Poland 2021 Earnings Presentation - 2 February 2022 - Banco Santander
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2 February 2022 Poland 2021 Earnings Presentation
Important Information
Non-IFRS and alternative performance measures
This presentation contains, in addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, 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”). These financial measures that qualify as APMs and non-IFRS measures have been calculated with information from Santander
Group; however, those financial measures are not defined or detailed in the applicable financial reporting framework nor have been audited or 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 our management and investors to compare
operating performance between accounting periods, as these measures exclude items outside the ordinary course performance of our business, which are grouped in the “management adjustment” line
and are further detailed in Section 3.2 of the Economic and Financial Review in our Directors’ Report included in our Annual Report on Form 20-F for the year ended 31 December 2020. Nonetheless, these
APMs and non-IFRS measures should be considered supplemental information to and are not meant to substitute IFRS measures. Furthermore, companies in our industry and others may calculate or use
APMs and non-IFRS measures differently, thus making them less useful for comparison purposes. For further details on APMs and Non-IFRS Measures, 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 the 2020 Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission (the “SEC”) on 26 February 2021, as updated by the Form 6-K filed with the SEC on 14 April 2021 in order to reflect our new organizational and reporting structure,
as well as the section “Alternative performance measures” of the annex to the Banco Santander, S.A. (“Santander”) Q4 2021 Financial Report, published as Inside Information on 2 February 2022. These
documents are available on Santander’s website (www.santander.com). Underlying measures, which are included in this presentation, are non-IFRS measures.
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 advises that this presentation contains “forward-looking statements” as per the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by
words like “expect”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “RoRAC”, “RoRWA”, “TNAV”, “target”, “goal”, “objective”, “estimate”, “future” and similar expressions. Found
throughout this presentation, they include (but are not limited to) statements on our future business development, economic performance and shareholder remuneration policy. However, a number of
risks, uncertainties and other important factors may cause actual developments and results to differ materially from our expectations. The following important factors, in addition to others discussed
elsewhere in this presentation, could affect our future results and could cause materially different outcomes from those anticipated in forward-looking statements: (1) general economic or industry
conditions of areas where we have significant operations or investments (such as a worse economic environment; higher volatility in the capital markets; inflation or deflation; changes in demographics,
consumer spending, investment or saving habits; and the effects of the COVID-19 pandemic in the global economy); (2) exposure to various market risks (particularly interest rate risk, foreign exchange
rate risk, equity price risk and risks associated with the replacement of benchmark indices); (3) potential losses from early repayments on our loan and investment portfolio, declines in value of collateral
securing our loan portfolio, and counterparty risk; (4) political stability in Spain, the United Kingdom, other European countries, Latin America and the US (5) changes in legislation, regulations, taxes,
including regulatory capital and liquidity requirements, especially in view of the UK exit of the European Union and increased regulation in response to financial crises; (6) our ability to integrate
successfully our acquisitions and related challenges that result from the inherent diversion of management’s focus and resources from other strategic opportunities and operational matters; and (7)
changes in our access to liquidity and funding on acceptable terms, in particular if resulting from credit spreads shifts or downgrade in credit ratings for the entire Group or significant subsidiaries.
2
Important Information
Numerous factors could affect our future results and could cause those results deviating from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause
actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this presentation and are informed by the knowledge, information and views available on such date. Santander is not required to update or
revise any forward-looking statements, regardless 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 about historical performance or accretion must not be construed to indicate that future performance, share price or results (including earnings per share) in any future period will necessarily
match or exceed those of any prior period. Nothing in this presentation should be taken as a profit forecast.
Third Party Information
In particular, regarding the data provided by third parties, neither Santander, nor any of its administrators, directors or employees, either explicitly or implicitly, guarantees that these contents are exact,
accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case that any deficiency, error or omission were to be detected. Moreover, in reproducing
these contents by any means, Santander may introduce any changes it deems suitable, may omit partially or completely any of the elements of this document, and in case of any deviation between such
a version and this one, Santander assumes no liability for any discrepancy.
3Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
4Financial system
Loan growth steadily accelerating, deposit growth remained solid
Total loans (Constant EUR bn1)
277 Loan growth accelerated throughout 2021 and reached 4% YoY2 in
273
265 266 267
December.
Individuals grew strongly (+5 YoY2) supported by PLN-denominated
YoY 4.7%
2.8% mortgages (+13%), while consumer lending grew 2% YoY.
(%)
0.6% 0.3%
-2.0% Corporate sector new business rebounded strongly. Total loan
growth for firms was 4% YoY2 in December (fastest rise since late
2019).
Dec-20 Mar-21 Jun-21 Sep-21 Dec-21
Total customer deposits (Constant EUR bn1)
357
338 344
328 336 Deposits advanced 9% YoY in December. Demand deposits
surged 14% YoY and term deposits declined 12% YoY.
YoY 12.3% 11.8% Deposits from individuals increased 6% YoY, while business
(%) deposits were up 13% YoY (non-financial corporations up 10%).
8.8%
7.0%
5.7%
Dec-20 Mar-21 Jun-21 Sep-21 Dec-21
(1) End period exchange rate as of Dec-21, Source: National Bank of Poland, Santander Bank Polska 5
(2) FX adjustedStrategy and business
Santander Bank Polska S.A. – 3rd largest bank in Poland
KEY DATA 2021 YoY Var.4 STRATEGIC PRIORITIES
Customer loans1 EUR 30.7 bn +6.4%
Simplifying organization: systems, structures and
processes based on the One Purpose - One Process
Customer funds2 EUR 42.3 bn +9.7%
approach
Underlying att. Profit EUR 161 mn +2.0% Maximizing customer self-service and enhancing
availability of remote processes & increasing digital
Underlying RoTE 5.0% 0.0 pp customer base
Improving customer satisfaction to remain at Top 3
Efficiency ratio 40.2% -104 bps position in NPS in the Polish market
Loans market share3 11.7% -4 bps Ensuring sustainable growth through safety & long-
lasting trust of our customers and communities by
Deposits market share3 11.2% -7 bps continuing the involvement in CSR activities &
cybersecurity
Loyal customers 2.3 mn +7.1%
Strengthen employee engagement to support
transformation of the Bank
Digital customers 3.0 mn +8.8%
Striving to be the Best Financial Services Platform-
Branches 440 -12.4% supporting further evolution to the Open Platform
Employees 9,718 -8.2% Increasing profitability through effective net interest
income management, higher net fee income and cost
control
Note: 3rd largest bank in Poland in terms of assets as of Sep-21
(1) Gross loans excluding reverse repos. 6
(2) Excluding repos.
(3) As of September 2021.
(4) Constant euros.Strategy and business
Good growth in loyal customers across all segments
Loyal customers (mn)
2.3
7% Significant increase in loyal customers YoY (+7%) reflecting our strategy to
2.1
increase income from loyal customers and to build long-term relationships
Loyal individuals: +7% YoY
Loyal corporates and SMEs: significant increase in loyal companies YoY (+10%)
as we enhance value proposition and non-risk-based revenue and provide
Dec-20 Dec-21
service excellence and continuous quality improvement
Digital customers (mn)
9% 3.0
2.8
Mobile customers +18% YoY and digital customers +9% YoY
Digital framework: delivering efficiency and broadening product range in
digital channels
Dec-20 Dec-21
Digital sales / total1: 61% (+7 pp YoY)
(1) Full year data
7Strategy and business
Retail Banking Q4’21 Summary
Key product performance New products and processes
Good performance in customer acquisition and sales volumes BLIK C – contactless functionality for mobile payments.
in key business lines, despite latest covid wave. Cash consolidation loan available via online channels.
Record mortgage loans new production.
Household insurance in mobile app now available in all sales
channels.
Personal account sales -7% vs. Q3’21; +28% vs. Q4’20
New offer for SMEs: business loan with fixed interest rate –
Personal loan sales vol. +3% vs. Q321; +49% vs. Q4’20 first product of its type in the Polish market.
Mortgage loan sales vol. +12% vs Q3’21; +150% vs. Q4’20
Bancassurance premiums -2,7% vs. Q3’21; +60% vs. Q4’20
Digital channel development Customer Experience Business transformation
3.0 mn digital customers (+9% YoY) Improved service quality: Strategic programmes focused on digital acceleration
2.2 mn mobile customers (+18% YoY) - first time achieved #3 in NPS mass and simplification in progress (in 2021: 6 fewer products in
benchmark (#4 in 2020), front-book and 25 in back-book).
Product and process improvements to maximize self-service, - #2 in NPS benchmark for SMEs Further optimization of the retail network: 16% reduction
increase digital acquisition and sales. of own branch network in 2021 (73 branches closed).
Awards in important rankings: Commenced integration with Allianz in bancassurance area
#1 Forbes Best Bank for SMEs started (due to sale of business in Poland by Aviva).
#3 Newsweek (Retail banking).
8Strategy and business
Further embedding ESG to build a more responsible bank
Environmental: Social: building a Governance: doing
supporting the more inclusive business the right
green transition society way
Helping customers go green Talented & diverse team A strong culture
EUR 372 mn Top Employer c. 35% women in Simple, Personal, Fair
Green Finance in 1st sustainable Certificate leadership positions
20211 debt securities in Taking ESG criteria into account
EUR 109.5 mn Poland with a nominal
for financing OZE in value of PLN 750 million Financially empowering people when determining remuneration
2021
Going green ourselves
> 130 k people since 2019
ESG governance
100% purchased Carbon Neutral
Establishing an ESG forum with
electricity from in our own Supporting society
6,422 ESG Leds function in each division
renewable sources operations
0% single use > 305 k people scholarships 40% women on the Board
helped in 2021 granted in
plastic 2021
2021 provisional data, not audited
Note: For further information, please see https://esg.santander.pl/2020/en/
9
(1) Retail, BCB and CIBIndex
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
10Strategy and business
Positive system-wide trend in mortgages, together with our growth strategy in SMEs
and CIB led to 6% growth in loans YoY
Total customer loans (Constant EUR bn)1
30.0 30.7 Dec-21 Dec-20 YoY (%) QoQ (%)
28.8 29.5 29.4
Individuals2 15.5 14.7 5.5 2.1
o/w Mortgages 11.6 10.9 6.6 2.9
o/w Consumer credit 3.0 2.9 2.9 0.5
SMEs 3.5 3.3 6.4 0.0
Corporates & Institutions 7.6 7.3 3.7 3.4
CIB 3.7 3.3 14.6 3.9
Other 0.4 0.3 26.4 -3.6
Total customer loans 30.7 28.8 6.4 2.3
Dec-20 Mar-21 Jun-21 Sep-21 Dec-21
Group criteria.
(1) Excludes reverse repos. End period exchange rate as at Dec-21. 11
(2) Includes Private Banking.Strategy and business
Following our funding cost optimization strategy, demand deposits increased while
time decreased. Mutual funds grew 10% YoY
Total customer funds (Constant EUR bn)1
42.3
41.0 40.1 41.1
38.6
Dec-21 Dec-20 YoY (%) QoQ (%)
Demand 34.7 30.8 12.6 3.3
Time 3.3 3.8 -14.0 19.5
Total deposits 37.9 34.6 9.7 4.6
Mutual Funds 4.4 4.0 10.4 -8.2
Total customer funds 42.3 38.6 9.7 3.1
Dec-20 Mar-21 Jun-21 Sep-21 Dec-21
Group criteria. 12
(1) Excluding repos. End period exchange rate as at Dec-21.Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
13Results
NII grew by 24% QoQ boosted by latest interest rates hikes, increasing the yield on
loans, while funding strategy was unchanged flattening cost of deposits
Net interest income (Constant EUR mn)1 Yields and costs (%)
312 3.31%
2.89% 2.91% 2.91% 2.94%
251 Yield on loans
240 248
239
0.09% 0.05% 0.03% 0.01% 0.03% Cost of deposits
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
2
NIM Differential
2.10% 2.03% 2.06% 2.11% 2.55% 2.80 pp 2.86 pp 2.88 pp 2.92 pp 3.28 pp
3
Official interest rate
0.10% 0.10% 0.10% 0.10% 1.07%
(1) Average exchange rate as at 12M’21.
(2) Group criteria.
14
(3) Daily average interest rate of the periodResults
Net fee income up 18% YoY, boosted by transactional fees, FX, funds and insurance
Net fee income (Constant EUR mn)1
2021 2020 YoY (%) QoQ (%)
Transactional fees 353 287 23.1 1.8
133 134 Payment methods 77 67 14.7 -4.5
126 125 Transfers, drafts, cheques
51 46 12.6 6.9
118 and other orders
Foreign exchange
125 103 22.1 5.8
currencies
Other transactional 100 72 39.0 -1.1
Investment and pension
61 51 19.1 2.2
funds
Insurance 29 22 33.8 -11.6
Securitites and custody
28 26 10.3 30.4
services
Other 47 55 -14.6 -11.8
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Total net fee income 518 440 17.7 0.8
(1) Average exchange rate as at 12M’21 15Results
Strong performance in customer revenue. Dividend income drove total income up 11% YoY
Total income (Constant EUR mn)1
472
414 405
382 2021 2020 YoY (%) QoQ (%)
355
Net interest income 1,049 1,009 4.0 24.2
Net fee income 518 440 17.7 0.8
Customer revenue 1,568 1,449 8.2 16.1
Other2 79 34 133.9 24.0
Total income 1,646 1,483 11.0 16.5
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
(1) Average exchange rate as at 12M’21. 16
(2) Other includes Gains (losses) on financial transactions, dividends and Other operating income.Results
Expenses increased 8% YoY driven by higher inflation, IT & transformation plan
investments and costs related to increased activity
Operating expenses (Constant EUR mn)1
181
157 162 162
152
2021 2020 YoY (%) QoQ (%)
Operating Expenses 663 612 8.2 11.9
Branches (#) 440 502 -12.4 -3.9
Employees (#) 9,718 10,582 -8.2 -0.6
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
(1) Average exchange rate as at 12M’21. 17Results
Net operating income up 13% YoY, driven by stronger revenue which offset cost growth
and enhanced efficiency ratio by 104 bps
Net operating income (Constant EUR mn)1
291
252 243
230
2021 2020 YoY (%) QoQ (%)
198
Total income 1,646 1,483 11.0 16.5
Operating Expenses (663) (612) 8.2 11.9
Net operating income 984 870 13.0 19.6
Efficiency ratio 40.2% 41.3% -104 bps
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
(1) Average exchange rate as at 12M’21. 18Results
Stronger economic environment was reflected in lower NPL ratio and LLP reduction
(-38% YoY). Consequently, net operating income after LLPs increased +43%
Net LLPs (Constant EUR mn)1
2021 2020 YoY (%) QoQ (%)
79
Net operating income 984 870 13.0 19.6
68
Loan-loss provisions (200) (321) -37.7 -15.7
45 47
40
Net operating income after
784 550 42.6 28.2
provisions
NPL ratio 3.61% 4.74% -113 bps -73 bps
Cost of credit2 0.67% 1.10% -42 bps -14 bps
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
Coverage ratio 74% 71% 3.2 pp -0.6 pp
(1) Average exchange rate as at 12M’21. 19
(2) Cost of credit based on 12-month loan-loss provisions divided by average customer loans.Results
Underlying attributable profit grew 2% YoY but heavily impacted by charges related to
Swiss franc mortgages (EUR -255 mn2)
Underlying Attributable Profit (Constant EUR mn)1
2021 2020 YoY (%) QoQ (%)
70
PBT 380 360 5.6 -28.7
Tax on profit (150) (126) 18.7 23.4
Consolidated profit 230 233 -1.4 -47.8
33 36
Minority interests (69) (76) -8.6 -46.9
20 20 Underlying attributable
161 158 2.0 -48.2
profit
Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
(1) Average exchange rate as at 12M’21. 20
(2) Mortgages CHF-nominated charges of EUR 255 mn in the year; EUR 107 mn in the quarter vs EUR 77 mn in 2020 and EUR 23 mn in Q3’21Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
21Concluding remarks
Final remarks
Loan growth accelerated throughout 2021 and reached 4% YoY in December supported by strong demand from
individuals, with PLN-denominated mortgages growing at double-digits. Corporate sector new business is also
rebounding strongly. Total loan growth for firms was at 4% YoY in December (fastest rise since late 2019)
Financial System
The legal risk of FX mortgages remains the main risk to Polish banks
Deposits increased 9%, as demand deposits surged 14% YoY, while term deposits declined 12% YoY
We are developing a customer-centric approach to business management through the continuous improvement of service
quality and product range with a special focus on digitalization and simplification of processes, increasing efficiency
Strategy In retail banking, we continued our strategic programmes to simplify products and processes and to maximize the number
& of self-service, digital acquisition and sales. We delivered new solutions and functionalities, including a new application
Business process for cash consolidation loans both online and mobile
Business Corporate Banking reflected positive trends in the corporate treasury business, and strong FX business
performance in the context of customer activity. CIB maintained leading position in the local market
Latest interest rate hikes increased NIM delivering higher NII for the quarter. Net fee income boosted by transactional fees
Costs increased by 8%, mainly due to inflationary pressures, IT expenditures and stronger commercial activity
Results LLPs down 38% YoY, supporting net operating income after LLPs (+43%)
Underlying attributable profit grew slightly (+2%) but heavily impacted by charges related to Swiss franc mortgages
(EUR -255 mn)
22Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
23Appendix
Balance sheet
1
Constant EUR million Variation
Dec-21 Dec-20 Amount %
Loans and advances to customers 29,817 27,793 2,023 7.3
Cash, central banks and credit institutions 2,968 2,518 449 17.8
Debt instruments 15,082 13,890 1,192 8.6
Other financial assets 503 972 (469) (48.3)
Other asset accounts 1,419 1,330 89 6.7
Total assets 49,788 46,504 3,284 7.1
Customer deposits 37,919 34,580 3,339 9.7
Central banks and credit institutions 3,312 2,592 720 27.8
Marketable debt securities 1,618 2,093 (474) (22.7)
Other financial liabilities 692 985 (293) (29.7)
Other liabilities accounts 1,529 1,222 307 25.1
Total liabilities 45,071 41,472 3,599 8.7
Total equity 4,717 5,032 (315) (6.3)
Other managed customer funds 4,626 4,247 379 8.9
Mutual funds 4,406 3,990 416 10.4
Pension funds — — — —
Managed portfolios 220 257 (37) (14.5)
(1) End of period exchange rate as at Sep-21. 24Appendix
Income statement
Constant EUR million1 Variation
2021 2020 Amount %
Net interest income 1,049 1,009 41 4.0
Net fee income 518 440 78 17.7
Gains (losses) on financial transactions 77 87 (10) (11.8)
Other operating income 2 (54) 55 —
Total income 1,646 1,483 164 11.0
Operating expenses (663) (612) (50) 8.2
Net operating income 984 870 113 13.0
Net loan-loss provisions (200) (321) 121 (37.7)
Other gains (losses) and provisions (404) (190) (214) 112.5
Underlying profit before tax 380 360 20 5.6
Tax on profit (150) (126) (24) 18.7
Underlying profit from continuing operations 230 233 (3) (1.4)
Net profit from discontinued operations — — — —
Underlying consolidated profit 230 233 (3) (1.4)
Non-controlling interests (69) (76) 7 (8.6)
Underlying attributable profit to the parent 161 158 3 2.0
(1) Average exchange rate as at 12M'21. 25Appendix
Quarterly income statement
Constant EUR million1
Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
Net interest income 280 249 240 240 239 248 251 312
Net fee income 110 102 109 118 126 125 133 134
Gains (losses) on financial transactions 8 21 34 25 20 21 22 14
Other operating income (53) 0 1 (1) (30) 20 (1) 12
Total income 345 372 383 382 355 414 405 472
Operating expenses (162) (141) (156) (152) (157) (162) (162) (181)
Net operating income 183 230 227 230 198 252 243 291
Net loan-loss provisions (90) (88) (64) (79) (68) (45) (47) (40)
Other gains (losses) and provisions (34) (40) (31) (85) (72) (125) (56) (151)
Underlying profit before tax 59 103 132 66 58 82 140 100
Tax on profit (28) (31) (35) (32) (32) (34) (37) (46)
Underlying profit from continuing operations 31 72 97 34 25 49 102 53
Net profit from discontinued operations — — — — — — — —
Underlying consolidated profit 31 72 97 34 25 49 102 53
Non-controlling interests (9) (23) (31) (13) (5) (15) (32) (17)
Underlying attributable profit to the parent 21 49 66 20 20 33 70 36
(1) Average exchange rate as at 12M'21. 26Thank You. Our purpose is to help people and businesses prosper. Our culture is based on believing that everything we do should be:
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