 bank 63% 47% in 7 core countries for customer Peer´s satisfaction1 average
hence we are re-engineering our core banks (Supertankers) leveraging Group scale and innovation Transforming the FRONT All products and services to be available in digital channels (end-to-end) Transforming the BACK Re-engineering, digitizing and automatizing all our processes Evolving our IT architecture and systems Our Core banking system is a structural advantage Onboarding new technologies Rapid integration of new technologies in our day-to-day operations Becoming an agile and data-driven organisation 15% Cloud adoption 15-30% efficiencies over IT infrastructure cost Machine Learning -40% customer churn, +20% conversion rate improvement 1,200 robots allow c.10% cost reduction of processes Santander Agile Way 35% of projects in agile (450 teams)
and the positive evolution of our digital metrics proves that our transformation is paying off x2 digital more x2 transactions and x2 customers engaged increase sales 2015 vs. 2018 16.6Mn vs 14 vs 18 X2 15% 32% vs monthly more transactions in digital 32Mn digital sales over total accesses per customer channels since 2015 30% vs 48% 68% 38% 15% digital customers over accesses through of digital transactions digital sales through active mobile1 through mobile1 mobile1
We have launched autonomous ventures (Speedboats) that serve our core banks with new solutions while competing in the open market Largest fully digital bank by balance sheet with full suite of products & services +370% Mortgages1 (front book) c.90% Asset growth1 +19% Deposit growth1 1st Blockchain-based retail payments solution Launched in 4 geographies simultaneously +55% YoY FX transactions growth since launched in Spain Financial solution for the unbanked c.70% active customer growth vs 2016 (c.400k) +130% revenue growth vs 2016 Breakeven with 1M€ EBITDA (1) YoY growth, digital mortgages were launched in 2017
Our teams are proud to work for a responsible bank with a Simple, Personal and Fair culture Embedding a common culture that is truly changing the way we do things Top 3 bank to work for in 7 of our 10 geographies Team engagement 82% >6pp than the avg. financial industry 75% 2015 2018 1 69% 63% 74% 63% 75% 79% 2015 2018 (1) Percentage of employees that consider that the Bank is Simple, Personal and Fair
while delivering profits in a responsible way, supporting inclusive and sustainable growth Supporting our communities +12% ahead target 5.6Mn1 people supported vs.1.2Mn in 2015 +5% ahead target 136k1 scholarships granted vs.35k in 2015 Santander X 96 Universities from 8 different countries promoting financial inclusion 200Mn $620Bn Unbanked Credit gap in population in unbanked LatAm LatAm SMEs and sustainable growth rd 3 in the world st 1 in Europe Leading Global Bank in the financing of renewable energy projects2 (1) It refers to 2016-18 cumulative activity (2) #1 position based on number of operations; #2 position based on volume; Source: Dealogic
Growing TNAVPS + Cash DPS by 21% in plan period (€) 4.19 TNAVps +4.8% Reaching double 4.00 digit EPS growth 2015 2018 +31% 0.20 1 in 2018 (vs. 2017) 0.15 Cash DPS 2015 2018 Statutory 0.397 0.449 EPS (1) Total dividend charged to 2018 earnings is subject to the Board and 2019 AGM approval Note: 2015 metrics have been re-stated to reflect the capital increase
2018 performance ahead of plan as we continued to invest for our customers Accelerating the implementation of our commercial & digital transformation for our 144 Mn customers Group & Business areas review Key takeaways & mid-term targets
In 2018 a more committed team did better for our customers which in turn led to higher revenues and improved profitability Team engagement Loyal customers (Mn) Fee income RoTE1 (EUR Bn constant) 82% +15% 19.9 +9% 11.5 11.7% 10.6 +5 pp +129 bps 17.3 77% 10.4% 2017 2018 2017 2018 2017 2018 2017 2018 Growth Profitability Strength (1) Underlying RoTE 2017: 11.8%. Underlying RoTE 2018 12.1% 23
Double digit profit growth with sustainable quarterly performance % vs. 2017 2018 Constant EUR mn Euros euros Net interest income 34,341 0 9 Fee income 11,485 -1 9 Customer revenues 45,826 0 9 ROF and other 2,598 4 14 Gross income 48,424 0 9 Operating expenses -22,779 -1 7 Net operating income 25,645 1 11 Net loan-loss provisions -8,873 -3 7 Other provisions -1,996 -29 -22 PBT 14,776 9 20 Underlying attrib. profit 8,064 7 18 Net capital gains and provisions1 -254 -72 -72 Attributable Profit 7,810 18 32 (1) Details on slide 55 Underlying attributable profit Constant EUR mn +12% Q418 vs Q417 2,084 2,016 1,986 1,978 1,844 1,803 1,618 1,541 Q117 Q2 Q3 Q4 Q118 Q2 Q3 Q4 Attributable profit 1,618 1,541 1,329 1,424 1,986 1,678 2,084 2,062 Note: Contribution to the SRF (net of tax) recorded in Q217 (EUR -146 mn) and Q218 (EUR -187 mn). Contribution to the DGF in Spain (net of tax) in Q417 (EUR -155 mn) and Q418 (EUR -158 mn)
Revenues: for yet another year, growth driven by strong recurring customer revenues 8,969 Net interest 8,179 income 7,458 2,775 2,908 Fee 2,499 income Other 687 revenues1 483 512 Q117 Q2 Q3 Q4 Q118 Q2 Q3 Q4 YoY growth due to greater volumes and management of spreads, with improvement in 9 of our 10 core markets Sustained QoQ evolution Q4 favoured by TDR reclassification in the US (c. EUR 180mn) Higher fee income reflecting greater activity and customer loyalty QoQ improvement partially due to seasonality (Brazil) YoY increase in the majority of our main markets Low Q418 affected by DGF contribution in Spain and high inflation adjustment in Argentina Note: Constant euros (1) Other income includes gains/losses on financial transactions, income from the equity accounted method, dividends and other operating results. Contribution to the SRF recorded in Q217 and Q218. Contribution to the DGF in Spain recorded in Q417 and Q418. (2) TDR (Troubled Debt Restructuring)
Costs: best-in-class cost-to-income ratio while enhancing customer experience Cost evolution 2018 vs. 2017, % Nominal1 In real terms2 5.4 1.2 10.9 -5.5 5.7 1.9 0.9 -0.9 12.8 7.0 5.4 2.0 -1.3 -3.9 4.5 -3.0 5.3 1.4 51.0 -1.0 3.9 2.3 Group costs in real terms -0.5% in 2018 +0.3% in 2017 Group cost-to-income 47.0% in 2018 47.4% in 2017 Top 3 in customer satisfaction3 in 7 core markets Note: Constant euros (1) Spain and Portugal include Popular (2) Excluding inflation and perimeter (3) Internal benchmark of active customers experience and satisfaction
Continued credit quality enhancement: YoY improvement in all metrics % -7 bps 1.07 Cost of credit 1.00 -35 bps 4.08 NPL ratio 3.73 +2 pp 67 Coverage 65 ratio 2017 2018 Cost of credit ratio improved or maintained low levels in 2018 Lower NPL ratio in most units
Capital: we surpassed our goal of 11% in 2018 Fully loaded CET1 % +0.11 +0.10 -0.02 11.30 11.11 10.84 Dec-17 Sep-181 Organic Perimeter2 Other Dec-181 generation High organic capital generation in 2018 +64 bps FL Total Capital ratio Dec-18 14.78% Leverage ratio Dec-18 5.1% Our positive results over the 7 stress tests since 2008 demonstrate the strength and diversification of our model (1) Data calculated using the IFRS 9 transitional arrangements, otherwise the total impact would have been -27 bps (2) WiZink: +8 bps
Banco Santander S.A. funding plan 2017 2018 2019 EUR bn issued issued issuance plan2 Covered bonds 0.4 1.0 35 Senior preferred 0.7 0.2 35 Senior non-preferred 9.9 6.3 Hybrids 2.9 2.8 1.5 TOTAL 13.9 10.3 7.511.5 o/w Subordinated 12.8 9.1 1.5 Santander S.A. meets current MREL requirement1 and Group capital buffers (AT1: 1.5%; T2: 2%) During the last 2 years Santander S.A.s Funding Plan has been focused on TLAC-eligible instruments and in 2019 the Funding Plan is expected to cover debt maturities, and manage our funding structure (1) Santanders understanding of current policy under the existing recovery and resolution rules (2) Issuance plan subject to, amongst other considerations, market conditions and regulatory requirements
Breakdown by geographies
Group profit growth driven by most markets 2018 Underlying attributable profit1 Americas Europe 48% 52% Other Latam; Other 2% Europe; Argentina; 1% 1% Chile; 6% UK; 13% Spain; Brazil; 17% 26% SCF; 13% Mexico; 8% Portugal; 5% USA; 5% Poland; 3% 2018 Underlying attributable profit in core markets EUR mn and % change vs. 2017 in constant euros 2,605 +22% 1,738 +21% 1,362 -8% 1,296 +4% 760 +14% 614 +8% 552 +42% 480 +10% 298 -1% 84 -54% (1) Excluding Corporate Centre and Spain Real Estate Activity
Brazil: transformation focused on customers and sustainable profitable growth. YoY double-digit profit growth, higher RoTE and improvement in customer service and satisfaction P&L* Q418 % Q318 2018 % 2017 NII 2,475 -1.2 9,758 15.7 Fee income 929 12.7 3,497 14.8 Gross income 3,396 1.2 13,345 11.7 Operating expenses -1,191 9.1 -4,482 5.4 LLPs -726 2.8 -2,963 4.2 PBT 1,281 -7.0 5,203 34.8 Attributable profit 663 1.4 2,605 22.3 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros 110 Yield on loans 15.41% 15.64% 16.08% 15.62% 15.73% 75 -1% +4% QoQ QoQ Cost of deposits +15% +13% YoY 5.59% 5.02% 4.66% 4.57% 4.44% YoY Loa Funds Q417 Q118 Q2 Q3 Q4 +25% +33% Loyal Digital customers customers 4.06% 5.25% (-30 bps) (-4 bps) Cost of NPL ratio credit 33.6% 20% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change
Spain: commercial dynamism achieved. Double-digit profit growth YoY boosted by NII and cost synergies. Q418 profit affected by DGF contribution P&L* Q418 % Q318 2018 % 2017 NII 1,150 3.0 4,360 15.2 Fee income 634 -3.0 2,631 12.8 Gross income¹ 1,880 -11.1 7,894 15.1 Operating expenses -1,110 0.7 -4,480 10.9 LLPs -129 -34.7 -728 20.7 PBT 571 -19.9 2,325 16.1 Underlying att. profit 432 -18.0 1,738 20.8 Net capital gains and provisions² 0 -280 -6.8 Attributable profit 432 -18.0 1,458 28.1 (*) EUR mn (1) Q418 DGF contribution of EUR 226 mn; (2) Restructuring costs after tax ACTIVITY Volumes in EUR bn 315 Yield on loans 210 -1% 2.03% 1.96% 1.96% 1.97% 2.02% -2% QoQ QoQ Cost of deposits -4% 0% YoY YoY 0.41% 0.35% 0.27% 0.21% 0.20% Loans Funds Q417 Q118 Q2 Q3 Q4 +40% +51% Loyal Digital customers customers 0.33% 6.19% (+3 bps) (-13 bps) Cost of NPL ratio credit 56.8% 11% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds. Underlying RoTE Customers and credit quality ratios YoY change
UK: our results reflect competitive revenue pressures and higher regulatory and strategic project costs in the current uncertain environment. Q418 impacted by other provisions1 P&L* Q418 % Q318 2018 % 2017 NII 1,033 -0.6 4,136 -4.3 Fee income 257 -0.9 1,023 2.9 Gross income 1,332 -3.2 5,420 -4.3 Operating expenses -738 0.5 -2,995 5.7 LLPs -44 70.4 -173 -14.5 PBT 394 -28.6 1,926 -11.0 Attributable profit 286 -26.1 1,362 -8.2 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros Yield on loans 236 207 2.78% 2.81% 2.75% 2.76% 2.77% 0% +2% QoQ QoQ Cost of deposits +1% -1% YoY YoY 0.63% 0.64% 0.64% 0.64% 0.67% Loan unds Q417 Q118 Q2 Q3 Q4 +4% +9% Loyal Digital customers customers 0.07% 1.05% (-1 bp) (-28 bps) Cost of NPL ratio credit 55.2% 9% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change (1) Relating to historical probate and bereavement processes and consumer credit business operations
SCF: Leadership in Europe with best-in-class profitability (RoRWA: 2.3%) and efficiency. Historically low NPL ratio and cost of credit. Q418 profit impacted by non-recurring items1 P&L* Q418 % Q318 2018 % 2017 NII 943 0.7 3,723 4.9 Fee income 189 -8.5 798 -9.0 Gross income 1,187 2.7 4,610 3.3 Operating expenses -494 4.1 -1,985 0.9 LLPs -47 -62.4 -360 36.1 PBT 480 -14.5 2,140 3.3 Underlying att. profit 296 -10.7 1,296 4.1 Net capital gains and provisions 0 0 -100.0 Attributable profit 296 -10.7 1,296 11.7 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros 98 42 Yield on loans +4% 0% QoQ QoQ 4.61% 4.60% 4.55% 4.51% 4.45% +6% +7% YoY YoY Loa N lending Q417 Q118 Q2 Q3 Q4 19.4 mn 43.1% Active Efficiency customers ratio 0.38% 2.29% (+8 bps) (-21 bps) Cost of NPL ratio credit 2.3% 16% RoRWA RoTE Note: Loans excluding reverse repos. Underlying RoTE (1) Impairment of intangible assets, restructuring costs and written-off portfolio sales. Excluding Santander Consumer UK profit, which is recorded in Santander UK results. Including it, 2018 underlying attributable profit: EUR 1,421 mn (+4% vs. 2017) and Q418 underlying attributable profit: EUR 331 mn (-9% vs. Q318)
Units performance: larger customer base, higher profits and better credit quality Attributable profit Continued to strengthen our distribution model, reflected in an increase in customer base, volumes and profitability EUR 760 mn 20% +14% Double-digit profit growth due to improving customer revenue and cost of credit Business volumes grew at a faster pace in core segments EUR 614 mn 18% Higher profitability, lower NPL ratio and stable cost of credit. Profit up driven by +8% customer revenue Positive year for Santander US: achieved significant regulatory milestones, strengthened business performance and turned around profits 1 SBNA increased volumes with higher NIM. SC USA maintained high RoTE (20.6%2) EUR 552 mn 7.6%2 +42% In the quarter, reclassification of TDRs and LLPs up due seasonality and strong originations Note: % change vs. 2017 in constant euros (1) Underlying attributable profit (2) Adjusted RoTE for 11.30% CET1, otherwise Santander US 4% and SC USA 13.3%
Units performance: larger customer base and integration processes Attributable profit RoTE Integration of Banco Popular completed in Q418 EUR 480 mn1 12% Strong profit growth thanks to better efficiency and a very low cost of credit +10% (significant improvement in credit quality). Gaining market share YoY volume growth across all key products, increase in customer revenue, rebranding costs and lower NPL ratio EUR 298 mn1 10% In Nov-18, integration of DB Polska. Including badwill generated in the -1% transaction, attributable profit increased 14% After the agreement with the IMF, the economic programme was revamped. Nevertheless, the country is still affected for this situation EUR 84 mn 12% Good evolution of revenues not reflected in profit as it was hit by high inflation -54% adjustments2 (Q4 and Q3) Note: Attributable profit. % change vs. 2017 in constant euros. Underlying RoTE 37 (1) Underlying attributable profit (2) Total impact EUR -239 mn (monetary adjustment EUR -193 mn; use of fixing exchange rates instead of average rates EUR -46 mn)
Corporate Centre P&L* 2018 2017 NII -947 -851 Gains/Losses on FT 11 -227 Operating expenses -495 -476 Provisions and other income -216 -227 Tax and minority interests 18 33 Underlying att. profit -1,721 -1,889 Net capital gains and provisions -40 -436 Attributable profit -1,761 -2,326 (*) EUR mn Higher loss in NII due to increased volume of issuances (TLAC) Better FX hedging results reflected in gains on financial transactions Operating expenses remained virtually unchanged as a result of streamlining and simplification measures Restructuring costs in 2018 and charges for equity stakes and intangible assets in 2017
2018 performance ahead of plan as we continued to invest for our customers Accelerating the implementation of our commercial & digital transformation for our 144 Mn customers Group & Business areas review Key takeaways & mid-term targets
Our purpose To help people and businesses prosper Our aim as a bank To be the best open financial services platform, by acting responsibly and earning the lasting loyalty of our people, customers, shareholders and communities Our how Everything we do should be Simple, Personal and Fair
Our vision, strategy and progress since 2015 plus our core strengths will allow us to accelerate execution Predictable Scale Business Diversification & profitable model growth Accelerate Execution
Scale Our scale benefits our leading local banks Leadership position by market share1 in our local markets Top bank2in 6 out of our 10 Markets Top #3 3 Top #5 4 144Mn customers in markets with a total population of >1Bn people while accelerating collaboration across the Group €200Mn savings by centralising the global negotiations with T&O providers 25-35% mid-term potential savings in 3 Group transversal processes by building them globally €1.4Bn revenue synergies from leveraging CIB value proposition to Corporates & SMEs (~8% CAGR since 2015) (1) Market share by lending (2) Only private sector banks in the case of Poland, Argentina and Portugal. 42 (3) Only private sector banks in the case of Brazil. UK mortgages (excluding Social Housing), Consumer credit and commercial loans (excluding Financial Institutions) (4) Non-prime auto lending
Business model Unique personal relationships strengthens customer loyalty 100,000 People talking to our customers everyday 13,000 #1 Branch Branches across all network 1 our geographies (1) Excluding Chinese banks and Sberbank 43
Diversification Our business model & geographical diversification make us more resilient than our peers Balanced diversification1 Underlying attributable profit 2018 48% 52% Americas Europe ~97% of our profits from our 10 core markets Best performer under stress test Capital depletion EBA adverse scenario Santander -1.4% vs. -1.99% in 2016 BBVA -1.9% Intesa SP. -2.2% Nordea -2.7% BNP -2.9% Unicredit -3.3% Commerzbank -3.4% S. Generale -3.6% ING -3.8% Average -4.0% vs. -3.35% in 2016 C. Agricole -4.4% HSBC -5.3% Deutsche -5.8% RBS -6.2% Barclays -6.6% (1) Excluding Corporate Centre and Spain Real Estate Activity Source: EBA stress test 2018 44
Predictability resulting in higher earnings predictability Quarterly reported EPS volatility1, 1999-Q318 703% 348% 125% 110% 89% 77% 57% 45% 43% 33% 9% -2x 3x -1x -1x 6x 3x 4x 3x 1x 10x 4x Net income increase 1999-2017 (1) Source: Bloomberg, with GAAP Criteria. Note: Standard deviation of the quarterly EPS starting from the first available data since Jan-99 45
Accelerate execution Accelerate the digital transformation through increased collaboration across the Groupcreating a model with improved profitability Digital Capital light transformation model Delivering excellent products and services to our customers, leveraging and accelerating collaboration across the Group Enhanced profitability
Digitalising our core banks (Supertankers) at a faster pace and building global processes Complete digitalisation of the core 100% products and services available through digital channels processes E2E digitalised/ automatised data sources accessible for ML/AI algorithms leveraging Group capabilities Common For example Reference architecture, leveraging cloud, Contact Centre infrastructure and tools digitalisation €200Mn cost set of components and synergies, and services €100Mn sales uplift mid-term opportunity data models
while launching new initiatives to build loyalty and attract new customers Operating at full speed Expansion of a single platform, cloud-based model to new markets in Europe and LatAm ~20Mn€ set up cost in new countries and mid-term RoE target c.20% All Santander countries connected #1 NPS vs alternative Millions of transactions processed More new ventures to come
Accelerating the execution to continue delivering growth, profitability and strength Mid-term targets RoTE CET1 FL 13-15% 11-12%
3 april 2019 london 50
2018 performance ahead of plan as we continued to invest for our customers Accelerating the implementation of our commercial & digital transformation for our 144 Mn customers Group & Business areas review Key takeaways & mid-term targets
2015-18 plan completed: exceeding our targets while building the foundations for continued success Continue building on our strengths with a clear strategy to fulfil our aim and purpose Focus on customer loyalty and digital excellence to continue delivering profitable growth Accelerating in building a smartly connected Group to the benefit of all our stakeholders Mid-term RoTE CET1 FL targets 13-15% 11%-12%
Appendix
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Net capital gains and provisions detail 2017 EUR million net of tax -897 -1,267 Equity stakes and -130 intangible assets -85 Germany integration costs -300 Popular integration costs -149 USA (hurricanes and other) 370 USA tax 73 reform -603 Goodwill (SC USA and other) Allfunds 297 capital gains Positive net capital Negative net capital gains and provisions gains and provisions 2018 EUR million net of tax -254 -320 Corporate Centre -40 integration costs 66 -280 Spain integration Portugal Integration 20 costs Badwill Poland 45 Positive net capital Negative net capital gains and provisions gains and provisions Net capital gains and provisions detail 2017 EUR million net of tax -897 -1,267 Equity stakes and -130 intangible assets -85 Germany integration costs -300 Popular integration costs -149 USA (hurricanes and other) 370 USA tax 73 reform -603 Goodwill (SC USA and other) Allfunds 297 capital gains Positive net capital Negative net capital gains and provisions gains and provisions 2018 EUR million net of tax -254 -320 Corporate Centre -40 integration costs 66 -280 Spain integration Portugal Integration 20 costs Badwill Poland 45 Positive net capital Negative net capital gains and provisions gains and provisions
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Overall increase in loans and customer funds, boosted by developing markets Loan portfolio MATURE MARKETS DEVELOPING MARKETS Dec-18 EUR bn YoY Chg. Dec-18 EUR bn YoY Chg. Spain 210 -4% Poland 29 30% UK 236 1% Brazil 75 13% USA 84 6% Mexico 31 10% SCF 98 6% Chile 39 10% Portugal 37 -2% Argentina 6 40% Other individuals, 9% Home mortgages, 36% CIB, 11% EUR Corporates, 16% 874 bn. SMEs, 11% Consumer, 17% Customer funds MATURE MARKETS DEVELOPING MARKETS Dec-18 EUR bn YoY Chg. Dec-18 EUR bn YoY Chg. Spain 315 0% Poland 36 32% UK 207 -1% Brazil 110 15% USA 64 3% Mexico 39 3% SCF 37 4% Chile 33 8% Portugal 39 8% Argentina 10 51% Individuals demand deposits, 36% CIB, 10% Corporates, 12% EUR 906 bn. SMEs, 10% Individuals time deposits, 14% Consumer, 4% Individuals mutual funds, 14% Note: Loans excluding reverse repos. Customer funds: deposits excluding repos + marketed mutual funds. % change in constant euros.
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Mexico:continued to strengthen our distribution model, reflected in the increase of customer base, volumes and profitability. Double-digit profit growth due to customer revenues and cost of credit P&L* Q418 % Q318 2018 % 2017 NII 733 3.0 2,763 13.2 Fee income 181 -6.6 756 7.5 Gross income 897 -1.4 3,527 8.6 Operating expenses -376 0.3 -1,462 12.8 LLPs -215 -3.3 -830 -2.2 PBT 323 5.1 1,230 15.6 Attributable profit 206 8.0 760 14.0 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros Yield on loans 39 31 12.02% 12.09% 12.35% 12.49% 12.66% -1% +1% QoQ Cost of deposits QoQ +10% +3% 3.39% 3.48% 3.57% 3.64% 3.66% YoY YoY Loans Funds Q417 Q118 Q2 Q3 Q4 +26% +48% Loyal Digital customers customers 2.75% 2.43% (-33 bps) (-26 bps) Cost of NPL ratio credit 41.5% 20% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change
Chile: business volumes grew at a faster pace in core segments. Higher profitability, lower NPL ratio and stable cost of credit. Profit up driven by customer revenues P&L* Q418 % Q318 2018 % 2017 NII 477 -0.1 1,944 5.4 Fee income 95 -5.6 424 12.0 Gross income 622 -0.9 2,535 3.9 Operating expenses -258 1.0 -1,045 5.4 LLPs -120 3.1 -473 6.0 PBT 275 0.0 1,121 9.5 Attributable profit 153 1.2 614 8.5 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros 39 Yield on loans 33 +1% 7.33% 7.52% 7.53% 7.35% 7.43% QoQ +6% QoQ Cost of deposits +10% +8% YoY YoY 1.87% 1.78% 1.73% 1.75% 1.84% Loa ds Q417 Q118 Q2 Q3 Q4 +7% +7% Loyal Digital customers customers 1.19% 4.66% (-2 bps) (-30 bps) Cost of NPL ratio credit 41.2% 18% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change
USA: very positive year for Santander US (achieved significant regulatory milestones, strengthened business performance and turned around profits). In Q4, reclassification of TDRs3 and LLPs up due to seasonality and strong originations P&L* Q418 % Q318 2018 % 2017 NII 1,553 14.5 5,391 1.3 Fee income 217 2.9 859 -7.4 Gross income 1,967 11.6 6,949 4.5 Operating expenses -795 4.5 -3,015 -1.3 LLPs -945 44.0 -2,618 -1.4 PBT 170 -39.2 1,117 31.0 Underlying att. profit 92 -28.9 552 41.7 Net capital gains and provisions 0 0 -100.0 Attributable profit 92 -28.9 552 74.0 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros Santander Bank Santander Consumer USA 47 49 46 40 +5% +1% +3% +2% QoQ QoQ QoQ QoQ +9% +2% +14% +12% YoY YoY YoY YoY Loans Funds Loans¹ Managed assets +12% +10% Loyal Digital customers customers 3.27% 2.92% (-15 bps) (+13 bps) Cost of NPL ratio credit 43.4% 7.6% Efficiency 2 RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change Santander Banks customers (1) Include leasing (2) Adjusted RoTE for 11.30% CET1, otherwise Santander US 4% and SC USA 13.3% (3) Impact on NII and LLPs
Portugal: integration of Popular completed. Strong profit growth thanks to better efficiency and a very low cost of credit (significant improvement in credit quality). Market share gains P&L* Q418 % Q318 2018 % 2017 NII 211 0.1 858 8.9 Fee income 96 4.5 377 4.7 Gross income 334 3.5 1,344 8.0 Operating expenses -162 3.0 -642 4.5 LLPs -12 7.9 -32 160.6 PBT 196 17.3 688 19.8 Underlying att. profit 136 18.9 480 10.3 Net capital gains and provisions¹ 0 -- 20 -- Attributable profit 136 18.9 500 14.9 (*) EUR mn (1) Provisions and restructuring costs associated with inorganic operations, net of tax impacts ACTIVITY Volumes in EUR bn 37 39 Yield on loans -1% 0% 1.84% 1.86% 1.81% 1.74% 1.83% QoQ QoQ Cost of deposits -2% +8% YoY YoY 0.19% 0.18% 0.18% 0.15% 0.18% Loans Funds Q417 Q118 Q2 Q3 Q4 +9% +32% Loyal Digital customers customers 0.09% 5.94% (+5 bps) (-157 bps) Cost of NPL ratio credit 47.8% 12% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds. Underlying RoTE Customers and credit quality ratios YoY change
Poland: volume growth across all key products, increase in customer revenues, rebranding costs and lower NPL ratio. In Q4 DBP1 integration P&L* Q418 % Q318 2018 % 2017 NII 265 8.8 996 7.4 Fee income 115 3.2 453 2.3 Gross income 390 6.0 1,488 4.9 Operating expenses -165 5.1 -636 5.3 LLPs -41 23.8 -161 17.4 PBT 123 -18.8 555 -4.3 Underlying att. profit 62 -23.2 298 -0.6 Net capital gains and provisions² 45 45 Attributable profit 107 32.4 343 14.5 (*) EUR mn and % change in constant euros (2) DBP badwill ACTIVITY Volumes in EUR bn and % change in constant euros Yield on loans 36 4.15% 4.18% 4.13% 4.10% 4.07% 29 +19% +20% QoQ oQ Cost of deposits +30% +32% YoY YoY 0.72% 0.68% 0.78% 0.83% 0.89% Loans ds Q417 Q118 Q2 Q3 Q4 +30% +5% Loyal Digital customers customers 0.65% 4.28% (+3 bps) (-29 bps) Cost of NPL ratio credit 42.8% 10% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds. Underlying RoTE (1) DBP: Deutsche Bank Polska, integrated in Nov-2018. Impact in volumes, integration costs and badwill Customers and credit quality ratios YoY change
Argentina: good evolution of revenues not reflected in profit as it was hit by high inflation adjustments in Q4 and Q3 and regulatory changes P&L* Q418 % Q318 2018 % 2017 NII 327 8.8 768 52.5 Fee income 192 12.3 448 47.0 Gross income 472 0.6 1,209 35.4 Operating expenses -323 10.7 -749 51.0 LLPs -99 2.7 -231 184.4 PBT 58 185 -31.4 Attributable profit 17 84 -54.5 (*) EUR mn and % change in constant euros ACTIVITY Volumes in EUR bn and % change in constant euros 24.54% 10 18.65% 19.03% 20.57% 17.76% Yield on loans 6 -0% -13% QoQ 11.25% QoQ 7.79% +40% +51% 4.64% 5.25% 6.32% YoY YoY Cost of deposits Loans Funds Q417 Q118 Q2 Q3 Q4 +6% +7% Loyal Digital customers customers 3.45% 3.17% (+160 bps) (+67 bps) Cost of NPL ratio credit 61.9% 12% Efficiency RoTE ratio Note: Loans excluding reverse repos. Funds: deposits excluding repos + marketed mutual funds Customers and credit quality ratios YoY change. Efficiency ratio and RoTE impacted by high inflation adjustments account
Other Latin American countries URUGUAY Constant EUR mn +43% 132 92 27% RoTE 2017 2018 PERU Constant EUR mn +8% 41 38 22% RoTE 2017 2018 Focusing on loyalty, transactions and target segments Uruguays profit driven by higher NII and fee income, with improved C/I Perus higher revenue more than offset the cost increase
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Appendix Retail Banking: continued to focus on customer loyalty and digital transformation with new products and services that cover the current need of our customers. Strong growth in loyal and digital customers P&L* Q418 % Q318 2018 % 2017 NII 8,500 2.4 32,522 8.8 Fee income 2,334 3.1 8,946 6.0 Gross income 11,106 1.2 42,832 8.3 Operating expenses -5,025 4.4 -19,255 5.8 LLPs -2,354 8.6 -8,461 13.0 PBT 3,119 -12.4 13,408 14.6 Underlying att. profit 1,863 -7.5 7,793 11.7 Net capital gains and provisions¹ 46 -214 -51.3 Attributable profit 1,909 -5.3 7,579 16.0 (*) EUR mn and % change in constant euros ACTIVITY EUR bn and % change in constant euros 755 714 +2% QoQ 0% QoQ +3% YoY +2% YoY Loans Funds +15% +26% Loyal Digital customers customers YoY YoY Commercial transformation with two priorities to continue to deliver the best customer service: to make all our products and services digital for our customers and do it in the fastest and most efficient way. Profit boosted by the strong performance in customer revenue (1) Charges related to integrations in Spain and Portugal (mainly restructuring costs), net of tax impacts, and badwill in Poland.
Appendix Corporate & Investment Banking: Profit growth underpinned by higher revenues and significantly lower provisions in Spain, the UK, Brazil and the US P&L* Q418 % Q318 2018 % 2017 NII 713 12.2 2,378 7.6 Fee income 379 7.1 1,512 0.3 Gross income 1,343 0.3 5,087 1.7 Operating expenses -551 -1.3 -2,105 10.7 LLPs -56 21.0 -217 -66.1 PBT 693 -2.6 2,657 11.1 Attributable profit 447 -2.0 1,705 8.2 (*) EUR mn and % change in constant euros REVENUE Constant EUR mn TOTAL 5,000 +2% 5,087 Capital & Other 501 +8% 539 Global Markets 1,561 -1% 1,544 Global Debt Financing 1,315 1,333 +1% Global Transaction 1,622 1,671 Banking +3% 2017 2018 +21% 1.85% Collaboration RoRWA revenues (constant euros) Leading positions in Latam and Europe, particularly in export & agency finance, debt capital markets and structured financing Continued support to global customers in their capital issuances, with financing solutions and transactional services
Appendix Wealth Management: In our first year we launched the following strategic initiatives: development of Private Wealth (UHNW) proposition, Private Banking digital platform, strengthening of SAM value proposition P&L* Q418 % Q318 2018 % 2017 NII 109 -1.6 420 11.9 Fee income 271 -1.8 1,097 62.7 Gross income 393 0.5 1,543 34.1 Operating expenses -181 -1.9 -730 45.6 LLPs -5 -9 -1.6 PBT 209 3.5 797 26.0 Underlying att. profit 136 0.0 528 16.5 Net capital gains and provisions 0 0 -100.0 Attributable profit 136 0.0 528 21.3 (*) EUR mn and % change in constant euros Total contribution to Cross-border Groups profit1 collaboration volumes EUR 1,015 mn EUR 3,727 mn +13% +19% ACTIVITY Constant EUR bn and % change vs 2017 Management Total Assets Under 329 -2% Funds and 203 -2% investments* - SAM 172 -1% - Private Banking 55 -2% Custody of customer funds 81 -6% Customer deposits 45 +6% Customer loans 14 +12% (*) Total adjusted for funds from private banking customers managed by SAM Note: Total assets marketed and/or managed in 2018 and 2017 Profit growth driven by volumes of higher added value Loans increased 12% driven by the development of the Private Wealth segment, which offers a differential service to the Groups largest clients 69 (1) Profit after tax + total fee income generated by this business
Appendix Spain Real Estate activity: Management continued to be aimed at reducing these assets, particularly loans and foreclosed assets Real estate exposure1 EUR bn 9.3 4.6 4.7 Gross value Provisions Net value Dec-18 Dec-18 Net value EUR bn Dec-18 Real estate assets 3.8 Foreclosed assets 2.6 Rental assets 1.2 RE non-performing loans (NPLs) 0.9 RE assets + RE non-performing loans 4.7 The agreement with a subsidiary of Cerberus Capital Management to sell properties for approximately EUR 1,535 million is expected to be closed in the first quarter of 2019 Loss of EUR 242 million in 2018 vs loss of EUR 308 million in 2017, due to the reduced need for provisions (1) Spain Real Estate activity 70
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Appendix In 2018 we made good headway in our funding plan to enhance the Groups TLAC position Key liquidity ratios Dec-18 Net loan-to-deposit ratio (LTD): 113% Deposits + M/LT funding / net loans: 114% Liquidity Coverage Ratio (LCR)1: 160% Comfortable liquidity position (Group and subsidiaries) Funding planissuances Jan-Dec 18 Group issuances2 EUR 24bn (~EUR 13bn TLAC-eligible) Main issuers Parent bank, SCF and UK Main issuance currencies EUR, USD, GBP Focus on TLAC-eligible instruments, following our decentralised liquidity and funding model (1) Provisional data (2) Parent Bank, UK, SCF and USA. Excluding covered bonds and securitisations
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Appendix Coverage ratio by stage Exposure1 Coverage EUR bn Dec-18 Dec-18 Jan-18 Stage 1 845 0.5% 0.6% Stage 2 53 9.2% 8.6% Stage 3 36 42.4% 44.2% (1) Exposure subject to impairment. Additionally, there are EUR 24 bn in customer loans not subject to impairment recorded at mark to market with changes through P&L
Appendix NPL ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 5.62 8.70 6.30 5.82 5.81 5.68 5.57 5.25 Spain 5.22 10.52 6.82 6.32 6.27 6.24 6.23 6.19 Santander Consumer Finance 2.62 2.61 2.60 2.50 2.48 2.44 2.45 2.29 Poland 5.20 4.66 4.70 4.57 4.77 4.58 4.23 4.28 Portugal 8.47 9.10 8.39 7.51 8.29 7.55 7.43 5.94 United Kingdom 1.31 1.23 1.32 1.33 1.17 1.12 1.10 1.05 Latin America 4.50 4.40 4.41 4.46 4.43 4.40 4.33 4.34 Brazil 5.36 5.36 5.32 5.29 5.26 5.26 5.26 5.25 Mexico 2.77 2.58 2.56 2.69 2.68 2.58 2.41 2.43 Chile 4.93 5.00 4.95 4.96 5.00 4.86 4.78 4.66 Argentina 1.82 2.21 2.34 2.50 2.54 2.40 2.47 3.17 USA 2.43 2.64 2.56 2.79 2.86 2.91 3.00 2.92 Operating Areas 3.77 5.40 4.27 4.10 4.04 3.94 3.87 3.71 Total Group 3.74 5.37 4.24 4.08 4.02 3.92 3.87 3.73
Appendix Coverage ratio % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 60.6 59.7 53.7 54.4 56.8 55.2 54.4 52.2 Spain 49.1 56.6 46.2 46.8 51.1 49.0 47.7 45.0 Santander Consumer Finance 108.9 106.5 104.3 101.4 107.2 107.7 106.4 106.4 Poland 61.2 67.5 67.6 68.2 72.0 72.1 71.6 67.1 Portugal 61.7 55.6 56.1 62.1 53.9 52.7 53.4 50.5 United Kingdom 33.8 32.6 31.5 32.0 34.6 34.0 33.1 33.0 Latin America 90.5 89.2 90.1 85.0 98.4 96.8 97.1 97.3 Brazil 98.1 95.5 97.6 92.6 110.4 108.7 109.1 106.9 Mexico 104.8 113.8 110.3 97.5 113.5 116.1 120.5 119.7 Chile 58.9 58.2 58.5 58.2 61.0 60.0 59.6 60.6 Argentina 134.1 109.9 102.8 100.1 121.3 121.5 124.0 135.0 USA 202.4 183.1 187.5 170.2 169.1 156.9 145.5 142.8 Operating Areas 74.6 67.6 65.7 65.1 69.7 68.3 67.6 67.1 Total Group 74.6 67.7 65.8 65.2 70.0 68.6 67.9 67.4
Appendix Non-performing loans and loan-loss allowances. December 2018 Non-performing loans 100%: EUR 35,692 million Other, 6% USA, 8% Argentina, 1% Spain, 42% Chile, 5% Mexico, 2% Brazil, 12% UK, 8% SCF*, 6% Portugal, 6% Poland, 4% Loan-loss allowances 100%: EUR 24,061 million Other, 3% USA, 16% Spain, 28% Argentina, 1% Chile, 5% Mexico, 4% SCF*, 10% Brazil, 20% Poland, 4% UK, 4% Portugal, 5% Percentage over Groups total (*) Excluding SCF UK
Appendix Cost of credit % Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Continental Europe 0.38 0.36 0.32 0.31 0.32 0.34 0.37 0.36 Spain 0.33 0.32 0.28 0.30 0.29 0.31 0.35 0.33 Santander Consumer Finance 0.39 0.37 0.34 0.30 0.36 0.37 0.40 0.38 Poland 0.66 0.65 0.61 0.62 0.69 0.71 0.69 0.65 Portugal 0.07 0.03 0.10 0.04 0.08 0.10 0.03 0.09 United Kingdom 0.03 0.02 0.03 0.08 0.10 0.10 0.08 0.07 Latin America 3.36 3.36 3.25 3.15 3.12 3.04 2.94 2.95 Brazil 4.84 4.79 4.55 4.36 4.35 4.30 4.17 4.06 Mexico 2.94 3.01 3.14 3.08 2.95 2.78 2.72 2.75 Chile 1.42 1.37 1.27 1.21 1.22 1.18 1.18 1.19 Argentina 1.68 1.75 1.85 1.85 2.06 2.47 2.92 3.45 USA 3.63 3.65 3.57 3.42 3.29 3.02 3.00 3.27 Operating Areas 1.18 1.18 1.12 1.07 1.03 0.99 0.97 0.99 Total Group 1.17 1.17 1.12 1.07 1.04 0.99 0.98 1.00
Appendix Net capital gains and provisions Loans and customer funds by units and by businesses Other countries results Global business results Liquidity NPL and coverage ratios and cost of credit Quarterly income statements
Appendix Grupo Santander EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 11,246 11,522 11,569 11,556 11,409 11,411 10,989 12,017 45,892 45,826 Gross income 12,029 12,049 12,252 12,062 12,151 12,011 11,720 12,542 48,392 48,424 Operating expenses (5,543) (5,648) (5,766) (5,961) (5,764) (5,718) (5,361) (5,936) (22,918) (22,779) Net operating income 6,486 6,401 6,486 6,101 6,387 6,293 6,359 6,606 25,473 25,645 Net loan-loss provisions (2,400) (2,280) (2,250) (2,181) (2,282) (2,015) (2,121) (2,455) (9,111) (8,873) Other (775) (848) (645) (544) (416) (487) (488) (605) (2,812) (1,996) Underlying profit before taxes 3,311 3,273 3,591 3,375 3,689 3,791 3,750 3,546 13,550 14,776 Underlying consolidated profit 2,186 2,144 2,347 2,285 2,409 2,412 2,356 2,369 8,963 9,546 Underlying attributable profit 1,867 1,749 1,976 1,924 2,054 1,998 1,990 2,022 7,516 8,064 Net capital gains and provisions* (515) (382) (300) 46 (897) (254) Attributable profit 1,867 1,749 1,461 1,542 2,054 1,698 1,990 2,068 6,619 7,810 (*) Including: in Q317 charges for integration costs and equity stakes and intangible assets in Q417 Allfunds capital gains, USA fiscal reform, goodwill charges and in the US, provisions for hurricanes, increased stake in Santander Consumer USA and other in Q218 costs associated to integrations (mainly restructuring costs), net of tax impacts, in Spain, Corporate Centre and Po rtugal in Q418 badwill in Poland for the integration of Deutsche Bank Polska
Appendix Grupo Santander Constant EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 9,957 10,401 10,870 10,954 11,100 11,316 11,532 11,877 42,181 45,826 Gross income 10,644 10,871 11,517 11,437 11,834 11,901 12,300 12,390 44,468 48,424 Operating expenses (4,981) (5,153) (5,466) (5,689) (5,634) (5,666) (5,636) (5,843) (21,287) (22,779) Net operating income 5,663 5,718 6,051 5,748 6,200 6,234 6,664 6,547 23,180 25,645 Net loan-loss provisions (2,080) (2,030) (2,098) (2,068) (2,230) (1,998) (2,225) (2,420) (8,276) (8,873) Other (691) (760) (598) (514) (400) (476) (526) (594) (2,563) (1,996) Underlying profit before taxes 2,893 2,928 3,355 3,166 3,569 3,760 3,913 3,533 12,342 14,776 Underlying consolidated profit 1,908 1,908 2,197 2,151 2,335 2,392 2,455 2,363 8,164 9,546 Underlying attributable profit 1,618 1,541 1,844 1,803 1,986 1,978 2,084 2,016 6,805 8,064 Net capital gains and provisions* (515) (379) (300) 46 (894) (254) Attributable profit 1,618 1,541 1,329 1,424 1,986 1,678 2,084 2,062 5,912 7,810 (*) Including: in Q317 charges for integration costs and equity stakes and intangible assets in Q417 Allfunds capital gains, USA fiscal reform, goodwill charges and in the US, provisions for hurricanes, increased stake in 81 Santander Consumer USA and other in Q218 costs associated to integrations (mainly restructuring costs), net of tax impacts, in Spain, Corporate Centre and Po rtugal in Q418 badwill in Poland for the integration of Deutsche Bank Polska
Appendix Spain EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,206 1,409 1,753 1,749 1,710 1,729 1,769 1,783 6,117 6,991 Gross income 1,539 1,475 2,011 1,835 2,063 1,837 2,114 1,880 6,860 7,894 Operating expenses (798) (893) (1,161) (1,188) (1,145) (1,123) (1,103) (1,110) (4,040) (4,480) Net operating income 741 582 850 647 918 714 1,012 770 2,820 3,414 Net loan-loss provisions (163) (144) (120) (175) (207) (196) (197) (129) (603) (728) Other (64) (64) (62) (25) (104) (86) (102) (70) (215) (362) Underlying profit before taxes 514 374 667 447 608 432 713 571 2,002 2,325 Underlying consolidated profit 367 267 489 333 455 326 526 432 1,456 1,739 Underlying attributable profit 362 262 484 330 455 325 526 432 1,439 1,738 Net capital gains and provisions* (300) (280) (300) (280) Attributable profit 362 262 184 330 455 45 526 432 1,139 1,458 (*) Including: in Q317 charges for integration costs in Q218 restructuring costs
Santander Consumer Finance EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,121 1,096 1,121 1,110 1,130 1,116 1,143 1,132 4,449 4,521 Gross income 1,118 1,099 1,135 1,132 1,140 1,126 1,157 1,187 4,484 4,610 Operating expenses (502) (485) (484) (506) (509) (507) (475) (494) (1,978) (1,985) Net operating income 616 614 650 625 631 619 682 693 2,506 2,625 Net loan-loss provisions (61) (57) (90) (58) (120) (69) (124) (47) (266) (360) Other (37) (35) (30) (55) 24 13 5 (166) (157) (125) Underlying profit before taxes 518 522 531 512 535 563 562 480 2,083 2,140 Underlying consolidated profit 370 382 370 373 388 412 405 358 1,495 1,564 Underlying attributable profit 314 319 309 311 323 346 332 296 1,254 1,296 Net capital gains and provisions* (85) (85) Attributable profit 314 319 224 311 323 346 332 296 1,169 1,296 (*) Including: in Q317 charges for integration costs 83
Appendix Santander Consumer Finance Constant EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 + Fee income 1,111 1,091 1,117 1,109 1,128 1,116 1,144 1,133 4,427 4,521 Gross income 1,108 1,093 1,130 1,131 1,139 1,125 1,157 1,189 4,462 4,610 Operating expenses (498) (483) (482) (506) (508) (507) (475) (495) (1,968) (1,985) operating income 610 611 648 625 630 619 682 694 2,493 2,625 loan-loss provisions (60) (58) (89) (58) (120) (69) (124) (47) (264) (360) Other (37) (35) (30) (56) 24 13 5 (166) (158) (125) Underlying profit before taxes 513 519 529 511 534 562 563 481 2,072 2,140 Underlying consolidated profit 366 379 369 373 388 411 406 359 1,486 1,564 Underlying attributable profit 310 316 308 311 322 346 332 296 1,245 1,296 capital gains and provisions* (85) (85) Attributable profit 310 316 223 311 322 346 332 296 1,160 1,296 (*) Including: in Q317 charges for integration costs 84
Appendix Poland EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 318 343 350 360 359 355 354 380 1,371 1,448 Gross income 321 363 358 378 333 398 367 390 1,419 1,488 Operating expenses (146) (150) (149) (160) (154) (162) (156) (165) (605) (636) Net operating income 175 212 209 218 179 236 211 225 814 851 Net loan-loss provisions (27) (34) (36) (40) (46) (41) (33) (41) (137) (161) Other (23) (27) (28) (19) (13) (34) (26) (61) (96) (135) Underlying profit before taxes 125 152 144 159 120 161 151 123 581 555 Underlying consolidated profit 86 120 110 116 89 132 114 88 432 424 Underlying attributable profit 59 83 76 81 63 93 80 62 300 298 Net capital gains and provisions* 45 45 Attributable profit 59 83 76 81 63 93 80 107 300 343 (*) Including: in Q418 badwill for the integration of Deutsche Bank Polska 85
Appendix Poland PLN million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,374 1,449 1,489 1,522 1,500 1,512 1,525 1,632 5,835 6,170 Gross income 1,386 1,532 1,525 1,599 1,390 1,695 1,579 1,674 6,041 6,338 Operating expenses (630) (634) (636) (675) (642) (690) (672) (707) (2,576) (2,711) Net operating income 756 898 889 924 748 1,005 907 967 3,465 3,627 Net loan-loss provisions (116) (142) (155) (171) (191) (175) (143) (177) (585) (687) Other (100) (112) (119) (78) (55) (146) (113) (261) (410) (575) Underlying profit before taxes 539 644 614 674 502 684 651 528 2,471 2,366 Underlying consolidated profit 372 506 470 492 373 560 491 381 1,840 1,805 Underlying attributable profit 257 351 324 344 264 393 346 265 1,276 1,269 Net capital gains and provisions* 193 193 Attributable profit 257 351 324 344 264 393 346 458 1,276 1,461 (*) Including: in Q418 badwill for the integration of Deutsche Bank Polska 86
Appendix Portugal EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 261 262 311 313 320 305 303 307 1,147 1,234 Gross income 294 275 345 330 341 346 323 334 1,245 1,344 Operating expenses (139) (142) (166) (167) (158) (165) (157) (162) (614) (642) Net operating income 155 133 179 163 183 182 166 172 630 702 Net loan-loss provisions 10 5 (37) 10 (8) (0) (11) (12) (12) (32) Other (14) (9) (16) (5) (9) (22) 13 36 (44) 18 Underlying profit before taxes 151 129 126 168 166 159 167 196 574 688 Underlying consolidated profit 126 111 81 120 128 104 115 137 438 483 Underlying attributable profit 125 110 80 119 127 103 114 136 435 480 Net capital gains and provisions* 20 20 Attributable profit 125 110 80 119 127 123 114 136 435 500 (*) Including: in Q218 provisions and restructuring costs associated with inorganic operations, net of tax impacts 87
Appendix United Kingdom EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,349 1,409 1,317 1,291 1,274 1,304 1,291 1,290 5,366 5,159 Gross income 1,432 1,544 1,397 1,344 1,349 1,373 1,367 1,332 5,716 5,420 Operating expenses (723) (723) (694) (721) (764) (763) (730) (738) (2,861) (2,995) Net operating income 709 821 703 623 586 610 637 593 2,855 2,426 Net loan-loss provisions (15) (42) (66) (81) (66) (37) (26) (44) (205) (173) Other (105) (171) (89) (101) (62) (47) (62) (155) (466) (327) Underlying profit before taxes 588 608 547 441 457 526 549 394 2,184 1,926 Underlying consolidated profit 423 414 382 304 326 380 391 291 1,523 1,387 Underlying attributable profit 416 408 377 297 320 372 385 286 1,498 1,362 Net capital gains and provisions Attributable profit 416 408 377 297 320 372 385 286 1,498 1,362
Appendix United Kingdom GBP million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,160 1,213 1,183 1,146 1,125 1,142 1,152 1,144 4,702 4,564 Gross income 1,231 1,329 1,255 1,193 1,192 1,203 1,220 1,181 5,008 4,795 Operating expenses (622) (622) (623) (639) (675) (669) (651) (655) (2,507) (2,649) Net operating income 609 706 632 554 517 534 568 526 2,502 2,146 Net loan-loss provisions (13) (36) (59) (72) (58) (32) (23) (39) (179) (153) Other (90) (147) (81) (90) (55) (41) (56) (137) (408) (289) Underlying profit before taxes 506 524 492 392 404 461 490 350 1,914 1,704 Underlying consolidated profit 364 356 344 270 288 333 348 258 1,334 1,227 Underlying attributable profit 358 351 339 265 282 326 343 254 1,313 1,205 Net capital gains and provisions Attributable profit 358 351 339 265 282 326 343 254 1,313 1,205
Appendix Brazil EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 3,455 3,413 3,392 3,458 3,403 3,296 3,153 3,404 13,718 13,256 Gross income 3,717 3,502 3,542 3,512 3,445 3,323 3,180 3,396 14,273 13,345 Operating expenses (1,314) (1,233) (1,244) (1,289) (1,165) (1,095) (1,031) (1,191) (5,080) (4,482) Net operating income 2,403 2,269 2,298 2,223 2,280 2,228 2,149 2,205 9,193 8,863 Net loan-loss provisions (910) (852) (819) (814) (822) (750) (665) (726) (3,395) (2,963) Other (358) (349) (268) (211) (154) (170) (174) (198) (1,186) (697) Underlying profit before taxes 1,135 1,068 1,211 1,198 1,304 1,308 1,310 1,281 4,612 5,203 Underlying consolidated profit 713 689 747 738 761 730 698 752 2,887 2,940 Underlying attributable profit 634 610 659 642 677 647 619 663 2,544 2,605 Net capital gains and provisions Attributable profit 634 610 659 642 677 647 619 663 2,544 2,605
Appendix Brazil BRL million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 11,561 12,036 12,567 13,139 13,568 14,121 14,451 14,779 49,304 56,920 Gross income 12,438 12,367 13,129 13,367 13,737 14,241 14,579 14,747 51,301 57,304 Operating expenses (4,397) (4,355) (4,613) (4,895) (4,644) (4,697) (4,736) (5,169) (18,259) (19,245) Net operating income 8,041 8,013 8,516 8,472 9,093 9,544 9,843 9,579 33,042 38,059 Net loan-loss provisions (3,045) (3,008) (3,045) (3,105) (3,276) (3,220) (3,070) (3,155) (12,203) (12,721) Other (1,198) (1,231) (1,007) (825) (615) (727) (793) (859) (4,261) (2,994) Underlying profit before taxes 3,798 3,773 4,464 4,543 5,202 5,597 5,981 5,564 16,578 22,344 Underlying consolidated profit 2,386 2,431 2,757 2,802 3,034 3,127 3,200 3,264 10,376 12,624 Underlying attributable profit 2,121 2,152 2,432 2,438 2,699 2,772 2,837 2,877 9,143 11,184 Net capital gains and provisions Attributable profit 2,121 2,152 2,432 2,438 2,699 2,772 2,837 2,877 9,143 11,184
Appendix Mexico EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 804 856 879 811 836 841 927 915 3,350 3,519 Gross income 824 914 892 830 831 868 931 897 3,460 3,527 Operating expenses (319) (361) (356) (345) (340) (363) (384) (376) (1,382) (1,462) Net operating income 505 553 536 485 491 505 547 521 2,078 2,064 Net loan-loss provisions (233) (246) (240) (187) (200) (189) (227) (215) (905) (830) Other (4) (6) (4) (24) (3) (12) (5) 17 (39) (3) Underlying profit before taxes 267 301 292 274 288 305 315 323 1,134 1,230 Underlying consolidated profit 211 238 231 225 225 238 250 262 904 975 Underlying attributable profit 163 187 182 178 175 184 195 206 710 760 Net capital gains and provisions Attributable profit 163 187 182 178 175 184 195 206 710 760
Appendix Mexico MXN million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 17,348 17,505 18,399 18,076 19,257 19,435 20,475 20,671 71,327 79,838 Gross income 17,779 18,706 18,677 18,508 19,143 20,058 20,546 20,264 73,671 80,011 Operating expenses (6,894) (7,386) (7,460) (7,683) (7,832) (8,381) (8,467) (8,497) (29,423) (33,177) Net operating income 10,886 11,320 11,218 10,825 11,310 11,678 12,079 11,767 44,248 46,834 Net loan-loss provisions (5,032) (5,019) (5,015) (4,201) (4,610) (4,357) (5,020) (4,853) (19,267) (18,840) Other (90) (131) (89) (522) (72) (272) (115) 383 (832) (77) Underlying profit before taxes 5,764 6,170 6,113 6,102 6,628 7,049 6,944 7,296 24,149 27,917 Underlying consolidated profit 4,548 4,865 4,841 4,996 5,181 5,511 5,516 5,918 19,250 22,126 Underlying attributable profit 3,523 3,829 3,808 3,963 4,021 4,259 4,306 4,652 15,123 17,239 Net capital gains and provisions Attributable profit 3,523 3,829 3,808 3,963 4,021 4,259 4,306 4,652 15,123 17,239
Appendix Chile EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 592 589 534 583 601 612 582 573 2,298 2,367 Gross income 645 644 604 630 640 642 632 622 2,523 2,535 Operating expenses (264) (260) (253) (248) (258) (272) (257) (258) (1,025) (1,045) Net operating income 381 383 351 382 382 370 375 364 1,498 1,491 Net loan-loss provisions (122) (122) (108) (110) (121) (115) (117) (120) (462) (473) Other 2 7 11 3 22 32 19 31 23 103 Underlying profit before taxes 261 267 255 276 282 287 276 275 1,059 1,121 Underlying consolidated profit 214 218 209 218 223 232 221 226 859 901 Underlying attributable profit 147 149 143 146 151 158 153 153 586 614 Net capital gains and provisions Attributable profit 147 149 143 146 151 158 153 153 586 614
Appendix Chile CLP million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 413,110 430,039 403,461 434,470 444,260 453,403 449,145 444,368 1,681,080 1,791,177 Gross income 450,136 469,704 456,238 469,635 473,564 475,595 486,844 482,500 1,845,714 1,918,503 Operating expenses (184,039) (189,977) (191,129) (184,867) (190,863) (201,511) (198,000) (199,964) (750,012) (790,338) Net operating income 266,097 279,727 265,110 284,768 282,700 274,084 288,844 282,536 1,095,702 1,128,165 Net loan-loss provisions (85,110) (89,381) (81,474) (81,875) (89,852) (84,920) (90,252) (93,034) (337,840) (358,059) Other 1,438 4,750 8,384 2,363 16,034 23,790 14,617 23,614 16,935 78,054 Underlying profit before taxes 182,425 195,096 192,020 205,256 208,882 212,954 213,209 213,115 774,797 848,161 Underlying consolidated profit 149,458 158,760 157,744 162,572 164,822 171,559 170,114 175,302 628,535 681,798 Underlying attributable profit 102,796 108,904 107,839 109,081 111,380 116,945 117,586 118,954 428,619 464,865 Net capital gains and provisions Attributable profit 102,796 108,904 107,839 109,081 111,380 116,945 117,586 118,954 428,619 464,865
Appendix Argentina EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 374 428 382 398 343 367 (12) 518 1,582 1,217 Gross income 405 470 423 449 377 430 (70) 472 1,747 1,209 Operating expenses (221) (269) (235) (244) (218) (207) (0) (323) (970) (749) Net operating income 184 201 187 205 159 223 (70) 149 777 460 Net loan-loss provisions (29) (42) (46) (41) (49) (75) (7) (99) (159) (231) Other 1 (35) (35) (23) (17) (41) 4 9 (92) (45) Underlying profit before taxes 156 123 106 141 92 107 (73) 58 526 185 Underlying consolidated profit 108 86 71 97 67 72 (71) 17 362 84 Underlying attributable profit 108 85 70 96 66 71 (71) 17 359 84 Net capital gains and provisions Attributable profit 108 85 70 96 66 71 (71) 17 359 84
Appendix Argentina ARS million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 6,241 7,378 7,644 8,101 8,293 10,046 12,292 13,530 29,364 44,160 Gross income 6,764 8,104 8,460 9,103 9,117 11,729 11,492 11,557 32,431 43,896 Operating expenses (3,690) (4,640) (4,713) (4,964) (5,278) (5,707) (7,693) (8,516) (18,007) (27,193) Net operating income 3,074 3,464 3,747 4,139 3,840 6,022 3,800 3,042 14,424 16,703 Net loan-loss provisions (486) (730) (903) (828) (1,196) (2,021) (2,546) (2,615) (2,947) (8,379) Other 17 (596) (659) (466) (411) (1,077) (849) 721 (1,704) (1,616) Underlying profit before taxes 2,606 2,138 2,185 2,845 2,232 2,923 404 1,148 9,774 6,708 Underlying consolidated profit 1,807 1,486 1,462 1,960 1,610 1,961 (612) 104 6,715 3,063 Underlying attributable profit 1,795 1,477 1,453 1,948 1,599 1,946 (618) 112 6,672 3,039 Net capital gains and provisions Attributable profit 1,795 1,477 1,453 1,948 1,599 1,946 (618) 112 6,672 3,039
Appendix United States EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,763 1,738 1,545 1,495 1,435 1,500 1,545 1,770 6,540 6,250 Gross income 1,879 1,880 1,604 1,596 1,578 1,670 1,735 1,967 6,959 6,949 Operating expenses (837) (845) (743) (773) (735) (737) (748) (795) (3,198) (3,015) Net operating income 1,042 1,035 861 824 843 932 987 1,172 3,761 3,934 Net loan-loss provisions (811) (697) (634) (638) (579) (445) (649) (945) (2,780) (2,618) Other (32) (24) (2) (31) (23) (50) (69) (57) (90) (199) Underlying profit before taxes 199 314 225 155 241 437 269 170 892 1,117 Underlying consolidated profit 138 235 154 109 174 298 175 123 636 770 Underlying attributable profit 95 149 93 71 125 210 125 92 408 552 Net capital gains and provisions* (76) (76) Attributable profit 95 149 93 (5) 125 210 125 92 332 552 (*) Including: in Q417 fiscal reform, provisions for hurricanes, increased stake in Santander Consumer USA and other 98
Appendix United States USD million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income 1,877 1,912 1,820 1,765 1,764 1,787 1,796 2,028 7,373 7,374 Gross income 2,001 2,068 1,893 1,884 1,940 1,990 2,018 2,252 7,845 8,199 Operating expenses (891) (929) (875) (909) (904) (878) (868) (907) (3,605) (3,557) Net operating income 1,109 1,138 1,018 975 1,036 1,112 1,149 1,345 4,240 4,642 Net loan-loss provisions (863) (768) (749) (753) (712) (528) (758) (1,092) (3,134) (3,089) Other (34) (27) (4) (36) (28) (60) (81) (65) (101) (235) Underlying profit before taxes 212 343 265 186 296 524 310 188 1,006 1,318 Underlying consolidated profit 147 257 182 132 214 357 201 136 717 909 Underlying attributable profit 101 163 111 85 154 252 144 102 460 651 Net capital gains and provisions* (85) (85) Attributable profit 101 163 111 (0) 154 252 144 102 374 651 (*) Including: in Q417 fiscal reform, provisions for hurricanes, increased stake in Santander Consumer USA and other 99
Appendix Corporate Centre EUR million Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 2017 2018 NII + Fee income (198) (223) (227) (240) (233) (241) (265) (277) (889) (1,016) Gross income (341) (340) (300) (238) (227) (250) (257) (295) (1,220) (1,028) Operating expenses (119) (118) (118) (120) (121) (122) (123) (128) (476) (495) Net operating income (460) (458) (419) (359) (348) (372) (380) (423) (1,696) (1,523) Net loan-loss provisions (5) (11) (22) (8) (37) (30) (28) (21) (45) (115) Other (32) (53) (54) (43) (43) (50) (55) 47 (181) (101) Underlying profit before taxes (497) (522) (495) (410) (427) (452) (463) (397) (1,923) (1,739) Underlying consolidated profit (471) (561) (481) (378) (421) (474) (456) (368) (1,890) (1,718) Underlying attributable profit (468) (563) (480) (378) (421) (475) (456) (369) (1,889) (1,721) Net capital gains and provisions* (130) (306) (40) (436) (40) Attributable profit (468) (563) (610) (684) (421) (515) (456) (369) (2,326) (1,761) (*) Including: in Q317 equity stakes and intangible assets in Q417 goodwill charges 100 in Q218 restructuring costs
Glossary
GlossaryAcronyms AT1: Additional Tier 1 NPL: Non-performing loans bn: Billion PBT: Profit before tax CET1: Common equity tier 1 P&L: Profit and loss CIB: Corporate & Investment Bank QoQ: Quarter on Quarter CoE: Cost of equity Repos: Repurchase agreements C/I: Cost to income ROE: Return on equity DGF: Deposit guarantee fund ROF: Gains on financial transactions DPS: Dividend per share RoRWA: Return on risk-weighted assets GDP: Gross domestic product RoTE: Return on tangible equity FL: Fully-loaded RWA: Risk-weighted assets EPS: Earning per share SBNA: Santander Bank NA LLPs: Loan-loss provisions SCF: Santander Consumer Finance LCR: Liquidity coverage ratio SC USA: Santander Consumer USA LTD: Loan to deposit SME: Small and Medium Enterprises M/LT: Medium- long- term SRF: Single Resolution Fund mn: million ST: Short term n.a.: Not available TLAC: Total loss absorbing capacity NII: Net interest income TNAV: Tangible net asset value NIM: Net interest margin YoY: Year on Year MREL: Minimum requirement for eligible liabilities UK: United Kingdom n.m.: Not meaningful US: United States
Glossary definitions PROFITABILITY AND EFFICIENCY RoTE: Return on tangible capital: Group attributable profit / average of: net equity (excluding minority interests) intangible assets (including goodwill) RoRWA: Return on risk-weighted assets: consolidated profit / average risk-weighted assets Efficiency: Operating expenses / gross income. Operating expenses defined as general administrative expenses + amortisations CREDIT RISK NPL ratio: Non-performing loans and customer advances, customer guarantees and contingent liabilities / total risk. Total risk is defined as: normal and non-performing balances of customer loans and advances, customer guarantees and contingent liabilities NPL coverage ratio: Provisions to cover losses due to impairment of customer loans and advances, customer guarantees and contingent liabilities / non-performing balances of customer loans and advances, customer guarantees and contingent liabilities Cost of credit: Provisions to cover losses due to impairment of loans in the last 12 months / average customer loans and advances of the last 12 months CAPITALISATION Tangible net asset value per share TNAV: Tangible stockholders equity / number of shares (excluding treasury shares). Tangible stockholders equity calculated as shareholders equity + accumulated other comprehensive incomeintangible assets Notes: 1) The averages for the RoTE and RoRWA denominators are calculated on the basis of thirteen months from December to December. 2) For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the RoTE is the annualised underlying attributable profit (excluding non-recurring results), to which are added non-recurring results without annualising them. 3) For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the RoRWA is the consolidated annualised result (excluding non-recurring results), to which is added non-recurring results without annualising them. 4) The risk-weighted assets included in the RoRWA denominator are calculated in accordance with the criteria defined by the Capital Requirements Regulation (CRR).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Banco Santander, S.A. | ||||||||
Date: January 31, 2019 |
By: | /s/ José García Cantera | ||||||
Name: | José García Cantera | |||||||
Title: | Chief Financial Officer |