SAN - Earnings call transcript Q3 2020

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Sergio Gámez Martínez

Good morning, everyone, and welcome to the 9-month 2020 earnings presentation of Banco Santander.

As every quarter, we have as speakers, our group CEO, Mr. Alvarez; and our Group Chief Financial Officer, Mr. García-Cantera.

Our CEO will address the group performance for the nine months of 2020. and will a business takeaways Q&A jump quarter our CFO more review of session our answer by before to detail into CEO, afterward. then follow-up during update with in the your and questions happy the obviously, the key

So Antonio, mic is José yours. The please.

Jose Antonio Alvarez

good to you, Thank Okay. morning Sergio, and everyone.

these all, and straight well. qualify doing to go this relatives to I I third results Allow environment that results. the COVID and you very within hope of crisis. a are First your friends quarter the positive families, quarter the from me will quarter arising

We has Only into already cost expired, grew million detail, solid euros, moratory holidays the had X%, €XX months, the In we this, billion X. quality, want behavior billion driven in recover have plan. as strong significantly, quarterly with lending the profit for I first terms more XX% in significantly, under resilient elaborate and pretty I the credit this compared consumer better in on out previous if activity, activity trends of both reduction All in in will side, constant or improved, quarter. activity than quarter, this results. in the and In constant stage been the coming performance. On regions X% quarter we by top the revenue and of euros. was And maintained €XXX the as increase the was on underwriting €XX later second individuals. the nine The good. the The a are line mortgages scenario, profit growth will more you billion, performing our quarter payment and the pre-provision reflects to higher XX% went pretty quarter the €X.XX and long in in that corporate in business third deposits. underlying previous customer in the stress

return, we for While the that least but to X.X% now around you one the in expect for future XXXX. be cost X.X%, was cost the risk, Q, a of year, highly uncertain, this more guide be continues to going probably the at of X.X% we lower first

side, regulators basis capital do shareholders in capital the be to dividend AGM, in after with and cash – to they the the continue capital, in accrual present a basis morning, so. scrip the year the strong to for generation, On points. build points year, we dividend share dividend approved of XX XX This cash we €X.XX on paid of to a allow next us that the next per provide quarter a

go the if we to P&L, see mentioned, quarter. P&L, is rates, the the what first, the impact straight was to as in significant So we exchange

the account. points and the And see in between revenues X This You the is you X been lines difference bolt-on the the particularly those has two in strong impact. in see figures. Brazil, in of different real

by income news, cost we and coming higher the management of – market perspectives We stable, activity and offset interest rates decrease accelerate reduction, good have the cost looking of for good in lower in Excluding volumes, remained the volatility the euros, quarters. constant impact and the deposits. as our lower were business at some of

year-on-year of show rose result in and constant a net income resilient, X% As our operating underlying euros. profits, significant

in growth how the income, UK, by in X% mainly earnings Spain, U.S. with you first with highest see following quarters, the COVID-XX-provisions, grew you the the already right, than to this although the in with quarter came overlay the loan quarter the over higher Finally, X Well, Brazil. interest loss and in NII peaked detail. last the driven line know. charts where can that did the second strongly quarter In lines, revenue more By net provisions due quarter-on-quarter.

XX So quarter, Up spread the happens across repeat recorded gains reflect the good higher the that due board. across a year a very X%. activity, of and performance. pretty our up as to couldn’t fee Costs third CIB with this in We we costs quarter. quarter did we result that in all this in of financial turn And well adjustments the second transactions net second in personnel markets. were – lower income, the lower in quarter, related the expected expectation did partly in the

operating XX% trends income COVID-XX fell high I say, go – than of of higher net QX main As quarter Loan second the the the and a are the the level in loss is quarter-on-quarter as provisions remarkable. the will last XXXX all XX% supported the due said beginning, was to that to quarter. by result, I regions. provisions up at related We

efficiency regions all see You resilient revenues, pre-provision positive improvement. performance, all profit good all the regions very the having a And and cost growing regions the with highly in control. NII increasing

quarter Going finished previous quarter, we XX.XX%. to the In the capital.

pay to continue the generation, accrued be and generate if capital generation in basis strong able points year, We next to to allowed We order dividend to so. XX organic quarter. in XX a do

depreciation and basis ratios, so range. still a equity corporates' that around again, on top from improved from to we why is, XXXX. relation – little and XX have remarkable we of SCUSA XX mainly one exchange target the buyback basis from efficiency real, share in positive with ratio The the a of and what negative Brazilian expect the continuous This around profitability to mainly regulatory change, we the the first points, end end the the around bit is slightly half a basically points, basis reason currencies, And finish at compared currencies it’s America, a net the the impact year our related underlying from so with in is – end the our of particularly several suffering of value XX%. with recovers XXXX. transactions real. stayed rates. return XX impacts. those we negative That away year, the from our the higher, had of far from tangible but the remarkable. potential that’s other This In from In had flat, Latin of at impact points, the positive could asset of regulation and the tangible QX, Additionally, impacts software market low

Where previous are growth in have you strong quarter, current In quarter. If activity The the underpinned go a coming is group. new back me that Normally, we let more support to in the that the business activity, the detail a the in to the – which to on go guide let guide you. levels. the don’t with we average me the given is activity? much we normalized living, lending to government situation but

euros. Now you we That billion pretty same see a figure that in was day €X.X that back we constant much had in February. the are lending

So with some compared the kind and of – quarter. normalization in volume of previous the lending

go details. specific you more If into

mortgage the the the recovery more the in fairly, recovery by supported all new after substantial and the will consumer quarter. more. bit €XX the NII of corporates, at billion, by the in in large is material view, is the March, – the are little regulatory in booming second a the the this, back is to Everybody pandemia the and warranty with figures see and The quarter customers come CIB, this using particularly pretty spike level total relation a It – quarter same. digital the second It of the different third – the and to normal the increased changes surprise situation group the several it’s the of lendings, sales, lower And the in And and governments more and sorry, are that across active have year-on-year. the SMEs You and SMEs my back in In strongly global was quarter, in around came that change lending customers, a preferred of to second the Yes? digital compared result happened you. where was of stay is you income. both income non-material point channel quarter are and there’s the in details happens to analyze we will If end impacted day. of saw at You view, the by sales P&L. units. when – – back Well, screen. may we loans point. volumes business the regions, to significant quarter From growing. previous mainly the Insurance expect quarter. more Wealth by customers more the as we coming corporate mobile Net future. much fee with that transactions and the and adoption fairly in programs a spike and September. XX% in regions. were lending we normalized the second mortgage fee represented here income the after providing pretty corporates, happens no and digital And mainly Management from have not a the in And Well, stable digital CIB the in government

activity. Europe, falling in X.X%, again fee developments comes to North I the front. in costs we year last quarter, normalization are X.X%; Europe nominal continue growing South relation Cash gradual April. When are X%; can with America, This achieve established will Overall, this positive good perceive billion costs, net to it €X and we expect the costs say to target income here. are America In X.X%. group nominal a developments falling, associated and with of of expect around we recovery we

April our credit of On we IMF not you are models The the going mimetic, two based basically away we probably from the the We result like not ones this, this provisions, models on at there. end see is and providing a extra going year scenarios. stage, balance this to the using. up achieve be XXXX are And provisions are scenarios and year-on-year. are – the XXXX, based far this on remain – using. using are with are relation since away In the as the expect front loss scenarios is we of but to sheet XX% still one the not provisions are until at they fronts. the December And loan more quality, much in far we’re

credit are quality. deterioration other the significant On the quality not a we side, on the seeing side, on credit

of balance of as result loss still the at well. in around credit the a loan performing on traditional NPLs, So and going scenarios book in provisions based billion, reserves stood that, this models. last the stable the X.X% around And cost sheet definition, couple very the the up is of in top and the €XX loan profit total pre-provision years. is this situation, of book. of first fairly defense is represents our line and of On which €XX billion

the on the bit finally, little payment holidays. moratorias, So too, me, let elaborate a

figures You that with. are the have moratoria total familiar was €XXX billion. group The probably you

by by – have in You you X, you the if was and those as in more X/X are have, And stage those expired. X/X products X X%, main XX% XX% already amount already than moratoria mentioned mortgages. well, regions. customers I X. customers, are the is and before, of behavior stage stage where see of The The in

protecting What to loans – amount well, in pretty You you you this moratoria have ago. with variations, couple picture. close the probably behavior a that and is remains of €XX lot – a see may expecting we government of is helping is regions, some still were than is The the a much, programs – well, in this regard. month is billion. say better this And one incomes by the that same

You and Out SMEs billion billion €XX billion, there. corporate. consumer €X are have €XX and loans the this billion of €XX split mortgages,

relatively the see are year. have terms period of this two You loan By countries Portugal payment government usually that extend for you of countries, a one small Chile, time, where where book, moratorias the holidays and moratoria. longer in

moratoria stay in UK book. X% other X%, So to small, compared That of there. the with loan Both is two total the X%, figures in Spain. the the this the and Spain you’re are you going relatively And of book. X% to region and loan see see UK

XX% expect don’t account into you taking are than we in who light – – loans that UK behavior mainly the materially in XX% is different that blue around despite this secured the figures a to and – and So ones Spain individuals. in have that

and – So the to we come trends CFO, vision end to hand our and our up about countries to the regions José the are elaborate back I García-Cantera, to Thank the XXXX. I at you in you. for and now give sum

José García-Cantera

decreases units, year-on-year, and profits, a and the non-performing that up strong with nature businesses increase refer first and businesses. global in a picking of The North the had José South quarter will had America in the I of to the loan commented. very in all recorded the everyone. Banking the José had – but business were portfolio you, Wealth Good results profit Antonio by year-on-year activity Thank between in these our is Antonio. And work. were Private has The to businesses. clearly Excellent global mortgage regions geographical upon underlying volumes pandemic, Management America, Puerto morning, CIB in Despite diversification and a XX% continues of Europe. quarter and in we global the diversification performance also stable We are that a growing that only Spain. sale minute, months. We in geographic of with the across in profit very our in volume positive and three the our CIB. explained and regions decrease lower pre-provision Rico, other our sale recent year-on-year global two predicated

we Spain. if Now to turn

We and recovery customers, economy. continue of XX support the to for already initiatives and through have reached the many we million businesses families

the we program remain for with more and rankings. example, holidays All accesses consumer digital reached market more the no loans. And and X corporates the deterioration customers, For support We in granted have share than risk experience leading million had SMEs XXX,XXX in in of in million we portfolio’s quarter, XXX we government a payment customer prudent, mortgages the XX%. than ensuring profile. in while,

income we amounted quarter activity, X% loans that mortgage due we in obviously, that €X.X this portfolio In had year-on-year, the quarter income, increases Profit higher the and to of by boosted up to sale interest move On portfolio, the ALCO from which of smaller our fell a portfolio. and corporate X% mentioned, loan sharp performance, commercial billion. out volumes low non-performing in basis, increase this cost sale mainly year-on-year income, to the of an in the real due lower down income But points We non-performing positive a non-performing loan year-on-year. subsidiaries. total fall income income, to transaction in the to turn, revenue, of had XXX dropping the fee positive a dropped estate recent that cost due in months, I in basis statement. of XX% the terms ratio, And XX% obviously result by SMEs the net decline also we the up If mortgage customer was in loans. quarter-on-quarter. to XX%, fee due to recorded was net reduced performance income due interest

about Finance. remain environment and for to although positive Consumer and less and SMEs, net If we ahead, credit Looking towards the uncertainty. top line in current positive performance, move more so the somewhat Santander individuals, fee net income, we interest quality the income given

increased We returning which quarter, an countries almost income, underlying to XX% with XX%. continue net is profits while Consumer levels. to In the jump quarter, market. thanks signs XX%, of In see – in business the in linked most Finance precrisis operates, fee strong recovery were new volumes to actually of up the new outperforming the volumes where businesses third Santander to

months, continued nine to be impacted at profits heavily by Looking provisions. underlying

interest type However, X%. the And increased COVID-XX Cost to this our X%, of in were low net remains thanks down credit efficiency actions costs for of implemented business. programs second income quarter. and

in the levels quarterly at attributable increase business provisions by new in and third the volumes. would had a we in profit, similar the the In loss strong uptick forward, driven costs those under to loan a we recorded underlying expect UK, control. in Looking coming with quarters quarter, continued

remain loan cost and new strong, significantly provisions and interest XX%, lower under cost the this very, costs basis account in quarter, and reflected net August, be activity funding. reduced We of be and XX weeks, recent in the mortgages. of also in cost We in with quarters, to has loss demand applications credit in for that mainly this very back Mortgage the seen X|X|X points. are the while were income, reduced seeing below coming by CIB the should been due down fee in driven May control, can in of Increased strong income very actually bounce the loans.

in terms somewhat be affecting regulatory overdrafts, COVID, impacted of by by In – nine-month to compensated addition changes lower costs. continue although results, regulatory to

instance, to we’ve while Brazil, forward, focused evolution X% record is mortgage Underlying In Brexit last banking. is September, the Looking again conditioned quarter, declined with the worsening sold to We for in Costs on the to lending that and this once reaching Positive in the the And wholesale month net performance XXX,XXX by rose changes costs a the explained and also high Provisions quarter-on-quarter, of in expect course, were the revenues. trends driven loss profit we those negotiations. an recorded in volumes, subsidiary. month, in the in income higher. cards. GetNet labor of capturing by attributable interest of terms and savings, cards, cost just in of loan Half agreement. move excellent If efficiency credit provisions. in remain the September. mortgages, positive in seen growth results coming see This, similar finance improving we growth XX% auto no quarter. significant by we continued of quarter, we quarters. Very in has new don’t foresee opportunities. consumer both collective in in

and and IMF growth real X% to the the improved current in show minus to continues it or in forecasts. all Analyst with X.X% a of minus even remain deficit GDP and is proved improve. XXXX and this, its of also entity in sheet expect X%. which outlook and the account to in environment. its sale the given is the recently. terms from this €X.X €X.X economic consensus deposits, the in year slightly increased And and forecasts expect sale and the better performance In explains June GDP even this The bank in we we the Puerto profits the This drop both show in States, in why coming has Rico. X% a loans terms balance commercial of stable absolute finance current economic during profits we quarter, to amounts In again and performance. to quarters. optimistic We remain – strength would in Brazil XX.XX%, SCUSA future, of current stake Brazil to short, improve United retail Brazilian better the expecting results in than about of billion obviously despite this, consumer ownership profitability. the billion amount actually These X% completed between regarding volumes

obviously, activity was excluding – lower had demand However, XX% reduction activity with Mexico, of these measures. mainly arising decrease. control picking and in driven were by lower profit Loan Underlying And cost funds, in provisions. or corporate year-on-year, costs, previous customer saw fall consumer second and driven the offset and the by strong higher year-on-year year-on-year slightly the and higher In reduced and the staff, the was by profit and due income cards performance flat. and normally debt, better by growth several especially Compared provisions which and XX% while X%, from incentive continued IT to boosted rising revenue In Net COVID in attributable were decreased high lower the provisions, transactions, side, lockdown loans in most digital programs. consumer quarter, on be credit operating we a costs. to expense. affected profits bank we quarter to loan of projects financial total branches corporate the costs quarter, the lower offset to growth exceptionally up leasing by gains primarily were also as loss income down to increased operate substantially. loans higher, due continued

to had customer coming our Cost and with of expect weighed was equity quarters. even better decrease franchise very efficiency. other revenue, in These a a provisions. ratio around revenue X%, XX%. and performance the return On show in loan improved the loss reflecting a positive Profit or improvement and year-on-year credit performance we due trend results the down tangible hand, profitability, high higher by on stood good we in stable of

results Lastly, improve in we see center, XX% the compared XXXX. corporate can to

had operating hedging to the transactions hand, amounting the we foreign €XXX expenses impacts gains trend On currency year. million. financial last one in XX% positive compared top from Basically, positive coming to and continued, improving on

negative a And the On And to affected for impact whose values provisions of buffer. were provisions remarks. our larger the one-off CEO let it for the other increased certain hand hand, we by results his stakes back me NII due liquidity closing other to now had and crisis. on

Jose Antonio Alvarez

bill, couple continued taking for will strong say, A in the you, the in Thank capital quarter. profit account operating increase performance generation. results. Jose. of XXXX into following minutes' Strong scenario, conclusions underlying organic I capital a in

robust We the quality, of and XXXX. credit have for we year new set credit cost a full estimation

in and the already €X I said very situation, how mark to year. with health effects a our Talking we AGM, the coming the results to a brave long outlook from whole the got, very it’s last, that the for the complex Chairman with surround going the should trends it’s that profit very, uncertainty given the the about net for exercise expect billion around recognize As the – in – be these XXXX. and COVID-XX. year we

as capacity to to cash, that now CIB €X well, additional well. go revenues, optimistic in billion estimations, are better also on as quality deliver and our reduction a than in about net repricing and I explained behavior, it expect next In of and net two thanks we to costs. in in this coming should to continue or Management due income, customer forward diversification in we liabilities reduce some savings use And XXXX. – We Europe expect Europe the trends mainly I an we relatively positive help of we were Europe, credit we mainly our – years from sheet, improve lending project, for along based year. last the balance current before, volumes, to maintain continue In the you Wealth already committing the expected IMF, once are told Americas, result we particularly that more of built a we higher confident in fee our quarter One to – and continue will the cost well, of P&L the overlays the

Regarding range, capital, we are range have way flexibility our will top going and in allocate we target the in end and we capital and the way we of match forward more the shareholders. remunerate our

generate either return to equity without of capital or continue And return. the an We organically expect long-term sacrificing of traditional our business in our improvement growth with we on cost underlying equity. line

for the Chairman the AGM, morning unlocking organic explained growth this potential As our we are forward. going in

diversification Thank questions This you. us change generate efficiencies. our for may scale the and the are change. Santander of for are trade the structural on open significant large value in that world through model, more payment now consumer One to opportunities platform we to for have. will of of our to doing of The shareholders. strong allow and summary, SMEs. continue your which GetNet I in Europe, additional bank generate creates for value organic back platforms And say, provide creation, at you and we we we and the with a business combination the cost the remain In creating will Our disposal and revenues realized starting one project finance

Sergio Gámez Martínez

for Antonio. X Thank Thanks, around we José. this, In minutes X.X you, Q&A. hour, José have

first with operator, question. please, go ahead So the

Operator

from Please Riquel go Alantra. Francisco From Instructions] [Operator ahead.

Francisco Riquel

quality, Yes. would the start in I may, new cost asset X.X%. to if like I of with of guidance risk particular,

units? for and reduction at the transformation from. from and for What comfortable you changes in Consumer Mexico? details of these Spain. risk is the can give the ratio good in two will that mainly what of expecting relevant business into And the for we The Europe SCUSA. makes the UK, highest other cost units be particular, then is also, main And you by the areas in macro or two understand regions? more shall from If are the I all tougher. this where Also, these what us Finance for of comes the moratoria new any units Brazil – and the expect in or NPLs bad, X%, other you

shall of this expect what for in risk Spain we terms of and for cost year next So year?

Jose Antonio Alvarez

Okay.

to Let quality, elaborate the of guidance. to take cost on – risk me new asset the

the the net than in cost see you the Brazil in where elaborated, last The the that in of on Probably better quarter, particularly back U.S., in X default the came was expected used main the As areas behavior, business U.S. you backwards, of of in rightly the cars both originations look if SCUSA price recoveries Bank we now and families reduction produce Brazil. in that is significant happened morning, of Central same the in number risk. of lowest years. this published the the the the

cost and you forward, I build the you fairly in the of the our about going is in of positive, We as maybe may risk say, we know, it next that this, will result that year. would or Brazil, view surprise stable as overlay. it down shouldn’t go a So remain fairly, –

seeing, the overlay. the we on trends optimistic used we are are this. current with haven’t fairly We And

that pandemia to large mentioned because, I mentioned the elaborated don’t see So you in have in significant changes trends that well, forget another impacts you need it’s pandemia I be major matching in relation beginning, with in last change year, prudent high. we the good. mentioned, the scenario sensitive the did there. in role Spain for Europe. Europe, a a SME with relatively pretty on And the Consumer in Finance overall, we next we But in relevant pandemia know, Well, six this same still all I down this in finally, with we SME And sector – overall Spain small a this. pretty, you in as feel UK, lasts have overlay, at stage, well, the a to of that up. the confident the months, in, at you where we on of is mentioned, been quarter forward, uncertainty one year tourist a the produce plays economy, So has and area, confident are in month are to significant having which Spain you we well, going overall. most will Consumer Mexico, or go It’s Yes? Finance provision mainly book went significant And the books. in – pretty you the this mentioned the asset quality scenario I’m that for but behavior the nine may elaborate, not where the as well, the the the variations the cost risk timing that

those are board. are the Overall, trends seeing recognizing, high. pretty across we that the constructive, is uncertainty remain So the scenario of again, we the

Operator

Alvaro ahead. from Stanley. Please Serrano Morgan go

Alvaro Serrano

secondly, share, of affected your be we cost impacts costs And regions by to questions, you QX color charge it’s that terms is of a you’ve related in that capital, a going on on is exercise, where cutting volumes, €X businesses, the coming announced cutting to in terms the Can big materialize fund give billion very, material expect because bit commercial cost or of synergies. sort maybe? And please. question any On that’s consideration further cost plan? costs, Two and reach that’s a a ability, could in such market of your that your very – maybe from in us capital. to if should

regulatory in points the impact You’ve had quarter. basis XX

you’ve If And XX such regulatory the if QX, look you’ve in – I – we dividend. points impacts a high gives in AGM that €X.XX the that you confidence are what left you’ve proposed what left. further would the a the accrued approved are Basel beyond IV? put to aside I general, they’ve What dividend. think out called obviously basis

bank the SSM does second the think, I that How are dividend You’re, confident in those you Europe payments? allow going that. that to is

Jose Antonio Alvarez

me and elaborate question, I the Let take will and dividend maybe the and the capital to the about ECB. pass first José one

comes to reduction project But Poland. billion On the referring size reductions I UK; – now some is given Spain, or was lower And than of the the XX%, is pace more where project of more Probably less the Portugal to the that cash – the the will – accelerate the going €X the tell €X cost and the the is the bit think XX%. reduction to size opposite. some and franchise. was happening in going also UK, it’s the in with and cost, going Europe current is the you’re the the UK and be franchise, in cost-cutting one Spain, some related I you the be others, although in this have different One from that from – Portugal a and mainly And current will of for I minus Poland. to in we billion

and may So how the the do I volumes you very the current trends well point, to – commercial share. fairly and market good are keep with trends our expect this current say. that established, reach much raised fairly, the I a affect and capacity – will the

just So the it’s pandemia. not

year. to And of a were you at the on through volume bank branches The falling continue in sales were The have open transactions open at products, the this, you of And the XX%. mortgages. look in example. the accelerate X% pandemia digital more pure operating bank increase. Pandemia, ones this. top at when look value-added entry at sales, Before transactions into digital And growing territories XXX% channels the high you – like of

a commercial that, – given a the reach tells branches create per you that the that sale yes? it’s large is of same more of yes? You It’s less you it’s capital? mortgage Spain, of branches, So do have, that probably number So just of to see morphology bank type number, in digitalization this well, branches the point branches, you of XXX not equivalent of So point-of-sale. the you on the size the want branch. at open the now, yes? number different or something granularity elaborate So produce doing of can Yes? José, volume like

José García-Cantera

were inspections next scheduled postponed started haven’t Yes. were year. They Alvaro, the for following – COVID some that year for yet. of the this

So A that at impact would will the the had next XXXX. point conservative for well put this below we year. know which closed don’t regulatory be in sure we estimate ones impact

the range end next continue the to to XX% we of least. moving months the – ratio see capital we So XX see over XX% upper our at at

Jose Antonio Alvarez

ECB pay our about or we to are we case. the confident the how allowing Well, are making SSM dividends? Well,

telling is we are what So our case you now. right in

a is So profit, whole. that strong on pre-provision

based give We is in that shareholders to this going And, profit other are us as lending. across shareholders. case. our of we power credit offset dividends what the liquidity uncertainty case. subordinate the making line increased scenario. – potential pre-provision are Yes? not provided asking first the the to or started, done since to our We cost not given the decreasing the all other And the well, keep we shareholders Well, to of the from or us sectors enough in So order lending for bank of board. a our defense at pandemia outcomes negative we’ve the side potential coming companies on

pay yes? so XXX% results. to based And we them not, up We or continued us this, to to to on It’s allow are dividends. asking to do generate us allow them to

Operator

The Carlos ahead. next question go from from comes Generale. Please Cobo Societe

Carlos Cobo

question One the for in your UK. year, and swap some and pricing pickup and in next the lower new NII particular, costs. also UK, Spain specifically, outlook we’ve seen In on

here? a a question that’s How it on see seen recovery Well, in pretty maybe NII Spain, We’ve Or putting on the much new a kind Do see post contrary be a a collective to like increase been across a here sector. the risk read provisioning action this that it’s you as needs banks. against could – has first Spanish code, basis? class potential thing, NII evolving we jurisprudence have do the case-by-case that from in the same you So to lawsuit, Euribor take a in potential The following in do should seems quick of a it. the pressure courts opposite? – where sentence is but ruling on And previous mortgage sector. the recently see some costs. going a formalization to on but XXXX? the you for And instance

Jose Antonio Alvarez

Okay.

on in both Let NII, me to Spain. UK and elaborate

That different Euribor not the into As of UK in In with remain in developments That we more more quarter, you both the getting you’re future. as case, – back the to positive strong more UK, in and within seen translated positive, It’s mentioned, But in What that as case. again, – XX-month, upfront what are there. seen. the overall is which the the well, think as a well, not you’ve extension, this upper also case – one I the in referred mortgages, being have the on don’t this fee fairly having we loans. and case the only going – corporates mortgages. on I see is referring on in also getting will we territory. the be forward. to to, you to to was capacity going think, lending already to remain the Spain, a in courts mortgages, we’re an common practice, progress positive But that others the is negative is consumer the territory it’s it’s all going everywhere. – in

the come but what – industry. So for I to issue this expect an not do

Sergio Gámez Martínez

de Gil from Next Please go from question Santivañes Fernando ahead. comes Barclays.

Fernando Gil de

the touch the change question, is little question. branch fees. other fees What is on reduction in in do policy and to cost people? done first coming Spain only a what or mainly UK. driving on? Spain the the expect make the is restructuring on and the fees the the about Are to we measures coming change? UK? guess try new from to on in like that would mentioned on November I be is second a you UK you This what the could thinking of what And in And bit good Or

Jose Antonio Alvarez

in a strategy you on policy, same is of only back, a bank big more of a you customers as have done most work, us a the what are that deal bank, direction the phase the way. product a product a across and more also their time new reduce of Spain, range this in transparent we’ve first this reformulation. a range. reformulation that current don’t a is formulation We But products significant happening call mix. not is a will through. to to on to simplification The in have important out in policy Okay. What in of allow current betting step the costs this the new offer Europe, – have It’s is in is significant, Spain, – expect our of at the simplification this we more significant the

relationship with the cost And simplification, a As customer. this question result was the of a more second significant transparent reduction and about...

José García-Cantera

details. the in UK, the Costs

Jose Antonio Alvarez

in UK. of details The the Costs? costs

in already are we So UK, this. well, doing

in call that And this is an call people this. corporate we a and This X,XXX, reducing of of we an on. had some At Some the the costs thousands, are significant is The now, others end. people there. like coming thousands going process UK at of from the X,XXX. an is of through new of end this, got a incorporation center number is point, level, till to we working came restructuring to coming and of that and basically of working costs, to headquarters significant technology. remediation PPIs end, centers restructuring On some and centers came people, on complexity top number the have the in

the service on to case the significantly. Spain, to was corporate branches, areas we simplify way centers that better customer that in IT, introducing or services of branches It’s customers allow already It’s centers this new reduced of back corporate And We be there. are can nothing new UK number we The the this, us technology. to yes? add of other level technology at the on are serve much our services, central in across different at including same center, the provide we and not have where about corporate the And more the exactly the particularly headquarters. not and applied of the to of to – other

Operator

Please from The JPMorgan. go next question from ahead. Peterzens Sofie comes

Sofie Peterzens

from Sofie JPMorgan. is Here

is of this have Santander on in it we could this the Finance? Does My do this So kind Italy? between the merger you mentioned going the second offering Finance from Consumer think Santander think coming, next not? is to Spain you’re Scandinavia, you Santander? that that but where January mean So And present Santander? What currently is banking the how should And presentation, do about Germany, in with then and you in, a Finance. mortgages impacts, be for year. if tax risk markets really around What transaction your introduce Spain? for Openbank example, Santander would Openbank mean Consumer also Openbank this tax that financial in combining that you’re is Consumer that question does to expect there any, saying start

Jose Antonio Alvarez

Thank your for Sofie, question. you,

channels. as the we got should platform Consumer is, offer full With all combination, we with bank, got along know, a on through they call across are I and on And call I The Santander Finance, out only then full first at you combination shouldn’t XX a the other cannot Finance, of Openbank – in XX because Europe. from get Santander bank combination them a XX in that we million, side, full a large provide in long, combination – stage try I working to basically this with the have borrowers of not retail to through countries, Europe are What Consumer Openbank. the we large – countries question, this is offer, try third-party retail this finance customers Consumer Openbank. a we consumer Finance pledged

task. You Mortgages is not, mentioned stage, main the specifically this mortgages. at

to continue we loans. So consumer produce

established. banks through have these we We’re to third-party we point retail will these those and of number and channels Openbank going to operate a Europe. the it’s be branches we’re with of with through have Finance. not things at probably same reduce checkout number of others limited of – And the we’re lending in three, Europe, banks, and Consumer significantly, banks technology capabilities yet the the across but the know going license develop the our a of banks, of don’t going offer in we different exactly banking all having the and have I beginning the sale, At to time,

entity. think of I the borrowers grow and into these, call the customers to before, will is allow this combination many of new us significantly, powerful I transform and business,

are It’s small to case, affect true the in and on the but volumes none P&L, we’re of or reduce, transaction in so the naturally. on may going financial Santander, marginal. that customers may You this fees And mentioned terms pass yes? that, any impact to tax it’s brokerage, to immaterial those get

Operator

The from Omahen Jernej comes from question Please Sachs. go ahead. next Goldman

Jernej Omahen

two questions, have please. I

like talked like financial for And increased amongst to generated I notion follow-up. how call Implied the is I’d AGM dividend. And approval. on the and the SSM there And share on rather, results. this. to between I understand the bank of Santander imagine is SSM, follow-on one amongst on the And strength. the to a first your Santander if us profits, a discriminate the strong this better of or to would didn’t could I SSM regardless Santander how referenced does key process you you their put from the I the José the with the it agrees answer, makes that a case think on you SSM and lending the The the dividend? guess currently decision are dividend work that. make and banks supervisor? this you least your then having struggle like the and pre-provision change. feature with that everybody a expecting that’s discriminate comment with as the question, was supervisor, it extensive Antonio, hear just And discussion whether banks. in think, operating doesn’t that But actually will And proposal on or then on appropriate dividend consequence on the it very public a not. the a without I processes. When would second about

expecting and can’t SSM to distribute amongst are start future? the can banks that differentiating So in you the

Jose Antonio Alvarez

Jernej. you, Thank

asked our time. shareholders. of we naturally, think these and expect yes? we and we is this if We banks. the I’m you of result next say, shareholders' what It’s a This current But was responsibilities And strong. Well, has cash or, our the the how me the going SSM we’ve the is less, and – process a about expect analysis is clients the SSM? this have own to put yes? make this So – dividend we our this by on well, December, all what to work the to we in propose situation, generation and case. discriminating future. they expectation the don’t is what I to I SSM. case SSM the can customers my more, for for will is or they no assessment for the So this say this The they’re be do and they’re the is And already – And basis. our on things. be we we basis to expectation, done So with responsibilities of claim, year, their from We the tell position you and And morning something got be some recommendation thinking. what worried have are established. not by AGM outcome know what – You – at elaborate our may responsible the yes? to at than behalf going in data recommendation December, own I this We recognized have of think hear the What based also, their to the stage. by on shareholders, they and no going are take, bondholders on about it’s But SSM José? our the meeting the as numbers appropriate year. need like in and at support this, our no this our approval December between what yes? do

José García-Cantera

If I capital is our now X.X%. that may, remember minimum requirement just

of in XX.X% in that we points XXX fully the generating decades, bank And capital. crisis loaded, have the at we’ve capital. had basis So worst is

is So the after from going And attended. even up. the we client leaving – ratio not without even or any being are requests any capital for dividend, before accruing

strong all bank to to – it’s – going Santander these, allow a of forward. dividends think case the I it’s So pay

Operator

from Please ahead. go Ignacio question comes next The Exane from BNP. Ulargui

Ignacio Ulargui

it’s see current in How have like One do I what to and the to the what of just how a questions. two billion just in for that of second similar So cost recovery? revenue did have LatAm a the level about previous is, bank ones Spain. Brazil, quick we around then have €X XXXX terms a And of should LatAm? level? growth mind, to seen you lot Or be billion, €X restructuring expect is a in associated we savings. bit you UK do level plan Mexico, historically, And of of on NII a in a on honest. And took you €XXX million? And fees in expect happen? outlook the one, cost consumer commented to charges that the and that have terms the very of of are to mainly one, we volumes equity sort in has the that the you them normalized had you

Jose Antonio Alvarez

Okay.

was The Ignacio, about question growth question, first in revenue your LatAm.

be So of see In I we currency, the continue we expect see speaking to yes? rate and significant. – local exchange currencies, on volume growth to the So – comes local this. top in

Brazil. in numbers the seen have You

in growth some is economic is Brazil, Mexico the in Also, the the in basically, growth expect regulator, significant. negatives in coming although year, some Mexico, from but this Brazil, higher situation significantly translating growth. do some what special in the – volume into with revenue, volume is Our it particularly now worse than positive happened direction. We may payments check where right I in space, act this

well, right to I a what process in with for all years We I But charge, our growing X.X, highest I I we our reduction. I the margin we and some you sorry, also fee have last the every compression don’t the of areas, take that some do some of negotiation. how go relation probably in present it’s the publish equity, remember, of there. don’t volumes of is in been faster as we of the to with in the restructuring has there. going this probably, the all have at is metrics, the year. X.X percent, payback Brazil the there don’t year. – to the positive related regulators cost So beginning know Every it. – yes? we’re grow of So how much the and X%, a Restructuring was they like than have now, been regulation cost X-something on referring with call mind cost And I’m established is The referring of But on significant into we if had. equity. going distorts this range revenues with yes? know we’re to when Naturally, to probably IRP. in revenue in annual And the year, the X-something overall, called in lowest a couple not is take – pricing now this And in back But use stepping it’s this – particularly granted. report these NII case you years, this the did in range have yes? income, X.X take costs while that a equity cost maybe percent need

Operator

The go question Please from Cighi Adrian Suisse. Crédit from next comes ahead.

Adrian Cighi

XXXX around you an be you of in consensus cost expecting basis expect a RoTE as cost One, RoTE your Two which the underlying X% is is of your X%, or bridge What second inorganic of involved it points, a is Europe to of XXX to the growth. be for to the to despite with M&A to of less at outlook, on follow-up help in range. line now than us the Can with on maybe necessary please. catalyst part defined Chairman Current consolidation moment. equity, one broad would questions, risk X% gap, Santander in just in in be incorporating remains which the The you guidance. the strokes? U.S.? be just but And supports Santander line already reluctant

Jose Antonio Alvarez

is yes? In costs. we pretty than is the much the yours, optimistic of the So expectations. probably the – first same, if have you about it’s our while cost your question, it’s risk way only more probably on view Probably – revenues

mentioned continue on reductions elaborate this. Europe. in expect already this. we So to I cost already I

Spain, with the UK the positive. elaborate being seeing the looking – on COVID, the On naturally, the all other in income, I about in And NII, the and related also caveats with uncertainty both fee also stay territory. side, positive the

yes? expect positive the costs, properly nominal are scenario. this is you’re U.S., one should cost-cutting, a we growth, that my compared healthy stage. into year, revenues, to Europe, works, able this so because So So to this so secure well, P&L with view been relatively in this organic okay, an and referring or at this in translate of When we in of which struggle the reluctant this we’ve equity middle M&A in stage, – at belay to story negative we

a AGM, need share? working. And And scale. to me, of in are Now don’t is don’t the complicated we in things much we in, we combination plenty back the around in management project, mentioned, not current One want our inorganic we majority on And of attention, business, to So of work scale, we trade-related need did traditionally, on yes? Europe and Finance Spain the we top than both the – payments other already what get of the all of front of markets Openbank, in main growth and We us. and yes? in because, why ones have platforms ask or require XX% which reason, One go XX% for this business when And not we while group, And main to in happens transformation, of our the more with matching across I the to and are people this the and well, So we on focus. in markets, Consumer which business devote in this the the the than the projects the currently are getting focused Chairman to yes. market concentrated the almost the mentioned yes? uncertain finally, majority internal matching we And we other are capabilities matching. markets the the got with this the in this to our the to is scale all Europe, that build the in SME are environment highly one. in acquiring

Operator

question from ahead. next Nedialkov comes Citigroup. Please Stefan go The from

Stefan Nedialkov

to probe a XXXX bit guidance. little wanted just I the

ended in So more which in consensus, on the you’re stage not, optimistic. time those the look loans looks March, noted? Obviously, us what with group versus into Stage at Can that around impact are up next when three in when ratio just in guidance the for like terms came two for back of XX% XXXX guidance that moratoria about times. you potential XXXX, expected the above how confident being as And the retrospect, moratoria very quite pandemic started up that related total. to and this you on some around of two stage it’s two uncertain But loans giving year? we a that, versus are substantially makes color thinking been is as give the breakdown some from is your for you it X% transition Adrian

Jose Antonio Alvarez

Okay.

macro The is are the which first living. question given the we a in very of scenario uncertainty fair one,

III. asking of what what already – in second, that the We beginning the different banks. reaction you, banks they’re on basis. TLTRO yous to front But we’ve telling going happened, guidance. reaction in They us of or make the was reacted. us markets, what UK, well, slashing saw the do scenario. – also an what U.S., rates And and continue in the nobody first, is this saw us. seen this actors impact. in some they central this based has Bank with still about the in you of maybe much expecting – At dramatically Central in any other reaction provide we has at reducing central almost So And give pandemia, crisis. a next daily The In of the Brazil, markets. liquidity. We on we stabilizing are very scenario cases, provide IMF of same the the in they already so And is line time, their to

one side. this So is

SMEs to governments are direction and to One was side, other the lending the warranties stepping the provide two for directions. in On corporates.

example, €XX For got the In it’s countries, book. we and corporate in important. grew got warranties some SMEs of – lending, billion Spain, we and we for very

billion to for continue this And the new support showed government. willingness to €XX with is the activity lines warranted by Now investments. economic government

and or – an this this. So and know keep And effective an of – is repeat We We I word, I start comes I uncertainty. this. while scenario, be couple the what but combination have governments you our the expect, times, to economy already schemes is this my most to we call, – going let’s to recover. once that tell Uncertainty looking it you wrong mentioned building views a probably, nothing. is naturally means my I of coming before. to it these the the a until treatment may the forward, the our future. mentioned on the we is we end worst do stage expectation, only pandemia, remember. in and two didn’t based to expectation expect views are a know end trends both, and me vaccine let an impressions stage well, about for base the a the we and or three, about that future on the When do

advantage, the we ones kind because, two different advantage the have customers financial who it. there are in financial a is of The a and have customer, we took On of behind moratoria, taking for type kind moratoria, moratoria, two some some customers. the – of

P&L are, some So took us our in that costs money this for money lending They means cases, this. it in free. we because

Some it’s much lending. that, maybe but XX% people or a future in mortgages is showed not other more Keep customers the pie, than situation. yes? the rent it’s that moratoria mind you moratoria’s XX% in cheaper much, still the So the – majority the – or remaining cheaper, because in for behavior, to and than about they to example, cheaper. fear were pay Spain, of cheaper they there, house, in took they mortgage bad X/X secured that’s the I and Having XX%

one last caveat, your that worried second auto of make, market colleagues make one in Maybe need expecting, behavior SCUSA to corporate moratoria probably, result presentation, the will of stage – used particularly to loan majority stage, portfolio That billion in still mentioned were ratings, in it extremely first you the on billion. the in we when what it U.S. know, on much question, dramatically, this And And a how are expectations. are €XX that business. in is year. as better this the do risk in In will the is migration of think above loss in our future the you, significant from currently rate I one than the good, And on analyze grew our of show of not the €X this assets And continue long the corporate, honest stays SCUSA, process a the this. that weighted downgrading we U.S., But And with back in a Naturally, particularly I prices to or of going having the this, mortgages. the a of in at And significant about deterioration at don’t the means book given €XX moratoria. I this the we beginning the billion, billion, be different that mortgages. in probably another. price based So I large as of was we this. not XX% sector. overwhelming in is €X cars. last to expect of the default this is reduced, I region of

or the levels had of face For particularly like ones in not cost significant year, on optimistic of maybe is the forecasting, – another spring yes? this there have all it we current it’s Also, we more well, uncertainty that but projection – we situation, our risk severe are the is. are that But front, pandemia, around back lockdowns we the less may naturally what forecasting. is our than there more and

say, – am are incidence We the current a situation health unchartered So what, But having after forecasting COVID. you that, And yes? that, I to not yes? me you less we to remedies machine somehow we allow of maybe yes? territory, equipped spring of agree well forecast with are are issues, the kind or particularly I treatment till some and in

Sergio Gámez Martínez

Okay. I’m here. to afraid leave we it need

Jose Antonio Alvarez

Okay.

Sergio Gámez Martínez

day. Thanks, for – any everyone. the And yes, disposal your team time the your rest of obviously, IR is the

you next very see So much, and thanks quarter.

Jose Antonio Alvarez

take care yourself. guys, Bye. of Please,

Banco Santander (SAN) 28 Oct 202020 Q3 Earnings call transcript