FIXED INCOME INVESTORS PRESENTATION - Here to help you prosper H1 2019 - Banco Santander SA

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FIXED INCOME INVESTORS PRESENTATION - Here to help you prosper H1 2019 - Banco Santander SA
H1 2019

FIXED INCOME
INVESTORS
PRESENTATION
Here to help you prosper
Important information
Non-IFRS and alternative performance measures

In addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, this presentation contains
certain financial measures that constitute alternative performance measures (“APMs”) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and
Markets Authority (ESMA) on 5 October 2015 (ESMA/2015/1415en) and other non-IFRS measures (“Non-IFRS Measures”). The financial measures contained in this presentation that qualify as
APMs and non-IFRS measures have been calculated using the financial information from Santander Group but are not defined or detailed in the applicable financial reporting framework and have
neither been audited nor reviewed by our auditors. We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. We consider these APMs and non-
IFRS measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period. While we believe that these APMs and non-IFRS
measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute of IFRS measures. In addition, other companies,
including companies in our industry, may calculate or use such measures differently, which reduces their usefulness as comparative measures. 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 2019 2Q Financial Report, published as Relevant Fact on 23 July 2019 and 2018 Annual Financial Report, filed with the Comisión Nacional del Mercado de Valores of Spain
(CNMV) on 28 February 2019. These documents are available on Santander’s 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

Forward-looking statements

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.
The following important factors, in addition to those discussed elsewhere in this presentation, could affect our future results and could cause outcomes to differ materially from those anticipated in
any forward-looking statement: (1) general economic or industry conditions in areas in which we have significant business activities or investments, including a worsening of the economic
environment, increasing in the volatility of the capital markets, inflation or deflation, and changes in demographics, consumer spending, investment or saving habits; (2) exposure to various types
of market risks, principally including interest rate risk, foreign exchange rate risk, equity price risk and risks associated with the replacement of benchmark indices; (3) potential losses associated
with prepayment of our loan and investment portfolio, declines in the value of collateral securing our loan portfolio, and counterparty risk; (4) political stability in Spain, the UK, other European
countries, Latin America and the US (5) changes in laws, regulations or taxes, including changes in regulatory capital and liquidity requirements, including as a result of the UK exiting the
European Union and increased regulation in light of the global financial crisis; (6) our ability to integrate successfully our acquisitions and the challenges inherent in diverting management’s focus
and resources from other strategic opportunities and from operational matters while we integrate these acquisitions; and (7) changes in our ability to access liquidity and funding on acceptable
terms, including as a result of changes in our credit spreads or a downgrade in our credit ratings or those of our more significant subsidiaries. Numerous factors could affect the future results of
Santander and could result in those results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ
materially from those in the forward-looking statements.

                                                                                                                                                                                             2
Important information

 Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such date; such knowledge,
 information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information,
 future events or otherwise.

 No offer

 The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure
 document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person’s own judgment as to the merits or the suitability of the
 securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or
 appropriate in the circumstances and not in reliance on the information contained in 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.

 Historical performance is not indicative of future results

 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 period. Nothing in this presentation should be construed as a profit forecast.

                                                                                                                                                                                        3
CONTENT

1.   Markets and Macroeconomic Environment

2.   Santander Business Model & Strategy

3.   Capital

4.   Asset Quality

5.   Liquidity and Funding

6.   Concluding Remarks

7.   Appendix
                                             4
Markets and
Macroeconomic
Environment

                01
Markets and Macroeconomic Environment

 Environment of subdued global growth weighed down by trade tariffs, global tech
 supply chain concerns, Brexit and geopolitical tensions
                                                                                                         IMF 2019 GDP Outlook1

 Forecast for global economic growth in 2019: 3.2% (3.6%                                             World Output                   3.2%
   in 2018), though estimations continue to be revised down                                           Euro Area                      1.3%
 Mature economies are estimated to grow 1.9%, down from                                              UK                             1.3%
   2.2% in 2018 as cyclical forces begin to wane                                                      United States                  2.6%
                                                                                                      LatAm and the Caribbean        0.6%
 Developing economies will grow by around 4.1%, below the
                                                                                                      Mexico                         0.9%
   4.5% 2018 growth as all regions were revised downwards
                                                                                                      Brazil                         0.8%

 Santander is well-positioned for growth due to its balanced geographic diversification

               AMERICAS                                                                                            EUROPE
   (55% underlying attributable profit2)                                                               (45% underlying attributable profit2)

                1.   World Economic Outlook, July 2019 Update
                2.   Q2 2019 underlying attributable profit as a % of operating areas excluding SGP                                            6
Markets and Macroeconomic Environment

The expansionary cycle in Spain is expected to continue, but at a slower pace
backed by employment creation, higher consumption and real estate recovery
 Annual GDP Growth                                                                 Contribution to GDP Growth
Real, %                                                                            % YoY
                                                                                       6
          3.2        3.0                                                               4
                                  2.6
                                               2.3                                     2
                                                            1.9           1.7
                                                                                       0
                                                                                       -2

          2016      2017         2018       2019 (e)     2020 (e)       2021 (e)
                                                                                       -4
                                                                                            2013   2014    2015    2016   2017   2018   2019(e) 2020(e) 2021(e)

                                                                                                   Net external demand             Domestic demand

 Unemployment rate in Spain                                                        Housing sales and permits
%                                                                                  k
                                                                                            600                      New building permits             120
          19.6
                    17.2                                                                    550                                                       110
                                                                                                                     Sales
                                 14.4                                                                                                                 100
                                              13.9         13.0                             500
                                                                         12.2                                                                         90
                                                                                            450                                                       80
                                                                                            400                                                       70
                                                                                                                                                      60
                                                                                            350
                                                                                                                                                      50
                                                                                            300                                                       40
          2016      2017         2018       2019 (e)     2020 (e)       2021 (e)            250                                                       30

                 * 12m rolling sum                                                                                                                           7
                 Source: Santander Research Department, Bank of Spain
Markets and Macroeconomic Environment

Loan decrease and deposit building in Spain leading to the continued closing of
the funding gap and improved credit quality
Funding Gap                                                                    Non-performing loans
EUR bn, Spanish system, latest available data May-19                           EUR bn and %, Spanish system, latest available data May-19
                                                                               250                                                          16%
2,000                                                                  1,200
                                                                                                                                            14%
1,750                                                                  1,000   200
                                                                                                                                            12%

1,500                                                                  800     150                                                          10%

                                                                                                                                            8%
1,250                                                                  600
                                                                               100                                                          6%
1,000                                                                  400
                                                                                                                                            4%
                                                                                50
 750                                                                   200                                                                  2%

                                                                                 0                                                          0%
 500                                                                   0

                                                                                     Dec-06

                                                                                     Dec-07

                                                                                     Dec-08

                                                                                     Dec-10

                                                                                     Dec-11

                                                                                     Dec-13

                                                                                     Dec-14

                                                                                     Dec-16

                                                                                     Dec-17

                                                                                     Dec-18
                                                                                     Dec-09

                                                                                     Dec-12

                                                                                     Dec-15
                                                                                      Jun-08

                                                                                      Jun-09

                                                                                      Jun-11

                                                                                      Jun-12

                                                                                      Jun-13

                                                                                      Jun-14

                                                                                      Jun-16

                                                                                      Jun-17
                                                                                      Jun-07

                                                                                      Jun-10

                                                                                      Jun-15

                                                                                      Jun-18

                                                                                     May-19
        Dec-06

        Dec-07

        Dec-09

        Dec-10

        Dec-11

        Dec-13

        Dec-14

        Dec-15

        Dec-16

        Dec-18
        Dec-08

        Dec-12

        Dec-17
         Jun-07

         Jun-08

         Jun-09

         Jun-10

         Jun-12

         Jun-13

         Jun-14

         Jun-16

         Jun-17

         Jun-18
         Jun-11

         Jun-15

        May-19

          Total loans inc. reverse repos (LHS)                                          Non-performing loans (LHS)
          Total deposits inc. repos (LHS)                                               NPL ratio (RHS)
          Funding Gap (RHS)

                    Source: Bank of Spain and Santander calculations                                                                              8
Markets and Macroeconomic Environment

UK economy relatively stable, however uncertainty remains

    Annual GDP Growth                                                                                        Bank of England base rate
     Real %                                                                                                   Year end, %

       1.8                                                                1.8                                                        0.75              0.75              0.75      0.75
                    1.4                                 1.6
                                      1.2                                                                          0.50

      2017         2018           2019 (e)          2020 (e)          2021 (e)                                     2017              2018            2019 (e)          2020 (e)   2021 (e)

     Annual CPI inflation rate1                                                                              Average exchange rate
     Annual average, %                                                                                       EUR/GBP
                                                                                                                                     0.90

       2.7          2.5                                                                                            0.88
                                      2.1               1.9               1.8
                                                                                                                                                       0.87              0.87      0.87

      2017         2018            2019 (e)          2020 (e)         2021 (e)                                     2017              2018            2019 (e)          2020 (e)   2021 (e)

                2016, 2017 and 2018 source: Office for National Statistics and Bank of England. 2019 (e), 2020 (e) and 2021 (e) source: Santander UK forecasts at June 2019               9
                1. Consumer Price Index
Markets and Macroeconomic Environment

Steady loan growth, deposit growth expected to continue

        Total loans
        GBP bn1

                           2,017             2,030
                                                               2,040             2,053                Mortgage lending growth at c.3% in 2019, with weaker buyer
           2,000
                                                                                                           demand and subdued house price growth likely to continue
                                                                                                      Consumer credit growth has slowed from double-digit rates
            3.8                                3.9               3.9
  YoY                         3.7                                                  3.9                     to c.7%, and is expected to slow further to c.5% in 2019
  (%)
                                                                                                      Corporate borrowing market is expected to grow by c.2-3%,
                                                                                                           as uncertainty continues to dampen investment intentions

           Jun-18          Sep-18           Dec-18            Mar-19          Jun-19 (e)

        Total deposits
        GBP bn2
                                             1,947             1,947
                                                                                 1,978                Retail deposit growth is expected to be c.4% in 2019
           1,909           1,921
                                                                                                      Household saving ratio has fallen since the end of 2018 from
                                                                                                           4.5% to 4.1% in Q1 2019 and remains low by historical
                                                                                                           standards
  YoY
  (%)       3.6              3.6               3.6               3.6               3.6                Corporate deposit growth expected to remain at c.5%
          Jun-18          Sep-18            Dec-18            Mar-19          Jun-19 (e)

                    Source:Bank of England Bankstats (Monetary and Financial Statistics) published at end-Jun 2019, internal estimates for latest month. Annual growth rates are calculated using Bank of
                    England methodology. As a result, stated growth rates may differ from percentage change in assets
                    1. Total loans includes household (mortgages and consumer credit) plus corporate loans
                                                                                                                                                                                                       10
                    2. Total deposits include household deposits (with banks and NS&I) and corporate deposits, excluding cash holdings
Markets and Macroeconomic Environment

Gradual recovery in economic activity expected starting in 2020

     Annual GDP Growth                                                                                  Interest rate – Selic
     Real, %                                                                                            Year end, %

                                                                        2.5
                                                       2.1
                                                                                                           7.00       6.50                   6.00        7.00
          1.0         1.1                                                                                                        5.50
                                       0.8

         2017         2018          2019 (e)        2020 (e)         2021 (e)                              2017       2018      2019 (e)    2020 (e)    2021 (e)

     Annual inflation rate                                                                               End of period exchange rate
     IPCA, %                                                                                            BRL/USD

                                                                                                                       3.87        3.80        3.80        3.81
                                                                                                            3.30
                       3.8             3.8              3.9             3.8
          3.0

          2017        2018          2019 (e)         2020 (e)        2021 (e)                               2017       2018      2019 (e)    2020 (e)    2021 (e)

                 Sources: Brazilian Central Bank, IBGE and “Pesquisa Focus” estimates (July 12 2019).                                                               11
Markets and Macroeconomic Environment

Privately owned banks continue to support loan growth

     Total loans
        Constant EUR bn1
                                                                                                        Loans slight following resumption of the Brazilian economy with
                             730           749            751            755
               721
                                                                                                              different dynamics in the segments.

                                                          5.7%          5.5%                            Loans to Individuals grew 9.9%, while Corporate & SME Loans
                                          5.0%
  YoY                       3.8%
  (%)         1.5%                                                                                            rose 0.3% (YoY).
                                                                                                        Privately owned banks grew 13.2% YoY, while state-owned
                                                                                                              banks dropped 1.2% YoY.
             Jun-18       Sep-18         Dec-18         Mar-19        May-19

     Total customer funds
        Constant EUR bn1,2
                                                                        1,743
                                          1,684          1,708
                            1,651                                                                       Total customer funds increased 9.2%, mostly influenced by
              1,602
  YoY                                                                                                         Time Deposits (+13.7%), Savings Deposits (+7.2%) and
                                            7.8%                          9.2%
  (%)         6.3%           7.1%                          7.1%                                               Funds (+12.3%).

              Jun-18       Sep-18         Dec-18         Mar-19        May-19
                       Source: Central Bank of Brazil
                       (1) End period exchange rate as of May-19.
                                                                                                                                                                                                12
                       (2) Total Deposits+ mutual funds + other funding (debentures, real estate credit notes - LCI, agribusiness credit notes - LCA, treasury notes (letras financeiras) and
                           Certificate of Structured Transactions - COEs).
Markets and Macroeconomic Environment

US growth projected to slow as interest rates level off

     GDP Growth                                                                                          Interest Rate
     %, real                                                                                             %, period average1

                                                                                                                                            2.60        2.55        2.55
                          2.9                                                                                               2.31
                                        2.5
          2.2
                                                       1.7             1.5                                   1.26

          2017           2018        2019 (e)        2020 (e)       2021 (e)                                 2017           2018          2019 (e)     2020 (e)    2021 (e)

     CPI Inflation Rate                                                                                  USD/EUR Exchange Rate
     %, period average                                                                                    Period end

                                                                                                               1.20           1.14            1.14                    1.13
                                                                                                                                                          1.10
                         2.4                           2.3             2.3
         2.1                          1.9

        2017         2018           2019 (e)        2020 (e)        2021 (e)                                   2017           2018          2019 (e)    2020 (e)    2021 (e)

                   Source: FRB, Knoema.com (U.S. IMF Forecasts), LongForecast.com, and estimates by Santander Research La Semana as of 12 July 2019.                           13
                   1. 3-month LIBOR rate from ICE Benchmarking Administration.
Markets and Macroeconomic Environment

Industry loan growth driven by commercial balances

     Total loans                                                                                                       Total deposits
      USD bn 1                                                                                                         USD bn 1

                                                            10,155      10,150                                                                      13,866   13,926
                                             9,942                                                                       13,529   13,469   13,574
                 9,755          9,859

       YoY                                                                                                 YoY             3.4%                      3.5%     2.9%
                  4.9%                                      4.4%           4.1%                                                     2.8%     2.7%
       (%)                      4.2%          4.0%                                                         (%)

                 Mar-18        Jun-18        Sep-18       Dec-18        Mar-19                                           Mar-18   Jun-18   Sep-18   Dec-18   Mar-19

    Quarter over Quarter                                                                   Jun-19
                    2           Jun-18         Sep-18         Dec-18        Mar-19
         Growth %                                                                           (est.)
    Total Loans                       4.8%           0.0%         11.6%        (0.4%)          8.0%
    C&I                               7.6%           0.4%         24.4%          3.6%          2.0%                     Mortgages and C&I Loans projected to drive
    Real Estate                       1.2%         (0.4%)        (2.0%)        (0.4%)          2.4%
                                                                                                                            growth in Q2 2019. Home equity continues to
      Resi Mortgages                 0.8%           2.8%         (2.0%)        (0.8%)          6.8%
      CRE                            6.8%         (2.8%)           0.0%          2.0%        (0.4%)                         decline
      Home Equity                 (13.6%)        (10.8%)         (9.2%)        (8.0%)       (10.8%)
                                                                                                                        Deposits expected to grow in Q2 2019
    Deposits                        (2.8%)           4.0%         15.6%        (0.4%)          2.4%

    Loan to Deposit Ratio           71.6%         70.9%            70.2%          70.3%       71.3%

                          Source: FDIC Statistics on Depository Institutions; data available one quarter in arrears.
                          1. Gross Loans.                                                                                                                                 14
                          2. Annualised large banks ending QoQ growth rate based on Federal Reserve data.
Markets and Macroeconomic Environment

Economy expected to decelerate, with lower inflation and 8.00% benchmark rate

     Annual GDP Growth                                                                      Central Bank rate
     Real, %                                                                                Year end, %   8.25     8.00
                                                                                              7.25                             7.50
                                                                                                                                           7.00

           2.1       2.0
                                                       1.7              1.7
                                      1.0

          2017      2018           2019 (e)         2020 (e)         2021 (e)                 2017        2018    2019 (e)    2020 (e)    2021 (e)

      Annual Inflation Rate                                                                 Average Exchange Rate
     %                                                                                      MXN/USD
                                                                                                                                 20.5        20.8
         6.8                                                                                    18.9       19.2      19.7

                   4.8
                                    3.9
                                                      3.5              3.5

         2017     2018           2019 (e)          2020 (e)         2021 (e)                    2017       2018    2019 (e)    2020 (e)    2021 (e)
                  Source: Deputy General Direction of Analysis, Strategy & Public Affairs                                                             15
Markets and Macroeconomic Environment

Softer system loan and deposit growth

     Total loans
        Constant EUR bn1

                            230          237          240           243        Consumer loans growing at a moderate pace reflecting
              227
                                                                                  persistently high interest rates
  YoY        11.6%
  (%)                  10.2%            9.3%          10.1%                    Deceleration in corporate loan growth
                                                                    8.3%

             Jun-18    Sep-18          Dec-18        Mar-19       May-19
     Total customer deposits
        Constant EUR bn1
               225          224          232           233          236
                                                                               Slower YoY deposit expansion mainly driven by lower growth
                                                                                  rates in demand deposits experienced since Q3’18
  YoY        11.9%
                           9.6%                                                Sequentially, softer deposit growth was mainly driven by
  (%)                                   8.3%          8.4%          7.6%
                                                                                  term deposits while demand deposit growth was stable

             Jun-18        Sep-18      Dec-18        Mar-19       May-19
                           (1) End period exchange rate as of May-19                                                                       16
                           Source: CNBV Banks as of May-19 (last available)
Santander
Business Model &
Strategy

                   02
Santander Business Model & Strategy

Our business model has unique competitive advantages

                 1
                 1          Our scale provides potential for organic growth

                  2         Unique personal banking relationships strengthen customer loyalty

                            Our geographic and business diversification and our model of
                  3         subsidiaries makes us more resilient under adverse circumstances

                                                                                                18
Santander Business Model & Strategy

 We have in-market scale in our core markets, with customers distributed across                                                                                                                                   1
 geographies with high growth potential
Market shares                                                                                                     Customers distributed across geographies
                                                                                                                    Jun-19

                                                                  9%
                                                                Loans
                                                                                                                                                                1 Billion
                                                                  9%
                                                               Deposits
                                                                                                                                                           Total Population
                                                                                            12%
                                                      18%                                   Loans

                           3%
                                                      Loans
                                                      16%
                                                                                            12%
                                                                                          Deposits                                                          142 mn
                          Loans
                           3%
                                                    Deposits                    Top 3                                                            Total Customers
       13%                                                            17%
       Loans             Deposits                                    Loans
                                                                                                                                                             Argentina; 3% Others; 1%
       14%                                                            19%                                                                                  Chile; 2%                 Spain; 10%
      Deposits                                                      Deposits
                                               10%
                                               Loans                                                                                                                                              SCF; 14%

                                               11%
            18%                              Deposits                                                                                    Brazil; 31%
            Loans
            17%                      10%
           Deposits                  Loans                                                                                                                                                        UK; 18%

                                     12%
                                   Deposits                                                                                                                                         Poland; 3%
                                                                                                                                                       Mexico; 12%
                                                                                                                                                                        US; 4% Portugal; 2%

                      Data: Market-share as at Mar-19 and the US latest available. The UK: includes London Branch. Poland: including SCF business in Poland. The US: in all states                           19
                      where Santander Bank operates. Brazil: deposits including debenture, LCA (agribusiness notes), LCI (real estate credit notes), financial bills (letras financieras) and
                      COE (certificates of structured operations)
Santander Business Model & Strategy

Focus on increasing customer loyalty via unique personal banking                                                         2
relationships...

          Total customers                                  Loyal customers                  Loyal / Active
              142 mn (+4%)                                  20.6 mn (+10%)                   customers

                                                  Individuals (mn)   Companies (k)

                                                     +11%                +7%           29%               30%
                                           142             18.9       1,626   1,743
                        139       141              17.1
        136   138
 135                                                                                   Jun-18             Jun-19

                                                                                       Increased loyalty ratio in
Q1'18   Q2     Q3        Q4      Q1'19       Q2   Jun-18   Jun-19    Jun-18   Jun-19     8 core countries

                    Note: Year-on-year changes                                                                      20
Santander Business Model & Strategy

 … together with increased digitalisation…                                                                                                                                                                          2

         Digital customers1                                                              # Accesses2                                                      # Active transactions3
                                                                                           (online and mobile)                                                       (monetary and voluntary)

               34.8 mn (+22%)                                              3,725 mn in H1’19 (+28%)                                                      1,062 mn in H1’19 (+25%)

                                                                                                                  1,895                                                                                       545
                                    33.9 34.8                                                         1,768 1,830                                                                               517
                         32.0                                                               1,624                                                                                     498
               30.1                                                              1,521                                                                          443        456
27.5    28.4                                                          1,381                                                                          409

Q1'18   Q2     Q3          Q4      Q1'19        Q2                    Q1'18        Q2         Q3        Q4       Q1'19        Q2                    Q1'18        Q2         Q3        Q4       Q1'19          Q2

                      Note: YoY changes.
                      1. Data as of 30 June. Every natural or legal person that, being part of a commercial bank, has logged in to their personal area of internet banking or mobile phone (or both) in the
                      last 30 days. Digital customers in the last 90 days: 38.4 mn.                                                                                                                            21
                      2. Private accesses. Logins of bank’s customers on Santander internet banking or apps. ATM accesses by mobile are not included.
                      3. Customer interaction through mobile or internet banking which resulted in a change of balance (monetary and voluntary). ATM transactions are not included.
Santander Business Model & Strategy

   … improves operational excellence by helping to deliver sustained top line                                                                                                           2
   growth and increase cost savings
   Increased customer revenue…                                                                         …with better cost-to-income than peers1
    Constant EUR mn                                                                                     Cost-to-income, Peers Mar-19, Santander Jun-19

                                                                                                                                           47%                          9 pp
                                                                                                                                                                     better than
                                                                                                                  Peer 1                     49%                      peer avg.
Net interest income
                                                                 8,650          8,986
       8,278                                                                                                      Peer 2                     49%

                                                                                                                  Peer 3                        53%

                                                                                                                  Peer 4                         54%
Net fee income
        2,843                                                   2,917 2,946                                       Peer 5                           56%

                                                                                                                  Peer 6                           56%

                                                                                                                  Peer 7                           57%

        Q1'18     Q2'18             Q3'18          Q4'18          Q1'19          Q2'19                            Peer 8                                 63%

                                                                                                                  Peer 9                                       70%

                                                                                                                                                                                   22
                      1.   Peers included are: BBVA, BNP Paribas, Citibank, Credit Agricole, HSBC, ING, Itau, Scotiabank and Unicredit
Santander Business Model & Strategy

Our geographic and business diversification, coupled with our subsidiaries                                                                                    3
model…
Loan portfolio by country                                                              Loan portfolio by business
Breakdown of total gross loans excluding reverse repos, % of operating areas ex. SGP   Breakdown of total gross loans excluding reverse repos, Jun-19
Jun-19

                           Argentina;
                                                                                                       Other individuals;
                    Chile; 5% 1% Other S. Am.; 1%                                                             11%
           Brazil; 9%                             Spain; 22%

     Mexico; 4%                                                                              CIB; 12%                                         Home
                                                                                                                                            mortgages;
                                                                                                                                               35%
     US; 10%
                                                       SCF; 11%
                                                                                         Corporates;
 Other Eur; 4%                                                                              14%

     Portugal; 4%
           Poland; 3%
                                             UK; 26%                                                 SMEs; 11%                   Consumer;
                                                                                                                                    17%

        Total gross loans excluding reverse repos: EUR 899 bn
        RWAs as of Jun-19: EUR 605 bn                                                           88% of loan portfolio is Retail, 12% Wholesale

                                                                                                                                                         23
Santander Business Model & Strategy

   … with strong balance sheet growth…                                                                                                                                         3
    Loans and advances to customers in core markets                                                    Customer funds in core markets
    Jun-19                                                                                             Jun-19

                                                         232                         0%                                                                         317     +5%

                                                   201                              -4%                                                                 205             +2%

         SCF                   101                                                 +7%                                                    121                           +11%

                            90                                                    +10%                                            70                                    +10%

                          78                                                       +9%                                       42                                         +7%

                    41                                                             +7%                                       42                                         +2%

                   37                                                               -1%                     SCF              38                                         +3%

                   33                                                              +8%                                       36                                         +22%

                   30                                                             +26%                                       35                                         +5%

               6                                                                  +14%                                  11                                              +40%
Group                                                                                              Group
                                                                       899
                                                                        899
                                                                       896         +4%             Total1                                                         350
                                                                                                                                                                  954   +6%
Total1

                         1. Group Total also includes Other Europe, Other South America, Santander Global Platform and Corporate Centre.                                  24
                         Note: Gross loans and advance to customers excluding reverse repos. Customer funds: deposits excluding repos + marketed mutual funds
Santander Business Model & Strategy

   … and underlying attributable profit distributed across regions…                                                                                                                 3
     Underlying attributable profit distribution1                                                            H1’19 Underlying attributable profit in core markets
     % underlying profit, H1’19                                                                              EUR mn and % change vs. H1’18 in constant euros

                                                                                                                                                                     1,482   +18%
                                                          Spain;
                Brazil;
                                                           13%                                                                                                 694           +5%
                 29%
                                                                                                              SCF                                           658               -1%

                                                                                                                                                      582                    -13%
                           South                   Europe                 SCF;
                          America                                         13%
                                                                                                                                               465                           +30%
                                                     45%
                               38%
                                                                                                                                             424                             +12%
    Chile; 6%                    North America
                                                                         UK;                                                           311                                   +4%
Argentina; 1%
                                         17%                             11%
                                                                                                                                    260                                      +14%
      Uruguay and
     Andean Region;2                                       Portugal;
          2%                                                  5%                                                              150                                             -1%
                     Mexico;                         Poland;
                       8%                USA;          3%
                                          9%                                                                             73                                                   0%

                          1.   Excluding Corporate Centre (EUR -1,108 mn) and Santander Global Platform (EUR -51 mn)                                                          25
                          2.   Uruguay and Andean Region underlying profit (EUR 95 mn)
Santander Business Model & Strategy

… has allowed us to generate high and recurring pre-provision profit, leading to                                                                                          3
resilient growth through the economic cycle…
Resilient profit generation throughout the cycle                                                   PPP/Loans well above most European peers1
 Group attributable profit, EUR bn                                                                  %, Jun-19, Santander calculations

                                                                                                          Peer 1                                                   3.1

                                                                                                                                                             2.8

         9.1    8.9    8.9
                               8.2
                                                                                                          Peer 2                                           2.6
  7.6                                                                                  7.8
                                                                                6.6
                                                                  6.0    6.2
                                     5.3
                                                           5.8                                            Peer 3                                     2.3
                                                   4.2
                                                                                                          Peer 4                               2.0
                                            2.3

                                                                                                          Peer 5                              1.9
  2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018

                                                                                                          Peer 6                        1.4

                         1.   European peers include: BBVA, BNP Paribas, Credit Agricole, HSBC, ING and Unicredit                                                    26
Santander Business Model & Strategy

… and to generate stable and predictable growth                                                                                                                                 3
Predictable results with the lowest volatility among peers coupled with growth in earnings
Quarterly reported EPS volatility1, 1999-Q1’19

                 695%           344%

                                               123%
                                                               108%
                                                                                88%
                                                                                                76%
                                                                                                               61%
                                                                                                                               44%             42%
                                                                                                                                                               34%

                                                                                                                                                                      9%

                   US              IT             CH              CH              FR              FR             US              US              NL              US

                   2x              2x             0x              0x              6x             4x              6x              4x             1x             10x    5x

                                                                              Net income increase 1999-2018

                     1.   Source: Bloomberg, with GAAP Criteria. Note: Standard deviation of the quarterly EPS starting from the first available data since Jan-99         27
Santander Business Model & Strategy

 The Group’s medium-term strategy is based on three main pillars

                                               Improving operating performance

Our three-pillar
plan for                                            Accelerating digitalisation:
                                                    building an open financial
increasing                                          services platform
profitability
                                                           Continuing to improve
                                                           capital allocation

                                                                                   28
Santander Business Model & Strategy

        Improving operational performance: Further leveraging our diversification and
        scale and adding value via our global businesses and shared capabilities

Accelerating growth                                                          Global capabilities to enhance operating
with sustainable profitability                                                     efficiency across the Group
           USA                                              Europe

           Mexico
                                             Building the leading European
                                             bank in customer experience
                                             and profitability, leveraging           Medium-term efficiency
           South
                                             our scale & digital                   expected, mainly in Europe:
           America
                                                                                       IT & Operations
 A region with structural
 growth and high and                                                                   Shared services & Others
 increasing profitability

                                                                                                                    29
Santander Business Model & Strategy

Improving operational performance: Key regional expected levers

Europe                                North America                            South America

        Low credit demand & rates:             Attractive US market: better             High structural growth
        limited revenue growth…                risk return dynamics. Mexico:
                                               high growth potential
        …and CoR at lows…                                                               Focus on customer
                                               Benefitting from Group
                                               scale and strong                         experience & digitalisation
        …requires a cross-border               operational leverage
        approach in a fragmented                                                        High & sustainable revenue
        market                                 Volume growth expected to                growth (double digit expected
                                               be above the market to                   CAGR4)
        Further operational                    drive higher revenues
        integration and cost                                                            Organically deploying more
                                               Stable cost to income
        efficiencies (c.€1Bn)                                                           capital (>30% of RWAs in the
                                               despite heavy investment
                                               in Mexico                                medium-term)
        Focus on customer
        experience & digitisation              Stable credit quality                    Stable credit quality

                                                                                                                      30
Santander Business Model & Strategy

Accelerating digitalisation: creation of Santander Global Platform to accelerate
progress towards being the best open financial services platform in order to
improve customer experience and lower cost of delivery

                                                         Santander Global Platform (SGP)

            Openbank                                                 Global Payments Services                          Digital Assets

                                                                    Paymentsplatform
                                                                  Payments     platform to
                                                                                         to better
                                                                                            betterserve
                                                                                                   serve
   Fully digital banking platform                                                                               Our common digital assets and
                                                                       existing
                                                                  existing  andand
                                                                                 newnew   customerswith
                                                                                       customers
and value proposition in our existing                                                                         Centres of Digital Expertise help our
                                                                   with best-in-class
                                                                   best-in-class      value
                                                                                  value      propositions
                                                                                          propositions
   markets and in new markets                                                                                 banks in their digital transformation
                                                                            developed globally
                                                                          developed    globally

• Openbank                                                    • Superdigital                                • Digital assets – SaaS model1
• Open Digital Services (ODS)                                 • Pago FX                                     • Centres of Expertise2
                                                              • Global Merchant Services (GMS)              • InnoVentures
                                                              • Global Trade Services (GTS)

                  1.   SaaS: Software as a Service                                                                                             31
                  2.   Contact Centre Digitalisation; Conversion Rate Optimisation; Machine Learning; …
Santander Business Model & Strategy

Continuing to improve capital allocation: executing the following levers to drive
further improvement in profitability, aligned with our strategic plan

Improved capital                  Capital                                          Further alignment
allocation:                       efficiency:             Digitalisation:          of senior
more capital to our               minimum profitability   driving higher revenue   management
most profitable                   thresholds and faster   growth & operational     remuneration with
geographies                       asset rotation          efficiency               capital goals

Higher profitability leads to higher capital generation capacity and potential
              to increase growth & shareholder remuneration

                                                                                                   32
Capital

          03
Capital
     Santander’s capital levels, both phased-in and fully loaded, exceed minimum
     regulatory requirements
      SREP capital requirements (phased-in) and MDA                                                                 Assumed capital requirements (fully loaded)
       Jun-19                                                                                                        Jun-19

                                                                   14.83%                                                                                     14.80%                           >15%
                 13.20%                   +163 bps                                                                              13.20%                                                         2.00%
                                                                     1.96%           T2                                                       +160 bps          2.07%                                      T2
          T2       2.00%                                             1.57%           AT1                                  T2     2.00%                          1.43%                          1.50%       AT1
        AT1        1.50%                  +160 bps                                                                      AT1      1.50%        +160 bps
G-SIB buffer       1.00%                                                                                       G-SIB buffer      1.00%
                                        CCyB;                                                                                                  CCyB;
                                              1
      CCoB         2.50%                0.20%                                                                         CCoB       2.50%         0.20%

                                                                    11.30%           CET1                                                                      11.30%                         11-12%       CET1
   Pillar 2 R      1.50%                                                                                           Pillar 2 R    1.50%

     Pillar 1      4.50%                                                                                             Pillar 1    4.50%

           Regulatory Requirement                             Group ratios Jun-19                                        Assumed regulatory              Group ratios Jun-19               Medium-term
                    2019                                                                                                 requirement Mar-19                                                target ratios

       The minimum CET1 to be maintained by the Group as for 2019                                                  AT1 and T2 issuance to target 1.5% and 2% of RWAs
            following the results of the Supervisory Review and Evaluation                                               respectively is close to zero assuming constant RWAs
            Process (SREP) is 9.70%                                                                                 Santander currently complies with the minimum required
       As of Jun-19, the distance to the MDA for 2019 is 160 bps2                                                       eligible liabilities (MREL)3 following the MREL eligible
                                                                                                                         issuances over the last two years
                           Note: Data calculated using the IFRS 9 transitional arrangements.
                           1. Estimated Countercyclical buffer 2. MDA trigger = min (A;B;C) = 1.60%; (A) Group CET1 (11.30%) + AT1 (1.57%) + T2 (1.96%) vs. Regulatory Total Capital (13.20%) = 1.63%;   34
                           (B) Group CET1 (11.30%) + AT1 (1.57%) vs. Regulatory T1 Capital (11.20%) = 1.67%; (C) Group CET1 (11.30%) vs. Regulatory CET1 Capital (9.70%) = 1.60%.
                           3. Parent bank, preliminary data
Capital

We consistently generate capital organically
CET1 ratio
 %                                                 11.30                                      +0.29                        +0.15        11.30
                                    10.80                                      10.94
                                                                                                             -0.08
                                                                 -0.36

                                    Jun-18        Dec-18         Regulatory                   Organic Perimeter and Market               Jun-19
                                                                  impacts1                   generation restructuring and others
                                                                                                           costs2
                                              H1'19               H1'18            Diff.
             CET1 ratio                      10.80%              11.30%           50 bps
             FL Total capital ratio          14.24%              14.80%           56 bps                        Santander has a high RoTE with strong capital quality:
             FL Leverage ratio               4.98%                4.97%            -1 bp                        • Equal density (40% vs 40% European peers)
             RoRWA                           1.55%                1.48%           -7 bps                        • Similar FL leverage ratio (5.0% vs 5.4% European
             RoTE                            11.79%              10.51%          -128 bps                          peers)
             Density                         41.48%              40.04%          -144 bps

              1. IFRS 16 (-19 bps); models and TRIM (-15 bps); Other (-2 bps) 2. Restructuring costs (-13 bps); Prisma (+2 bps); Other (+3 bps)                                   35
              Note: 2019 data applying the IFRS 9 transitional arrangements. As indicated by the consolidating supervisor a pay-out of 50%, the maximum within the target range
              (40%-50%), was applied for the calculation of the capital ratios in 2019. Previously, the average cash pay-out for the last three years was considered.
Capital

2018 EBA stress test - Fully loaded CET1: adverse scenario

Fully loaded CET1: adverse scenario (%)      FL CET1: 2017 vs 2020 adverse scenario (bps)

                                                                                                 -141
                      -141 bps                     System: -395 bps                          -193
                                                   Peer average: -403 bps
                                                                                            -219
                                                                                          -265
                                                                                          -288
                                                                                      -334
              10.61              9.20                                                -341
                                                                                     -363
                                                                                    -381
              2017               2020                                              -437
                                                                             -533
                                                                            -576
   Santander is the bank with lowest fully                             -625
   loaded CET1 capital destroyed in the                               -657
  adverse scenario compared to its peers                              -694

                                                                                                        36
Capital

2018 EBA stress test - Fully loaded CET1: baseline scenario

 Fully loaded CET1: baseline scenario (%)   FL CET1 2017 vs 2020 baseline scenario (bps)

                                                                                326
                       +326 bps                                               233
                                                                          199
                                                                          196
                                                                         175
                                  13.87                                 113

               10.61                                                 108
                                                                    102
                                                                    102
               2017               2020                              82
                                                                   62
                                                                                      System: 126 bps
                                                                   59                 Peer average: 114 bps
 Santander is the bank with the strongest                          43
    capital generation in the baseline                       -45
     scenario compared to its peers                          -52

                                                                                                              37
Capital

Strong fundamentals for AT1 bond holders

 Distance to trigger1
  Santander Group’s CET1 levels are well above the minimum loss absorption trigger of 5.125%: >EUR 37 bn
  The first line of defense is the Group’s strong pre-provision profitability providing a high capacity to absorb provisions during crisis
     periods

 MDA
  As of Jun-19, the distance to the MDA for 2019 is 1.60%2
  Targeting a comfortable management buffer to MDA of >100 bps at all times, in line with Santander’s business model and
     predictable results

 ADIs
  Santander Parent Bank has EUR 56.4 bn in Available Distributable Items
  This amount of ADI represents more 110x times the 2019 full AT1 cost of the Parent
  Santander has never been prohibited from making a Tier 1 payment or dividend due to insufficient ADIs. Santander has never
     cancelled the payment of coupons of any of its Tier 1 securities

                1.   CET1 level below which AT1 capital instruments must either convert into ordinary shares or have their principal about written down                               38
                2.   MDA trigger = min (A;B;C) = 1.60%; (A) Group CET1 (11.30%) + AT1 (1.57%) + T2 (1.96%) vs. Regulatory Total Capital (13.20%) = 1.63%; (B) Group CET1 (11.30%) +
                     AT1 (1.57%) vs. Regulatory T1 Capital (11.20%) = 1.67%; (C) Group CET1 (11.30%) vs. Regulatory CET1 Capital (9.70%) = 1.60%
Capital

AT1 issuances distributed by call date

                                    AT1 issuances outstanding at Jun-19
                                         Nominal                                                  Reset
              EUR mn        Currency      EUR            Coupon    Structure         Call date   Spread
           Santander S.A.     EUR              1,500      5.48%           PNC5       12-Sep-19    541 bps
           Santander S.A.     EUR              1,500      6.25%           PBC7       11-Sep-21    564 bps
           Santander S.A.     EUR                750      6.75%           PNC5       25-Apr-22   680.3 bps
           Santander S.A.     EUR              1,000      5.25%           PNC6       29-Sep-23   499.9 bps
           Santander S.A.     EUR              1,500      4.75%           PNC7       19-Mar-25   409.7 bps
           Santander S.A.     USD              1,048      7.50%           PNC5        8-Feb-24   498.9 bps

                                       1,500     1,500      Call date                 1,500

                                                                  1,000      1,048

                                                          750

                                      2019      2021      2022    2023       2024    2025

                                                                                                             39
Capital

FX hedging policy on capital ratio and P&L…

Stable capital ratio hedge                                                          Our P&L Policy

    Hedged
    Exposure
                                                                     Group           Strategic management of the exposure to exchange
                                                                      CET1
                                                                     11.30%1           rates on equity and dynamic on the countervalue of the
                                                                                       units’ annual results in euros

                                                                                     Mitigate impact of FX volatility

                                                                                     Corporate Centre assumes all hedging costs

    Managed to mitigate FX volatility in our
          CET1 ratio

    Based on Group regulatory capital and
          RWAs

                 1.   Data calculated using the IFRS 9 transitional arrangements.                                                    40
Capital

… and interest rate risk hedging

Mostly positive interest rate sensitivity                     ALCO portfolios reflect our geographic diversification
Net interest income sensitivity to a +100 bp parallel shift   Distribution of ALCO portfolios by country
EUR mn, Jun-19                                                %, Jun-19

                                                                                                Chile
                                                                                                 4%

                                   +1,1671                                Brazil                                 Spain
                                                                           22%                                    24%

                                    +55

                                    +297                                               EUR 86 bn
                                                                      Mexico
                                                                                     o/w HTC&S EUR 66 bn
                                                                       5%
                                   +1362                                                                            UK
                                                                                                                   19%
                                                                               USA
                                                                               12%
                                    -66
                                                                                     Portugal           Poland
                                                                                       5%                 9%

                1.   Parent bank                                                                                         41
                2.   SBNA
Asset Quality

                04
Asset Quality

Continued credit quality improvement on a YoY and QoQ basis…

 %

                 0.99     0.97     0.98
                                            Cost of credit ratio flat YoY, maintaining
Cost of credit
                                            low levels in H1’19

                 3.92
                          3.62     3.51

NPL ratio                                   NPL ratio fell YoY in most markets

                  69       68       68
                                            High level of allowances to total loans:
Coverage                                    strong first line of defense
ratio
                 Jun-18   Mar-19   Jun-19

                                                                                         43
Asset Quality
 …to levels well below previous years, supported by generalised improvements
 across geographies
   Credit quality ratios                                                                NPL ratios by country
    %                                                                                   %
                                                                                                                Q2 2018   Q2 2019
                                                                                                 Spain           7.62      7.02
                         4.08% 4.02%                                                             SCF             2.44      2.24
                 3.93%                      3.92% 3.87%
                                                                                                 UK              1.13      1.13
                                                                3.73%
                                                                        3.62%                    Poland          4.58      4.21
    NPL ratio                                                                   3.51%            Portugal        7.55      5.00
                                                                                                 US              2.91      2.32
                                                                                                 Mexico          2.58      2.21
                                                                                                 Brazil          5.26      5.27
                                1
                 2016    2017       Q1'18    Q2'18    Q3'18     Q4'18   Q1'19   Q2'19            Chile           4.86      4.52
                                                                                                 Argentina       2.40      3.79

                                                                                        Cost of credit ratios by country
                 1.18%                                                                  %
                                                                                                                Q2 2018   Q2 2019
                         1.07%                                                                   Spain           0.36      0.41
                                    1.04%
Cost of credit                              0.99% 0.98% 1.00% 0.97% 0.98%                        SCF             0.37      0.36
                                                                                                 UK              0.10      0.06
                                                                                                 Poland          0.71      0.66
                                                                                                 Portugal        0.10      0.03
                                                                                                 USA             3.02      3.09
                               1
                 2016    2017       Q1'18    Q2'18    Q3'18     Q4'18   Q1'19   Q2'19            Mexico          2.78      2.61
                                                                                                 Brazil          4.30      3.84
                                                                                                 Chile           1.18      1.10
                          1.    Acquisition of Banco Popular in 2017
                                                                                                 Argentina       2.47      4.33     44
Liquidity and
Funding

                05
Liquidity and Funding

The Group’s business model combines local knowledge with global best practices
through legally, financially and operationally autonomous subsidiaries…

Legal autonomy structure
Dec-18

                                                                           Santander S.A.1

                                                                             Santander
                                                                             Consumer            Santander
                                                                              Finance1           Holdings
                                                                                                   USA        Banco
                                              Santander
                                              UK Group                                                       Santander
                                              Holdings                                                         Brasil
                               Santander                                                                                   Grupo
                                 Bank                                                                                    Financiero
                 Banco          Polska                                                                                     Mexico      Banco
                Santander                                                                                                             Santander
                  Totta                                                                                                                 Chile      Banco
                SGPS, SA
                                                                                                                                                  Santander
                                                                                                                                                     Río

  Legal autonomy: There are no legal commitments that entail financial support

  Financial autonomy: Financial interconnections are limited and at market prices

  Operational autonomy: Shared services are limited and carried out through autonomous factories. Access to FMIs through other
     Group entities is very limited

                1. Spain Resolution Group headed by Santander S.A. includes, among others, SCF                                                                46
Liquidity and Funding

… divided into different resolution groups that can be resolved separately
though multiple entry points

MPE resolution strategy
Dec-18, EUR bn
                                         Banking Union                                 European Union                                   3rd Countries

                                                 Spain1                                        Poland                            Brazil                    Mexico
     Resolution Group                     PE                                            PE                                PE                        PE

PE   Point of Entry                             Portugal                                            UK                           Chile                   Argentina
                                          PE                                            PE                                PE                        PE

                                                                                                                                 USA
                                                                                                                          PE

                                                                      Size of Resolution Groups (Total assets by geography)

                                                                                                                                   163               118
                                        709                                                                                        Brazil                USA
                                                                                        324
                                                            52                                           48                     61          49             12

                                       Spain1              Portugal                United Kingdom        Poland                Mexico       Chile        Argentina

  We have defined the Resolution Groups (RGs) mirroring the model of autonomous financial groups so that all entities have
     been assigned to one RG

  Each RG comprises the entity identified as the entry point in resolution and the entities that belong to it
                      1. Spain Resolution Group headed by Santander S.A. Includes, among others, SCF                                                                 47
Liquidity and Funding

Santander follows an autonomous capital and liquidity model
Capital ratios by country
Jun-19, %, local figures (phased-in)

                             USA
                                                                                                      UK
                              17.75
                              16.27                                                                   20.87
                                                                                                      17.07
                              15.04
                                                                                                      13.83
                                                                                         Portugal
                                                                                              20.11
                                                                             Brazil           19.78
                                                                                                                   Poland
                                                                             16.19
                                                                                              16.58                16.26
                                    Mexico                                   15.11
                                                                                                                   14.45
                                       16.50                                 14.02
                                       13.16                                                           Santander   14.45
                                                                                                          S.A.
                                       11.89
                                                                                                           21.89
                                                                                       Argentina           19.75
                                                       Chile                                                         Total
                                                                                      13.93
                                                        13.13                                              17.55      T1
                                                                                      11.42
                                                        10.42
                                                                                      10.78                          CET1
                                                        10.42

                    SCF: Total Capital Ratio: 14.75%; T1 13.96% and CET 1 12.37%                                             48
Liquidity and Funding

Santander’s liquidity management is based on the following principles

 Decentralised liquidity model

 Needs derived from medium- and long-term activity must be financed by medium- and long-term instruments

 High contribution from customer deposits, due to the retail nature of the balance sheet

 Diversification of wholesale funding sources by instruments/investors, markets/currencies and maturities

 Limited recourse to wholesale short-term funding

 Availability of sufficient liquidity reserves, including the discount window / standing facility in central banks to be
   used in adverse situations

 Compliance with regulatory liquidity requirements both at Group and subsidiary level, as a new conditioning
   management factor

                                                                                                                            49
Liquidity and Funding

Conservative and decentralised liquidity and funding model

EUR 19 bn1 issued in public markets in 2019 YTD                                                    Very manageable maturity profile
 EUR bn, Jun-19                                                                                     EUR bn, Jun-19
                                                                                                                                                                      40.4

     6.9                                                                                                                                                9.1    7.8
                                                                                                                                          6.3
                                                                                                       San S.A.                    1.6           3.4
                                         5.4

      4.3                                                                                                                                 5.8           4.6
                                                                                                           SCF                     1.2           3.0           2.4     3.1
                       3.1
                                          4.7                                 2.4                                                                                      18.4
                                                                                                                                   2019   2020   2021
                                                                                                                                                 12.4   2022   2023   2023+
                       1.0                                                                                                                11.9
      1.1
                                                                                                            UK                     3.0                  3.0    4.8
                                                            0.9                2.3
                       2.1
      1.5
                                          0.7                                  0.2                                                 2019   2020   2021   2022   2023   2023+

    Spain              UK                SCF               USA               Other                       Brazil                           4.4
                                                                                                                                   1.1           1.2    0.2    0.0     0.0

                                                                                                                                   2019   2020   2021   2022   2023   2023+
 Other public market issuances in Brazil and Chile
                                                                                                          USA                      0.7    1.2    0.9    1.6    0.9     2.9

                                                                                                                                   2019
                                                                                                                                   2019   2020
                                                                                                                                          2020   2021
                                                                                                                                                 2021   2022
                                                                                                                                                        2022   2023
                                                                                                                                                               2023    2023+
                                                                                                                                                                      2023+
                                                                                                                                                                               50
                  1.   Data include public issuances from all units with period-average exchange rates. Excludes securitisations
Liquidity and Funding

  Santander S.A. funding plan

                                                                                                                               Santander S.A. meets current MREL
                                      2018               2019         2019
                                                                                                                               requirement1 and Group capital
EUR bn                               issued           issued YtD issuance plan 2
                                                                                                                               buffers (AT1: 1.5%; T2: 2%)
Covered bonds                           1.6                 1.5                 3-5
Senior preferred                        0.5                 4.3                 3-5
Senior non-preferred                    6.1                 0.0                  --
Hybrids                                 2.8                 1.1
                                                               3
                                                                                1.5*                                           During the last 2 years Santander
                                                                                                                               S.A.’s Funding Plan was focused on
TOTAL                                 10.9                 6.9             7.5 - 11.5                                          TLAC-eligible instruments…
o/w Subordinated                        8.9                 1.1                  1.5

                                                                                                                               … and in 2019 the Funding Plan is
                                                                                                                               expected to cover debt maturities,
                                                                                                                               and manage our funding structure

                    1. Santander’s understanding of current policy under the existing recovery and resolution rules
                    2. Issuance plan subject to, amongst other considerations, market conditions and regulatory requirements                                   51
                    3. EUR 1.1 bn AT1 issued in February 2019 however EUR 1.3bn AT1 amortised in Q2 2019
                    * Net issuance. Includes AT1 (EUR 500 mn) and T2 (EUR 1 bn)
Liquidity and Funding

 Issuances show diversification across instruments and entities

 Debt outstanding by type                              Debt outstanding by issuer entity
  EUR bn and %, Jun-19                                 EUR bn and %, Jun-19

                      Preference shares;                                              Other;
                            9.6; 6%                                                   6.8; 4%
                                                                 USA; 8.2; 5%
              Sub debt;
              12.8; 7%                                      Brazil; 7.0; 4%

                                                        Chile; 10.8; 6%

Senior non-
                                            Senior;                                             San S.A.;
 preferred;                                                SCF;
                                           68.6; 39%                                            68.5; 39%
 35.2; 20%                                               20.1; 11%

                          Covered bonds;                                      UK; 53.4;
                            48.6; 28%                                           31%

                                                                                                            52
Liquidity and Funding

Well-funded, prudent and highly liquid balance sheet with high contribution from
customer deposits and diversified wholesale instruments
Liquidity Balance Sheet
 EUR bn, Jun-19             1,215                  1,215                                                               Liquidity Coverage Net Stable Funding
                                                                                                                           Ratio (LCR) 1     Ratio (NSFR)
                                                                                                                               Jun-19            Mar-19

 Loans and                                                       Customer
 advances to                                        815          deposits                                                      155%             113%
                             908
 customers
                                                                                                              Group

                                                                                                                        2
                                                     54          Securitisations and others                                    158%             122%
                                                    175          M/LT debt issuances
Financial assets             206
                                                     33          ST Funding
Fixed assets & other         100                    138          Equity and other liabilities
                           Assets               Liabilities                                                                    153%             109%
 HQLAs3
 EUR bn, Jun-19      HQLAs Level 1                   189.8                                                              2
                                                                                                                               156%             104%
                     HQLAs Level 2                     15.0

                         Level 2A                        7.3

                         Level 2B                        7.7
                   Note: Liquidity balance sheet for management purposes (net of trading derivatives and interbank balances)
                   1. Provisional data                                                                                                                    53
                   2. Spain: Parent bank, UK: Ring-fenced bank
                   3. 12 month average, provisional
Liquidity and Funding

  The main metrics show the strength and stability the Group’s liquidity position

  Evolution of key liquidity metrics1                                                       LTD and MLT funding metrics by geography
                                                                                            Jun-19

                                                                                                                     (Deposits + M/LT
                                                 2015     2016     2017       2018 Jun-19                LTD Ratio    funding) / Loans 2
         2
Loans / net assets                                75%      75%      75%       76%   75%      Spain          77%            165%
     2
                                                                                             SCF           260%             66%
Loan-to-deposit ratio (LTD)                      116% 114% 109% 113% 111%                    UK            119%            108%
Customer deposits and medium-                                                                Poland         90%            117%
                             2                   114% 114% 115% 114% 115%
and long-term funding / loans                                                                Portugal       92%            119%
Short-term wholesale funding /                                                               USA           145%            109%
                                                  2%       3%       2%        2%    3%
net liabilities                                                                              Mexico         98%            110%
Structural liquidity surplus / net                                                           Brazil         98%            125%
                                                  14%      14%      15%       13%   14%
liabilities                                                                                  Chile         148%             95%
               3
Encumbrance                                       26%      25%      28%       25%   25%      Argentina      61%            167%
                                                                                             GROUP         111%            115%

                       1.   Balance sheet for liquidity management purposes                                                                54
                       2.   Loans and advances to customers
                       3.   Latest data Mar-19
Liquidity and Funding

      Banco Santander S.A. ratings

                                         Moody's                               S&P                                 Fitch
                                         Date last      Direction             Date last     Direction            Date last      Direction
                              Rating                                Rating                              Rating
                                         change       last change             change      last change            change       last change

Covered Bonds                   Aa1      17/04/2018       ↑           -           -            -         AA      15/01/2019          ↑

Senior Debt                   (P) A2     17/04/2018       ↑           A      05/04/2018       ↑           A      17/07/2018          ↑

Senior Non-preferred           Baa1      27/09/2017       ↑           A-     04/06/2018       ↑           A-     09/02/2017     Initial

Subordinated                  (P) Baa2   04/03/2014       ↑         BBB+     04/06/2018       ↑         BBB+     29/05/2014          ↑

AT1                             Ba1      17/07/2014       ↑           -           -            -         BB      29/05/2014          ↑

Short Term Debt                 P-1      17/04/2018       ↑          A-1     06/04/2018       ↑           F2     11/06/2012          ↓

                                                                                                                                55
Liquidity and Funding

     Santander Parent & Subsidiaries’ Senior Debt Ratings

                                                        Moody's                                            S&P                                           Fitch
                                                  Date last      Direction                         Date last      Direction                       Date last      Direction
                                     Rating                                     Outlook   Rating                              Outlook    Rating                              Outlook
                                                  change       last change                         change       last change                       change       last change
Group                                  A2        17/04/2018          ↑          STABLE      A      06/04/2018       ↑         STABLE       A      17/07/2018       ↑         STABLE
San UK PLC                            Aa3        21/12/2016          ↑         POSITIVE     A      09/06/2015       ↑         STABLE     A+*-     01/03/2019       ↓            -
San UK Group Holding PLC              Baa1       16/09/2015          ↑         POSITIVE    BBB     10/04/2015       ↑         STABLE      A*-     01/03/2019       ↓            -
Santander Consumer Finance SA          A2        17/04/2018          ↑          STABLE      A-     06/04/2018       ↑         STABLE      A-      29/05/2014       ↑         STABLE
Banco Santander Totta SA              Baa3       16/10/2018          ↑          STABLE     BBB     18/03/2019       ↑         STABLE     BBB+     21/12/2017       ↑         STABLE
Santander Holding US                  Baa3       18/10/2016          ↓          STABLE    BBB+     06/04/2018       ↑         STABLE     BBB+     17/11/2017       ↑         STABLE
Banco Santander Mexico                 A3        14/06/2016          ↑          STABLE      -           -           -            -       BBB+     13/06/2012       ↓         STABLE
Banco Santander Chile                  A1        27/07/2018          ↓          STABLE      A      04/08/2017       ↑         STABLE       A      17/08/2017       ↓         STABLE
Santander Bank Polska                  A3        03/06/2019          ↑          STABLE      -           -           -                    BBB+     18/09/2018     Initial     STABLE
Banco Santander Brasil                Ba1        25/02/2016          ↓          STABLE     BB-     12/01/2018       ↓         STABLE       -           -            -

Kingdom of Spain*                     Baa1       13/04/2018          ↑          STABLE     A-u     23/03/2018       ↑         POSITIVE     A-     19/01/2018       ↑         STABLE

                         Note: Santander Mexico decided to withdraw the S&P ratings                                                                                          56
Concluding
Remarks

             06
Concluding Remarks

Concluding Remarks

 The Group’s stable capital generation has been supported by strong pre-provision profits providing Santander with
   a high capacity to absorb provisions

 Strong capital levels in line with Santander’s business model based on geographic diversification, solid market
   positions in areas where it operates and independent subsidiary model in terms of capital and liquidity

 The Group is above the regulatory capital requirement with significant payment capacity from available distributable
   items, while maintaining comfortable margins to conversion and MDA triggers

 Santander S.A. already meets with its MREL requirements1 and Group capital buffers

 Comfortable liquidity position: Compliance with regulatory liquidity requirements established at Group and
   subsidiary levels ahead of schedule, with high availability of liquidity reserves

               1. Parent bank, preliminary data                                                                     58
Appendix

           07
Appendix: H1’19 P&L

H1’19 underlying P&L YoY performance
                                    H1’19     H1’18     % vs. H1’18
EUR million                                                     Constant
                                                        Euros
                                                                 euros          Higher customer revenue due to
Net interest income                  17,636   16,931      4        6            increased business volumes and
                                                                                      spread management
Net fee income                        5,863    5,889      0        2
                                                                                     Lower market revenue and
Gains on fin. trans. and other         937     1,342     -30     -29                 higher cost of FX hedging
Total income                         24,436   24,162      1        3
Operating expenses                  -11,587   -11,482     1        2          Cost control with an individualised and
                                                                           targeted cost management across the board
Net operating income                 12,849   12,680      1        3
Loan-loss provisions                 -4,313    -4,297     0        1              Good credit quality evolution,
Other results                          -957     -903      6       10        with low cost of credit and better NPL ratio
Underlying PBT                        7,579    7,480      1        3
Taxes                                -2,679    -2,659     1        3
Minority interests                     -855     -769     11       11
Underlying attributable profit        4,045    4,052      0        2
Net capital gains and provisions1      -814     -300    171      171                        XXXXXX
                                                                                   Mainly restructuring costs
Attributable profit                   3,231    3,752     -14     -12

                                                                                                                     60
Appendix: Costs
Costs (-1.8% YoY in real terms) reflect the first integration synergies, maintaining a
best-in-class cost-to-income ratio and high quality customer service

  Cost evolution
   H1’19 vs. H1’18, %           Nominal           In real terms1                             Targeted cost management by geographies:
                                  -7.3                  -8.8
                                                                                                   Europe: -3.2% cost reduction in real terms, enhancing
         SCF                       2.0                   0.3                                       operating efficiency
                                  -0.6                  -2.8                                       Better operational leverage in the US, while we are
                                                               2
                                 12.0                  10.3                                        investing to update distribution capacity in Mexico
                                  -3.8                  -4.7                                       Costs under control in the South American markets
                                   0.1                  -2.0                                       SGP up EUR 46 mn due to the higher ongoing
                                   7.1                   2.6                                       investments in its initial stage
                                   3.1                  -1.2
                                   1.7                  -0.8
                                                                                                         Costs in real terms             Cost-to-income
                                 89.0                  41.3                                              -1.8% YoY                       47.4% in H1’19
                                  -9.1                -10.6

                  Note: Constant euros   1. Excluding inflation 2. Impacted by DB Polska integration. Efficiency ratio improved 0.6 pp                     61
Appendix: Profitability

Creating shareholder value whilst maintaining high profitability

 TNAV per share                                                                                         Profitability ratios
  EUR

                                                                                                        Underlying RoTE1                                              Underlying RoRWA1

                                                            4.30                                        12.1%                        11.7%                              1.59%                         1.62%
                                4.19
          4.10

         Jun-18               Dec-18                      Jun-19                                         2018                         H1'19                               2018                         H1'19

                   1. Statutory RoTE 2018 11.7% and H1’19 10.5%. Statutory RoRWA 2018 1.55% and H1’19 1.48%
                   Notes: : The averages for the H1 RoTE and RoRWA denominators are calculated on the basis of 7 months from December to June.
                   For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the statutory RoTE is the annualised underlying attributable profit
                   (excluding non-recurring results), to which are added non-recurring results without annualising them.                                                                                       62
                   For periods of less than a year, and in the event of non-recurring results existing, the profit used to calculate the statutory RoRWA is the annualised underlying consolidated result
                   (excluding non-recurring results), to which is added non-recurring results without annualising them.
Appendix: Balance sheet size and profits by geography

Total assets and profit generation by geography

Total assets by geography                                                                        Profitability by geography
 Constant EUR bn, Jun-19                                                                         Underlying attributable profit in constant EUR mn, Underlying RoTE in %, H1’19

                                    YoY Change ex. FX                                                                              YoY Change ex. FX
                  Total               abs.       %                                                                   Total          abs.        %                 RoTE
 Spain           344,831            -14,861     -4.1                                              Spain               694             33        5.0                9.3
 SCF             112,622             8,875       8.6                                              SCF                 658             -9       -1.4                15.4
 UK              327,109            -14,863     -4.3                                              UK                  582            -83      -12.5                7.8
 Poland          44,591              9,409     26.7                                               Poland 1            150             -5       -3.1                9.6
 Portugal        56,747               634        1.1                                              Portugal            260             31      13.5                 12.5
 USA             142,572            19,824     16.2                                               USA 2               465            131      39.4                 6.4
 Mexico          66,930               867        1.3                                              Mexico              424             68      19.0                 20.5
                                                                                                  Brazil             1,482           165      12.6                 21.6
 Brazil          172,869            13,027       8.1
                                                                                                  Chile               311             4         1.3                17.6
 Chile           56,203              6,179     12.4
                                                                                                  Argentina            73            -63      -46.4                17.0
 Argentina       12,903              4,065     46.0

                   1. Adjusted RoTE for 11.30% CET1, 17% 2. Adjusted RoTE for 11.30% CET1, 11%                                                                             63
Appendix: UK loan portfolio: Mortgage and Corporate RE

Credit quality remains very strong, supported by our prudent approach to risk
        Credit impairment losses and cost of risk                                                         Prudent mortgage lending criteria
        Cost of risk (%)
                                                                                                                                                               Dec-18          H1 2019

                                     0.10                                                                  Average LTV on new lending                               63%              64%
                                                             0.08                    0.07                  > 85% LTV                                                17%              21%
            0.02                                                                                           > London                                                 58%              60%

                                                                                                           Stock                                                    42%              42%

       Credit impairment losses (GBP million)                                                             Mortgage loan loss allowance and gross write-offs (GBP million)
                                                                                                                 9x1                   10x                  13x
                                                                                                                                                                               Gross write-offs
                                                                                                                 279                                                           Loan loss allowance

                                                                                                                                       225                  237
                                                                                                                                                                                  214
                                      203

                                                            153

               67                                                                   69
                                                                                                                           33                    22                    18                    6

            Dec-16                  Dec-17                Dec-18                H1 2019                            2016                  2017                 2018               H1 2019
                    1.     Illustrates how many times the current value of write-offs would be covered by the current stock of mortgage impairment loan loss allowances, crystallised during the year.   64
Appendix: UK loan portfolio: Mortgage and Corporate RE

Prime residential mortgage book of GBP 159.4 billion
       Residential mortgage portfolio of GBP 159.4 bn           Geographical distribution
       (stock %, Jun-19)                                        (stock %, Jun-19)
                                                10
                                                                     31
             Fixed rate               15
                                                                                25
                                                 Product                                14        13
             Variable rate                                                                                    11
                                                 profile   75                                                               4              2
             Standard Variable Rate
                                                                  South East   London   North   Midlands   South West,   Scotland     Northern
                                                                                                and East    Wales and                  Ireland
                                                                                                 Anglia       Other

                                                                 Prime London Lending
                                                 6
             Home movers                                                                                     Central Prime Prime Prime
                                      18                                                                             Fringe      Central
             Remortgagers                                                                       Asset (£bn) 39.8         1.85       1.10       0.27
                                                Borrower
                                                 profile   43
             First time buyers                                                                  Ave Loan      203k       288k       325k   411k

             Buy to Let (BTL)                                                                   Volume        196k       6.42k 3.40k           661
                                           33
                                                                                                % >75LTV       11%       10%        6%         8%

                                                                                                % >90LTV       1%        1%         1%         3%
                                                                                                                                                      65
Appendix: Glossary

Glossary and Acronyms
      ADIs: Available distributable items           MPE: Multiple Point of Entry
      bn: Billion                                   MREL: Minimum Required Eligible Liabilities
      bps: Basis points                             NII: Net interest income
      BTL: Buy-to-Let                               NPL: Non-performing loans
      CCoB: Capital Conservation Buffer             PBT: Profit before tax
      CCyB: Countercyclical buffer                  P&L: Profit and loss
      CET1: Common equity tier 1                    PPP: Pre-Provision Profit
      CIB: Corporate & Investment Banking           QoQ: Quarter-on-Quarter
      DGF: Deposit Guarantee Fund                   RoRWA: Return on risk-weighted assets
      DPS: Dividend per share                       RWA: Risk-weighted assets
      EPS: Earning per share                        RoTE: Return on tangible equity
      FL: Fully loaded                              SCF: Santander Consumer Finance
      G-SIBs: Global Systemically Important Banks   SMEs: Small and Medium Enterprises
      HTC: Held to collect portfolio                SRF: Single Resolution Fund
      HTC&S: Held to collect & sell portfolio       ST: Short term
      k: thousands                                  SVR: Standard variable rate
      LTV: Loan-to-Value                            TDR: Troubled Debt Restructuring
      LLPs: Loan-loss provisions                    TLAC: Total Loss-Absorbing Capacity
      MDA: Maximum distributable amount             TNAV: Tangible net asset value
      M/LT: Medium- and long-term                   YoY: Year-on-Year
      mn: Million
                                                                                                  66
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