Banco Santander (SAN) 26 Oct 222022 Q3 Earnings call transcript

Good morning, everybody and welcome to Banco Santander’s Conference Call to Discuss Our Financial Results for the Third Quarter of 2022.

Just as a reminder, by the results report and presentation we will be following today are available to you on our website. I'm joined here today by our CEO, Mr. Jose Antonio Alvarez; and our CFO, Mr. Jose Garcia Cantera.

will may floor session. have we all any presentations, you questions in their open for the and Following the Q&A this, over hand I With to Alvarez. will Mr. yours. Antonio Jose floor is the Alvarez,

everyone. Thank Thank conference. you, good Begona. morning you attending to And for this to

to we've should presentation this revenue keep base our been our able say, been macro environment. and that highly customer into and in to growth. unusual, So uncertain we've volumes translating In developing start I while activity this growth this environment, growing

So we the the quarter-on-quarter the to is Euro higher broadly out interest most levels main remarkable change quarter our activity starting higher where the grading Shang X% or of the and has in raise Starting rates, acceleration. just event particularly acceleration been back to high. rate exposure on per of took in the this is of the NII, it starting

EPS XX%. profitability significantly. in Return on tangible stays equities at is XX.X%. Our growing improved

continue on is quarter profit good profit, X% plus overall quality in sheet On being balance serving generate constant grew in the In remain currency minorities positive the XX% back below €X.X we of north profit the €X.X the credit we've gross of payments tax related the in billion got impact increase holiday number Euros. net million quarter of show in the our new net €XXX so because the month attributable billion excluding regulation, on of Poland, far to was quarter got our in base. duration of quarter the million shares €XXX capital a in XX% and XX% the no with XX% profits, we nine after years. constant in signs of to The

the value share XX%. shareholders terms both dividend Finally, a as we that net that asset combined and within in our announced shareholder share continue with cash the value per our you pay of cost up approved the in growth board last tangible plus remuneration know, we to to month dividend already provides per

constant into well in spread across you more Yes, fairly that while across growth. are X% we business process Euro loans we growing. part into constant up in €XX were the region which environment. that years. is the the of and detail all balanced X% see quarter the in deposits board say Going rate interest one billion, loans increased with given the also and We in the about X% the towards X% shift in increases Intellectual quarter-on-quarter some the the in cannot are all month we do countries board policies growing current losses growth is tying almost

UK €XXX remind loan billion lending our see balanced have the doesn't corporate. mortgages and of in of Regarding domain, portfolios consumer the The by Spain being all lending. majority to mainly our consumer to natural portfolio are in exposure Europe close growing And US. The that in in are X%, the finally, majority you'll out and book. we auto X% is individual and XX% an loan CIB in our north corporates and UK SMEs you third. is fairly and yes, Individual that one mortgages total this change more disorder portfolio. quarter-over-quarter, a by close the third XX% far portfolio of largest history, XX% to less than at is than They X%,

across as said sheet balance the So, board. I growth

in industries where rates have for you can you we you in statement, Euros growth in you the and diversity way both in provide income analyze. the constant the to at the analyze Looking you Euros

in pressures the two at the that points QX corporate forces There gains billion transactions. loss years, first operating QX constant €XX inflationary right As grew you in this for performance. pace included and on in of these there a were partially is of particular effects can income that Thanks around the financial offset from than X% see costs of nine revenue impacting performance by center impact two in the environment. In net rates and to is but was seeing positive face a one topics for reached loan X%, inflation. year. the record provisions In this current continue months below grow year-on-year of the opposition faster

performance. were On of the and other XXXX hand provisions releasing due COVID-XX expected loss QX to related than QX in credit caught XXXX, they better loan

and UK, and sheet in €XXX the million balance On provision Spain countries share. Spain, loss billion lower the an including and spenders is include was in a million. other provisions €XXX of other The €XXX the reassigned €XXX represents assumptions, XXXX mainly in mainly €X additional €X speaking related markup which roughly COVID were update and coming is macro loan P&L hand billion million; against billion. from provisions €XXX UK. new million, US, provision US, funds, [ph] million in to that €XXX the million €X.X sheet.

semester are we in important as that And this seen cause and will in elaborate some on normalization in an in fall. the the US of risk, costs you. these of So, to this realization Brazil elaborate development quarter the anticipate we is we

just Europe, like Poland, has happened in minorities countries rates. the of hikes billion. Additionally, to and regions. other narrow more in south the US. can the me little to or positive the you led Elaborating plus happens trends to say as last somehow while NII higher trends continue impact in impact fully and especially negative revenue, will activity P&L know €X.X that Brazil related as are lower in advanced a and see and bit The we contributions recall gearing different opposite More Chile as the tax Mexico. in with this borrowing. so expect in UK customer new year interest quarter, resolution rate reflected and our so impact positive fund they toward charges lower in scams and The you is positive in The starting

between efficiency below But grew the our Secondly, revenue on ‘XX. compared the in some with come from immediate countries, impact lack and our to XX.X% in slightly year by almost inflationary higher late. full eroded is most being in benefit cost the regions, inflation this rates reuse improved or costs by pressures

grew we we we indicators In believe confident whole than peaks we stable more that the are see we a on going has as peak achieve own higher our both not and general, quality In burial in per more share ROTE the very our of also such amortize up we US now X.X% performing and reached was to group at XX.X%. X.X% good our and where capital. cause share ECB. bought forward. this Greece any in backed been relation expected. with the are already from have of by All-in-all, and mentioned to I is went XX% process for profit in of Harriers, costs group's America the key and Mexico this stable. or did row we of we quarters the normalization profitability, cost general risk Earnings for are to on race some Brazil a the target. buybacks, constructive in because we back year better Europe two for the iteration South in And North race in America, Thirdly, in the of in

million remuneration start that out €X.XX in to in soon expect wouldn't buybacks €XXX cash approved. by shareholder the as execute half XXXX, approved pay to as for regarding fine policy XX% I soon and intention of and cash in board be the tell approve we these our ECB we Finally, is already to

increasing to exchange is this the total given performance this remuneration a and going the several for a performance our the in dividend constructive that in of in combined. As is row be the before, first more rate profitability quarters a billion positive result, €X.X group, on mentioned

generation quarter our comfortable be tier for points was after we business one capital, X basis very one available remaining negative with on sale the future for consider ratio markets tier XX%. impacts appropriate equity of net basis we A in capital accruals are the very for The increase cash points offset by to organic dividend. level portfolios. partly XX our Finally, above that core for

and mainly we to net the more discipline Some same At from our deliver models. this models simple capital markets commitment of continue time, location.

loan assets risk equity from below assets below slide, of the lower weighted on book profitability, cost of and see weighted weight higher As well risk you return on book we can the grow growth, equity.

you I take CFO, Jose will through in Now, results more Garcia detail. the Cantera will Mr.

the has beginning although and in show quarters. benefit Chile by look at already Spain, mostly a couple AI we increased which in both slightly strong less Thank same to by explains see Argentina, due at in where upward neutral the negative the on you, to bank previous supported that This the America was UK, through business in through will in primarily in In last we detail detail rates first neutralizes seasonality. revenue morning, we row profitability, -- the quarter. to and Europe In see flat rates in Brazil. X% in while go in inflation I two more digital in which quarters quarter. bit that's starting as then quarters, in growth was had and everyone. of growing can addition pace. following you good It's Antonio, supported Poland, US, After this to CEO we to rate up profit North due America interest go will consumer the progress ECB. weak have increased in increase South seen in etcetera. The quarter was in remained in can more are our country the hustler Portugal position especially AI driven as countries we trend growth have by declines in the was X% Brazil with what right-hand when I to or increases, the negative also behavior. and it performance the rate explain X% income And like more with this more stable accelerated in a practically lower the countries we detail. quarter And Chile side the into flat from the and due in Net a Brazil, a which and in of in terms X% quarter mainly presentation performance in sensitivity

cards UK. lower in off in fees second credit one corporate a quarter have charged the We and large in deposits CIB from clients on

point On the obviously other higher in performance driven second in America CIB, financial and the previous This be would change. with affected quarter-on-quarter it rather quarter. better was fund sensitivity what the shown basis than hand, This were net an rates by other contribution rates. sensitivity Resolution in consistent in Argentina. quarters. look increased we to have Gains to Chile This to we income forward thought is around income transactions on Single to by South is our interest a excellent time XXX comparison X% at the

because rates for next So, this for over of rates Euro to And XX XXX is forward compatible previous rates forward points. instance. we Obviously, sensitivity points is the showed basis are was it XXX months. the almost sensitivity in the fully stable now basis the relative quarter zone the remaining the

So the forward is to rates stable. or again remaining sensitivity this rates relative

very sensitivity we obviously sensitivity levels, additional some as well. have higher the the expected obviously As have from Euros. in the but we high rates, current the higher In beta Sterling,

is is maintenance which they be XX% so So the Brazil the important know in the the as repricing will the asset interest change we'll the exist of what deposits, beta automatically as in know, all here presentation. to the at conditions cost of moment know flat in XX% TLT or is XX%, tomorrow. compensate change note in remain adjust accordingly that that And to row you that based increase this have We depo repriced. gradually we and will It's exercise. should the that on sensitivity rates the almost we around next don't

achieving on at already The longer We are slide, is percentage you transformation same income of as mentioned performance. are for point good in has to our at below inflation very emerging to know, Europe can that Europe, improvement a in It takes as CEO growing the plans had Europe, in thanks markets. we underway -- in countries, to costs. the Looking that targets. the all see adjust one automatically happen. inflation, cost four bit in in particularly a with costs the you as which costs And time

of we America a In region our to is So continue cost rising the cost worth North investments -- to fell so remain particularly in modernize the infrastructure. real in Chile is adjustment or the and increased. the by explained mentioning I a Argentina. the cost said little in inflation, America, terms, that Even in in Brazil, efficiency automatic South excellent auto Mexico make bit despite to salaries slight in

not recent of has exposures seeing In credit we are and in significant of deterioration. the ratios credit The quality, coverage quarters, status in been three terms as line cost with any risk stable portfolio. increase have NPL the

the As came line through were much quarter, increases second the long were macro what previously COVID in Brazil, can you and additional mentioned to which the ‘XX. Compared And Antonio COVID-XX expected. quarter the XXXX, in Jose in of billion related and by created Alvarez of half in but UK, very have previously the and reclassifications Mr. related there provisions US, term we ‘XX. fourth of Poland, P&L loans provision with see in provisions. our the CEO, X releases mentioned over half the provisions

the a about more estate total risk of profile our XX% quality sheet. It's collateral. markets portfolio, approximately Going low in real XX% detail into mostly exposure mature the balance insecure we lending mostly maintain a of by with bit concentrated

the our businesses, remain that Additionally, resilient variables footprint. to macroeconomic particularly main are our affect unemployment across expected

than average main versus is prices in performing with years, portfolio affordability loan XX% stable the significantly as in less is the reduced the average very the XX% loan mortgages expected are XX% value significantly know, portfolios Spain UK, values over is rating. simple Housing percentage corporate and X% The in over Unemployment terms we in the to XXXX. and mortgages portfolios mortgage better at XX% portfolio and to than floating. well And and values of and improved value And to floating, of In lower the so. XX% real Looking of expected. loan is you have ECHO low of loan in our to remain and improve XXXX. average to on has house its XX% than recent countries XX%. have

new are which a of portfolio it's macro a is in said of terms total towards XXXX. than bit believe levels better-quality currently in the vehicles. clearly currently take also, the scarcity but percentage change we go a the normalize, therefore which help portfolio. affordability of prices but means Moreover, very has should by is and will In reaching represents auto of UK that avoid above very And mix XX% unemployment lower fall is low to normalization prime historical ten XX%, this no prices. more Used a rate, the gradually In car US at should sharp because they we I expected recently place gradually US, levels the as of up levels unemployment crisis. low previous points

recovering. Lastly activity Brazil in gradually is

means than in quality. The very constructive balance We which sheet In future our remain is our the XX% summary, Brazil asset of are in of X.X years growing portfolio we a loss on secured. of surfaces maturity products. deterioration individual bit less low-risk that the is quality as average quickly.

through we detail Spain, had continue main very a have month we XXXX. dynamic customer a December see growth since to net market. in more countries. Now every customer go bit Net let the with positive me Starting

first our half. growing profit reported risk NII the million We to robust from points It we've rates. the and cost under the in X.X ease annualized have provisions income third pressure in nine-month is plans XX XX% XXX to hike including and macro increased volume transactionality, Year-on-year revenue, starting adjustments. quarter, was basis in efficiency seen reduction the In is of was points, interest cost reflect started quarter-on-quarter, in growth. the loss down loan to percentage by

in growth strong revenue In due the and to Costs were UK, drove cost to interest improvement rates trends resulted terms, down NII forward We in X% have higher in over few real trends positive control the the which lower income continue continue releases together up had and growth. loss And of loan with next provisions are an absolute line was higher for cost the cost XXXX. NII strong was cost rates to X% versus performance base in to digit profit in XX%. we and which lending Looking the in new terms risk. in positive flat we see supporting operating control. interest obviously months, double

both and will double income targets, AI growth reach we return our on comfortable flat are to with digit and tangible cost year-on-year for costs. We in equity and

of US, of solid year-on-year again risk. months and record nine Turning very the normalization following despite also of average high billion by cost ‘XX to the obviously pandemic well in affected economics the business levels, remains loans both underlying falling competitive profit a pricing and at deposits, €X.X above pre

the normalizing in continue US. on levels We working capital the our

corporate billion €X the So year, over far been have to this upstream center.

leasing So gradually, at US, of profitability anticipated a revenue a quarter-on-quarter, for quarter Costs by our the levels took revisions you around well flood as show sort on of We in better and outlook levels. XX%. excellent equity that profit uptrend returns term transparent impacted another long cost loan the for initially below Mexico, is in objective by more keep lower costs In of which our will affected strong lower year to normalized maintain and by NII we the driven in salary know, the of place ‘XX were increase provisions. than July. risk

management, greater and volumes also by growth, rate excellent profitability year-over-year delivered profit higher interest higher behavior. We supported and fees fees

we Mexico with on to on customer of obviously The margins pressure X%. is Brazil, repricing. coming performance in grow around our from base asset the obviously dealing our affected quality of maintain higher income, For of in inflation the growth the and of XXXX, double-digit in again, expectations our investments NII and in costs in and we cost by growth volumes risk fee excellent. continue In the utilization,

in unsecured and that September, risk individual As still last credit you continues. highest the portfolios, standards particularly lending know, we tighten our

particularly affecting in the quarter. first then after obviously CIB flat very is of And gradual improvement And businesses waiting the second mortgages. that it's is NII would of liabilities more in It or grow until of mix assets. year. starting We in are And quarter. NII changing in third third repricing already more we more half out the in flatten basically less next to see growing replacing NII are and expect to low margin quarter-on-quarter is but starts quarter

rates peaked. You interest have know already

repricing We have a gap. XX-month

of see next the inflation the So in second to relative X% the the last in half expect of costs for gradually through automatic to increasing of September XX% would rose of NII two was we ‘XX pass salary year. country Costs agreement in because year.

some of X.X% have cost remain for we costs line but next and around down these touch guidance. very to quarter. starting So XXXX. levels positive year. much a in The our news would more X.X%, at or in around risk expect these with fourth X.X% in the come less gradually We higher Maybe to

to we gaining different share, businesses, in countries return reported In America. with to all market a cars profit products, and continue supported best but will growth leading Consumer its Challenging and continued the the quarters. positions turn activity equity expand for US, in we strong, we environment to we market history, performance. market particularly Bank of the able quarter maintain had in gaining contraction, CIB in share, our global high in we a the be will on to should fees in digit in we by and that very be new we we able risk share As of double cost Digital businesses in the good here are the despite cars remains think use we market leasing its maintain coming gain Latin

in finance in Latin the sector. ranking are We structured number America, one in leaders renewables sustainability, globally in and Europe leading

core to XX% base like management XX% of profits represented the In a wealth profits. double management of for new line all volatility performance. its increased profits attracting And was customers grew affected money terms attributable X%. with band this Also total €XX contribution management to asset and up Banking on underlying grew Private profits group asset growth the of it businesses. the in billion insurance, like up was unit business to good basis but contribution digit year-on-year In or and profit new group's the the by operating results, in is market very In XX% Santander to the year-on-year. XX% X%.

and contribution gross we insurance, sustained growth to in in total Finally, premiums, profit written the increased XX%. had

XX% in maintain main Euros this In Santander in revenue XXX% to year-on-year in four and fueled expect by train. almost all contribution in cost quarters. growth in unit X, double Euros, We coming businesses, in especially digit profit the merchants total increased

XX% revenue better activities target finally, to that we So highlight performance highlight nine-month group. Euros the we year are almost in efforts really €XXX for XX% We the are will the our million And very in America. like in higher customer card management, going than cost active across we in currently with doing to credit cards our credit And cards, of thanks in regions, XX% manage to cards debit in across was both and the improve particularly revenue I here. year-on-year well making guidance very Euros; business. positive South

Let comments. you. me back for now Thank Jose turn it his Antonio to final

in relation words the outlook. a few Yes, with

rate So coming constructive net on should growth activity back generate significant and remains on revenue, the global hikes particularly the additional will income. our quarters. in the that we to levels from that NII see capacity healthy, interest growing benefiting to say keep revenue federally of so And with our in activity additional our I business while growth that the expect capacity

productivity On the continue our efficiency back our but going for to I side that one capacity pressures you've expansion revenues is capacity uncertain, inflation but improve P&L, environment are book, the not ready through run loan to the to particularly the cars seen inflation. sure comfortable only also is difficult prepared face and cost to and we more the I we balance demonstrated in On I that the quality on while and a when recognize we sheet I or for while confident happen. the of do at below felt while face look highly environment with credit that that I'm have harder is does given consensus it are much why that the for position in are to even today affected handled to at match the a capital worry of above as less value as the across capital, be the we of scenarios feel the me that the impact natural discipline a be capital than XX%. the portfolio. competitors. bidding our I in average good our same the of the going ours we the the time, portfolio we or that very the allocation. And the the On continue in on better share macro, portfolio, consensus has more to we stimulate

So grow all-in-all, back these to side. costs than offset of the That's all increase raise we on more revenue potential or value for pressures, spare improve and and my and on of on profitability costs, our inflation creation the shareholders. our

remains disposal on we be that we Day, questions mention may I'm Investor you. the the forget, product, there. going So have your I because very the an forgot have. Thank you page at last for to to

you Investor So prospect we where update Back London, on Begona. we XXth group. the an to on February the of for have the Day in you,

with start session, Thank can Q&A you. We please. a

you. Instructions] from We Paribas, the go [Operator one coming the Thank first Ulargui Ignacio already BNP please some from questions is And ahead. in queue. have

a because for last NII have One been we these support Thanks then sense your Alvarez, asset to that repricing terms on all will you contribution are in I last in and where book wanted DMTL of wish will on side uplift all just question. thank be of I coming linked wanted I standing to understand very get years. Jose better a bit quarter. a far, and much. of Thanks the this is to bit the results in the for come numbers. the best of the you of the how quarters has also what two the the the the NII. so questions wanted call the to European Antonio loan in the my taking

sticky question for going to income have bit The improving Thank a that target Latin side income flat goals, in probably to the be of you. can XXXX. to your is keep to What me on particularly cost you ratio cost to to to the ratio linked in to in second basically for you on do have America. is growth, which you very terms be final keep remarks that looks improving

but at X% Bank know, X% Okay, mentioned a a the one first. reacted you And the with expansion I Poland in mention along that to NII question, XX%, XX%. not particularly shots. going first that European than Chile forgot Central the Brazil the later same reacted, from saw Mexico in more I levels. the the to American going came that reacting one. we being reaction UK European function from US bit has have book the to mentioned Fed starting the Europe, the been last higher And and little ECB reaction was the particular loan of just the this we first central banks the said have is Central I cycle, board. Latin starting US I across in and as In

particular loan you have was through month. repricing origination Euro The some this mortgage We is the more say right that is while and between the pretty September because the I higher in representation go replaced books, the to significant. you to that trade months, a we with when and high rates labeled so than in the we XX, was been related for different next inflation to So, and Chile, of complex rates, case just coming presentation not midway September, July seeing represent negative in yes, barely going library that along some one that the the is was with the is that the nominal impact Mexico a loan somehow going I we we book. mentioned but Brazil reaction is appreciation in and expansion the UK, have in a from book which go and book, new so that other in loans in follows. margin in be Latin US the advanced. are midway. quarter the is see not and that start America, everybody specifically compared the that XX big It's you should Poland Remember, Europe now. like Guam the

as quarter something So to €XX million €XX is I the have in in or number try the that. or like the mind you million

€XX. so First whole the that's thing, for to €XXX yes,

First €XX to in been in €XXX the quarter.

okay. Yes,

but cost going some with in this specific go costs details growing overall, So this improvement specific remark, cost Well, income inflation. my of probably at you're DMTL. point, expect the to sure, that is we I do pressure Day of target the environment, keeping the but current the naturally, on income down, this for remember I have well said inflation Europe, as to South some on the improved, is impact and that in and also becoming at point. we back more recognize Chile, costs have with in leads the on going is on to cost should that unions, Naturally, for to this and the America, nominal were for renew Brazil some fairly that recover final improving? doing keep this. to impossible, but CIB we this at Investor start in is the incomes to outlook to point, put to cost confident we we I'm will we need income, revenues are Because is some in with income reduce the expansion the income in relation to the the higher trends agreements to below difficult constructive on the that And

Thank Can have question, you, next we Ignacio. please? the

The ahead. from Riquel from Francisco question is Please Alantra. you. coming go Thank next

about my NII. Brazil. particular, Thank I for taking questions. first to In about of you all, ask the wanted

peak a on trust the mentioned the presentation the two-quarter rate was You in that in between NII. silica past in there the lag

NII comments your in third Brazil grow until fast quarter the ‘XX. from the hear I would Now that not

update if please NII guidance about And in you So in well. you And is the Brazil. your here, dynamics update NII can quality. can please Brazil as on asset second

for Well, quarter? still cost can unsecured you X.X% deviation it? can MPLS on That lending did How the of this update see much you What you. then, for of You comment if is and guidance what on of from thank normalizing And individuals? here the going? cost ‘XX? driving is risk

Okay.

on and picture question Brazil specifically big Let you me the to give raise. you the

which rates, with So mix compression the year, toward alienation backing yield been And the two balance our we changing the lower suffering September Where these are on year margin second, sheet the the we've a things, that of underwriting a portfolio. a That's we lower the impact the now. standards a in we of NII. near impact in lowering the of is higher on rates. the right back of last in back the our in issuing yield And the we've of are to situation leads that mass been yield changed last market. interest naturally in

for we are So constructive risk two line we've cost quarters, more our with expectations. now seen the of in

this in to the a to So a we normalized to time start little gap be grow the are the as And in the in to is NII, little mix position reprice have this pass start in to over a book. confidence and than this we we while. we sang is more checking NII like bit if the by maybe offset that activity costs some But at are past. with to one still reduced that to going grow assets becoming means the growth in one through point compared to volumes faster had and for in little more growth set today got get in

that's for the NII. expectation So

little the year, you little we other the more X.X, The asset X.X, activity, to pass by summer. X.X, of were the through guiding more more X.X. in also were quality X.X the constructive like doing NII mentioned end So

asset expected sector CIB particularly nominator a push the and little us and the the that We growing market, quality of under SMEs expectation in has is fundamentally growth nothing non-individual are our we we but where corporate the in market the mass analyzing in bit lowering quality where mass on sector where than less on we problem. up generation see the vintage, is been in limited income wrong the are good, in in got the

there, from for constructive feel look Yes. So, more will Brazil. I all-in-all, I I'm

you I we're and So quarters. to little, in these trends, the little coming show think that going I show by to hope

the Can Francisco. please? have you, question, we Thank next

Alvaro The go Stanley. is Yes. next question Serrano ahead. from Morgan coming Please from

mortgages. US. When about mortgage more the I you've about question market, now headwinds given potential pretty on few some the remuneration. the update minimum sort from clear. deposit questions you've the UK, on the In on from NII? NII on obviously to because think ability repricing Minimum of the overall to Good just outlook we on going other profits sort and But deposit got of an the on touch U.S. wanting of the next the me. account region, want the question competitive one And grow thinking, been be outlook and morning. UK do Brazil, the Couple one you deteriorating UK year. I going thinking still on on to to remuneration next capacity considering have what's you're think the raised in pretty quarters I'm sensitivity and economic second in forward deposit you've media and grow

out think gradual called I the normalization. called out the think I you Jose

And competitors warned the of normalizing normalized you. us some update the profit season, provision normalize warned performing, context charge it's about are for put is you and for to could Some reasonable level basis ’XX, you in just fully charge that back delinquencies as in fully how a secondhand XXX prices. what provision of of look of points your peers Thank your in sort of profit or a of XXXX normalized what's like you. that normalization we during auto sort results space of

overall, for fairly UK, Alvaro, is Yes. and in Okay. one, a UK the competitive And mentioned there know, Thank three, as you, two, your deposit you questions. you dynamic market.

goes the this need have, mainly reason retail more about book, the plan we only Can your not having mentioned you keep beta. NII with a So book is the to to think to line to long we we And but Jose that I grow the funding react mortgages. deposit react, the mortgages, for question we can. we have Just while market? astray. long the uncompetitive in large, dynamic

constructive book, need faster, in the complex, remortgage half expansion of So from is And should margin year. react that case, expect into keep we to react corporate UK a should may the and all outstanding enjoy it's offset you raise more the you increase the than of increase our the nicely billion that going one while to in this do to to is going But along speaking we with that, to go coming along three NII because taking be two of these UK as And double the I basically of growing two, we as €XX in mortgage roughly more as of be The some account the today. questions, to market All-in-all, reprise enough is within to book very this going happening. and still in enough three. the year. because one, third in deposit this is happen reprice than that in and two, to

the next Okay, space. UK, but in market, the back And of the year base happening, margin in in goes competitive of the P&L risk. is sector, particularly more was of cost see prices I is the what U.S.? I question all-in-all. expecting. margin deposit seeing Well, the in Fairly expansion US, bank, auto the to federally we're in what on referring auto expansion than competitive the our the in In the you're there

leasing. We disposal several the cost having the second on gains factor are used is high than back expected, is that also the very prices, mentioned have that not negative of the of increasing we'll on car one factors, fairly going be leases Damn the we that on less the the basis previously, Because year. risk on. probably is have side, to we be of because as to the primed that you our used than of other raise up points previous is not And had mentioned book is more we same. cars XXX the

back XX% in is the do not subprime. through is some in the US XX% they feel our but not US. change back some We're And I the the don't only had prying knowing of sadly is competitors Because seeing and of we book mix, this. said, levels or well fairly comfortable. go they that this recite. increasing we I are I the mix change, are the And of and we we go as I the haven't numbers the provide on to if know show XXXX. in to expect So true

fact, of build In we €XXX the macro to that we new for scenario. COVID reassign provisions million

to were overall. will to going to that not get point some expecting. and there. to the is in at of So normalization makes to the on taking than a little means, Overall, sense for basis, is I the go happen. XXXX like this XXth But that back by like happen little we we'll mix because expect don't due longer it the regard, just but

the Antonio, have next we Alvaro. Thank and you, Can please? question,

is coming question Peterzens JPMorgan. from from next The Sofie

go Sofie, please ahead.

Yes, hi.

JPMorgan. Here is Sofie from

TLDR question costs to costs are But my how in be in So that. the is first higher growth hire should story. you investment couldn't would the repeat higher the agreements benefit instead IT I performance quite if cost one strong just questions on broadly, wage NII could then the we of more that hear first are Europe. about have general Also off? in But think coming very Europe, expenses.

Centenario about for going going relatively risk cost high Europe risk still risk, ready, should like trending sounds expect when then growth of would of forward? will the second cost And we you peak, think the growth up question be your to going to is it how So of my in cost is risk be, up. UK would risk Brazil of

And should of So cost think could level come for we fee how the Thank there? about you. at something that what in? risk

I to pass the Garcia Jose Cantera. question you, off

in Consumer Finance in you billion €XX Portugal. billion €XX billion and figures. in Spain, Let me the €XX Santander give billion TLTRO, €X group The has in

Sofie. the easily. you, do can Thank math very you So

where Europe, are UK, wage say in in in different Poland updating along so I inflation. should and we've growth been with Because jurisdictions? we the salaries agreements

years. in that Portugal a of several businesses and I the agreement the one And union's Spain, is agreements to most is to XXXX. make XXXX. say size had starting due end for usually we Spain the BoU with probably the negotiate In [ph] till are new by we should So where important

forecast at difficult while remind that naturally. the to before happening are we minor we has some in maybe into Okay, expect But be to final X.X%. quite then, XXXX And demanding what in agreement. but looking us wages growing adjustments, Spain these and will unions it

are see bit. little speaking is naturally, accelerate with for this seen servants, a an X.X%. because million these or having north a not of of establish he's half the agreement million I X -- three people. And years, X% We've Along that civil expect the wages agreement a do roughly in one do We growing the government X people of negotiation a benchmark, wages Spain with kind to lines, unions. I of this the the for

is below think so. my to possible costs I is keep this be the going inflation, to expectation So match

agreements, main as the will presentation the X% business negative the of than positive before of presentation doable. cost CIB efficiencies in Portugal in probably below Spain deeply be probably Europe, in units, that With these and countries are or share, faster is in in well, in something the nominal CIB costs should growth. and I Over we're going the to region units in all probably the of expanding the X% get costs something the in cars we're as in mentioned X% the something retail some probably, growing kinds while up inflation these will driver as be less again, mentioned or be in

transformation year, in this going the below grow We to this X%. €X.X the So, this had is deteriorates X%, the macro, overall in the or billion, of for year is Because of or resume macro billion have the know, and same. add couple in to macro, you difficult probably I pick, so are further, €X.X scenario the all expect of next remains for CIB years. naturally. we now. the than we've wrong. same, remains providing X% to the the right macro billion because to know to We're I €X.X going due year, to where the as units been macro region faster Is Yes, retail we continue the to risk go due say. the the

next on specter race of we one year. may to next pick is going increase macro As costs the Yes. the is Euro should to be based to need the farther, the year consensus is that

So but naturally difficult to say. Yes.

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said much. costs increase before that sure, not That's and offset offsetting our much levels, the revenues, expectation current potential but including why more up, in up, with I for all going than ordinary and revenues So scenario very are going increase costs will of but in risk.

please? Thank Can you, question, next have Sofie. you, Antonio. we the And thank

question next Societe Generale. The Catena Carlos go coming is ahead. Carlos, from Cobo from please

you Thank you. the quick thank sensitivity Hi, for A please. presentation. on question the NII

on upside site assume that them quarters? the deposit of you reasonable Brazil where could is do time mentioned the deposits between is think NII way you million. NII but going for you time are how what quickly And slide updated you the do expect For the see thing mix to Spain, data over the already how But in calculate The Europe progressives, on that show NII only the following forward? you explained the you've and in touch you €XXX sensitivities to involved? same in compares you that with evolve why

explain be will If you can Thank helpful. or reconcile two those guidance you.

XXX% been, of it's something, XXX% given well, deposits, but our isn't it has isn't and he account current Okay, yes. almost currently,

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potential online there. So or this deposits deposits players new, is somehow is in of online tension

in more offering only is important going Now know or they X% going be rates if I the naturally ones to is higher this. big to how rates, are the playing they're that impact area the either are the the be remains X% the of this go don't rates not the high rates

million higher. no volume for through exercise rates You means from you to growth one pass The year, mentioned one -- like is NII they you in in quarter, the Brazil, the plus we're rates. forward €XXX rates is going telling every the so what the year million; the into taking what to plus for using and is plus constructed €XXX a is we That's forward like forward to be €XXX overall NII got volume the million. being growth

interest because Basically, okay. increasing. stop It’s just rates

end we figures. September of next and lag, XX-month you of liabilities. we the are repricing have will of you full will year, XX months of know, said be because have as assets using obviously, three it months only So end you September is

look sensitivity say. what So months when is we I the XX in advance,

look greater. you the months, XX is beyond If the sensitivity obviously

thank please? Okay. next Cantera. have Can the you, And Thank we question, you, Carlos.

from question ahead. from next coming Citi. is the Sanchez go Yes, Romero Marta, please Marta

Thank much my for very Good taking morning. questions. you

a is I'm on a we XXX risk, clarification the the if mention of which follow just one beeps. XXXX that levels, Antonio right US first want to roughly go cost up The on because is

How the of on see the that? between And well you've going the also as generally I cycle for somewhere past, lending for next business? we think in level year? Are in deposits appetite, guided be the you is through us second your do XXX. the risk in expectations, on question growth Europe. elaborate And for could you if US long the auto to in

got above to you doing deposits strategically sheet the deposit deposit. in excess digital of in terms but UK. going XXX% that the It's loan a the you've ratio Spanish balance bank in have to are what true be You XXX% in

chasing the you're to the bank. So digital books be deposits to in going balance

price going higher. pushing potentially you're to be to So the prices setting be I'm and going

a I think already launched gather deposits. new platform you've in to Germany

on very So cost see XX what deposits, businesses more do for bit across you a if give changes PMPRO, different holding would little ECB XX them? you. TLTRO or the just betas what on your months? Thank us do you next you to the clarity to the of can the repaying if you be quickly, the you be terms on funds all the And will

question one Okay, is the the easiest Yes. last the on depends terms.

longer excess and was change we look the Antonio that no in were again, repay next in on we the year are full terms to those we pay full repay we immediately liquidity full as the we liquidity if it sense So, almost to know, next we need build planning today into the us you funds, have will amounts need that would but as to says the repay let prepared, at we terms. makes we repay could year, will almost to hold

US into Okay, questions. Marta, of in costs XXXX. go risen the

close Our X% that? to €XXX something like Yes. cost of was risen was or

than be that. normalization lower should So

that stem going in prime cost we yes, And dummies, alienation, high. and two meaning month, the was our others growth backup these working growth, progress, that two penetration the are yes, you I September think of the and we new on the the have and say, sources we this we XXXX where that naturally, and affecting So best Yes. month may you below so, long risen of as long alienation, growth, that good is month, last in growth. prime car is the this being Well, so think, our the of Yes, reasons. on as main means say, so is is Atlantis sources stem this. last are continue the they bluest our this that levels ante sales for cars, affecting penetration us a the saw sell pace, ever blue simply two was be tester to we you this

road little we On little on the affect is a while traditional but bit, the largely going and car subprime a increase bit space, the we these went the our bikers, long appetite market. depend to

and and to the we are add, already diversify agreements We order We with them our to trying with order all to Association sign Mitsubishi Dealers long agreements some we are sign in OEMs. run. had working in with

appetite fairly competitive we are that loans grow for type is have right there we we And mentioned, now. these market for at these Naturally, this business. of We want the some I the provide price. as targeting profitability can to the are obtain but

and in bank, deposit retail You the rightly is in consumer lowering and our Consumer significantly. process we Europe to do Spain the UK. on grow to finance said you finance mentioned expect than XXX% we lower Portugal, plan that to in higher in significantly somehow and consumer loan what

of following €XX loan are a figures have book we roughly Now book the billion to the with billion. up €XXX billion deposit the in €XX a region speaking

region that much, to the to close gap, figure think deposits. a between close not in couple deposits, of billions deposits, next sorry, we billion the in in to the years, gap but do about of in tougher expect to So, €XX couple billion loans add the is maybe order €XX a and

that. a in position are to We do

in past, in business Germany, business. some this these And this the reactivating Netherlands, percentage the or process coming we we are and also more active several As Nordic less deposits to in the order deposit is Belgium. have platforms advanced increase in from were in know, a the countries of you also we that in countries, in funding in

where in are assets well, We and to growing to liabilities that's Because in keep we think already to this we think a markets. beta this high other in is be position in that's good I UK and the plan basically reason successful is it And in it. we're that. our the on elaborate Spain. line we do going the UK position than

And Antonio. please? have we Can Marta. question, you, next you, the thank Garcia, Thank

from Absolutely. question Peixoto coming CaixaBank. ahead. go The please next Carlos, from is Carlos

for good to kudos is his all my Thank presentation; a pleasure was these it you And Jose Hi, morning. questions. years. word taking for for the last

on actually the So -- my question NII Spain. was on in

some NII that margin this in in higher I Poland; then interest I further will complement hikes we considering mounting? to sensitivity get the gave the deposit going pressure there politics evolution as very you opposed if the And is you scenarios seems hikes -- expectation rate on And wondering these stable and So forward? the but sensitivity two be you of was finally, that wondering costs you was possibly political on with type week, Thank before that to could could expect much. compression you some to think of whether front what to given be that the year-end.

one that XXX said, basis which to XXX is Carlos, million. in we previous as in we €XXX consistent Spain sensitivity showed I bps these analysis the show that points here is with

rates additional increases in the Eurozone, is which the forward higher. Spain to So that's not in the over sensitivity only, obviously

on you’ve Well, Naturally, we to are the have increasing we that having repricing a the say -- expansion probably keep the -- going comfortable is are assets. in NII through of of on cheapest we can margin, remain be but Poland, I we expansion the in NIM; that we rates a additional margin margin interest would is back net on going difficult funding very around seen enjoyed significant -- levels the I back Poland. costs the

should than the having in funding market. that we costs recognize our being pay position less the deposits more liabilities cost do given we lower the Although the for

around assumption being of an probably but like assumption -- is with me. So to need this a working fair

we you, please? have And question, thank Carlos. Thank the you. Can next

from is from ahead. Zuluaga question Suisse. Pamela, please next Pamela The Credit Yes. go coming

Thank for good Hello, my morning. you taking very much questions.

first The outlook. the one is provisioning on

now overlay footprints. mentioning the you've significant been that your deterioration you of [ph]; €X.X across yet, You've seen built not a a in credit billion quality majority have

risk that peaking You sees year. flagged of cost next consensus also

trade be either on to cost thinking current and particular then open XX% your keep some have to these to expecting XX.XX% specifically therefore increasing you're deciding build capital to we capital last one was what power Thank may, from and with you for in the purchasing Can to a of understand negotiations optionality; provisions? the [ph]. the the Friday. these inflation of Then heard However, to -- risk loss about unions be address in some color question the more us cautious? the now anything mean A you Spain? Spain? you And or then some a proposals if foreseeing to of in B's in how I allocate use this would provisions you timing -- follow-up. that Are Have specifically stability about managed I your meeting the give target are to there headwind above the cost you on the on release Would CET-X your payout? unions you. you're is Or XXXX?

you, Pamela. Thank

of sees losses, based about Naturally, initiative recession of an with too are are on providing use XXXX, we XXXX. mild -- well, Let we these providing overlay. expected me This that some asking in the the me in countries and are towards initiative. we end providing some more you when

presentation if is models theory, prohibition; scenario is we wrong, are our this in in to and the If €X.X our just is if some see the -- part right, we building, situation that when use is way at away to one says around okay. yes, or away this not scenario delaying Capital we materialize build we clear AVL or -- the board if negotiations But the employees there million board from a extra from we already in IMF us well, the these far -- Having the is -- keep everything the were one-off from some understand we [ph] not than way So, and to XX%, IMF, IMF. use may scenario we the far will board, while another, our the second a will of In XXXX [ph] the from the recession. from negotiation into aside of among €XXX the are have -- us, right, and releasing; scenario going the if within capital. build -- it's building other the not or on deteriorates some based especially union stated going billion until of for about this is materialization the XXXX. the that we I and so the expecting, on been is XXXX. we employees based case, The employees further worse The of is keep so we this approved to goes that future. -- scenario one that for yes, that said the the point; an kind that the the or will some in this expect is -- the the scenario we our that again, not be year, year. level XX% said that decision board a again appropriate A-B negotiations; is XX% taken. that, up decision optionality;

negotiation not one -- to going of about So the come the unions and cost. the not matters but in XXXX going -- which not this is terms big the will mid-XXXX. negotiation is more at of full a small said a This the substitute is compensation to this one, be in I one start is that is that as agreement before, with some

Pamela. have question, Thank Can you. please? you, And thank last we the

from question is coming The [indiscernible]. Yes. last ahead. please go Fernando,

Thank please. you questions, questions. for taking my Couple of

This you The first the there card may families that those be If good on might practices one is -- [ph] potential is on What change have? is view one. on your the the impact on implemented? of Spain. vulnerability a that

Thank Poland, you be in a Spanish the you the any that have coming and the seeing will provision little are forecasting strategy have ALCO you that much. next that more in and can mix bit great. Second, done; comment on you holidays payment on the if portfolio, or very finally, And quarter? the you

They I business is the way embedded our say the the loan disposable it we we agreements with of should how ways in is should result and do So match -- -- to these repay that the the with things. in naturally, agreement I the any, this? these I to should inflation, If deteriorate is is the Okay. In customers provisions, all work, mortgage contemplate already the unnaturally. extra mortgage usual. income, comes included The Spain, a if business the which higher affordability, a this say scenario, to customers usual, are we and there. are match and that value, our -- capacity that are as lower the as mortgages macro the as way are vulnerable discussing have of us macro authorities when scenario ways these well, say

anything need not be our the respected do scenario. we here included to sensitive expectation issue to in because the I this, is it’s is change unemployment. So supposed changed if Naturally, more because worse,

the in So not unemployment is overvalued. real the is I key look estate it because any at when in Spain market dimension,

for this. that ratios on. macro customers the low scenario. ratios Poland; a see need payment high income So that low [ph], those said medium in is question affordability holidays included of it XX had to it I or it is as suffer our affordability of the disposable more not what's ago, is more we Yes. But case with going in income end with years we is or or low the XX income in

bank operating as if provision. high the that more. So to do. profit before well, don't we more think are is we’ve majority Having the going need to the if and us or our to if and want from on -- question I constructive we to add maybe this? holidays. that portfolio allow payment of strategy; -- we Jose, a we're done assess holidays, generates; to generation the to very Well, we expect start very claim to little your need little; will least relatively I I by case, all of bank -- said adjust to ALCO the the significant, payment said more, we of potential elaborate be I In I customers many don't [indiscernible] higher not so how face to the we going say know, but we at to it's accordingly NII pass. and you build requirements that should that, not or one this any to keep revenue colleagues, to come feel to know I of add quarter-on-quarter,

Yes.

was us going have portfolio presentation, the first interest we at a us income value, As to our forward. the decision in balance in cost to terms sheet the put obviously rebuild and in position that net some time much we in results an which didn't mentioned ALCO Euros, conscious compared ALCO obviously, half But better opportunity the portfolio a competitors. of

clearly, next the in We a years. over what rebuild which we billion so we a €X.X through tenure we through €X.X don't have Eurozone, continue an we to than building only and the We two we billion. the but Italy, would we have have X% in diversified the building today the Spain, portfolio France, probably yield, far figure the have gradually not opportunity have earning countries; is [ph], mind already. In diversified portfolio have portfolio are more

years. see. the larger couple growing We depending opportunities will next €X.X of again purchases make figure But from today, again, much gradually to billion we on a over the that

are Thank you, further questions. no Jose and Jose Antonio. There

years. all Thank you Okay. Thank you, guys. these for

guys. and Yes, years. I so the this count got Following times in times Keep Santander. luck, faced been following result -- last of a presentation, number of I've I yesterday good XX XX tried you; to the number

an with always, and improving As forward. interesting is bye. the message Good you. This you. Bye, equity luck. profitability story, last to going my Thank