Post on 27-Aug-2020
0 Toronto
September, 2013
Grupo Financiero Santander
México, S.A.B. de C.V.
Investor Presentation
1
Safe Harbor Statement
Grupo Financiero Santander México cautions that this presentation may contain forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in
various places throughout this presentation and include, without limitation, statements regarding our intent, belief, targets or
current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion
of our distribution network; our focus on strategic businesses; our compound annual growth rate; our risk, efficiency and
profitability targets; financing plans; competition; impact of regulation; exposure to market risks including interest rate risk,
foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk;
projected capital expenditures; capitalization requirements and level of reserves; liquidity; trends affecting the economy
generally; and trends affecting our financial condition and our results of operations. While these forward-looking statements
represent our judgment and future expectations concerning the development of our business, a number of risks,
uncertainties and other important factors could cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to: changes in capital markets in general that may affect policies or
attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the
United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de
México); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange
rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and
regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or
requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes;
competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic
conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of
allowances for loans and other losses; increased default by borrowers; technological changes; changes in consumer
spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain
additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations; and certain
other risk factors included in our annual report on Form 20-F. The risk factors and other key factors that we have indicated
in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could
adversely affect our business and financial performance. Note: The information contained in this presentation is not audited. Nevertheless, the consolidated accounts are prepared on the basis
of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión
Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in millions
of nominal Mexican pesos, unless otherwise indicated. Historical figures are not adjusted by inflation.
2
Strong and Steady GDP Growth…
…Supported by Stable Inflation… …and Low Interest Rates
Notes: *Original estimate (as of Feb’13)
1.5
-4.7
3.83.84.05.1
2014E 2013E
3.6*
2012 2011 2010 2009
3.73.93.63.8
4.4
3.6
2014E 2013E 2012 2011 2010 2009
4.14.04.54.54.5
5.4
2014E 2013E 2012 2011 2010 2009
The Mexican Banking Sector: A Compelling and Profitable Growth Story,
Based on Strong Macro Fundamentals
Source: INEGI, Estimates: Santander
Source: BANXICO Source: BANXICO
3
Despite a Tougher Than Anticipated First Half of the Year, the Mexican
Economy is Expected to Recover Starting in 2H13
Source: INEGI, Estimates: Santander
Source: CNBV
Weaker than anticipated GDP growth…
2.21.8
1.5
0.6
3.33.1
4.24.6
3Q12 4Q12 2Q12 1Q13 1Q12 2Q13 3Q13(E) 4Q13(E)
2,8552,7772,7512,6462,583
3Q12 2Q13
4.0% 2.8%
0.9%
4Q12 1Q13
3.5% 2.4%
2Q12
… has affected loan growth rates throughout
Mexico’s financial system…
Stronger expected US economic growth
Normalization of public expenditure in Mexico
Pending infrastructure and social housing investments
to drive further economic growth, starting 2014
Proposed fiscal and energy reforms to enhance
medium and long term growth prospects
Volume
QoQ Growth
Notes: Loan volumes in billions of pesos
…but favorable drivers support a recovery in
Mexico’s near-term growth story
4
Low Banking Penetration
An Expanding Middle-Class
Solid Macro Fundamentals are Complemented by an Under Banked
System with Favorable Demographics…
2010
17%
2011
16%
2012
17%
2009
16%
2008
15%
2007
15%
2006
13%
2005
12%
2004
12%
2003
13%
2002
14%
2001
14%
2000
16%
1999
18%
1998
21%
1997
21%
1996
26%
1995
32%
1994
38%
1993
35%
1992
29%
1991
24%
Source: CNBV, INEGI and IMF and HBS ”Mexico’s financial crisis of 1994-1995” from May 2012
Avg. pre-tequila crisis levels1: 31.5%
Notes: 1) Pre-tequila average takes into account 1991-1994 period
Loan-to-GDP Ratio
Source: CONAPO 2010
5
A Large, Young…
…and Join the Formal Sector …and Active Population, Expected to Expand…
…that Support Increasing Demand for Financial Products…
Source: US Census Bureau
Population <60 years old
Source: CONAPO
Active Population per Sector
687376778190
UK US Germany Canada Japan Mexico
%
Ag
es
2010 2020 (E)
% % % %
25-60
43%
25-60
46%
Source: iNEGI
71%
Formal
35.4mm
29%
Informal
14.2mm
+9.1mm
6
…Further Reinforced by Structural Reforms and an Ambitious
Infrastructure Plan
Labor
Infrastructure
Plan
Fiscal
Energy
Encourage foreign investment and higher formality
Increase flexibility and formalization
Reduce industrial operating costs and strengthen public
finance
Pick up in economic activity
Financial Enhance transparency
7
Santander México:
One of the Most Profitable Banking Franchises in Mexico…
Source: Company filings and CNBV (Mexican banking GAAP) figures for Financial Groups as of june 30, 2013
Notes: 1 Comprised by: 980 branches, 121 cash desks, 3 select offices, 48 select units, 35 select boxes and 28 brokerage house branches
2 ROAE
3 Efficiency
4 NPL Ratio
Santander México Ranking
Strong Efficiency3
Low Risk4
MX$831.8 billion in assets
MX$365.4 billion in loans
MX$405.0 billion in deposits
MX$101.7 billion in equity
1,215 branches1
10.0 million customers
#4
#3
#4
#4
#4
#2
Profitable Growth2
61.761.152.246.341.839.2
25.7
Scotiabank HSBC Banorte Banamex BBVA Santander Inbursa
4.64.33.4
2.72.42.21.8
Inbursa HSBC BBVA Scotiabank Santander Banorte Banamex
Retail
Banking
55%
Corporate
Activities
18%
Wholesale
Banking
27%
Retail Banking Franchise
7.99.012.813.1
15.617.8
HSBC Scotibank Inbursa Banamex Banorte Santander BBVA
19.4
#3
#2
Profit before taxes distribution
8
…Consistently Generating Best-in-Class Profitability with
Strong Loan Growth…
Loan Growth
Net Income1
13,85111,827
8,527
2012
17,822
2011
18,683
2010 2009 2008
350,683313,672
227,556207,737
229,673
2012 2011 2010 2009 2008
MX
$m
m
MX
$m
m
Source: Company filings and CNBV (Mexican banking GAAP) figures for Financial Groups as of March 31, 2013
Notes: 1 Net income in 2011 and 2012 include the following non-recurring gains:
2011 = 4,348 Insurance business sale to Zurich
2012 = 1,731 Sale and leaseback of branches
CAGR takes into account recurring gains
9
…Achieved by Executing a Successful Proven Strategy that Targets the
Growing Middle Class and Profitable Affluent Segments…
Clients are classified according to their
socioeconomic level…
…and then sub-segmented according to their
age
Early Stage
(18-30 years)
Anchor product
First Credit Card
Number of customers
Classic
5,896,518
Development
(30-60 years)
Retirement
(+60 years)
Anchor product
Mortgages
Anchor product
Saving Plans
Source: Company data
As of June 2013
Private Banking
12,456
Premier
284,814
Select
210,214
Preferred
3,607,268
Hig
h-I
nco
me
M
id-I
nco
me
10
…with a Comprehensive and Innovative Product Offering …
A full range of product offerings
(auto, life, fraud, property and
credit related) through a strategic
alliance with Zurich
Top 3 player in Credit Cards
Products that meet clients’ needs
and provide access to promotions
Fast assessment processes
and wide product offering
Agreement to acquire ING’s
mortgage portfolio in Mexico,
to strengthen position as #2
player
Source: Company data
As of June 2013
11
…through a Strong Multi-Channel Distribution Platform Supported
by a Unique CRM System…
CRM
Customer
Management Tool
Contact
Centers
ATMs Branches
Brokers
Around 1.6 million customers with
pre-authorized credit offers
Source: Company data
As of June 2013
37% mortgages
31% consumer loans
39% credit cards
32% insurance policies
Main sales and service channel
50% consumer loans
61% credit cards
63% mortgages
50% insurance policies
19% consumer loans
18% insurance policies
12
…and also Servicing High Potential SMEs with a Wide Range of Products
through a Specialized Network
Specialized
Network 12 Offices
Nationwide
Dedicated
Executives
Wide variety of lending
Highly active participation in
NAFIN programs
Driven by pre-authorized
models Comprehensive
investment products
Cash management oriented
Payroll services
266,066 clients
41,286 with credit
12,435 pre-authorized
13
Our Retail Business is Complemented by Well-Regarded, Client-Oriented
and Profitable Wholesale Banking Operations
“Best Trade Bank in Mexico” –
Trade Finance Magazine in 2013
Top Rated in Custody – Global
Custodian Magazine in 2013
Top player in the local derivatives
exchange MexDer in 2012
…Highly Regarded and Award-Winning
Source: Company filings and CNBV (Mexican banking GAAP) as of 2012
Revenue Mainly Driven by Recurring
Business…
Total: MX$7,145mm
53%
24%
23%
14
Focus on operating efficiency and profitability
Efficiency ratio2 39.2%
ROAE3 18.5%
YoY growth in core segments
Consumer1 12.5%
SMEs 42.6%
Mortgages 13.3%
Source: Company filings CNBV GAAP
Notes: 1) Includes credit cards, payroll and personal loans
2) Annualized opex / Annualized income before opex and allowances
3) ROAE excluding declared dividends from equity
4) This transaction s subject to customary regulatory approvals and is expected to close in the second half of 2013
Prudent risk management
NPL ratio 2.4%
Cost of risk 3.4%
Further strengthened the SanMex franchise Acquired ING Hipotecaria’s mortgage portfolio4
Continued branch network expansion
In this Context, Santander México Achieved Solid Results in 2Q13…
One of the most profitable banking franchises in
Mexico
15
Source: Company filings CNBV GAAP
Notes: 1) Includes personal, payroll and auto loans
Total Loans
+12%
(-5)%
3Q12
350,683
2Q13
365,360
4Q12
+4%
+8%
1Q13
352,267 343,383 338,905
2Q12
Retail
Corporates
…with Loan Growth in Line with Market Trends...
16
Source: Company filings CNBV GAAP
Notes: 1) Includes personal, payroll and auto loans
…Driven by Solid and Continued Growth in Core Segments…
… and Continued Growth in Commercial Loans,
Driven by a Strong Performance in Middle-Market
and SMEs
+13%
2Q13
75,167
2Q12
66,348 +16%
2Q13
38,253
2Q12
33,001
+8%
2Q13
27,817
2Q12
25,751
Personal
Payroll
2Q12
84,221
+10%
2Q13
76,828
-5%
2Q12 2Q13
74,326 70,392
26,492
+43%
2Q13
37,766
2Q12
141,237 125,100
Individual Loans
2Q12 2Q13 +13%
Commercial Loans
Mo
rtg
ag
es
Cre
dit
Ca
rds
Co
ns
um
er1
Mid
dle
-ma
rket
2Q13 2Q12
36,160
-12%
31,744
Co
rpo
rate
s
SM
Es
Go
v &
Fin
En
t
224,123 213,805 2Q12 2Q13 +5%
17
Total Deposits
Source: Company filings CNBV GAAP
Notes: * Includes money market
2Q13 1Q13
374,920 +1%
40%
60% Demand
Term
+14%
4Q12
362,452
58%
42%
2Q12 3Q12
336,289 330,875
58%
42%
62%
38%
378,690
42%
58%
Campaigns targeting commercial deposits
Specific services for our “Select” (VIP) client base
Branch expansion starts contributing to deposit growth
…while a Strong Deposit Base Continues to Underscore the Liquidity
Profile and Further Support Loan Growth
Net Loans to Deposits1
92.3% +1.5 pp
- 6.8 pp
2Q13 1Q13
90.8%
4Q12
93.6%
3Q12
98.7%
2Q12
99.1%
18
Source: Company filings CNBV GAAP
Notes: 1) Gross Operating Income does not include Other Income
2 Financial margin divided by daily average interest earnings assets
Pick-up in Net Interest Income Together with Higher Net Commissions and
Fees, Resulted in an 18% YoY Increase in Gross Operating Income
67%
23%
10%
Financial Margin
Net commissions and fees
Net gain (loss) on financialassets and liabiities
13,25912,90312,45212,46411,260 +3%
+18%
2Q13 1Q13 4Q12 3Q12 2Q12
Gross Operating Income1
8,8998,6368,8128,5828,394
2Q12
4.87
3Q12 1Q13 4Q12
+3%
+6%
2Q13
5.05
Net Commissions and Fees
3,0523,2183,2272,9642,761 -5%
+11%
2Q13 1Q13 4Q12 3Q12 2Q12
Net Interest Income and NIM2
19
Source: Company filings CNBV GAAP
Notes: 1) Annualized loan loss reserves divided by average loans
*Non-recurring: 2Q13 = 330 million related to homebuilders provisions /
4Q12 = 100 million non-recurring provision from project finance
**Commercial NPLs reflect the exposure to homebuilders
Healthy Asset Quality Despite Negative Impact from Homebuilders…
Cost of Risk1
2,8042,535
1,994
330
+19%
2Q13
3,348
1Q13 4Q12
2,948
3Q12 2Q12
3,018
Non-recurring*
Loan Loss Reserves (LLR)
+0.2 pp
2Q13
3.4%
3.7%
1Q13
3.2%
3.2%
4Q12
2.8%
3.5%
3Q12
2.6%
3.1%
2Q12
2.4%
2.4%
For the Quarter
3.3%
ex-homebuilders provisioning
3.4%
NPLs 2Q12 1Q13 2Q13 Var YoY (bps) Var QoQ (bps)
Consumer** 2.91% 3.52% 3.94% 104 42
Credit Card 2.87% 2.95% 3.53% 65 57
Mortgages 2.91% 3.24% 3.17% 26 -7
Commercial 0.74% 1.02% 2.03% 129 100
SMEs 2.00% 2.20% 2.40% 40 20
Total Loans 1.46% 1.83% 2.43% 97 60
Total Loans (ex-homebuilders) 1.46% 1.83% 1.98% 52 15
20
…and Strong Expense Management while Growing the Business and
Maintaining High Efficiency
Administrative & Promotional Expenses
5,3145,2884,535
3Q12
+17%
0%
2Q13 1Q13 4Q12
5,996 5,157
2Q12
+4.3 pp
2Q13
39.2%
1Q13
39.8%
4Q12
39.5%
3Q12
36.9%
2Q12
34.9%
Efficiency1
-4.6 pp
2Q13
64.0%
1Q13
65.6%
4Q12
63.7%
3Q12
66.2%
2Q12
68.6%
Fees to Expenses2
Source: Company Filings CNBV GAAP
Notes: 1) Annualized opex divided by annualized income before opex (net of allowances)
2) Annualized net fees divided by annualized opex (net of amortizations and depreciations)
1,2) Ratios slightly difer from the ones reported in 1Q13, due to the disaggregation of the asset management results to “profit from discontinued operat ions”
21
Source: Company filings CNBV GAAP
Notes: 1) Annualized net income divided by average equity
* ROAE excluding declared dividends from equity
3,891 4,2143,310
4,562
4,651 +2%
+20%
2Q13
4,143
1Q13
4,717
4Q12
4,268
3Q12
4,305
2Q12
5,285
Net Income (comparable)
Net Income (reported)
4,1434,717
3,310
4,214
5,285
3Q12 2Q12 4Q12
-12%
-22%
2Q13 1Q13 1Q13 2Q13
19.4%*
4Q12
19.1%
3Q12
21.1%
2Q12
22.4%
ROAE1
Comparable
18.5%* 19.2%*
While Reported Profitability was Affected by One-Time Events, Comparable
Net Income Increased and Capitalization Levels Remain Healthy
Core Capital and Capitalization
14.3 14.2 14.5 15.4Core capital
Capitalization
2Q13 1Q13
15.6%
4Q12
14.8%
3Q12
14.5%
2Q12
14.6% 15.2%
22
NPLs Ratio
Efficiency
ROAE
Focus on Strategic Businesses
Consumer / Credit Cards
SMEs
Mortgages
2013 - 2015
CAGR Target
Δ ~20%
Δ ~30%
Δ ~10%-12%
Focus on Risk, Efficiency and Profitability
1.5% - 2.2%
35.0% - 40.0%
~ 20%
2013 - 2015
Target Range
We Confirm Our Targets for the Three Year Period Ending 2015
Despite Lower Anticipated Economic Growth in 2013
23
Questions and Answers