Institutional Presentation Q1’19
Highlights Santander, a leading financial group Q1’19 Highlights 1.51 Total assets (EUR trillion) 896 Customer loans (EUR billion excluding reverse repos) Customer deposits + mutual funds (EUR billion excluding repos) 935 Branches 13,277 2018 Attributable profit (EUR million) 7,810 Q1’19 Attributable profit (EUR million) 1,840 Market capitalisation (EUR billion; 29-03-19) 67 202,484 People (headcount) 144 Customers (millions) 4.1 Shareholders (millions) 2.5 Communities (million people helped in 2018)
Index 1. Santander vision and business model 2. Aim and value creation 3. Corporate governance and internal control 4. Group structure and business units Q1’19 Highlights – results and activity 5. 6. Summary and mid-term strategy
1. Santander vision and business model
Santander vision 1. Santander vision and business model OUR To help people and businesses prosper PURPOSE To be the best open financial services platform, by OUR AIM acting responsibly and earning the lasting loyalty of our AS A BANK people, customers, shareholders and communities Simple Personal Fair OUR HOW In everything we do Building a responsible bank from our core strengths 5
Santander vision 1. Santander is a retail bank with a unique and business model business model underpinned by three strengths 1 Our scale provides potential for organic growth Unique personal banking relationships strengthen customer loyalty 2 Our geographic and business diversification and our model of subsidiaries 3 make us more resilient under adverse circumstances 6
Santander vision 1. We maintain a leadership position 1.1 Scale and business model in our core markets Market shares Customers by country. Mar-19 United Kingdom 1 USA 4% Loans: 10% Poland 2 Others 1% Argentina 3% Deposits: 9% Spain 12% Loans: 12% Chile 2% United States 3 Deposits: 12% SCF Portugal Mexico 12% Loans: 3% SCF 13% Top 3 Loans: 18% Deposits: 3% 144 Deposits: 16% Spain 5 Mexico Poland 3% Million customers Loans: 17% Loans: 13% Portugal 2% Brazil Deposits: 18% Deposits: 14% Loans: 9% Deposits 4 : 11% Chile Brazil 30% UK 18% Loans: 19% Argentina Deposits: 18% Loans: 10% Deposits: 12% Data: Market-share as at Mar-19 or latest available. (1) Loans include household (mortgages and consumer credit) plus corporate loans. Deposits include household deposits 7 (with banks and NS&I) and corporate deposits, excluding cash holdings (2) Including Santander Consumer Finance business (SCF) (3) In all states where Santander Bank operates (4) Includes demand, savings and time deposits, LCA (agribusiness notes) and LCI (real estate credit notes) (5) Other Resident Sectors in Spain
Santander vision 1. Focus on increasing customer loyalty 1.2 Unique personal banking relationships and business model together with increased digitalisation Active Loyal Digital 68.5 mn (+8%) 20.2 mn (+10%) 33.9 mn (+24%) Active customers Loyal customers Digital customers +2.2 mn 30% +1.8 mn active customers QoQ digital customers loyal / active customers QoQ ~77% of PBT 1 among Top 3 in customer satisfaction Note: Year-on-year changes 8 Source: Customer satisfaction study (clients and non-clients) audited by Stiga/Deloitte (1) % of operating areas (excluding Corporate Centre and Real Estate Activity Spain)
Santander vision 1. 1.2 Unique personal banking relationships and business model We are transforming our core banks The digital transformation of our core banks (Supertankers) is customer focused with two key priorities Priority 1 Priority 2 * Two key priorities for All our products & services Deliver all products & services in a digital transformation through End To End (E2E) fast and efficient way of the core banks… digital channels Best-in-class in operational excellence * • More digital customers …to continue to Top 3 bank • Increased customer engagement deliver the best in 8 countries in customer satisfaction 1 customer service • Stronger loyal relationships 9 (1) Source: Customer satisfaction study (clients and non-clients) audited by Stiga/Deloitte
Santander vision 1. While we are transforming our core banks, 1.2 Unique personal banking relationships and business model we are also launching innovative ventures * We are re-engineering our core banks leveraging Group scale and innovation Transforming the FRONT • 15% cloud adoption All products and services to be available in digital channels • 15-30% efficiencies over IT infrastructure cost (end-to-end) Transforming the BACK Re-engineering, digitizing and automatizing all our • 1,200 robots allow c.10% cost reduction of processes processes Evolving our IT architecture and systems Machine Learning Our Core banking system is a structural advantage • -40% customer churn Onboarding new technologies • +20% conversion rate improvement Rapid integration of new technologies in our day-to-day operations Santander Agile Way Becoming an agile and data-driven organisation • 35% of projects in agile (450 teams) * We are also launching innovative ventures (Speedboats) to address challenges emerging from the new digital era 10 Note: data as of 2018
Santander vision 1. Well-balanced 1.3 Diversification and model of subsidiaries and business model geographic distribution * Balanced distribution between mature markets, which provide stability, and developing markets, which fuel growth in revenue Contribution to Q1’19 underlying attributable profit 1 Other Latam, 2% UK, 11% Chile, 6% Americas Europe 52% 48% Spain; 16% Brazil, 29% SCF, 13% Mexico, 8% Portugal, 5% USA, Poland, 3% 7% (1) Excluding Corporate Centre and Real Estate Activity Spain 11
Santander vision 1. A good mix of products 1.3 Diversification and model of subsidiaries and business model for individuals and companies Customer loans by business Customer funds by business Other individuals, 12% Individuals demand deposits, 40% CIB, 10% CIB, 12% Home mortgages, 35% EUR EUR Corporates, 12% 935 bn 896 bn Corporates, 14% Individuals time deposits, SMEs, 9% 10% SMEs, 11% Consumer, 4% Individuals mutual funds, 15% Consumer, 16% 12 Note: Customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Santander vision 1. We have a strong 1.3 Diversification and model of subsidiaries and business model balance sheet growth Customer loans by geographies Customer funds by geographies EUR bn and YoY change in constant EUR EUR bn and YoY change in constant EUR +1% +4% 325 247 +1% -3% 213 210 +11% +7% 114 98 SCF +6% +11% 68 88 +10% 42 76 +5% +8% 40 +8% 41 0% -3% SCF 37 36 +10% 35 +28% 33 +29% 34 +4% 29 +50% 10 +55% 6 +4% +5% 350 935 300 896 13 Note: Customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds
Santander vision 1. Our diversification and model of 1.3 Diversification and model of subsidiaries and business model subsidiaries make us more resilient Low Earning per share (EPS) volatility Profitability drivers - high and recurring pre-provision profit Pre-provision profit, EUR bn EPS volatility calculated using quarterly data from Jan-99 to 2018 26 25 24 24 24 24 23 23 23 20 18 699% 346% 124% 109% 88% 77% 58% 44% 42% 34% 9% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pre-provision profit / loans 3.28% 3.26% 3.25% 3.03% 3.06% 3.04% 2.97% 2.94% 2.90% 2.89% 2.83% 2x 2x 0x 0x 6x 4x 6x 4x 1x 10x 5x Cost of credit Net profit increase 1999-2018 2.44% 1.69% 1.25% 1.65% 1.02% 1.40% 1.43% 1.36% 1.18% 1.07% 1.00% Source: Bloomberg • Risk pro defines the way in which we understand Note: GAAP criteria. Standard deviation of the quarterly EPS starting from the first available data since Jan-99 and manage risks in our day-to-day activities 14
2. Aim and value creation
Aim and value 2. creation Santander is one of the most valued brands in the world Employees who are more ... make our customers motivated and committed ... more satisfied and loyal ... • 5 th best global bank brand (BrandZ ranking, 2018) People Customers • 6 th best global financial brand 202 144 (BGB 2018, Interbrand Ranking) thousands million Our brand embeds the essence of the Group's culture and identity Communities Shareholders 2.5 4.1 The Santander brand, one of the bank’s greatest million people million helped in 2018 assets, embodies our culture: purpose, aim and way of doing things. It transmits our global dimension, trustworthiness ... which drives profitability and ... and results in more sustainable growth ... investment in communities. and commitment to act responsibly Simple Personal Fair 16
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