Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of April, 2012

Commission File Number: 001-12518

 

 

Banco Santander, S.A.

(Exact name of registrant as specified in its charter)

 

 

Ciudad Grupo Santander

28660 Boadilla del Monte (Madrid) Spain

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ¨             No  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ¨             No  x

 

 

 


Table of Contents

Banco Santander, S.A.

TABLE OF CONTENTS

 

Item

    

1

  

Financial report 1st quarter results, 2012

2

  

Financial statements 1st quarter results, 2012


Table of Contents

LOGO


Table of Contents

LOGO


Table of Contents

LOGO

CONTENTS   

KEY CONSOLIDATED DATA

     5   

HIGHLIGHTS OF THE QUARTER

     6   

CONSOLIDATED FINANCIAL REPORT

     8   

Income statement

     9   

Balance sheet

     13   

RISK MANAGEMENT

     20   

THE SANTANDER SHARE

     23   

INFORMATION BY PRINCIPAL SEGMENTS

     24   

Continental Europe

     28   

United Kingdom

     36   

Latin America

     38   

United States

     46   

Corporate Activities

     48   

INFORMATION BY SECONDARY SEGMENTS

     50   

Retail Banking

     50   

Global Wholesale Banking

     52   

Asset Management and Insurance

     54   

CORPORATE GOVERNANCE

     56   

SIGNIFICANT EVENTS IN THE QUARTER AND SUBSEQUENT ONES

     57   

CORPORATE SOCIAL RESPONSIBILITY

     58   

www.santander.com

 

 

3


Table of Contents

 

 

 

 

Gross income

EUR Million

+ 8.3% Q1’12 - Q1’11

 

LOGO

Attributable profit

EUR Million

-23.9% Q1’12 - Q1’11

 

LOGO

Efficiency ratio

%

-0.4 p.p. Q1’12 - Q1’11

 

LOGO

Pre-provision profit

EUR Million

+9.2% Q1’12 - Q1’11

 

LOGO

Earnings per share

Euros

-28.5% Q1’12 - Q1’11

 

LOGO

Core capital

%

+ 0.4 p,p, Q1’12 - Q1’11

 

LOGO

 

 

4

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

KEY CONSOLIDATED DATA

 

 

Balance sheet (EUR Million)    Q1’12      Q1’11      Amount     (%)     2011  

Total assets

     1,283,349         1,208,563         74,786        6.2        1,251,525   

Net customer loans

     746,382         713,871         32,511        4.6        750,100   

Customer deposits

     642,786         620,774         22,013        3.5        632,533   

Customer funds under management

     1,007,804         984,668         23,136        2.3        984,353   

Shareholders’ equity (1)

     80,695         77,590         3,105        4.0        80,629   

Total managed funds

     1,418,528         1,350,922         67,606        5.0        1,382,980   
Income statement (EUR Million)    Q1’12      Q1’11      Amount     (%)     2011  

Net interest income

     7,821         7,075         746        10.6        29,110   

Gross income

     11,354         10,482         872        8.3        42,754   

Pre-provision profit

     6,280         5,750         530        9.2        23,195   

Profit from continuing operations

     1,829         2,332         (504     (21.6     7,812   

Attributable profit to the Group

     1,604         2,108         (504     (23.9     5,351   
EPS, profitability and efficiency (%)    Q1’12      Q1’11      Amount     (%)     2011  

EPS (euro)

     0.17         0.24         (0.07     (28.5     0.60   

Diluted EPS (euro)

     0.17         0.24         (0.07     (28.5     0.60   

ROE

     8.13         11.37             7.14   

ROTE

     11.99         16.90             10.81   

ROA

     0.57         0.77             0.50   

RoRWA

     1.28         1.58             1.06   

Efficiency ratio (with amortisations)

     44.7         45.1             45.7   
BIS II ratios and NPL ratios (%)    Q1’12      Q1’11                  2011  

Core capital

     10.10         9.66             10.02   

Tier I

     11.05         10.93             11.01   

BIS II ratio

     13.50         13.74             13.56   

NPL ratio

     3.98         3.61             3.89   

NPL coverage

     62         71             61   
Market capitalisation and shares    Q1’12      Q1’11      Amount     (%)     2011  

Shares (2) (millions at period-end)

     9,077         8,440         637        7.5        8,909   

Share price (euros)

     5.770         8.192         (2.422     (29.6     5.870   

Market capitalisation (EUR million)

     52,373         69,143         (16,769     (24.3     50,290   

Book value (1) (euro)

     8.45         8.72             8.62   

Price / Book value (X)

     0.68         0.94             0.68   

P/E ratio (X)

     8.47         8.60             9.75   
Other data    Q1’12      Q1’11      Amount     (%)     2011  

Number of shareholders

     3,269,996         3,149,422         120,574        3.8        3,293,537   

Number of employees

     189,613         177,648         11,965        6.7        189,766   

Continental Europe

     58,506         49,702         8,804        17.7        59,297   

o/w: Spain

     31,809         32,192         (383     (1.2     31,889   

United Kingdom

     27,381         26,902         479        1.8        27,072   

Latin America

     92,244         89,866         2,378        2.6        91,913   

USA

     9,151         8,928         223        2.5        9,187   

Corporate Activities

     2,331         2,250         81        3.6        2,297   

Number of branches

     14,696         14,179         517        3.6        14,756   

Continental Europe

     6,558         6,151         407        6.6        6,608   

o/w: Spain

     4,763         4,794         (31     (0.6     4,781   

United Kingdom

     1,363         1,412         (49     (3.5     1,379   

Latin America

     6,053         5,895         158        2.7        6,046   

USA

     722         721         1        0.1        723   

Note: The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on April, 24 2012, following a favourable report from the Audit and Compliance Committee on April, 18 2012. The Committee verified that the information for the quarter was based on the same principles and practices as those used to draw up the annual financial statements.

 

(1)

In December 2011, estimated data of May 2012 scrip dividend

(2)

In December 2011, includes shares issued to cover the exchange of preferred shares of December 2011

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   5


Table of Contents

 

HIGHLIGHTS OF THE QUARTER

 

 

  LOGO

Income statement: (pages 9-12)

 

 

In a quarter characterised by a difficult economic and financial environment, the Group posted an attributable profit of EUR 1,604 million (EPS of EUR 0.17), 23.9% less than in the first quarter of 2011. This was largely due to still high provisions in some units, higher minority interests in Brazil and Chile, and the reduced stake in Santander Consumer USA and more taxes.

 

 

The Group continued to show its capacity to generate high operating profits. Pre-provision profit set a new quarterly record of EUR 6,280 million, 9.2% more year-on-year and 13.4% above the fourth quarter.

 

 

The income statement reflects the main focuses of management during the quarter:

 

   

Good performance of basic revenues (+8.9% y-o-y) thanks to net interest income (+10.6%) and fee income (+4.1%), Trading gains were also good, chiefly due to wholesale businesses.

 

   

Year-on-year growth in expenses (+7.2%) slightly below the growth in gross income and with a better trend: zero growth in the first quarter over the fourth quarter of 2011 compared to a 7% rise in gross income.

 

   

Higher provisions for loan losses because of specific ones and consumption of the generic ones in Spain in 2011 (release of EUR 356 million in the first quarter of last year).

 

 

Better trend over the fourth quarter. Pre-provision profit was up 13.4%, spurred by a 6.8% rise in gross income and flat costs. This absorbed the higher provisions and increased profit before tax by 4.4%.

 

  LOGO

Strong balance sheet: (pages 13-22)

 

 

Core capital ratio of 10.10% under BIS II criteria at the end of March (+ 8 b.p. since the end of 2011). In accordance with the requirements established by the European Banking Authority (EBA), the ratio is 9.11%.

 

 

Better financing structure (deposits plus medium- and long- term funding to loans ratio of 116% compared to 113% at the end of 2011).

 

 

The liquidity ratio (loans-to-deposits) was 115% (117% at the end of 2011). The preference for deposits throughout the Group and a conservative policy of issues was maintained, taking advantage of market opportunities and guaranteeing comfortable coverage of liquidity.

 

 

The Group’s non-performing loan and coverage ratios were 3.98% and 62%, respectively, at the end of March. The NPL ratio in Spain was 5.75% and coverage 46%. In each case, the NPL ratios rose in the quarter and coverage was 1 p.p. higher.

 

  LOGO

Significant event in the quarter and subsequent ones: (more detail on page 57)

 

 

Banco Santander and KBC Bank agreed to merge their subsidiaries in Poland (Bank Zachodni WBK and Kredyt Bank), consolidating the combined bank as the third largest in the country. After the operation Santander will control between 76.5% and 81.5% of the bank.

 

 

The operation is in line with the Group’s strategy of growing in high potential core markets and will improve the critical mass and generate synergies in business in addition to those already announced at the time of the acquisition of Bank Zachodni WBK. It will have a positive impact on EPS and a ROI higher than the cost of capital in the third year.

 

6

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

HIGHLIGHTS OF THE QUARTER

 

 

  LOGO

The Santander share: (page 23)

 

 

The Santander share stood at EUR 5.770 on March 30, 1.7% lower than at the end of 2011 and 29.6% lower year- on-year.

 

 

Banco Santander has already paid the first interim dividend of EUR 0.135 in cash per share charged to 2011’s profits. The second and third dividends of EUR 0.126 and EUR 0.119 per share respectively were paid under the Santander Dividendo Elección (scrip dividend) scheme. In addition, the AGM on March 30 approved a final dividend of EUR 0.22 per share, also under the programme, to be paid in May.

 

 

The total remuneration per share for 2011 was EUR 0.60 for the third year running (a total of EUR 5,260 million).

 

  LOGO

Business Areas: (more detail on pages 24-55)

 

   

Continental Europe: attributable profit of EUR 584 million, 33.5% less year-on-year because of the fall in the units in Spain and Portugal, which in the first quarter of 2011 consumed EUR 350 million of generic provisions. Net operating income before provisions, was 10.6% higher. The profit was two times higher than in the fourth quarter of 2011 and also clearly above that of the third quarter, due to higher gross income and lower costs and provisions.

 

   

United Kingdom: attributable profit of £255 million, 40.8% less year-on-year, hard hit by the higher cost of funding and the impact of low interest rates on the spreads of products. Costs remained stable and provisions increased.

 

   

Latin America: attributable profit of EUR 1,218 million in the first quarter of 2012. In local currency, profit was 4.1% lower because of the perimeter impact, higher provisions and taxes. On a like-for-like basis, profit was 4.0% higher and net operating income increased 17.5%. In relation to the fourth quarter, higher gross income and lower costs produced positive growth in net operating income and profits.

 

   

United States: attributable profit of $314 million, 20.6% less than in the first quarter of 2011 because of the perimeter impact. Sovereign Bank, which was not affected by the perimeter, produced attributable profit 8.9% higher year-on-year and 7.7% more than the fourth quarter of 2011.

 

Distribution of attributable profit

by geographic segments. Q1’12

 

LOGO

Distribution of attributable profit

by business segments. Q1’12

 

LOGO

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   7


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

General background

Grupo Santander conducted its business in the first quarter of 2012 against a global economic backdrop that showed some signs of greater stability following approval of the new rescue package for Greece, higher growth in the US and the recovery of Latin American economies.

Yet the situation is not free of risks, which still emanate from Europe’s sovereign debt crisis, despite the extraordinary support measures taken by the European Central Bank, the surge in oil prices and signs of a downturn in the Chinese economy.

In the US, the upward revision in fourth quarter GDP growth (+3.0% quarter-on-quarter annualized), together with improvements in employment, consumption and the housing sector, should make it possible to continue this growth in the first quarter of 2012 at significant rates (above 2% according to the IMF). With inflation expected to continue to fall to around 2%, the Fed has leeway to maintain a monetary policy that supports growth and calms sovereign and financial tensions in Europe. Its official interest rate will remain at around zero beyond 2013.

Latin America’s indicators since the end of 2011 point to more solid growth than envisaged. This cooled expectations of lower official interest rates in the coming months and appreciated currencies.

Brazil’s GDP rose 2.7% in 2011 after growing 0.3% in the fourth quarter over the third. Domestic demand, which looks like accelerating in 2012 to an average 3.5%, was the engine of growth. Lower inflation (5.2% in March) enabled the central bank to cut interest rates again (to 9.0% from 11% in 2011). In this environment, the real strengthened notably and ended March at BRL 1.82/US$1 after the central bank’s measures and interventions.

Mexico grew 3.8% in 2011, after lower growth in the fourth quarter (0.4% quarter-on-quarter) due to services and agriculture. The low unemployment rate (5.2% in February) combined with strong growth in lending will help to boost domestic demand and public investment in 2012, key elements for maintaining GDP growth of around 3.5%, according to the IMF.

In this context and with inflation under control, the Bank of Mexico held its benchmark rate at 4.5% in a strategy that does not look like changing. The peso appreciated in the first quarter to MXN 12.7/US$1.

Chile’s growth accelerated in the fourth quarter (+2% over the third quarter; +0.3% third quarter over second quarter) to end the year at 5.9%. This pace continued in the first quarter of 2012. The spurt in inflation (3.8% in March) and the stronger growth led the central bank to change the bias of its monetary policy, initially focused on cutting its official rate (-0.25% in January to 5%) and now closer to a possible rise. The peso strengthened by almost 7% in the first quarter to CLP 486/US$1.

The euro zone economy shrank 0.3% in the fourth quarter, reducing growth for the year to 1.5%, due to the sharp deterioration in the confidence of markets, households and companies, and the tougher lending conditions due to the sovereign crisis.

With inflation (2.7% in March) expected to decline, the ECB carried out a second auction of long-term liquidity which, together with the first one, brought to EUR 1,021 million the three-year funding granted to European banks at 1%. The ECB seems to be adopting a strategy of wait and see in order to assess the impact of the unconventional measures. The euro remained stable against the dollar and ended the quarter at US$1.34/EUR.

The situation by countries reflects the very varied performance. The impact of sovereign debt tensions on the peripheral countries intensified in the fourth quarter (Italy’s GDP shrank 0.7% and Portugal’s 1.3%), while France grew 0.2%.

Germany, after the contraction in the fourth quarter (0.2%) began 2012 with greater signs of upturn than the rest of the euro zone and a robust labour market (lowest unemployment rate since 1991), which should gradually boost the contribution of domestic demand.

Spain’s economy shrank 0.3% in the fourth quarter over the third. Despite a solid external sector, the adjustment process (debt, real estate and the current account) and the substantial fiscal consolidation effort, will result in negative growth for the whole year. Inflation dropped to 1.9% in March.

The UK economy contracted 0.3% in the fourth quarter over the third. Inflation continued to fall (3.5% in March). The Bank of England held its base rate at 0.5% and increased the objective for acquiring bonds by £50,000 million (to £325,000 million), which it aims to complete in May. Sterling remained stable against the euro and ended March at EUR 1.20/£1.

Poland, after growing 4.3% in 2011, began 2012 with lower growth but still more than 2.5% according to the IMF. External demand and private consumption were weaker, while investment remained strong. With inflation lower in March at 3.8%, the central bank held its key rate at 4.5% (since June) while the zloty appreciated 7% against the euro during the first quarter to PLN 4.15/EUR 1.

 

 

Exchange rates: 1 euro / currency parity

 

     Average (income statement)      Period-end (balance sheet)  
     Q1’12      Q1’11      31.03.12      31.12.11      31.03.11  

US$

     1.3105         1.3672         1.3356         1.2939         1.4207   

Pound

     0.8344         0.8537         0.8339         0.8353         0.8837   

Brazilian real

     2.3156         2.2789         2.4323         2.4159         2.3058   

New Mexican peso

     17.0138         16.4943         17.0222         18.0512         16.9276   

Chilean peso

     640.4469         658.8955         649.3019         671.3400         683.1436   

Argentine peso

     5.6878         5.4932         5.8366         5.5686         5.7528   

Polish zloty

     4.2297         3.9450         4.1522         4.4580         4.0106   

 

8

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Grupo Santander. Income statement

 

LOGO

New quarterly record for pre-provision profit of EUR 6,280 million, 9.2% more year-on-year and 13.4% above that of the fourth quarter of 2011.

 

LOGO

Basic revenues increased 8.9% year-on-year thanks to the good evolution of net interest income (+10.6%), fee income (+4.1%) and insurance activity (+10.0%). The increase over the fourth quarter was 5.3%.

 

LOGO

The quarter was also good for trading gains (+20.1%), general improvement over recent quarters.

 

LOGO

Year-on-year growth in expenses slightly below that of gross income and with a better trend in the last quarter: (gross income: +6.8%; expenses: -0.4%).

 

LOGO

Higher loan-loss provisions due to the rise in specific ones and release of EUR 356 million in the first quarter of 2011).

 

LOGO

Negative impact on attributable profit from a higher tax charge and perimeter (mainly in minority interests).

Attributable profit was EUR 1,604 million, 23.9% less than in the first quarter of 2011 and due to three factors that affected the year-on-year comparison:

 

 

Generic provisions instead of the release made in 2011.

 

 

A net negative perimeter effect of 3 p.p. This was due, on the one hand, to the difference between a positive impact from the entry in April 2011 of Bank Zachodni WBK and, to a lesser extent, of the business acquired from SEB in Germany as of February 2011, and, on the other hand, a negative impact from the lower contribution of income by the equity accounted method (because of the entry of new partners into the capital of Santander Consumer Finance and the partial disposal of insurance business in Latin America, which means that the Group has reduced its equity stakes in both cases) and the rise in minority interests after the placement of part of the capital of the subsidiaries in Chile and Brazil.

 

 

The larger impact of taxes.

These effects absorbed the good evolution of pre-provision profit, which set a new quarterly record of EUR 6,280 million (+9.2% y-o-y), spurred by sound basic revenues (+8.9%).

Attributable profit was 6.6% lower than recurring profit in the fourth quarter, also affected by minority interests and taxes as profit before tax was 4.4% higher, due to gross income and operating expenses.

 

 

Income statement

EUR Million

 

     Q1’12     Q1’11     Variation
Amount
    (%)     Q4’11     Variation
Amount
    (%)  

Net interest income

     7,821        7,075        746        10.6        7,536        285        3.8   

Dividends

     61        40        21        52.6        101        (39     (39.1

Income from equity-accounted method

     136        225        (90     (39.9     176        (41     (23.2

Net fees

     2,622        2,518        104        4.1        2,387        235        9.9   

Gains (losses) on financial transactions

     797        664        134        20.1        474        323        68.1   

Other operating income/expenses

     (83     (40     (43     107.8        (45     (38     83.9   

Gross income

     11,354        10,482        872        8.3        10,629        725        6.8   

Operating expenses

     (5,074     (4,731     (343     7.2        (5,093     19        (0.4

General administrative expenses

     (4,549     (4,227     (322     7.6        (4,563     14        (0.3

Personnel

     (2,637     (2,474     (163     6.6        (2,601     (36     1.4   

Other general administrative expenses

     (1,911     (1,752     (159     9.1        (1,961     50        (2.5

Depreciation and amortisation

     (525     (505     (21     4.1        (530     5        (0.9

Net operating income

     6,280        5,750        530        9.2        5,536        744        13.4   

Net loan-loss provisions

     (3,127     (2,065     (1,061     51.4        (2,577     (549     21.3   

Impairment losses on other assets

     (83     (48     (35     74.2        11        (94     —     

Other income

     (526     (546     20        (3.7     (531     5        (1.0

Profit before taxes (w/o capital gains)

     2,545        3,092        (547     (17.7     2,439        106        4.4   

Tax on profit

     (716     (759     43        (5.6     (545     (171     31.4   

Profit from continuing operations (w/o capital gains)

     1,829        2,332        (504     (21.6     1,894        (65     (3.4

Net profit from discontinued operations

     1        (6     7        —          (3     4        —     

Consolidated profit (w/o capital gains)

     1,829        2,327        (497     (21.4     1,890        (61     (3.2

Minority interests

     226        218        7        3.3        173        53        30.4   

Attributable profit to the Group (w/o capital gains)

     1,604        2,108        (504     (23.9     1,717        (114     (6.6

Net extraordinary capital gains and provisions

     —          —          —          —          (1,670     1,670        (100.0

Attributable profit to the Group

     1,604        2,108        (504     (23.9     47        1,556        —     

EPS (euros)

     0.17        0.24        (0.07     (28.5     0.00        0.17        —     

Diluted EPS (euros)

     0.17        0.24        (0.07     (28.5     0.00        0.16        —     

Pro memoria:

              

Average total assets

     1,275,368        1,210,814        64,554        5.3        1,243,254        32,114        2.6   

Average shareholders’ equity

     78,894        74,152        4,742        6.4        75,458        3,436        4.6   

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   9


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

Quarterly

EUR Million

 

     Q1’11     Q2’11     Q3’11     Q4’11     Q1’12  

Net interest income

     7,075        7,225        7,275        7,536        7,821   

Dividends

     40        193        60        101        61   

Income from equity-accounted method

     225        204        169        176        136   

Net fees

     2,518        2,667        2,636        2,387        2,622   

Gains (losses) on financial transactions

     664        722        639        474        797   

Other operating income/expenses

     (40     (90     (57     (45     (83

Gross income

     10,482        10,921        10,722        10,629        11,354   

Operating expenses

     (4,731     (4,826     (4,909     (5,093     (5,074

General administrative expenses

     (4,227     (4,303     (4,376     (4,563     (4,549

Personnel

     (2,474     (2,511     (2,569     (2,601     (2,637

Other general administrative expenses

     (1,752     (1,791     (1,807     (1,961     (1,911

Depreciation and amortisation

     (505     (523     (533     (530     (525

Net operating income

     5,750        6,095        5,813        5,536        6,280   

Net loan-loss provisions

     (2,065     (2,546     (2,711     (2,577     (3,127

Impairment losses on other assets

     (48     (52     (84     11        (83

Other income

     (546     (1,378     (357     (531     (526

Profit before taxes (w/o capital gains)

     3,092        2,119        2,661        2,439        2,545   

Tax on profit

     (759     (512     (683     (545     (716

Profit from continuing operations (w/o capital gains)

     2,332        1,607        1,978        1,894        1,829   

Net profit from discontinued operations

     (6     (0     (15     (3     1   

Consolidated profit (w/o capital gains)

     2,327        1,607        1,963        1,890        1,829   

Minority interests

     218        214        161        173        226   

Attributable profit to the Group (w/o capital gains)

     2,108        1,393        1,803        1,717        1,604   

Net extraordinary capital gains and provisions

     —          —          —          (1,670     —     

Attributable profit to the Group

     2,108        1,393        1,803        47        1,604   

EPS (euros)

     0.24        0.16        0.20        0.00        0.17   

Diluted EPS (euros)

     0.24        0.16        0.20        0.00        0.17   

 

Net interest income

EUR Million

 

LOGO

Basic revenues*

EUR Million

 

(*)

Including net interest income, fees and insurance activities

 

LOGO

Other aspects to be taken into account before looking at the results are:

 

 

The impact of exchange rates against the euro was virtually zero (less than one negative percentage point) when comparing gross income and operating expenses with the first quarter of 2011. The impact in the UK and the US was positive (2 and 4 p.p., respectively) and in Latin America the effect was negative (1 p.p.).

 

 

The profit for the quarter still does not reflect the capital gain from the sale of the business in Colombia (EUR 615 million net of tax), which is expected to occur in the second quarter and will be fully assigned, as announced, to strengthening the balance sheet.

The performance of the income statement and comparison between the first quarter 2012 and the same period of 2011 was as follows:

Gross income was EUR 11,354 million, 8.3% higher year-on-year (+6.8% excluding the perimeter and exchange rate impacts).

 

 

Net interest income rose 10.6% to EUR 7,821 million. This was due to the net impact of several factors.

 

   

There was a positive effect from the moderate increase in volumes and the improvement in the spreads on loans for the whole Group (from 3.59% to 3.89%).

 

   

The spread on deposits was 0.24% in the first quarter of 2012, the same as in the first quarter of 2011.

 

 

10

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Net fees

EUR Million

 

                   Variation        
     Q1’12      Q1’11      Amount     (%)  

Fees from services

     1,499         1,412         87        6.2   

Mutual & pension funds

     302         307         (5     (1.5

Securities and custody

     184         162         22        13.5   

Insurance

     637         637         (0     (0.0

Net fee income

     2,622         2,518         104        4.1   

 

   

Negative effect from the higher cost of funding and from higher liquidity requirements in some countries such as the UK.

 

 

Net fee income increased 4.1%, with a favourable performance of those from services (+6.2%) and from almost all concepts. Fee income from securities rose 13.5% while those originated by mutual funds were 1.6% lower.

 

 

Gains on financial transactions increased 20.1% year-on-year, largely due to the businesses contribution, with very good performance of GBM, as well as to Corporate Activities. The latter made a loss of EUR 74 million in the first quarter of 2011 (due to the negative effect of the foreing exchange rates variations in the payment of dividends and valuation of portfolios) and in the first quarter of 2012 was EUR 46 million positive.

 

 

Income by the equity accounted method was 39.9% lower at EUR 136 million (down from EUR 225 million), largely due to the perimeter impact from the Group’s reduced stake in Santander Consumer USA and insurance business in Latin America, which make up most of this concept.

 

 

Lastly, other operating results were EUR 83 million negative in the first quarter of 2012 (EUR 40 million also negative in the same period of 2011) because of the EUR 47 million increase in the contribution to the deposit guarantee funds, mainly in Spain.

Better trend of gross income over the fourth quarter of 2011, as it was 6.8% higher (+27% annualised) and 3.5% excluding the perimeter and exchange rate effects. This reflected the good performance of basic revenues and trading gains.

Operating expenses rose 7.2% year-on-year and 4.4% excluding the perimeter and exchange rate effects. The year-on-year performance varied throughout the Group.

In Europe, both the large retail units as well as the UK followed the same trend as in 2011 and registered negative growth in real terms or growth of around zero. Of note was the 3.8% fall in Portugal.

The increase in costs was due to the incorporations in Poland and Germany, Latin America (rise in commercial capacity and revision of the wage agreements made in 2011 in an environment of higher inflation) and the US, which reflects the greater level of investments in technology and structures.

Compared to the fourth quarter, operating expenses were basically flat for the whole Group and 3.0% lower excluding the exchange rate effect. Almost all of the main units registered negative growth.

Operating expenses

EUR Million

 

     Q1’12      Q1’11      Variation
Amount
    (%)  

Personnel expenses

     2,637         2,474         163        6.6   

General expenses

     1,911         1,752         159        9.1   

Information technology

     249         237         12        5.2   

Communications

     166         169         (2     (1.4

Advertising

     162         142         20        14.1   

Buildings and premises

     436         401         35        8.6   

Printed and office material

     45         41         4        9.6   

Taxes (other than profit tax)

     97         92         6        6.1   

Other expenses

     756         671         85        12.7   

Personnel and gen. expenses

     4,549         4,227         322        7.6   

Depreciation and amortisation

     525         505         21        4.1   

Total operating expenses

     5,074         4,731         343        7.2   

Operating expenses

EUR Million

 

LOGO

As a result, net operating income (pre-provision profit) was EUR 6,280 million in the first quarter, 9.2% more year-on-year and 13.4% above that of the fourth quarter. This performance underscored once again in a difficult environment like today’s, the Group’s capacity to continue to generate recurring revenues and absorb the higher provisions and writedowns required by the phase of the cycle.

Net operating income

EUR Million

 

LOGO

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   11


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Net loans-loss provisions

EUR Million

 

                 Variation        
     Q1’12     Q1’11     Amount     (%)  

Non performing loans

     3,401        2,343        1,058        45.1   

Country-risk

     2        3        (1     (21.6

Recovery of written-off assets

     (277     (281     4        (1.4

Total

     3,127        2,065        1,061        51.4   

Provisions for loan losses were EUR 3,127 million (+51.4% y-o-y). This was due to higher specific provisions because of larger volumes in emerging countries and because the moment of the cycle is still very demanding in provisions in some units. In 2011, EUR 356 million were released in the first quarter and EUR 80 million in the third and fourth quarters compared to a provision of EUR 99 million in the first quarter of 2012.

Net operating income after provisions was EUR 3,153 million, 14.4% lower year-on-year, but 6.6% more than in the fourth quarter due to growth in gross income and stable costs, which absorbed the increase in provisions.

Asset impairment losses and other results were EUR 608 million negative, virtually unchanged from the first quarter of 2011.

Profit before tax was 17.7% lower year-on-year at EUR 2,545 million (-18.1% excluding the perimeter and exchange rate effects), but 4.4% more than the fourth quarter.

The impact (on the first and fourth quarters of 2011) of higher taxes and minority interests made attributable profit 23.9% lower year-on-year at EUR 1,604 million (-21.1% excluding the exchange rate and perimeter effects) and 6.6% less than in the fourth quarter.

Earnings per share in the first quarter were EUR 0.17, 28.5% less than in the same period of 2011. They were slightly affected by the capital increases in 2011 and the beginning of 2012 to repurchase preferred shares and meet the dividend payment in shares for shareholders who chose the scrip dividend option.

The Group’s ROE was 8.1% and return on tangible equity (ROTE) (attributable profit/shareholders’ equity less goodwill) was 12.0%.

 

 

Attributable profit to the Group

EUR Million

 

LOGO

Earnings per share

Euros

 

LOGO

 

 

12

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Balance sheet

EUR Million

 

     31.03.12     31.03.11     Variation
Amount
    (%)     31.12.11  

Assets

          

Cash on hand and deposits at central banks

     111,943        86,006        25,937        30.2        96,524   

Trading portfolio

     174,223        148,138        26,085        17.6        172,637   

Debt securities

     53,235        55,426        (2,191     (4.0     52,704   

Customer loans

     13,300        2,080        11,220        539.3        8,056   

Equities

     5,304        8,146        (2,842     (34.9     4,744   

Trading derivatives

     95,495        62,509        32,986        52.8        102,498   

Deposits from credit institutions

     6,889        19,976        (13,087     (65.5     4,636   

Other financial assets at fair value

     20,358        41,907        (21,548     (51.4     19,563   

Customer loans

     12,116        6,892        5,224        75.8        11,748   

Other (deposits at credit institutions, debt securities and equities)

     8,242        35,014        (26,773     (76.5     7,815   

Available-for-sale financial assets

     99,165        85,125        14,040        16.5        86,612   

Debt securities

     94,349        78,741        15,608        19.8        81,589   

Equities

     4,816        6,384        (1,568     (24.6     5,024   

Loans

     780,763        760,084        20,679        2.7        779,525   

Deposits at credit institutions

     52,924        47,414        5,510        11.6        42,389   

Customer loans

     720,965        704,898        16,067        2.3        730,296   

Debt securities

     6,874        7,772        (898     (11.6     6,840   

Investments

     4,685        275        4,411        —          4,154   

Intangible assets and property and equipment

     16,816        17,041        (225     (1.3     16,840   

Goodwill

     25,200        23,856        1,344        5.6        25,089   

Other

     50,195        46,132        4,063        8.8        50,580   

Total assets

     1,283,349        1,208,563        74,786        6.2        1,251,525   

Liabilities and shareholders’ equity

          

Trading portfolio

     149,125        130,191        18,935        14.5        146,949   

Customer deposits

     16,085        7,838        8,247        105.2        16,574   

Marketable debt securities

     74        1,207        (1,133     (93.9     77   

Trading derivatives

     96,889        63,746        33,144        52.0        103,083   

Other

     36,077        57,400        (21,323     (37.1     27,214   

Other financial liabilities at fair value

     47,490        52,786        (5,297     (10.0     44,908   

Customer deposits

     32,068        30,836        1,233        4.0        26,982   

Marketable debt securities

     5,247        5,203        44        0.8        8,185   

Due to central banks and credit institutions

     10,174        16,747        (6,573     (39.2     9,741   

Financial liabilities at amortized cost

     964,252        898,476        65,776        7.3        935,669   

Due to central banks and credit institutions

     124,780        80,790        43,990        54.4        116,368   

Customer deposits

     594,633        582,100        12,533        2.2        588,977   

Marketable debt securities

     201,697        187,861        13,836        7.4        189,110   

Subordinated debt

     22,821        26,431        (3,611     (13.7     22,992   

Other financial liabilities

     20,321        21,293        (972     (4.6     18,221   

Insurance liabilities

     717        10,453        (9,736     (93.1     517   

Provisions

     15,486        15,142        344        2.3        15,571   

Other liability accounts

     22,123        21,762        361        1.7        25,052   

Total liabilities

     1,199,194        1,128,810        70,383        6.2        1,168,666   

Shareholders’ equity

     80,695        77,590        3,105        4.0        80,895   

Capital stock

     4,538        4,220        318        7.5        4,455   

Reserves

     74,552        74,592        (39     (0.1     72,660   

Attributable profit to the Group

     1,604        2,108        (504     (23.9     5,351   

Less: dividends

     —          (3,330     3,330        (100.0     (1,570

Equity adjustments by valuation

     (4,900     (3,813     (1,087     28.5        (4,482

Minority interests

     8,361        5,976        2,385        39.9        6,445   

Total equity

     84,155        79,753        4,402        5.5        82,859   

Total liabilities and equity

     1,283,349        1,208,563        74,786        6.2        1,251,525   

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   13


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Grupo Santander. Balance sheet

 

LOGO

Activity continued to reflect the market context:

 

   

Lower demand for loans in Europe, especially in Spain and Portugal, and double-digit growth in Latin America (+15%).

 

   

In funds, preference for deposits across the Group and conservative policy in issues.

 

   

The loan-to-deposit ratio improved again in the quarter to 115%.

 

LOGO

Core capital ratio (BIS II) of 10.10%, very solid as befits the Group’s business model and low risk profile.

 

LOGO

The European Banking Authority’s target has already been reached: core capital ratio of 9.11%, above that required by June.

Distribution of total assets by geographic segments

March 2012

 

LOGO

Total managed funds at the end of March amounted to EUR 1,418,528 million, of which EUR 1,283,349 million (90%) were on-balance sheet and the rest mutual and pension funds and managed portfolios.

Two factors need to be taken into account in the year-on-year comparisons:

 

 

A slightly positive perimeter impact from the net effect of the following changes in the Group’s composition:

 

   

positive impact from the consolidation of Banco Zachodni WBK in Poland and the acquisition of the mortgage business of GE Capital Corporation (Mexico) and Creditel (Uruguay).

 

   

negative impact of Santander Consumer USA, which stopped consolidating by global integration and moved to consolidation by the equity accounted method and of bancassurance business incorporated to the holding in Latin America. Also impact of changes of the units that consolidated by the proportional method, mainly in Spain, to integration by the equity accounted method.

 

 

The second effect came from the appreciation/depreciation of various currencies against the euro (end of period rates). On the one hand, the dollar and sterling appreciated by 6% each and the Chilean peso by 5% and, on the other, the rest of the main Latin American currencies depreciated: the Brazilian real by 5% and the Mexican and Argentine pesos by 1% each. The net impact of both effects is 2 p.p. positive.

The joint impact of the two effects on changes on customer balances was 3 p.p., positive both on lending as well as customer funds.

Lending

The Group’s gross lending amounted to EUR 765,619 million, 4% higher than in March 2011. Eliminating the exchange rate and perimeter effects lending was 1% higher.

The geographic distribution (principal segments) was also very different by markets.

 

 

Customer loans

EUR Million

 

     31.03.12      31.03.11      Variation
Amount
    (%)     31.12.11  

Public sector

     12,801         12,340         461        3.7        12,147   

Other residents

     193,462         210,430         (16,969     (8.1     202,411   

Commercial bills

     8,790         9,320         (530     (5.7     9,679   

Secured loans

     110,731         124,610         (13,879     (11.1     117,946   

Other loans

     73,940         76,500         (2,560     (3.3     74,785   

Non-resident sector

     559,356         510,246         49,111        9.6        554,478   

Secured loans

     343,492         309,769         33,723        10.9        342,676   

Other loans

     215,865         200,476         15,388        7.7        211,802   

Gross customer loans

     765,619         733,016         32,603        4.4        769,036   

Loan-loss allowances

     19,237         19,145         92        0.5        18,936   

Net customer loans

     746,382         713,871         32,511        4.6        750,100   

Pro memoria: Doubtful loans

     31,838         27,871         3,968        14.2        31,287   

Public sector

     139         44         95        212.7        102   

Other residents

     14,613         12,539         2,075        16.5        14,745   

Non-resident sector

     17,086         15,287         1,799        11.8        16,439   

 

14

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

In Continental Europe, Spain’s and Portugal’s lending fell by 4% and 6%, respectively, due to deleveraging, while Santander Consumer Finance’s balances remained stable (-1). The incorporation of Bank Zachodni WBK increased the Group’s net lending by EUR 9,106 million.

 

 

Gross lending in Spain amounted to EUR 215,376 million, with the following structure:

Loans to the public sector amounted to EUR 12,801 million, (+4% year-on-year).

Loans to individuals amounted to EUR 75,902 million, of which EUR 56,948 million were mortgages for homes. These are the healthiest part and with the least risk of further deterioration of the portfolio in Spain because of the different features of this product compared to similar ones in other countries. For example, the principle is amortised as of the first day, the borrowers' responsibility extends to all their assets and almost all loans are for residences in ownership, with a very low expected loss.

In the specific case of Grupo Santander, the portfolio is mostly composed of mortgages that are for the first residence, with a large concentration of loans in the lowest tranches of loan-to-value (87% with an LTV lower than 80%) and a very low NPL ratio (2.5%).

Loans to SMEs and companies without real estate purposes amounted to EUR 105,166 million and were the main part (49% of the total). In the last 12 months, and in an environment of a cut in lending throughout the financial system, the volume of loans to SMEs and companies increased by 2%.

Loans with real estate purposes (with the greatest risk) stood at EUR 21,507 million, after falling again in the first quarter of 2012 (-EUR 1,935 million). The strategy begun in previous years of reducing exposure to this segment continued. The total reduction since December 2008 was EUR 16,181 million (-43%).

 

 

In Portugal, the fall in lending (6%) came from all segments: -15% to SMEs, -10% to companies and -4% to individuals. In addition, balances in construction and real estate, which represent only 3.4% of lending in Portugal, declined 17.4% in the year to March 2012.

 

 

Santander Consumer Finance’s lending remained stable. Germany, which accounts for 51% of the area’s credit, increased lending 1%, while other countries declined except for the Nordic nations (+12%).

New loans in the first quarter of 2012 rose 6% year-on-year. Those for auto financing were well above new loans for cars sales in Europe.

In the United Kingdom, the balance of customer loans was 6% higher. In local criteria, residential mortgages, in a still depressed market, were very stable, while loans to SMEs increased 21%, gaining further market share. Personal loans, reflecting the policy in the last few years of reducing them, declined 13% year-on-year.

Gross customer loans

EUR Billion

+ 4.4% Q1’12 - Q1’11

*

Excluding exchange rate impact: +2.5%

 

LOGO

Gross customer loans

% o/ operating areas. March 2012

 

LOGO

Loans portfolio in Spain

EUR Billion

 

LOGO

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   15


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Customer funds under managament

EUR Million

 

     31.03.12      31.03.11      Variation
Amount
    (%)     31.12.11  

Resident public sector

     10,925         8,640         2,285        26.5        6,528   

Other residents

     137,134         163,246         (26,112     (16.0     144,131   

Demand deposits

     67,382         71,018         (3,635     (5.1     68,389   

Time deposits

     60,511         78,500         (17,989     (22.9     61,185   

Other

     9,241         13,729         (4,488     (32.7     14,557   

Non-resident sector

     494,727         448,888         45,839        10.2        481,875   

Demand deposits

     224,318         211,861         12,456        5.9        220,299   

Time deposits

     194,764         197,313         (2,549     (1.3     197,249   

Other

     75,645         39,713         35,932        90.5        64,328   

Customer deposits

     642,786         620,774         22,013        3.5        632,533   

Debt securities*

     207,018         194,271         12,747        6.6        197,372   

Subordinated debt

     22,821         26,431         (3,611     (13.7     22,992   

On-balance-sheet customer funds

     872,625         841,476         31,149        3.7        852,898   

Mutual funds

     105,914         112,817         (6,903     (6.1     102,611   

Pension funds

     9,765         10,916         (1,151     (10.5     9,645   

Managed portfolios

     19,500         18,626         875        4.7        19,199   

Savings-insurance policies

     —           833         (833     (100.0     —     

Other customer funds under management

     135,179         143,192         (8,013     (5.6     131,456   

Customer funds under management

     1,007,804         984,668         23,136        2.3        984,353   

 

*

Including retail commercial paper. EUR 8,346 million in March 2012

 

Lending in Latin America (excluding the balances in the New York branch) increased 16% excluding the exchange rate impact, due to organic growth and the acquisition of the mortgage business in Mexico of GE Capital Corporation and of Creditel in Uruguay. Brazil’s lending, in local currency, rose 19%, Chile’s 5% and Mexico’s 21% (+14% excluding the perimeter impact).

Lastly, lending in the US increased 5% in dollars due to the rise to companies other than real estate ones.

Lending in the first quarter, excluding the exchange rate impact, dropped 0.6%: that in Continental Europe fell 1.5%, (Spain: -1.7%); while in the UK, Latin America and the US it increased 1.9%, 0.4% and 2.8%, respectively.

In March, Continental Europe accounted for 41% of the Group’s total lending (28% Spain), the UK 35%, Latin America 19% (11% Brazil) and the US 5%.

Customer funds under management

Total managed funds surpassed EUR 1 trillion for the first time (EUR 1,007,804 million), 2% more than in March 2011, slightly lower after deducting the perimeter and forex effects (-1%).

Customer deposits increased 6% including retail commercial paper in Spain and Brazil’s letras financeiras. Mutual and pension funds declined 7%, affected by the greater focus on capturing on-balance sheet funds.

Deposits and retail commercial paper in Continental Europe remained virtually unchanged (+0.2%) from March 2011 to March 2012, as follows:

 

 

Spain’s dropped 3%, reflecting the strategy followed for the renewal of funds captured in the 2010 campaign of giving priority to improved costs over volumes (mainly in the second quarter of 2011), and in the marketing of retail commercial paper in Spain in the fourth quarter of 2011 and in the first quarter of 2012.

 

 

Santander Consumer Finance’s deposits increased 5% year-on-year due to Germany which, through the campaign of welcome to Grupo Santander by Santander Retail Germany (SEB), increased its balances by EUR 2,500 million.

 

 

Portugal increased its customer deposits by 6% and significantly improved its liquidity position.

 

 

The incorporation of Bank Zachodni WBK contributed EUR 12,376 million of funds to the Group, of which EUR 10,028 million were deposits.

In the UK, customer deposits remained unchanged in sterling, while mutual funds rose 4%.

Mutual funds

EUR Million

 

     31.03.12      31.03.11      Var (%)  

Spain

     27,292         31,974         (14.6

Portugal

     1,809         3,051         (40.7

Poland

     2,059         

United Kingdom

     15,674         14,204         10.3   

Latin America

     59,080         63,588         (7.1

Total

     105,914         112,817         (6.1
 

 

16

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Pension funds

EUR Million

 

     31.03.12      31.03.11      Var (%)  

Spain

     8,983         9,602         (6.4

Portugal

     782         1,314         (40.5

Total

     9,765         10,916         (10.5

In Latin America (excluding the balances in the New York branch, which are more volatile), customer deposits without repos increased 7% excluding the exchange rate impact. Good evolution of the three main countries: Brazil (+12%, including the letras financeiras), Mexico (+22%) and Chile (+6%), with increases in both time and demand deposits except for Brazil (in demand deposits). Mutual funds dropped 7% in Brazil, 1% in Chile and rose 3% in Mexico. The overall reduction for the whole region was 4%.

Lastly, US customer deposits increased 7% in dollars in the last 12 months.

Continental Europe accounted for 37% of managed customer funds (27% Spain), the UK 32%, Latin America 27% (Brazil 16%) and the US 4%.

In the first quarter, and eliminating the exchange rate impact, managed customer funds increased 2.4%. Continental Europe’s rose 1.9% (Spain: +2.8%), the UK’s 0.1%, Latin America’s 5.9% (Brazil: +6.9%) and the US’s 2.7%.

As well as capturing large volumes of funds in the Group, for strategic reasons, maintained an active policy of issuing securities in the international fixed income markets.

The Group issued in the first quarter of 2012 EUR 12,185 million of medium- and long-term issues, as follows: EUR 6,651 million of senior debt and EUR 5,534 million of covered bonds.

This issuing activity underscores the Group’s capacity to access the different segments of institutional investors via more than 10 issuance units, including the parent bank, Banco Santander, and the main subsidiaries of the countries where it operates: Banesto, Santander Totta, Santander UK/Chile/Brazil/Mexico, Sovereign Bank and the units of Santander Consumer Finance. In all cases, issues were at higher prices than in 2011 because of the greater tensions and volatility in the markets.

As regards securitisations, the Group’s subsidiaries placed in the market in the first quarter of 2012 a total of EUR 3,845 million, mainly in the UK.

Maturities of medium and long-term debt amounted to EUR 11,289 million, of which EUR 8,617 million was senior debt, EUR 2,557 million covered bonds, EUR 112 million subordinated debt and EUR 3 million preferred shares.

This capturing of stable funds, via deposits, retail commercial paper and issues, combined with the trend of moderate growth in lending, improved the loan-to-deposit ratio to 115% (117% in December 2011), and put the ratio of deposits plus medium and long-term funding to the Group’s loans at 116%, underscoring the appropriate funding structure of the Group’s lending.

Customer funds under management

EUR Billion

+ 2.3% Q1’12 - Q1’11

(*)

Excluding exchange rate impact: +1.0%

 

LOGO

Customer funds under management

% o/ operating areas. March 2012

 

LOGO

Loans / deposits. Total Group*

%

 

(*)

Including retail commercial paper

 

LOGO

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   17


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

The Group’s access to wholesale funding markets, as well as the cost of issues, depend to some extent on the ratings accorded by rating agencies.

Rating agencies

 

     Long      Short      Stand-         
     term      term      alone      Outlook  

Standard & Poor’s

     A+         A-1         a         Negative   

Fitch Ratings

     A         F1         a         Negative   

Moody’s

     Aa3         P1         B-         Negative   

DBRS

     AA(low)         R1(medium)            Negative   

Rating agencies regularly review the Group’s ratings. Classification of long-term debt depends on a series of internal factors (solvency, business model, capacity to generate profits, etc) and external ones related to the general economic environment, the sector’s situation and the sovereign risk of the countries in which we operate.

Since the autumn, the difficulties in resolving the problems of European countries that required financial assistance, combined with a deterioration in the euro zone’s growth expectations, eroded confidence and intensified tensions on European sovereign debt. This situation led to a widespread and significant downgrading of the sovereign ratings of many European countries, and hence hit the ratings of banks.

Between October 2011 and April 2012, the rating of the Kingdom of Spain was reduced a notch by DBRS (from AA to AA low), three notches by Standard & Poor’s (from AA to A) and four by Moody’s (from Aa2 to A3) and Fitch (from AA+ to A), maintaining the negative outlook in all of them.

These downgradings led to a revision of Banco Santander’s ratings, which in March 2012 were as shown in the table.

Other items of the balance sheet

Total goodwill was EUR 25,200 million, EUR 1,344 million more than in March 2011, due to the net impact between the increase from the incorporations of BZ WBK, the Mexican mortgage business of GE Capital Corporation and Creditel in Uruguay and the reductions resulting from the amortisation of EUR 601 million of goodwill of Santander Totta in Portugal and the consolidation of Santander Consumer USA by the equity accounted method.

Trading derivatives rose strongly, both in assets and liabilities (+EUR 32,986 million and +EUR 33,144 million, respectively), due to the evolution of the market value, mainly interest rate swaps. The balance at the end of March was EUR 95,495 million in assets and EUR 96,889 million in liabilities.

The balances with central banks increased for both funds and loans, following the injections of liquidity by central banks in the countries where we operate and, particularly, in the euro zone. The European Central Bank implemented extraordinary monetary policy measures including larger guarantees and three-year liquidity auctions.

The Group followed the practice of recourse to these auctions and deposited most of the funds captured in the ECB, which boosted significantly its liquidity buffer while improving its structure by replacing short-term maturities with longer ones. The only Group bank that is still a net structural borrower from the ECB is Santander Totta (close to EUR 5 billion).

The balance of financial assets available for sale rose by EUR 14,040 million, from EUR 85,125 million in March 2011 to EUR 99,165 million in the same month of 2012, due to the rise in both private and public debt (the latter linked to hedging of interest rates).

 

 

Total equity and capital with the nature of financial liabilities

EUR Million

 

                 Variation              
     31.03.12     31.03.11     Amount     (%)     31.12.11  

Capital stock

     4,538        4,220        318        7.5        4,455   

Additional paid-in surplus

     31,172        29,446        1,726        5.9        31,223   

Reserves

     43,558        45,228        (1,669     (3.7     41,688   

Treasury stock

     (178     (82     (96     116.6        (251

Shareholders’ equity (before profit and dividends)

     79,091        78,812        279        0.4        77,115   

Attributable profit

     1,604        2,108        (504     (23.9     5,351   

Interim dividend distributed

     —          (1,399     1,399        (100.0     (1,429

Interim dividend not distributed (1)

     —          (1,931     1,931        (100.0     (408

Shareholders’ equity (after retained profit)

     80,695        77,590        3,105        4.0        80,629   

Valuation adjustments

     (4,900     (3,813     (1,087     28.5        (4,482

Minority interests

     8,361        5,976        2,385        39.9        6,445   

Total equity (after retained profit)

     84,155        79,753        4,402        5.5        82,592   

Preferred shares and securities in subordinated debt

     5,639        6,917        (1,279     (18.5     5,896   

Total equity and capital with the nature of financial liabilities

     89,794        86,671        3,123        3.6        88,488   

 

(1)

In December 2011, estimated data of May 2012 scrip dividend

 

18

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

CONSOLIDATED FINANCIAL REPORT

 

 

Shareholders’ equity and solvency ratios

Total shareholders’ equity, after retained profits, increased 4% (EUR 3,105) in the year to March to EUR 80,695 million.

Shareholders’ equity per share was EUR 8.45, a decline of EUR 0.17 in the first quarter due to the increase in shares resulting from the scrip dividend in February and the transfer of 4.41% of Santander Brazil to an international financial institution in January, which reduced reserves and increased minority interests by an equivalent amount.

Total equity at the end of March was EUR 85,155 million, an increase of EUR 4,402 million (+6% y-o-y).

Grupo Santander’s eligible equity applying the BIS II criteria amounted to EUR 76,999 million, EUR 31,380 million above the minimum requirement (+69%).

The core capital ratio (BIS II) was 10.10% (+8 b.p. in the first quarter, with a positive impact from organic generation of capital and a negative one from exchange rate differences). The core capital is of very high quality, very solid and adjusted to the business model, the balance sheet structure and the Group’s risk profile.

As regards the requirement of the European Banking Authority to have a core capital ratio of at least 9% by June, in accordance with the EBA’s criteria, Grupo Santander announced in January that it had already reached this figure (9.11%).

Capital ratio (BIS II)

%

 

LOGO

Book value per share*

Euros

 

*

(capital + reserves - own shares + profit - dividends) / (shares + Valores Santander)

 

LOGO

 

 

Computable capital and BIS II ratio

EUR Million

 

     31.03.12     31.03.11     Variation
Amount
    (%)     31.12.11  

Core capital

     57,567        55,478        2,089        3.8        56,694   

Basic capital

     63,031        62,730        301        0.5        62,294   

Supplementary capital

     15,173        18,513        (3,340     (18.0     15,568   

Deductions

     (1,205     (2,398     1,193        (49.7     (1,090

Computable capital

     76,999        78,845        (1,846     (2.3     76,772   

Risk-weighted assets

     570,239        574,036        (3,797     (0.7     565,958   

BIS II ratio

     13.50        13.74        (0.24 p.       13.56   

Tier I (before deductions)

     11.05        10.93        0.12 p.          11.01   

Core capital

     10.10        9.66        0.44 p.          10.02   

Shareholders’ equity surplus (BIS II ratio)

     31,380        32,922        (1,542     (4.7     31,495   

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   19


Table of Contents

 

RISK MANAGEMENT

 

 

Risk management

 

LOGO

Risk management mitigates the impact of the deterioration of the economic environment in some markets.

 

LOGO

Net NPL entries in the quarter are lower than those of the three previous quarters.

 

LOGO

The Group’s NPL ratio was 3.98% (+0.09 p.p. in the quarter) and coverage 62% (+1 p.p. in the quarter).

 

LOGO

The NPL ratio improved in the US, the UK, Mexico and Poland and continued to rise in Spain.

 

LOGO

Very active management of the exposure with real estate purpose in Spain. Total loans and foreclosures decreased by EUR 1,898 million in the first quarter.

 

Group’s NPL ratio

%

  

Group’s NPL coverage

%

[ LOGO    LOGO

NPLs and loans-loss allowances

EUR Million. March 2012

 

LOGO

Credit risk

The active risk management is reflected in a good evolution of NPL entries. The Group’s total in the first quarter, on a like-for-like basis and excluding the exchange rate impact, amounted to EUR 3,638 million, lower than that in the three previous quarters.

The Group’s annual risk premium was 1.72% in February, well below the peak of 2.47% in the third quarter of 2009.

The still weak situation in some markets, however, continues to push up NPLs due to the rise in bad and doubtful loans and the slower growth, or reductions in some cases, in lending volumes.

The Group’s NPL ratio was 3.98%, 9 b.p. more than at the end of 2011 (+37 b.p. since March 2011). Bad and doubtful loans amounted to EUR 32,560 million at the end of March, EUR 4,066 million more than a year earlier (+14%).

Total loan loss provisions were EUR 20,035 million. NPL coverage in March was 62% (+ 1 p.p. since the end of 2011).

To qualify this number, one must bear in mind that the ratio, mainly in the UK and in Spain, is affected by the balances of mortgage loans, which required lower on-balance sheet provisions, as they have guarantees not recorded here.

Residential balances, both in Spain and the UK, have an average LTV of 53%.

Net specific provisions, after deducting recovered write-offs, totalled EUR 3,025 million, 1.44% of the average credit risk (last 12 months) compared to EUR 2,418 million (1.51% in the equivalent period of 2011).

The NPL ratios by units and countries are set out below.

 

 

The NPL ratio in Spain of 5.75% is well below that of the banking sector as a whole, and coverage is 46%.

The ratio for mortgages for homes is 2.6%, while the remainder of the portfolio, (public sector, individual customers and companies without real estate purposes) has a ratio of 3.7%. In both cases, the ratios were moderately higher than 12 months ago.

The increase in the total ratio was due to loans with a real estate purpose (ratio of 32.8%) and reflects, on the one hand, the higher NPLs in this segment and, on the other, the Group’s anticipative policy of sharply reducing the balances in this segment.

Doubtful loans with real estate purpose amounted to EUR 7,047 million, and coverage is 33% (+2 p.p. since March 2011). There is also EUR 3,852 million of substandard loans, all of which are up-to-date with payments, and have a coverage of 16% (11% in March 2011).

 

 

20

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

RISK MANAGEMENT

 

 

The gross balance of foreclosures was EUR 8,590 million, virtually the same as in December 2011. For the second quarter running, net entries were almost zero, compared to entries of about EUR 400 million in the first three quarters of 2011. This trend indicates that the Group will be able to start reducing the stock in the coming quarters.

Foreclosed real estate, following the effort made in the fourth quarter of 2011, has a coverage level of 48% compared to 32% in March 2011.

 

 

In Portugal, the NPL ratio increased again in the quarter (+53 b.p.) to 4.59% (+156 b.p. year-on-year). Coverage is 58%.

 

 

Santander Consumer Finance’s NPL ratio was 4.05% and coverage 108% (+94 b.p. and 10 p.p. respectively) on a like-for-like basis. The figures in March 2011 were 4.99% and 98% respectively.

 

 

Poland’s BZ WBK has a NPL ratio of 4.74%, 15 b.p. lower than at the end of 2011, and well below the 6.43% recorded last June when it was integrated into the Group. Coverage is 66%.

 

 

In the UK, the NPL ratio is 1.82% (1.73% in March 2011), 2 b.p. better than at the end of 2011. Coverage is 40%, virtually unchanged since the end of 2011.

Of note in the Group’s total lending are residential mortgages in the UK (£166,114 million), consisting of operations on properties in the UK which are first mortgages, as there are no second or further loans on the mortgaged properties.

This portfolio had a NPL ratio at the end of March of 1.51% compared to 1.43% a year earlier. This improvement was due to constant monitoring and control, as well as strict credit policies that include, among other measures, maximum loan-to-value criteria in relation to the properties in guarantee. At the end of March, the average LTV was 53%.

Another indicator of this portfolio’s good performance is the reduced volume of foreclosed properties, which amounted to EUR 171 million in March 2012 and accounted for only 0.08% of the total real estate exposure. Efficient management of these cases and the existence of a dynamic market for this type of home, which enables a quick sale, contributed to the good results.

NPL ratio in Spain

%

 

LOGO

 

 

Credit risk management*

EUR Million

 

                   Variation              
     31.03.12      31.03.11      Amount     (%)     31.12.11  

Non-performing loans

     32,560         28,494         4,066        14.3        32,036   

NPL ratio (%)

     3.98         3.61         0.37 p.          3.89   

Loan-loss allowances

     20,035         20,124         (89     (0.4     19,661   

Specific

     15,808         14,992         816        5.4        15,474   

Generic

     4,227         5,132         (905     (17.6     4,187   

NPL coverage (%)

     62         71         (9 p.       61   

Credit cost (%) **

     1.44         1.51         (0.07 p.       1.41   

Ordinary non-performing and doubtful loans ***

     19,213         17,987         1,225        6.8        18,318   

NPL ratio (%) ***

     2.39         2.31         0.08 p.          2.26   

NPL coverage (%) ***

     104         112         (8 p.       107   

 

*

Excluding country-risk

**

Net specific allowance / computable assets

***

Excluding mortgage guarantees

Note: NPL ratio: Non-performing loans / computable assets

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   21


Table of Contents

 

RISK MANAGEMENT

 

 

 

Brazil’s NPL ratio is 5.76%, 91 b.p. more than a year earlier and up 38 b.p. since the end of 2011. This increase was affected by a moderate increase in NPLs in individual customers segment. Coverage is 90%.

 

Latin America ex–Brazil’s NPL ratio is 3.24% and coverage 95%. Mexico improved its ratio in the first quarter, Argentina’s was stable and Chile’s was higher because of a marginal worsening of the quality in the market.

 

 

Lastly, the US’s NPL ratio improved for the ninth straight quarter to 2.46%, while coverage surpassed 100% for the first time (107%).

 

 

Non-performing loans by quarter

EUR Million

 

     Q1’11     Q2’11     Q3’11     Q4’11     Q1’12  

Balance at beginning of period

     28,522        28,494        30,186        30,910        32,036   

Net additions

     3,112        4,015        4,206        4,048        3,638   

Increase in scope of consolidation

     186        739        (0     —          (602

Exchange differences

     (558     (31     (444     671        37   

Write-offs

     (2,767     (3,031     (3,037     (3,594     (2,549

Balance at period-end

     28,494        30,186        30,910        32,036        32,560   

 

 

 

Market risk

The risk of trading activity, measured in daily VaR terms at 99%, averaged around EUR 14.6 million in the first quarter. It fluctuated between EUR 10.5 and EUR 19.1 million.

After reaching a high for the quarter of EUR 19.1 million on February 7, the VaR declined as a result of the risk reduction in Madrid and active credit portfolio management (ACPM), due to the lower credit spread exposure.

Trading portfolios*. VaR performance

EUR Million

 

*

Trading activity

 

LOGO

 

 

 

Trading portfolios*. VaR by region

 

*

Trading activity

 

First quarter    2012      2011  
EUR Million    Average      Latest      Average  

Total

     14.6         12.8         25.7   

Europe

     10.5         10.3         16.1   

USA and Asia

     1.2         1.2         1.3   

Latin America

     8.4         10.1         13.4   

Global activities

     6.3         0.9         10.4   

Trading portfolios*. VaR by market factor

 

*

Trading activity

 

First quarter 2012                        
EUR Million   Min     Avg     Max     Latest  

VaR total

    10.5        14.6        19.1        12.8   

Diversification effect

    (11.1     (17.8     (25.2     (15.8

Interest rate VaR

    8.0        10.9        16.9        8.1   

Equity VaR

    5.3        7.9        11.1        8.8   

FX VaR

    2.3        5.1        10.1        3.4   

Credit spreads VaR

    3.4        8.1        13.0        8.1   

Commodities VaR

    0.3        0.4        0.7        0.3   
 

 

22

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

THE SANTANDER SHARE

 

 

The Santander share

Shareholder remuneration

Total shareholder remuneration for the year 2011 was EUR 0.60 per share, as follows: in August, a first interim dividend of EUR 0.135 in cash per share charged to 2011’s results was paid; in November a second one of EUR 0.126 and in February 2012 a third one of EUR 0.119. The second and third dividends were paid under the Santander Dividendo Elección (scrip dividend) scheme. The AGM on March 30 approved a fourth dividend of EUR 0.22 per share, also under this scheme, which will be paid in May.

The scheme enables shareholders to choose to receive the amount equivalent to the fourth dividend in cash or in shares. Every shareholder received a free allotment right of new shares for each share owned. Shareholders can sell the rights to the Bank at a set price (EUR 0.22 gross per right), on the stock market between April 13 and 27 at the market price, or receive new shares in the proportion of one new share for every 24 rights, and in the last two cases without withholding tax(*).

In order to meet this, a rights issue will be carried out for a maximum of EUR 189,101,112.50, represented by 378,202,225 shares. Shareholders are due to receive on May 3 the amount in cash if they opted to sell their rights to the Bank, and on May 9 the new shares those who chose this option.

Share price performance

The international stock markets ended higher in a first quarter marked by the green light given by the Eurogroup to the second rescue package for Greece and the EUR 500,000 million injection of liquidity by the European Central Bank into the financial system, despite the fact that several of the main rating agencies downgraded the rating of several European countries. In the last part of the first quarter and in April, the investors’ lack of confidence intensified volatility in the markets.

The Santander share ended March at EUR 5.770, 1.7% lower than at the end of 2011 and a smaller fall than the Ibex-35 (-6.5%) but below the DJ Stoxx Banks (+12.7%) and the DJ Stoxx 50 (+3.8%).

Market capitalisation

At March 30, Santander was the largest bank in the euro zone by market capitalisation and the 15th in the world among financial entities (EUR 52,373 million). The share’s weighting in the DJ Stoxx 50 index was 2.0%, 8.6% in the DJ Stoxx Banks and 17.1% in the Ibex-35.

Comparative performance of share prices

December 30, 2011 to March 30, 2012

 

LOGO

 

Trading

Santander’s share was the most liquid of the Eurostoxx. A total of 5,719 million shares were traded in the first quarter for an effective value of EUR 34,665 million. The average daily turnover was 88 million shares for an effective value of EUR 533 million.

Shareholders

There were 3,269,996 shareholders at March 30, of which 3,008,383 were European (87.20% of the capital stock) and 245,857 were from the Americas (12.47%).

Excluding the Board of Banco Santander, which holds 2.15% of the Bank’s capital, individual shareholders held 37.55% of the capital and institutional ones 60.30%.

 

(*)

The options, maturities and procedures indicated can present special features for shareholders holding Santander shares in the various foreign stock markets where the Bank is listed.

The Santander share. March 2012

 

Shareholders and trading data              

Shareholders (number)

        3,269,996   

Shares (number)

        9,076,853,400   

Average daily turnover (no. of shares)

        87,981,502   

Share liquidity (%)

        63   

(Number of shares traded during the year / number of shares)

     
Remuneration per share    euros      % (1)  

Fourth interim dividend 2010 (01.05.11)

     0.229         3.1   

First interim dividend 2011 (01.08.11)

     0.135         0.0   

Santander Dividendo Elección (03.11.11)

     0.126         5.9   

Santander Dividendo Elección (03.02.12)

     0.119         1.7   

Santander Dividendo Elección (01.05.12)

     0.220         (3.9
Price movements during the year              

Beginning (30.12.11)

        5.870   

Highest

        6.648   

Lowest

        5.387   

Last (30.03.12)

        5.770   

Market capitalisation (millions) (30.03.12)

        52,373   
Stock market indicators              

Price / Book value (2) (X)

        0.68   

P/E ratio (X)

        8.47   

Yield (3) (%)

        9.83   

 

(1)

Variation o/ equivalent previous year

(2)

Including the number of shares needed to compulsorily convert the “Valores Santander”

(3)

Total dividend 2011 / Q1’12 average share price

Capital stock ownership

 

March 2012    Shares      %  

The Board of Directors

     195,233,372         2.15   

Institutional investors

     5,473,769,064         60.30   

Individuals

     3,407,850,964         37.55   

Total

     9,076,853,400         100.00   
 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   23


Table of Contents

 

INFORMATION BY SEGMENTS

 

 

Description of the segments

Grupo Santander is maintaining in 2012 the general criteria used in 2011, with the following exceptions:

 

 

The geographic areas of Continental Europe, the UK and Latin America are maintained and one for the US is created which includes Sovereign Bank and Santander Consumer USA, which exits Continental Europe and, within it, SCF in which it was integrated.

Furthermore, and given that Santander Consumer USA began to consolidate by the equity accounted method in December 2011, all the quarters of 2011 of the income statement have been incorporated on this basis, and a pro-forma balance sheet restated, also using this criteria.

 

 

The consumer business in the UK has been incorporated into Santander UK and exits Continental Europe (and within it, SCF in which it was integrated). The figures for 2011 have been restated.

 

 

Following the operation with Zurich Seguros, the insurance business in Latin America included in this deal now consolidates by the equity accounted method. In order to facilitate like-for-like comparisons, the income statements for all the quarters in 2011 have been reformulated for the whole of Latin America and the countries affected, as well as the area of Asset Management and Insurance.

 

 

In order to facilitate like-for-like comparisons, a pro-forma balance sheet has been reformulated for all the quarters of 2011 in Spain, in order to consolidate by the equity accounted method companies that consolidated on a proportional basis.

 

 

The annual adjustment was made to the Global Customer Relationship Model and resulted in a net increase of 36 new clients. This does not mean any changes in the principal (geographic) segments, but it does affect the figures for Retail Banking and Global Wholesale Banking.

None of these changes was significant for the Group as a whole.

The basic operating units have been drawn up by aggregating the financial statements of each business segment. The information relates to both the accounting data of the companies in each area as well as that provided by the management information systems. In all cases, the same general principles as those used in the Group are applied.

In accordance with the IFRS, the business areas are structured into two levels:

Principal level (or geographic). The activity of the Group’s operating units is segmented by geographical areas. This coincides with the Group’s first level of management and reflects our positioning in the world’s three main currency areas (euro, dollar and sterling). The segments reported on are:

 

 

Continental Europe. This covers all retail banking business (including Banif, the specialised private bank), wholesale banking and asset management and insurance conducted in this region. Given the importance of some of these units, detailed financial information of the Santander Branch Network, Banesto, Santander Consumer Finance, Portugal and Banco Zachodni BWK is also provided.

 

United Kingdom. This includes retail and wholesale banking, asset management and insurance conducted by the various units and branches of the Group in the country.

 

 

Latin America. This embraces all the Group’s financial activities conducted via its subsidiary banks and subsidiaries. It also includes the specialised units of Santander Private Banking, as an independent and globally managed unit, and New York’s business. Because of their specific importance, the financial statements of Brazil, Mexico and Chile are also provided.

 

 

United States. Includes the businesses of Sovereign Bank and Santander Consumer USA (consolidated by the equity accounted method).

Secondary level (or business). This segments the activity of the operating units by the type of business. The reported segments are:

 

 

Retail Banking. This covers all customer banking businesses, including private banking (except those of Corporate Banking, managed through the Global Customer Relationship Model). Because of their relative importance, details are provided by the main geographic areas (Continental Europe, United Kingdom, Latin America and the US) and the main countries. The results of the hedging positions in each country are also included, conducted within the sphere of each one’s Assets and Liabilities Committee.

 

 

Global Wholesale Banking (GBM). This business reflects the revenues from global corporate banking, investment banking and markets worldwide including all treasuries managed globally, both trading and distribution to customers (always after the appropriate distribution with Retail Banking customers), as well as equities business.

 

 

Asset Management and Insurance. This includes the contribution of the various units to the Group in the design and management of mutual and pension funds and insurance. The Group uses, and remunerates through agreements, the retail networks that place these products. This means that the result recorded in this business is net (i.e. deducting the distribution cost from gross income).

As well as these operating units, which cover everything by geographic area and by businesses, the Group continues to maintain the area of Corporate Activities. This area incorporates the centralised activities relating to equity stakes in financial companies, financial management of the structural exchange rate position and of the parent bank’s structural interest rate risk, as well as management of liquidity and of shareholders’ equity through issues and securitisations.

As the Group’s holding entity, this area manages all capital and reserves and allocations of capital and liquidity. It also incorporates amortisation of goodwill but not the costs related to the Group’s central services (charged to the areas) except for corporate and institutional expenses related to the Group’s functioning.

The figures of the various units of the Group listed below have been prepared in accordance with these criteria and therefore do not match those published by each institution individually.

 

 

24

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

Income statement

EUR Million

 

     Net operating income     Attributable profit     Efficiency ratio (%)      ROE (%)  
     Q1’12     Q1’11     (%)     Q1’12     Q1’11     (%)     Q1’12      Q1’11      Q1’12      Q1’11  

Continental Europe

     2,019        1,826        10.6        584        878        (33.5     43.9         44.4         7.43         12.25   

o/w: Santander Branch Network

     606        588        3.2        75        274        (72.8     45.8         46.6         4.57         15.70   

Banesto

     335        273        22.6        41        101        (59.1     43.1         48.2         3.43         8.70   

Portugal

     192        151        27.3        33        90        (63.8     39.6         46.4         5.09         14.92   

Santander Consumer Finance

     473        486        (2.7     206        183        12.7        41.6         38.8         7.75         8.05   

Retail Poland (BZ WBK)

     114            73            47.9            17.05      

United Kingdom

     698        888        (21.4     306        505        (39.5     49.1         42.7         9.45         15.93   

Latin America

     3,876        3,367        15.1        1,218        1,270        (4.1     37.2         38.7         20.89         22.61   

o/w: Brazil

     2,825        2,445        15.5        647        732        (11.6     35.1         37.1         20.45         24.91   

Mexico

     428        379        13.1        296        256        15.6        36.7         37.7         27.03         22.45   

Chile

     352        321        9.7        133        162        (18.1     37.6         37.3         21.62         23.97   

USA

     387        471        (17.8     240        290        (17.2     41.6         33.8         19.29         29.85   

Operating areas

     6,980        6,551        6.6        2,348        2,943        (20.2     40.9         40.6         12.92         17.39   

Corporate Activities

     (700     (801     (12.6     (744     (835     (10.9           

Total Group

     6,280        5,750        9.2        1,604        2,108        (23.9     44.7         45.1         8.13         11.37   

Activity

EUR Million

 

     Net customer loans     Customer deposits     NPL ratio* (%)      NPL cover.* (%)  
     Q1’12      Q1’11      (%)     Q1’12      Q1’11      (%)     Q1’12      Q1’11      Q1’12      Q1’11  

Continental Europe

     301,654         303,460         (0.6     252,781         260,719         (3.0     5.42         4.53         55         62   

o/w: Santander Branch Network *

     100,487         110,051         (8.7     80,355         84,656         (5.1     8.90         5.99         40         50   

Banesto

     67,196         73,326         (8.4     53,875         59,660         (9.7     5.07         4.31         51         52   

Portugal

     27,808         29,744         (6.5     23,321         21,929         6.3        4.59         3.03         58         62   

Santander Consumer Finance

     56,306         56,524         (0.4     33,180         31,618         4.9        4.05         4.99         108         98   

Retail Poland (BZ WBK)

     9,106              10,028              4.74            66      

United Kingdom

     261,070         232,186         12.4        191,727         180,382         6.3        1.82         1.73         40         47   

Latin America

     141,411         124,691         13.4        143,065         135,034         5.9        4.67         4.01         92         107   

o/w: Brazil

     78,083         69,447         12.4        76,352         75,605         1.0        5.76         4.85         90         104   

Mexico

     19,146         15,907         20.4        26,120         20,528         27.2        1.61         1.58         195         234   

Chile

     27,257         24,562         11.0        20,547         18,353         12.0        4.52         3.80         68         89   

USA

     40,030         35,850         11.7        37,828         33,190         14.0        2.46         4.15         107         82   

Operating areas

     744,164         696,187         6.9        625,401         609,325         2.6        3.95         3.54         63         71   

Total Group

     746,382         713,871         4.6        642,786         620,774         3.5        3.98         3.61         62         71   

 

(*).-

Santander Branch Network is the retail banking unit of Banco Santander S.A. The NPL ratio of Banco Santander S.A. at the end of March 2012 stood at 6.33% (4.68% in March 2011) and NPL coverage was 41% (49% in March 2011).

Operating means

 

     Employees      Branches  
     Q1’12      Q1’11      Q1’12      Q1’11  

Continental Europe

     58,506         49,702         6,558         6,151   

o/w: Santander Branch Network

     17,964         18,234         2,915         2,912   

Banesto

     9,426         9,541         1,702         1,727   

Portugal

     5,753         5,934         694         758   

Santander Consumer Finance

     11,904         11,815         637         662   

Retail Poland (BZ WBK)

     9,200            526      

United Kingdom

     27,381         26,902         1,363         1,412   

Latin America

     92,244         89,866         6,053         5,895   

o/w: Brazil

     54,848         54,144         3,776         3,703   

Mexico

     13,032         12,337         1,125         1,099   

Chile

     12,216         11,815         499         506   

USA

     9,151         8,928         722         721   

Operating areas

     187,282         175,398         14,696         14,179   

Corporate Activities

     2,331         2,250         

Total Group

     189,613         177,648         14,696         14,179   

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   25


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Income statement and balance sheet of principal segments

EUR Million

 

    Operating business areas     Continental Europe  
    Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)  

Income statement

           

Net interest income

    8,334        7,586        9.9        2,296        2,042        12.4   

Net fees

    2,635        2,522        4.5        921        939        (2.0

Gains (losses) on financial transactions

    751        738        1.8        335        235        42.5   

Other operating income (1)

    85        192        (55.7     45        68        (33.2

Gross income

    11,806        11,038        7.0        3,597        3,284        9.5   

Operating expenses

    (4,825     (4,487     7.5        (1,578     (1,459     8.2   

General administrative expenses

    (4,335     (4,015     8.0        (1,419     (1,316     7.8   

Personnel

    (2,560     (2,386     7.3        (879     (827     6.3   

Other general administrative expenses

    (1,775     (1,629     9.0        (540     (489     10.4   

Depreciation and amortisation

    (490     (472     3.9        (159     (142     11.4   

Net operating income

    6,980        6,551        6.6        2,019        1,826        10.6   

Net loan-loss provisions

    (3,112     (1,997     55.9        (1,085     (496     118.5   

Other income

    (491     (406     20.9        (157     (111     41.1   

Profit before taxes

    3,377        4,148        (18.6     777        1,218        (36.2

Tax on profit

    (773     (981     (21.2     (176     (311     (43.4

Profit from continuing operations

    2,604        3,167        (17.8     601        907        (33.7

Net profit from discontinued operations

    1        (6     —          1        (6     —     

Consolidated profit

    2,605        3,161        (17.6     602        901        (33.2

Minority interests

    258        218        18.1        18        23        (21.3

Attributable profit to the Group

    2,348        2,943        (20.2     584        878        (33.5

Balance sheet

           

Customer loans (2)

    744,164        696,187        6.9        301,654        303,460        (0.6

Trading portfolio (w/o loans)

    146,559        121,244        20.9        78,600        51,350        53.1   

Available-for-sale financial assets

    68,786        63,538        8.3        29,433        22,240        32.3   

Due from credit institutions (2)

    93,436        115,197        (18.9     49,609        63,415        (21.8

Intangible assets and property and equipment

    12,941        12,335        4.9        5,821        4,904        18.7   

Other assets

    128,090        129,395        (1.0     27,005        18,362        47.1   

Total assets/liabilities & shareholders’ equity

    1,193,976        1,137,897        4.9        492,122        463,731        6.1   

Customer deposits (2)

    625,401        609,325        2.6        252,781        260,719        (3.0

Marketable debt securities (2)

    140,920        123,405        14.2        39,869        40,280        (1.0

Subordinated debt (2)

    17,316        16,430        5.4        909        1,218        (25.3

Insurance liabilities

    717        10,453        (93.1     717        1,021        (29.7

Due to credit institutions (2)

    170,578        174,581        (2.3     81,429        64,213        26.8   

Other liabilities

    165,500        135,078        22.5        84,631        66,975        26.4   

Shareholders’ equity (3)

    73,543        68,625        7.2        31,786        29,305        8.5   

Other customer funds under management

    135,179        143,192        (5.6     46,320        51,296        (9.7

Mutual funds

    105,914        112,817        (6.1     31,160        35,025        (11.0

Pension funds

    9,765        10,916        (10.5     9,765        10,916        (10.5

Managed portfolios

    19,500        18,626        4.7        5,395        5,354        0.8   

Savings-insurance policies

    —          833        (100.0     —          —          —     

Customer funds under management

    918,817        892,352        3.0        339,879        353,512        (3.9

 

(1).-

Including dividends, income from equity-accounted method and other operating income/expenses

(2).-

Including all on-balance sheet balances for this item

(3).-

Not including profit of the year

 

26

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Income statement and balance sheet of principal segments

EUR Million

 

United Kingdom     Latin America     United States      
Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)      
                  Income statement
  959        1,152        (16.8     4,650        3,950        17.7        430        441        (2.6   Net interest income
  292        234        25.2        1,327        1,256        5.6        95        93        2.3      Net fees
  111        157        (29.1     247        309        (20.0     58        37        57.2     

Gains (losses) on financial

transactions    

  8        6        39.2        (49     (21     130.6        81        140        (42.5   Other operating income (1)
  1,371        1,549        (11.5     6,175        5,494        12.4        663        711        (6.7   Gross income
  (673)        (661     1.8        (2,298     (2,127     8.1        (276     (240     15.0      Operating expenses
  (579)        (570     1.6        (2,090     (1,913     9.3        (246     (216     14.2     

General administrative expenses        

  (360)        (347     3.5        (1,184     (1,092     8.4        (137     (120     14.3      Personnel                
  (220)        (223     (1.3     (907     (821     10.4        (109     (96     14.0     

Other general                 

administrative expenses                    

  (94)        (91     3.1        (208     (214     (2.8     (30     (24     22.5      Depreciation and amortisation        
  698        888        (21.4     3,876        3,367        15.1        387        471        (17.8   Net operating income
  (215)        (152     41.7        (1,742     (1,251     39.2        (71     (98     (27.6   Net loan-loss provisions
  (67)        (45     47.5        (248     (223     11.2        (19     (27     (28.4   Other income
  416        691        (39.8     1,887        1,893        (0.3     297        346        (14.2   Profit before taxes
  (110)        (185     (40.7     (430     (429     0.3        (57     (57     1.0      Tax on profit
  306        505        (39.5     1,457        1,465        (0.5     240        290        (17.2   Profit from continuing operations
  —          —          —          —          —          —          —          —          —       

Net profit from discontinued

operations    

  306        505        (39.5     1,457        1,465        (0.5     240        290        (17.2   Consolidated profit
  0        (0     —          239        195        22.7        —          —          —        Minority interests
  306        505        (39.5     1,218        1,270        (4.1     240        290        (17.2   Attributable profit to the Group
                                                      Pro memoria
Million pound sterling     Million dollars     Million dollars      
  1,144        1,322        (13.5     8,092        7,511        7.7        869        972        (10.6   Gross income
  582        758        (23.2     5,080        4,603        10.4        507        644        (21.2   Net operating income
  255        431        (40.8     1,596        1,736        (8.0     314        396        (20.6   Attributable profit to the Group
                  Balance sheet
  261,070        232,186        12.4        141,411        124,691        13.4        40,030        35,850        11.7      Customer loans (2)
  36,225        40,965        (11.6     31,489        28,754        9.5        245        175        39.8      Trading portfolio (w/o loans)
  996        36        —          24,935        31,659        (21.2     13,421        9,603        39.8      Available-for-sale financial assets
  17,748        29,975        (40.8     25,567        21,288        20.1        512        518        (1.2   Due from credit institutions (2)
  2,286        2,255        1.4        4,355        4,669        (6.7     479        507        (5.6  

Intangible assets and property and

equipment    

  47,962        47,557        0.9        47,729        58,413        (18.3     5,393        5,063        6.5      Other assets
  366,287        352,975        3.8        275,486        269,474        2.2        60,081        51,717        16.2     

Total assets/liabilities &

shareholders’ equity    

  191,727        180,382        6.3        143,065        135,034        5.9        37,828        33,190        14.0      Customer deposits (2)
  74,322        62,944        18.1        26,167        18,681        40.1        563        1,499        (62.5   Marketable debt securities (2)
  8,086        7,352        10.0        6,100        5,586        9.2        2,220        2,274        (2.4   Subordinated debt (2)
  —          1        (100.0     —          9,431        (100.0     —          —          —        Insurance liabilities
  42,165        63,159        (33.2     34,622        38,597        (10.3     12,363        8,611        43.6      Due to credit institutions (2)
  37,011        26,458        39.9        41,855        39,616        5.7        2,003        2,028        (1.2   Other liabilities
  12,976        12,679        2.3        23,677        22,527        5.1        5,105        4,114        24.1      Shareholders’ equity (3)
  15,674        14,204        10.3        73,185        77,673        (5.8     1        19        (97.3  

Other customer funds under

management    

  15,674        14,204        10.3        59,080        63,588        (7.1     —          —          —        Mutual funds        
  —          —          —          —          —          —          —          —          —        Pension funds        
  —          —          —          14,105        13,252        6.4        1        19        (97.3   Managed portfolios        
  —          —          —          —          833        (100.0     —          —          —        Savings-insurance policies        
  289,809        264,882        9.4        248,518        236,975        4.9        40,611        36,983        9.8     

Customer funds under

management    

(1).- Including dividends, income from equity-accounted method and other operating income/expenses

(2).- Including all on-balance sheet balances for this item

(3).- Not including profit of the year

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   27


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Continental Europe. Main units

EUR Million

 

    Santander Branch Network     Banesto     Portugal  
    Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)  

Income statement

                 

Net interest income

    837        780        7.2        353        321        9.7        147        165        (10.6

Net fees

    279        292        (4.4     153        155        (1.7     90        101        (10.5

Gains (losses) on financial transactions

    35        37        (4.5     87        41        110.7        70        8        795.0   

Other operating income (1)

    (33     (10     235.6        (3     9        —          10        8        24.0   

Gross income

    1,118        1,100        1.7        589        527        11.7        318        282        12.8   

Operating expenses

    (512     (512     0.0        (254     (254     (0.1     (126     (131     (3.8

General administrative expenses

    (475     (474     0.1        (222     (223     (0.5     (108     (114     (5.4

Personnel

    (305     (310     (1.8     (162     (163     (0.7     (75     (79     (4.4

Other general administrative expenses

    (170     (164     3.6        (60     (60     (0.1     (32     (35     (7.8

Depreciation and amortisation

    (37     (38     (1.1     (32     (31     3.0        (18     (17     6.8   

Net operating income

    606        588        3.2        335        273        22.6        192        151        27.3   

Net loan-loss provisions

    (483     (184     162.0        (206     (102     102.7        (131     (32     304.2   

Other income

    (21     (27     (23.4     (90     (16     450.8        (16     (9     81.9   

Profit before taxes

    102        376        (72.8     39        155        (74.8     45        110        (59.1

Tax on profit

    (28     (101     (72.8     7        (38     —          (12     (19     (35.3

Profit from continuing operations

    75        274        (72.8     46        117        (60.8     33        91        (64.1

Net profit from discontinued operations

    —          —          —          —          —          —          —          —          —     

Consolidated profit

    75        274        (72.8     46        117        (60.8     33        91        (64.1

Minority interests

    0        0        (66.6     5        16        (71.2     (0     0        —     

Attributable profit to the Group

    75        274        (72.8     41        101        (59.1     33        90        (63.8

Balance sheet

                 

Customer loans (2)

    100,487        110,051        (8.7     67,196        73,326        (8.4     27,808        29,744        (6.5

Trading portfolio (w/o loans)

    —          —          —          8,071        5,979        35.0        1,672        1,411        18.5   

Available-for-sale financial assets

    —          —          —          10,325        9,328        10.7        5,295        4,584        15.5   

Due from credit institutions (2)

    59        214        (72.4     11,064        16,597        (33.3     2,200        3,932        (44.1

Intangible assets and property and equipment

    1,201        1,201        —          1,379        1,360        1.4        439        472        (7.1

Other assets

    1,657        411        302.8        11,116        5,834        90.5        6,580        6,656        (1.1

Total assets/liabilities & shareholders’ equity

    103,404        111,878        (7.6     109,152        112,426        (2.9     43,993        46,798        (6.0

Customer deposits (2)

    80,355        84,656        (5.1     53,875        59,660        (9.7     23,321        21,929        6.3   

Marketable debt securities (2)

    6,344        —          —          22,947        27,135        (15.4     4,734        7,122        (33.5

Subordinated debt (2)

    —          —          —          735        787        (6.6     (0     0        —     

Insurance liabilities

    —          —          —          —          —          —          70        83        (15.5

Due to credit institutions (2)

    650        323        101.4        15,926        10,822        47.2        13,197        14,208        (7.1

Other liabilities

    9,597        20,002        (52.0     10,875        9,305        16.9        100        843        (88.1

Shareholders’ equity (3)

    6,459        6,897        (6.4     4,793        4,717        1.6        2,571        2,613        (1.6

Other customer funds under management

    23,838        25,478        (6.4     8,308        9,303        (10.7     2,654        4,500        (41.0

Mutual funds

    15,819        18,558        (14.8     4,357        5,279        (17.5     1,809        3,051        (40.7

Pension funds

    6,049        6,225        (2.8     1,240        1,344        (7.8     782        1,314        (40.5

Managed portfolios

    —          —          —          110        114        (3.4     63        135        (53.2

Savings-insurance policies

    1,970        696        183.2        2,601        2,566        1.4        —          —          —     

Customer funds under management

    110,537        110,134        0.4        85,865        96,884        (11.4     30,708        33,551        (8.5

 

(1).-

Including dividends, income from equity-accounted method and other operating income/expenses

(2).-

Including all on-balance sheet balances for this item

(3).-

Not including profit of the year

 

28

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Continental Europe. Main units

EUR Million

 

Santander Consumer Finance     Retail Poland (BZ WBK)       
Q1’12     Q1’11     Var (%)     Q1’12                   
             Income statement
  611        582        4.9        129                                               Net interest income
  204        210        (2.8     78           Net fees
  (5)        (1     331.8        10           Gains (losses) on financial transactions
  0        2        (90.8     1           Other operating income (1)
  810        793        2.1        218           Gross income
  (337)        (308     9.6        (105        Operating expenses
  (302)        (279     8.4        (96        General administrative expenses        
  (149)        (137     8.8        (57        Personnel                
  (153)        (141     7.9        (39        Other general administrative expenses                
  (35)        (29     21.5        (9        Depreciation and amortisation        
  473        486        (2.7     114           Net operating income
  (176)        (192     (8.4     (20        Net loan-loss provisions
  (18)        (37     (50.7     2           Other income
  278        256        8.6        96           Profit before taxes
  (62)        (60     3.5        (21        Tax on profit
  216        196        10.1        75           Profit from continuing operations
  1        (6     —          —             Net profit from discontinued operations
  217        190        13.9        75           Consolidated profit
  10        7        45.8        2           Minority interests
  206        183        12.7        73           Attributable profit to the Group
             Balance sheet
  56,306        56,524        (0.4     9,106           Customer loans (2)
  1,186        968        22.5        769           Trading portfolio (w/o loans)
  1,174        317        270.8        2,832           Available-for-sale financial assets
  9,149        6,927        32.1        368           Due from credit institutions (2)
  842        808        4.2        187           Intangible assets and property and equipment
  2,792        2,234        25.0        1,100           Other assets
  71,449        67,777        5.4        14,363           Total assets/liabilities & shareholders’ equity
  33,180        31,618        4.9        10,028           Customer deposits (2)
  5,908        6,020        (1.9     —             Marketable debt securities (2)
  68        425        (84.0     100           Subordinated debt (2)
  —          —          —          —             Insurance liabilities
  17,210        17,010        1.2        1,690           Due to credit institutions (2)
  3,909        3,228        21.1        677           Other liabilities
  11,173        9,476        17.9        1,867           Shareholders’ equity (3)
  6        7        (9.4     2,248           Other customer funds under management
  2        3        (15.0     2,059           Mutual funds        
  4        4        (6.0     —             Pension funds        
  —          —          —          188           Managed portfolios        
  —          —          —          —             Savings-insurance policies        
  39,163        38,070        2.9        12,376           Customer funds under management

(1).- Including dividends, income from equity-accounted method and other operating income/expenses

(2).- Including all on-balance sheet balances for this item

(3).- Not including profit of the year

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   29


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Continental Europe

 

LOGO

Basic revenues increased 7.9% year-on-year due to the recovery in net interest income and consolidation of Bank Zachodni WBK.

 

LOGO

Flat expenses on a like-for-like basis (-0.8%).

 

LOGO

Net operating income increased 10.6% year-on-year and 28.3% over the fourth quarter of 2011.

 

LOGO

Attributable profit hit by the release of generic provisions in the first quarter of 2011 (EUR 396 million). Better trend over the fourth quarter.

 

LOGO

Growth strategy: preference for liquidity against a background of low demand for loans.

Continental Europe includes all activities carried out in this geographic area: retail banking, global wholesale banking, asset management and insurance.

Attributable profit was EUR 584 million, 33.5% less than in the first quarter of 2011, when almost EUR 400 million of generic provisions were released. Excluding this, net operating income increased 10.6%.

The results reflect the perimeter effect of incorporating Bank Zachodni WBK in Poland and SEB’s branches in Germany. Overall, the positive impact was around 8 percentage points in attributable profit.

Attributable profit over the fourth quarter, (where there was no perimeter effect) was spurred by gross income (+12.9%), expenses (-2.1%) and provisions (-1.8%) and almost doubled, reversing the downward trend of 2011.

Strategy

In a still weak environment and with low interest rates, the Group’s strategy continued to focus on the priorities outlined in 2011 and aimed at:

 

 

defending spreads on loans (those on new ones are improving) and on deposits;

 

 

control of expenses;

 

 

and active risk management;

 

 

in volumes preference was given to liquidity and deposits in a context of low demand for loans.

Activity

Lending was 1% lower year-on-year because of the lower demand in Spain and Portugal which offset the incorporation of Bank Zachodni WBK.

Customer deposits, including retail commercial paper remained virtually unchanged (+0.2%) year-on-year, as the incorporation of Bank Zachodni WBK and Portugal’s good evolution, offsetting the lower balances in Spain, affected by the strategy followed for the renewal of maturities of deposits captured in the 2010 campaign, mainly in the second quarter of 2011. Mutual funds and pension funds declined 11% in the last twelve months.

Total deposits increased 3% to EUR 7,493 million over the fourth quarter of 2011 and mutual funds and pension funds increased 1% after two quarters of significant falls.

Results

Net interest income rose 12.4% year-on-year with all units performing well, except for Portugal, and partly favoured by the incorporation of SEB in Germany and the entry of Bank Zachodni WBK. Excluding them, the increase was 5.2%.

Basic revenues grew 7.9% year-on-year and gross income 9.5%, driven by fee income, which was 2.0% lower and income from insurance activity. All commercial units increased.

Operating expenses were higher year-on-year, due to the perimeter effect, as on a like-for-like basis they declined 0.8%. Retail networks in Spain repeated expenses and Portugal’s were 3.8% less.

Net operating income was 10.6% higher (+4.6% on a like-for-like basis) and 28.3% more than the fourth quarter of 2011, driven by solid gross income.

Provisions for loan losses in the first quarter of 2012 more than doubled those of the same period of 2011, when EUR 396 million of generic provisions were used. Excluding this impact, that is, taking into account only specific provisions, the increase was 19.1%.

Attributable profit was EUR 584 million, 33.5% lower year-on-year due to the non-release of generic provisions. On the other hand, it compares very well with the EUR 266 million recorded in the fourth quarter of 2011, with all units improving.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11

 

EUR Million

 

EUR Million

(*)    Including retail commercial paper

 

+10.6%

 

-33.5% Q1’12-Q1’11

LOGO   LOGO   LOGO

 

30

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Santander Branch Network

 

LOGO

Improved underlying results.

 

   

Gross income was 1.7% higher than the first quarter of 2011 and 6.6% over the fourth quarter.

 

   

Operating expenses remained flat.

 

   

Net operating income rose 3.2% (+12.8% over the fourth quarter).

 

LOGO

Attributable profit year-on-year affected by the non-release of generic provisions (EUR 258 million in the first quarter of 2011).

 

LOGO

Scant demand for loans and a strategy in deposits which combines cost containment and volume increase.

In a still complicated environment, the Santander Branch Network posted an attributable profit of EUR 75 million, 72.8% less than in the first quarter of 2011 when EUR 258 million of generic provisions were released. Excluding this impact, net operating income increased 3.2%.

Gross income was 6.6% more than in the fourth quarter of 2011, expenses remained flat and net operating income was 12.8% higher. Provisions were slightly higher (+3.5%) and, as a result, attributable profit rose 28.0% and broke the downward trend of previous quarters.

Strategy

The Santander Branch Network maintained its priorities: management of NPLs and quality in risk admission; focus on customer funds; specific campaign to offer support to SMEs and exports; management of prices; austerity in costs and improved efficiency. All designed to increase the capturing of funds and customer linkage.

Activity

Customer funds continued the positive trend begun in the second half of 2011. In March they amounted to EUR 110,537 million, 3% higher than at the end of 2011 and 5% more than June, once the period for renewing balances captured in the 2010 campaign was over. The market share of total funds rose by 0.90 p.p. in the last two years and 1.30 p.p. in deposits.

Together with the capturing of funds, Santander is maintaining its policy of tending to the financing needs of its customers and boost economic sectors. The branch network is the leader in ICO credits (9,000 granted for a total of EUR 650 million and a market share of 17%).

Also noteworthy are the achievements obtained in the Crédito Compromiso and Plan Exporta programmes launched in 2011 and increased in 2012. The first provides access to loans for the self-employed, shops, professionals and SMEs (more than 6,000 loans granted for a limit of EUR 350 million), while the other one is focused on capturing and linking customers involved in foreign trade (more than 7,000 clients).

Furthermore, in April, the Santander Brach Network made available to SMEs EUR 4,000 million of loans, half of which is to back the activity of companies in Spain, via a new product (Crédito Activación) and the rest to international business, in addition to the Plan Exporta.

Results

Net interest income rose 7.2% year-on-year to EUR 837 million, due to the improved spreads on deposits and to a lesser extent on loans.

Fee income and trading gains dropped 4.4%, conditioned by the outflows of mutual funds in 2011. Fee income from the purchase and sale of securities, means of payment and credit lines available increased. The fall in the rest of revenues was due to the higher cost of the contribution to the Deposit Guarantee Fund (from 0.6‰ to 2‰ of eligible funds). This increased the charge from EUR 12 million in the first quarter of 2011 to EUR 36 million.

Gross income was EUR 1,118 million, 1.7% more than in the first quarter of 2011. Operating expenses remained flat, net operating income rose 3.2% to EUR 606 million and the efficiency ratio was 45.8%.

Net loan-loss provisions were 162.0% higher than in the first quarter of 2011, when generic provisions were released.

The NPL ratio was 8.90% in the retail network (excluding wholesale activity) and 6.33% at the parent bank, below the sector. Coverage was 40% and 41%, respectively.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11

 

EUR Million

 

EUR Million

(*)    Including retail commercial paper

 

+3.2%

 

-72.8% Q1’12-Q1’11

LOGO   LOGO   LOGO

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   31


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Banesto

 

LOGO

Better underlying trend of the income statement:

 

   

Gross income was 11.7% higher than in the first quarter of 2011.

 

   

Operating expenses were 0.1% lower.

 

   

Net operating income increased 22.6%.

 

LOGO

The year-on-year comparison for profits is affected by the non-release of generic provisions (EUR 91 million in the first quarter of 2011),

 

LOGO

NPL ratios still better than the sector’s.

 

LOGO

Lending reflected the lower demand and funds the focus on profitability.

Banesto generated attributable profit of EUR 41 million in the first quarter, 59.1% lower than in the same period of 2011. This fall was due to a release of generic provisions in 2011, unlike in 2012. Excluding this, net operating income was 22.6% higher year-on-year and 42.3% more than the fourth quarter.

Strategy

In the first quarter of 2012 the economy remained weak. In this environment, Banesto focused on strengthening the balance sheet, optimising liquidity and improving profitability, while strictly controlling risk and enhancing efficiency.

Activity

Managed customer funds amounted to EUR 85,865 million at the end of March, 11% less than a year earlier. This decline was due to the bank’s policy of partly renewing deposits captured in the special campaign launched in 2010 and which matured in the second quarter of 2011.

The weak demand for loans continued to affect lending whose volume amounted to EUR 67,196 million at the end of March, 8% less than a year earlier and in line with the downward trend shown by the sector.

 

Growth in NPLs was less than in previous quarters, as it declined over the fourth quarter, as against a rise of EUR 402 million in 2011. This, combined with the fall in lending, left the NPL ratio at 5.07%. Coverage was 51%.

Results

Net interest income was EUR 353 million, 9.7% more year-on-year. The impact of lower activity on business was offset by an improvement in the return on assets and balance sheet management that reduced the cost of funding.

Net fee income was EUR 153 million, 1.7% less than in the first quarter of 2011. That from services amounted to EUR 137 million (+1.4% y-o-y). The customer management and linkage policy is enabling revenues to rise thanks to an increase in transactions.

Gains on financial transactions were EUR 87 million (EUR 41 million in the first quarter of 2011). Other operating results reflect the rise in the contribution to the Deposit Guarantee Fund.

Gross income was EUR 589 million in the first quarter, 11.7% more year-on-year after a change of trend with regard to the fourth and third quarters of 2011. It was 22.9% higher than the fourth quarter.

Banesto continued to keep a tight rein on expenses (-0.1% y-o-y to EUR 254 million). The efficiency ratio, which in 2011 was the best among Spanish banks, was 43.1% at the end of March (+5.1 p.p. better than in the first quarter of 2011).

Net operating income was EUR 335 million (+22.6% y-o-y and +42.3% over the fourth quarter).

Loan-loss provisions were EUR 206 million (EUR 102 million in the first quarter of 2011). The 2011 figure included a EUR 91 million release of generic provisions.

Profit before tax was EUR 39 million, lower than that in the first quarter of 2011 mainly due to the non-release of generic provisions but a change of trend over the fourth quarter. Attributable profit after taxes and minority interests was EUR 41 million.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11

 

EUR Million

 

EUR Million

(*)    Including retail commercial paper

 

+22.6%

 

-59.1% Q1’12-Q1’11

LOGO   LOGO   LOGO

 

32

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Portugal

 

LOGO

Year-on-year comparisons are affected by the large fall in business because of the policy of adjustments:

 

   

Basic revenues dropped 9.8% due to deleveraging and the strong competition for liquidity.

 

   

Prudent management of expenses (-3.8%).

 

   

Higher trading gains due to tender offer, which strengthened provisions.

 

LOGO

Further fall in lending and rise in deposits, improving the loan-to-deposit ratio to 119%.

Santander Totta’s attributable profit was EUR 33 million, 64% lower year-on-year, because of the reduction in basic revenues, the result of the lower demand for solvent loans and the rise in the cost of deposits, and larger provisions.

Comparisons with the fourth quarter of 2011 are better as basic revenues are higher, costs improved and provisions are flat. As a result profit before tax doubled.

Environment

The economy shrank in 2011 and this trend continued in the first quarter of 2012, particularly in domestic demand, because of the impact of high unemployment, the rise in VAT on some goods and services and restrictions in global markets.

The rise in credit spreads, more restrictive lending and higher energy costs caused investment to fall, particularly in the construction sector.

The assessment of the Economic and Financial Assistance Programme by the IMF, ECB and the EU was positive as it said Portugal was making progress in correcting its macroeconomic imbalances, although some risks remained high.

Activity

Santander Totta continued its policy, focusing on capturing deposits. This improved the commercial gap and the structure of the balance sheet.

Deposits amounted to EUR 23,321 million, 6% more than in March 2011. Lending dropped 6% to EUR 27,808 million (SMEs: -15%; companiues: -10%; individuals: -4%). The evolution of deposits and lending further improved the loan-to-deposit ratio to 119% at the end of March.

Despite the environment, the bank’s liquidity remains comfortable, as a result of the gradual reduction in the commercial gap, the capacity to generate profits and the pool of assets available, if necessary, to finance itself in the repo market or the ECB.

Results

Net interest income of EUR 147 million was 10.6% lower than in the first quarter of 2011, due to the reduction in lending and the higher funding cost, because of increased competition in capturing deposits.

Fee income dropped 10.5% to EUR 90 million, due to reduced lending, asset management and risk insurance. On the other hand, those from means of payment and savings insurance increased.

Trading gains plus other operating income increased from EUR 16 million to EUR 80 million, due to the repurchase of securities. Gross income was 12.8% more year-on-year at EUR 318 million.

Compared to the fourth quarter of 2011, gross income was 42.3% higher thanks to the 8.7% rise in net interest income and 20.4% in fee income.

Tight expenses remained a key element. They were 3.8% less than in the first quarter of 2011. Net operating income was EUR 192 million, which even after eliminating the trading gains shows a clear improvement in the trend of previous quarters.

Loan-loss provisions were EUR 131 million (EUR 32 million in the first quarter of 2011), reflecting, on the one hand, the rise in NPLs and, on the other, the strengthening with the results obtained from trading gains. The NPL ratio was 1.56 p.p. higher at 4.59% and coverage was 4 p.p. lower at 58%. In comparable terms with the sector, in local criteria, Santander Totta’s ratio was significantly lower than the system’s.

Profit before tax was EUR 45 million, 59.1% less year-on-year but 107.8% more than in the fourth quarter of 2011.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11

 

EUR Million

 

EUR Million

 

+27.3%

 

-63.8% Q1’12-Q1’11

LOGO   LOGO   LOGO

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   33


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Santander Consumer Finance

 

LOGO

The improvement in gross income, control of expenses and lower provisions resulted in a 12.7% increase in attributable profit year-on-year.

 

LOGO

Active management of prices with stable volumes and notable growth in new lending in Germany (+14%) and the Nordic countries (+8% in local currency).

 

LOGO

Further improvement in credit quality in the first quarter (lower NPLs and higher coverage).

The attributable profit of Santander Consumer Finance in Continental Europe was EUR 206 million, 12.7% more than in the first quarter of 2011. Good quarterly performance, which puts the first quarter of 2012 above any quarter of 2011.

Strategy

Santander Consumer Finance (SCF) continued to strengthen the pillars of its business model: diversification of the portfolio, leadership in core markets, efficiency, risk control and recoveries, as well as a single pan-European IT platform. The focus was on:

 

 

Organic growth and cross-selling, backed by brand agreements, greater penetration in the used car segment and a rise in new car sales in Central European and Nordic countries.

 

 

Further development of retail banking in Germany via Santander Retail, strengthening the capturing and linking of customers in order to convert the unit into a universal bank.

 

 

Consolidating SCF Poland.

Activity

Gross lending amounted to EUR 58,891 million, 1% less year-on-year because of the growth in Nordic countries (+12%) and in Germany (+1%) which offset the reductions in Portugal (-15%), Spain (-11%), and Italy (-7%).

New lending amounted to EUR 5,485 million (+6% y-o-y). All segments increased, particularly the financing of used (+13%) and new cars (+3%), the latter well above the EU average (-8%). Cards advanced 4% and direct credit and financing of durable goods 7% combined.

Of note in lending growth was Germany (+14%), the Nordic countries (+8% in local currency) and Spain (+4%) and declined 19% in Italy and 35% in Portugal, hit in both cases by the sharp fall in new car sales.

Customer deposits increased 5% to EUR 33,180 million, spurred by Germany and Poland. Wholesale funding also went well, with strong demand for retail commercial paper that almost doubled the balance outstanding at the end of 2011.

The appetite for securitisation of assets from Germany and the Nordic countries was strong and will result in new placements in the market in the second quarter (over EUR 1,000 million in the pipeline).

Customer deposits and medium- and long-term issues, including securitisations, represented 69% of net loans at the end of March.

Results

Gross income increased 2.1% year-on-year, backed by net interest income (+4.9%), due to the rise in spreads on a slightly higher average portfolio that offset the higher cost of funding.

Higher expenses (+9.6% y-o-y) reflect the incorporation of Santander Retail in Germany and its restructuring costs. The efficiency ratio was 41.6% compared to 38.8% in the first quarter of 2011.

Loan-loss provisions (-8.4%) reflect the improvement in credit quality: NPL ratio of 4.05% (March 2011: 4.99%) and coverage of 108% (March 2011: 98%).

Profit was 12.7% higher year-on-year because of the evolution of gross income, costs and provisions.

Germany’s attributable profit was 5.8% higher year-on-year, due to stable net interest income and lower provisions. Poland increased 48.0% (in local currency) because of lower provisions.

In the rest of the units, the underlying performance was positive, in Spain and the Nordic countries although not reflected in profits because of lower provisions in 2011 from one-off events (sale of portfolios and incorporation of portfolios already provisioned). Portugal and Italy were weak, due to lower revenues and higher provisioning needs.

 

 

New lending by countries

  

Attributable profit

% o/ total. Q1’12

  

EUR Million

LOGO   

+12.7% Q1’12-Q1’11

  

 

LOGO

 

34

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Poland (BZ WBK)

 

LOGO

Consolidation as of April 1, 2011.

 

LOGO

Attributable profit registered EUR 73 million, 20.7% more than in the fourth quarter of 2011.

 

LOGO

In local criteria, all gross and net income lines and profits registered double digit growth year-on-year.

 

LOGO

Solid funding structure: loan-to-deposit ratio of 91%.

 

LOGO

Strong growth potential due to the favourable macroeconomic environment, solid market presence and management capacity.

 

LOGO

Agreement to merge Bank Zachodni WBK and Kredyt Bank.

Description of the bank and its environment

Banco Santander completed its acquisition of 95.67% of BZ WBK on April 1, 2011 after launching its takeover bid in the first quarter for full control, together with 50% stake of BZ WBK Asset Management still in the hands of AIB. Group BZ WBK is now integrated into Grupo Santander.

Subsequently, in February 2012, Banco Santander, S.A. and KBC Bank (‘BC’) reached an investment agreement to combine their Polish banking subsidiaries, Bank Zachodni WBK, S.A. and Kredyt Bank S.A.

This acquisition enables Grupo Santander to increase its presence in Poland, one of its core markets. The new institution will have 899 branches, 3.5 million individual customers and EUR 37,000 million of loans and customer funds, making it the third largest bank in the country by branches, business volumes, revenues and profits with market shares of 12.9% in branches, 9.6% in deposits and 8.0% in loans.

These operations enable Grupo Santander to develop its activity in Poland, a country with considerable potential for banking business: 38.5 million citizens and a stable economy (the only EU country not to have suffered a recession in the last decade), which needs to complete its infrastructure and has a low level of “bankarisation” (lending represents around 50% of GDP).

The new bank’s business model will remain that of commercial banking, including retail clients, SMEs and companies, complemented by a notable presence in asset management businesses, brokerage of securities and leasing. All of this fits perfectly with Banco Santander’s commercial banking model and will strengthen results significantly in the coming years, both via business and synergies.

Economic environment

The economy remained solid during 2011 (+4.3% growth), fuelled by domestic demand and growth in consumption and the recovery in investment. GDP increased by close to 3.5% in the first quarter of 2012. The zloty appreciated against the euro to PLN 4.15/EUR 1.

Activity

Bank Zachodni WBK had EUR 9,106 million of net loans in March and EUR 10,028 million of customer deposits. In local currency and criteria, net lending grew 15% year-on-year, backed by all segments, while deposits increased 6%. The loan-to-deposit ratio at the end of March was 91%.

Results

Attributable profit was EUR 73 million, backed by solid gross income of EUR 218 million, an efficiency ratio below 48% and loan-loss provisions of EUR 20 million which only absorbed 18% of net operating income. The results compared well with those of the fourth quarter of 2011, as gross income, net operating income and profits were all higher (the latter one grew by more than 10%).

Compared to the first quarter of 2011 and in local criteria, profit was 16.3% higher. Gross income rose 6.4%, due to the good performance of net interest income (+12.6%), thanks to greater lending in all segments and better spreads on deposits. Fee income dropped 2.5% because of the decline in income from asset management and brokerage of securities, offset by the strong growth in income from loans and insurance.

Operating expenses increased 3.0% year-on-year, due to greater spending in marketing. Net operating income was 9.7% higher.

Loan-loss provisions were 14.8% lower than in the first quarter of 2011, while the NPL ratio improved to 4.74% from 6.43% in June (the first quarter after integration into the Group).

Attributable profit

EUR Million

 

LOGO

 

 

Rest of Continental Europe

The rest of businesses (GBM, asset management, insurance and Banif) generated attributable profit of EUR 156 million, 32.0% lower than in the first quarter of 2011, when there was a release of provisions, unlike in 2012.

Sharp improvement in net interest income, gross income, net operating income and profit over to the other three quarters of 2011.

 

The reason for this was Global Wholesale Banking, which accounts for almost all the profit of the businesses included here. Its attributable profit was 28.9% lower than in the first quarter of 2011, mainly because of release of provisions. Gross income was well above that of the fourth quarter and costs were held, almost doubling profit.

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   35


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

United Kingdom (changes in local currency)

 

LOGO

Attributable profit of £255 million:

 

   

Lower revenues (-13.5%) largely due to the impact of historically low interest rates and the higher funding costs.

 

   

Operating expenses were 0.5% lower after absorbing the investment in the UK business.

 

   

Loan-loss provisions were 38.5% higher, largely due to the corporate portfolio.

 

LOGO

Moderate increase in lending (2%) and decrease in deposits (3%), after reducing high cost balances (both in local criteria).

 

LOGO

Better funding structure: £5,669 million of medium-term funding issues, while reducing short-term funding.

Santander UK posted attributable profit of £255 million, 40.8% less than in 2011. All of this was in the context of weak economic growth, a low interest rate environment and sharp increase in the cost of funding.

Environment

GDP grew weakly in 2011 (+0.7%) and on downward path. Growth in the fourth quarter was 0.3% negative. Inflation (4.5% on average for the year) increased at a faster pace than the average growth in wages and this reduction in real terms is impacting consumers and eroding confidence indices. Inflation started to fall and at the end of March was 3.5%, down from 5.2% in September 2011.

In this environment, of continued uncertainty, the Bank of England held the base rate at 0.5% for the eighth straight quarter and boosted its quantitative easing programme by £50,000 million to £325,000 million.

Strategy

Santander UK maintained its 14% market share in residential mortgages and 10% in retail deposits. It also continued to widen its range of products and services, while growth in lending to SMEs remained one of its priorities.

Santander UK’s goal is to become a full service, diversified, customer-centred commercial banking franchise. The strategy has three basic principles: focus more on the customer than on the product, business diversification towards a more balanced mix and continued operational efficiency consistent with a good level of customer service.

Our proprietary market-leading IT platform is integral to meeting these goals. We plan to invest £490 million over the next three years to further improve its functionality and capabilities, at which point the ability to differentiate and grow the businesses faster will be in place.

Santander UK has launched a number of innovative and value-added products to boost the UK business. The market leading ‘123’ credit card and current account range has been well received by the press and the market and is designed to build closer primary customer relationships.

Activity

Santander UK focuses its activity and balance sheet on the United Kingdom. More than 80% of customer loans are mortgages for homes in the UK. The portfolio of mortgages is of a high quality, with no exposure to self-certified or subprime mortgages and buy-to-let loans are less than 1%.

The loan-to-deposit ratio was 136% at the end of March 2012, a slight deterioration compared to March 2011, largely due to the outflow of rate-sensitive deposits in the second half of 2011 and into 2012.

The following information on activity is in local criteria. Customer loans amounted to £205,443 million, 2% higher than in March 2011. This was driven by the strong increase in loans to SMEs (+21%), offsetting the reduction in unsecured personal loans. The stock of residential mortgages was 1% more.

Gross mortgage lending amounted to £5,620 million, £1,437 million higher than in 2011. The market share in the first quarter was 17.6%, well above our stock share. New business spreads improved, while the new business loan-to-value (LTV) was 64% and the indexed stock LTV was steady at 52%.

Loans to SMEs via the network of regional business centres kept up their strong pace of growth and amounted to £11,123 million at the end of March 2012, 21% higher than in the same period of 2011. Our market share was 4.5%, 0.8 p.p. better than at March 2011.

The balance of unsecured personal loans (UPLs) was 13% lower than in the same period of 2011 (down to £2,790 million). During 2011 and into 2012, this product was being selectively marketed to better risk-adjusted spreads to low risk customers. Gross lending increased 3% over the same period of 2011.

Santander UK continued to dispose of non-core assets. The portfolio ended the year at £5,714, a decline of 24% over March 2011 and 74% below December 2008.

 

 

36

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Retail deposits (£149,409 million) were 3% lower than in March 2011, due to the sluggish British market in capturing of deposits and at negative prices and spreads, combined with Santander UK’s policy of focusing on medium-term funding instead of expensive retail deposits.

This strategy was more than offset by medium-term funding issuance of £5,669 million in the first quarter of 2012 and a substantial reduction in short-term funding. The issuances cover a wide range of products at attractive rates within the market environment.

The opening of some 235,000 current accounts in the first quarter of 2012 continued to reflect the effort and the success in attracting quality customers and the launching of the ‘123’ account.

The latest phase of the ‘123’ marketing campaign was launched in March to promote new current accounts and credit cards, as part of a new strategy to develop better and more lasting relationships with customers. The new current account offers greater incentives to existing customers, who change their primary account to Santander, and the credit card cash-back offers reimbursements / rebates on purchases has helped to increase openings of credit cards to 175,000, 13% more than in the same period of 2011.

Results

Attributable profit for the quarter was £255 million.

Gross income declined from £1,322 million in the first quarter of 2011 to £1,144 million in the same period of 2012.

Net interest income was 18.6% lower, largely due to the negative impacts of the higher cost of funding and of sustained low interest rates on product spreads.

These impacts are partly offset by higher gross income in SMEs and companies reflected in growth in loans and deposits volumes and spreads on new loans. Spreads on mortgage loans are also improving, favoured by the customers’ preference for variable rate mortgages.

Net fee income was 22.4% higher, due to a new pricing structure for current accounts, launched in the second quarter of 2011 with overdraft interest charges replaced with a flat fee. Income from GBM was also higher.

Gains on financial transactions declined 30.6%, due to the impact of lower market activity.

Operating expenses were 0.5% lower, (4% lower in real terms) despite the continued investments in Corporate Banking and Markets. The efficiency ratio was 49.1%, an increase largely due to weaker revenue.

Loan-loss provisions were 38.5% higher, primarily due to the higher expected loss of the corporate portfolio, which increased its share over the total portfolio.

The NPL ratio was 1.82%, 2 b.p. lower than that of the fourth quarter of 2011. With the exception of mortgages, there was a better performance in all retail products, particularly unsecured personal loans. There was a slight deterioration in the corporate loans book.

The stock of residential properties in possession remained very low (0.06% of the total portfolio, in line with the first quarter of 2011). In general, our trend in retail mortgages was better than the sector’s, according to the Council of Mortgage Lenders (CML).

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11 (excluding FX)  

EUR Million

 

EUR Million

 

-21.4%

 

-39.5% Q1’12-Q1’11

 

 

(*)    Excluding exchange rate impact: -23.2%

 

(*)    Excluding exchange rate impact: -40.8%

LOGO   LOGO   LOGO

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   37


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Latin America (changes in local currency)

 

LOGO

Basic revenues increased 16.1% and were the main engine of the rise in profits.

 

LOGO

Net operating income was 16.5% higher than in the first quarter of 2011.

 

LOGO

Loan-loss provisions increased 40.9% because of higher lending and some worsening of NPLs.

 

LOGO

Dynamic activity in all countries. Lending grew 16% and deposits 12%.

Santander generated attributable profit of EUR 1,218 million in the first quarter of 2012, 3.0% less in local currency. On a like-for-like basis profit was 4.0% higher thanks to strong revenues (+17.5% in net operating income).

Gross income, net operating income and profit registered positive growth compared to the fourth quarter of 2011, (net operating income: +14.5%; profit before minority interests: +4.3%).

Economic environment

The main economies grew at a slower pace in the fourth quarter of 2011, reducing average growth for the region to close to 3% from 4% in previous quarters. This slowdown shows that Latin America has not been immune to the global crisis and it also reflects the region’s growing resistance to external shocks.

Monthly indicators suggest that economies touched bottom at the end of 2011 and began to pick up at the beginning of 2012, due to the stabilisation of global financial markets and also the region’s healthy balances to tackle the global downturn. The forecasts for 2012 envisage growth of around 3.6%, above that in the fourth quarter of 2011.

Inflation eased a little in the first three months of 2012, although it varies from country to country. In some, such as Peru and Uruguay inflation came down from high levels, while in Chile, Brazil and Mexico it is comfortably within the range of central banks’ targets.

The tone of monetary policy was still preventative and watchful of the risks from the international markets. Brazil and Chile cut their official interest rates (200 b.p., and 25 b.p. respectively), while Mexico, Uruguay and Peru remained stable.

The stabilization of global financial markets since the beginning of the year led to the appreciation of the region’s currencies against the dollar (4.8% on average since the end of 2011). Stock market indices also recovered, with rises of 13% on average in the first quarter of 2012 and 30% from the lows of the fourth quarter of 2011. Some central banks (Brazil, Colombia and Peru) began to intervene in the currency market to halt the strengthening of their currencies. This was good proof of the return of foreign capital to the region in recent months, after outflows during periods of greatest volatility in the financial markets. International reserves rose from $680 billion at the end of 2011 to $695 billion in February.

Despite the slower growth in exports, more so than in imports, and the higher trade deficit, the region still has a healthy external position. The current account deficit in 2012 is expected to be around 2% of GDP, lower than that estimated for inflows of foreign direct investment.

The evolution of public sector accounts is also good, as governments did not use fiscal stimulus policies in 2011 and just let the automatic stabilizers function. As the region has a sound fiscal position (deficit of less than 2.5% of GDP in 2011) the expected increase in the deficit in 2012 from the cyclical economic slowdown and the role of the automatic stabilizers should not be that significant.

The region’s banking systems, meanwhile, have high levels of solvency, liquidity and solid credit quality indicators. Moreover, the systems show no signs of deceleration.

In the countries where Santander operates (Brazil, Mexico, Chile, Argentina, Uruguay, Colombia, Peru and Puerto Rico), the banking systems’ business grew 16% year-on-year. Lending rose 18%, excluding the exchange rate impact. Loans to individuals increased at a faster pace (+20%) than in 2011 (credit cards: +22%; consumer credit: +16%; mortgages: +28%) and lending to companies and institutions also rose (+17%).

Savings continued to grow at double-digit rates (+15%), with demand deposits up 10% and time deposits 16%. In general terms, Brazil grew the fastest while Chile and Mexico’s activity was more moderate.

Because of their impact on business and on converting figures into euros, the evolution of interest rates and exchange rates is commented on:

 

 

Average short-term interest rates, based on the region’s average weighted rate, dropped between the first quarter of 2011 and the same period of 2012.

 

 

The evolution of results in euros is affected by average exchange rates. Latin American currencies depreciated against the dollar between the first quarter of 2011 and the same period of 2012, while the dollar, the reference currency in Latin America, appreciated 4% against the euro. In average terms, the Brazilian real fell against the euro from 2.28 to 2.32, the Mexican peso from 16.49 to 17.01 and the Chilean peso appreciated from 659 to 640.

Strategy

In these circumstances, the Bank’s strategy is centred on continuing to transform business in order to create better value for our customers, supported by closer and better quality relations and linkage. This transformation, from a commercial standpoint, is coming from higher value added products and services; from a financial one via growth in recurring and sustainable profits and from a productive one from better organisational, operational and technological models that deliver enhanced quality service.

At the end of March, Grupo Santander had 6,053 branches and points of attention in Latin America and 28,085 ATMs.

 

 

38

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Total customers amounted to 41.3 million. The strategy focuses on linkage more than capturing new clients. Grupo Santander has the largest financial franchise in the region (almost double that of its nearest competitor).

Activity and results

The main points in the first quarter are set out below. All year-on-year percentage changes exclude the exchange rate impact.

 

 

Lending in Latin America (excluding the balances in the New York branch, which are more volatile) increased 16% over March of 2011. Cards increased 24%, mortgages 21% and consumer credits 17%. Commercial credit (companies in all their range and institutions) grew 13%.

 

 

Savings (including letras financeiras in Brazil) increased 6% in the last twelve months. Deposits without repos were up 12%, while mutual funds declined 4%.

 

 

The Group’s market share in lending is 11.1%, 9.4% in deposits and 9.3% in overall business.

 

 

Net interest income rose 19.0% year-on-year, due to higher volumes and optimum management of spreads.

 

 

Fee income increased 6.8%, with those from the administration of accounts up 11.7%, cards: +9.9% and insurance +6.5%.

 

 

Basic revenues increased 16.1% and were 3.8% higher than in the fourth quarter of 2011.

 

 

Gains on financial transactions dropped 19.2% year-on-year.

 

 

Gross income rose 13.6% year-on-year and was 5.6% more than in the fourth quarter of 2011.

 

 

Operating expenses grew 9.1% over the first quarter of 2011, due to new business projects, the increase in customer transactions and renegotiating commissions and collective bargaining agreements. Costs were 6.5% lower than in the fourth quarter.

Main focuses in 2012

 

1

Emphasis on generating revenues in retail banking, via volumes and management of spreads.

 

2

Balanced growth of the balance sheet, focusing on deposits

 

3

Efficient use of capital and comfortable ratios in relation to regulatory requirements.

 

4

Prudent handling of business risks with integral management of early NPLs and their recovery.

 

5

Optimisation of the installed capacity and enhanced efficiency.

 

 

The efficiency ratio improved to 37.2% (-1.6 p.p. over the first quarter of 2011) and net operating income was 16.5% higher (+14.5% over the fourth quarter).

 

 

Loan-loss provisions increased 40.9%, as a result of a rigorous and prudent policy and increased lending. Coverage ratio remained around 92%.

 

 

Profit before tax grew 0.8% (4.2% over the fourth quarter) due to the larger loan-loss provisions.

 

 

Higher taxes and minority interests (sale of equity stakes in Brazil and Chile) left attributable profit 3.0% lower than in the first quarter of 2011.

 

 

Retail Banking’s profit on a like-for-like basis rose 2.0%, driven by gross income, which grew at rates of more than 15% year-on-year. Global Wholesale Banking’s profit increased 8.4%.

 

 

Activity*   Net operating income   Attributable profit
% var. Mar’12-Mar’11 (excluding FX)   EUR Million   EUR Million

(*)    w/o New York branch

 

+15.1%

 

-4.1% Q1’12-Q1’11

(**)  w/o CTAs, Including letras financeiras

 

 

(*)    Excluding exchange rate impact: +16.5%

 

(*)    Excluding exchange rate impact: -3.0%

LOGO   LOGO   LOGO

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   39


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Latin America. Income statement

EUR Million

 

     Brazil     Mexico     Chile  
     Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)     Q1’12     Q1’11     Var (%)  

Income statement

                  

Net interest income

     3,376        2,911        15.9        477        401        18.8        432        358        20.6   

Net fees

     848        810        4.7        180        159        12.8        111        110        1.5   

Gains (losses) on financial transactions

     170        195        (12.8     31        51        (39.1     16        30        (47.7

Other operating income (1)

     (41     (31     32.1        (10     (4     188.6        5        13        (64.4

Gross income

     4,353        3,886        12.0        677        608        11.4        564        511        10.3   

Operating expenses

     (1,528     (1,441     6.1        (249     (229     8.6        (212     (191     11.1   

General administrative expenses

     (1,393     (1,295     7.6        (219     (202     8.7        (191     (168     13.8   

Personnel

     (777     (726     7.0        (127     (118     7.7        (117     (104     13.3   

Other general administrative expenses

     (616     (569     8.3        (92     (84     10.0        (73     (64     14.8   

Depreciation and amortisation

     (135     (146     (7.2     (30     (27     8.3        (21     (23     (8.6

Net operating income

     2,825        2,445        15.5        428        379        13.1        352        321        9.7   

Net loan-loss provisions

     (1,490     (1,046     42.5        (78     (63     23.0        (125     (75     66.6   

Other income

     (222     (227     (2.2     (2     (6     (65.0     (4     2        —     

Profit before taxes

     1,112        1,172        (5.1     348        310        12.5        223        247        (10.0

Tax on profit

     (285     (290     (1.7     (52     (53     (2.4     (31     (40     (23.3

Profit from continuing operations

     827        881        (6.2     296        256        15.6        192        207        (7.4

Net profit from discontinued operations

     —          —          —          —          —          —          —          —          —     

Consolidated profit

     827        881        (6.2     296        256        15.6        192        207        (7.4

Minority interests

     179        149        20.3        0        0        16.5        59        45        31.4   

Attributable profit to the Group

     647        732        (11.6     296        256        15.6        133        162        (18.1

Balance sheet

                  

Customer loans (2)

     78,083        69,447        12.4        19,146        15,907        20.4        27,257        24,562        11.0   

Trading portfolio (w/o loans)

     10,977        10,567        3.9        15,296        12,232        25.0        1,816        2,782        (34.7

Available-for-sale financial assets

     15,261        22,584        (32.4     3,647        3,272        11.5        4,127        2,944        40.2   

Due from credit institutions (2)

     12,965        10,966        18.2        6,328        3,739        69.2        2,625        2,471        6.2   

Intangible assets and property and equipment

     3,262        3,679        (11.3     378        382        (1.1     365        332        10.1   

Other assets

     34,293        40,534        (15.4     4,411        4,120        7.1        2,845        4,108        (30.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets/liabilities & shareholders’ equity

     154,841        157,776        (1.9     49,205        39,651        24.1        39,035        37,198        4.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Customer deposits (2)

     76,352        75,605        1.0        26,120        20,528        27.2        20,547        18,353        12.0   

Marketable debt securities (2)

     18,872        11,780        60.2        1,312        1,202        9.1        5,819        5,462        6.5   

Subordinated debt (2)

     4,604        4,325        6.4        —          —          —          1,288        1,046        23.2   

Insurance liabilities

     —          8,679        (100.0     —          415        (100.0     —          314        (100.0

Due to credit institutions (2)

     17,193        22,091        (22.2     8,784        5,873        49.6        4,825        4,207        14.7   

Other liabilities

     24,731        23,612        4.7        8,551        6,939        23.2        3,928        5,054        (22.3

Shareholders’ equity (3)

     13,089        11,684        12.0        4,438        4,693        (5.4     2,629        2,761        (4.8

Other customer funds under management

     44,407        50,822        (12.6     10,503        10,481        0.2        5,091        4,929        3.3   

Mutual funds

     41,247        46,705        (11.7     10,503        10,257        2.4        5,091        4,868        4.6   

Pension funds

     —          —          —          —          —          —          —          —          —     

Managed portfolios

     3,160        3,568        (11.4     —          —          —          —          —          —     

Savings-insurance policies

     —          549        (100.0     —          224        (100.0     —          61        (100.0

Customer funds under management

     144,235        142,533        1.2        37,936        32,211        17.8        32,745        29,791        9.9   

 

(1).-

Including dividends, income from equity-accounted method and other operating income/expenses

(2).-

Including all on-balance sheet balances for this item

(3).-

Not including profit of the year

Latin America. Income statement

EUR Million

 

     Gross income     Net operating income      Attributable profit  
     Q1’12      Q1’11      Var (%)     Q1’12     Q1’11      Var (%)      Q1’12     Q1’11     Var (%)  

Brazil

     4,353         3,886         12.0        2,825        2,445         15.5         647        732        (11.6

Mexico

     677         608         11.4        428        379         13.1         296        256        15.6   

Chile

     564         511         10.3        352        321         9.7         133        162        (18.1

Argentina

     279         217         29.0        146        113         29.3         78        70        12.6   

Uruguay

     59         36         61.9        18        8         136.0         12        4        201.4   

Puerto Rico

     89         84         4.9        42        41         2.5         11        8        38.5   

Colombia

     63         46         37.8        31        18         72.0         15        11        34.3   

Rest

     12         33         (63.7     (12     3         —           (9     (4     112.7   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Subtotal

     6,095         5,421         12.4        3,831        3,327         15.1         1,184        1,239        (4.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Santander Private Banking

     79         73         8.9        46        40         15.4         34        31        11.6   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

     6,175         5,494         12.4        3,876        3,367         15.1         1,218        1,270        (4.1
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

40

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Brazil (changes in local currency)

 

LOGO

Greater activity and management of spreads led to growth of 15.3% in basic revenues.

 

LOGO

Reduced growth in costs (+7.8% y-o-y), which were 6.4% less than in the fourth quarter of 2011 (+12.3% in 2011).

 

LOGO

Net operating income rose 17.4%, absorbing the larger provisions from the increase in lending. Moderate rise in NPLs in the sector.

 

LOGO

The perimeter, basically from minority interests, had a negative impact on profits of 8 p.p.

 

LOGO

Lending grew 19% and deposits 12%.

Santander Brazil posted attributable profit of EUR 647 million, 11.6% less than in the first quarter of 2011 (-10.2% in local currency), affected by higher minority interests. Excluding this, profit before tax declined 3.5%.

Good evolution of revenues (+5.5%) and of expenses (-6.4%) over the fourth quarter of 2011. Net operating income was 13.2% higher and net profit increased 2.8% after provisions and writedowns.

Santander Brazil is the third largest private sector banks in terms of assets and the leading foreign bank, with a market share of 10.3% in lending. It operates in the main regions, with 3,776 branches and points of banking attention, 18,443 ATMs and 25.3 million customers, 19.5 million of whom have current accounts.

Economic environment

The latest figures for 2012 paint a favourable picture of the Brazilian economy. GDP growth in 2011 was 2.7%, sustained by domestic demand and investment. According to the IMF, Brazil was the world’s sixth largest economy in 2011. Investment represented 19.3% of GDP and the savings rate was 17.2%.

The labour market showed a favourable trend. The unemployment rate in February was 5.7%. Between March 2011 and March 2012 1.7 million new jobs were created. Real incomes rose 4.1% in twelve months, to January 2012.

Inflation was 5.2% in March, a slightly lower rate. The Selic benchmark interest rate was 9.75% in March and 9% in April, down from 11.0% at the end of 2011 as the central bank continued to soften monetary policy.

The year-on-year pace of lending (+17% to February 2012) eased, reflecting monetary policy and some measures introduced in the last few quarters. Taking into account only private national banks, year-on-year growth at February was 12%.

Of note in lending was the 44% growth in mortgage loans at February 2012.

Strategy

The strategy is based on the following objectives:

 

 

Be the best bank in quality of service, backed by the strength of the IT platform.

 

 

Intensify relations with customers, improving the quality of services provided and the infrastructure (the objective is to open between 100 and 120 new branches between 2011 and 2013).

 

 

Strengthen business in key segments such as SMEs, acquiring business, cards, real estate loans and consumer credit; and boost cross-selling.

 

 

Continue to construct and strengthen the Santander brand in Brazil.

 

 

All of this accompanied by prudent risk management.

The bank completed its technology integration in 2011 and improved the functionalities of the new unified platform, which is enabling the bank to develop its commercial activity more productively.

Credit cards, mortgages, where specific services have been developed for high income customers, such as personalised advice, discounts in home insurance and special conditions for time deposits and pension funds remained the key segments.

In acquiring business, Santander Brazil is the leader in combining these services with banking services, offering something very attractive for SMEs. Results remained positive (288 establishments in March and market share of 3.07%).

As part of the strategy to make Santander Brazil the best and most efficient universal bank in the country, improvements were made to the telephone attention centres for individuals and companies. Commercial processes are also being streamlined, in line with the new mission statement announced by the bank. This reads: “be for our customers the straight forward and safe, efficient and profitable bank, which constantly strives to improve the quality of everything it does, with a team that likes to work to win everyone’s recognition and confidence.”

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   41


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Activity

Lending growth remained high (+19% y-o-y) and in all segments:

 

 

Individuals: +21% (+41% in mortgages and +14% in consumer credit).

 

 

Consumer finance (vehicles): +18%.

 

 

SMEs (+31%).

 

 

Large companies (+14% y-o-y).

Growth slowed in the first quarter, in line with the market’s trend as loans to individuals and SMEs were partly offset by that to companies.

Customer funds increased 12% year-on-year including letras financeiras, an instrument that gives greater stability to the capturing of funds, while mutual funds declined 7%.

The market share in loans was 10.3% (12.3% in unrestricted lending) and 7.7% in deposits.

Results

Gross income maintained the trend of growth and amounted to EUR 4,353 million, a new quarterly record 13.8% more than in the first quarter of 2011 and 5.5% above the fourth quarter.

The main component of growth was net interest income (+17.8%), spurred by the larger volumes and management of spreads.

Net interest income over average total assets improved from 7.37% in the first quarter of 2011 to 8.32% in the same period of 2012.

Fee income rose 6.4%, backed by mutual funds and cards, which increased by 11%.

Gains on financial transactions were EUR 170 million (-11.4% year-on-year).

Operating expenses grew 7.8% year-on-year. This was due to the increased distribution capacity (+128 new branches in 12 months), investments in the new IT platform and the signing of the wage agreement in the second half of 2011.

Operating expenses were 6.4% lower than in the fourth quarter.

Net operating income rose 17.4% to EUR 2,825 million (+13.2% over the fourth quarter) and the efficiency ratio was 35.1%, an improvement of two percentage points over the first quarter of 2011.

Provisions for loan losses were 44.8% higher than in the first quarter of 2011, due to the increase of 19% in lending balances and a moderate rise in the NPLs of individual borrowers, mainly in consumer products and cards in a favourable macroeconomic scenario. The NPL ratio was 5.76% and coverage 90%.

Attributable profit amounted to EUR 647 million, 10.2% less than in the first quarter of 2011 (-2.3% excluding the perimeter impact), because of the higher minority interests. Compared to the fourth quarter of 2011 attributable profit declined 2.9% also impacted by the perimeter as a result of the increase in minority interests, as excluding these, the attributable profit for the quarter was 2.8% higher.

Retail Banking’s profit was 15.4% lower year-on-year, that of Asset Management and Insurance was down 18.5% and Global Wholesale Banking’s was 5.4% higher. All of them were affected by the perimeter (basically minority interests). Excluding this impact, profit before tax was 8.3% lower in Retail Banking and 4.0% in Asset Management and Insurance, while that of Global Wholesale Banking was 7.6% higher.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11 (excluding FX)

 

EUR Million

 

EUR Million

 

+15.5%*

 

-11.6% Q1’12-Q1’11

 

(*)    w/o REPOs. Including letras financeiras

 

 

(*)    Excluding exchange rate impact: +17.4%

 

 

(*)    Excluding exchange rate impact: -10.2%

LOGO   LOGO   LOGO

 

42

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Mexico (Changes in local currency)

 

LOGO

The strength of the franchise is reflected in the evolution of business and results.

 

LOGO

Greater business and management of spreads pushed up basic revenues (+20.8%).

 

LOGO

Expenses rose 12.0% because of business development and the perimeter effect.

 

LOGO

The improvement in NPLs is reflected in lower provisions than in the three previous quarters.

 

LOGO

Strong business: lending rose 17% on a like-for-like basis and deposits 22%.

Attributable profit was 15.6% higher at EUR 296 million (+19.2% in local currency). Results showed a good trend, with double digit growth in net interest income, gross income and net operating income and profits, both over the first quarter of 2011 and the fourth quarter, quarterly records in all of them.

Santander is the third largest banking group in Mexico by business volume, with a market share in loans of 15.9% and 15.1% in savings. It has 1,125 branches and 9.4 million customers.

Economic environment

GDP growth in 2011 was 3.8%, down from 5.5% in 2010 as domestic demand was less buoyant. The economy is expected to grow by 3.3% in 2012. Employment, although growing at a slower pace, remained high, with 612,000 jobs created in 2011 (+4.1%) and a further 530,000 expected in 2012 (+3.5%).

Inflation after the upturn of past months, eased in March to 3.7%. A rate below 4% is expected for the end of this year. The peso has appreciated 8.7% against the dollar since the end of 2011, correcting more than 50% of the depreciation registered in the last months of 2011. The federal government issued two new bonds in the international markets in the first quarter, with maturities of 10 and 30 years, and in both cases achieved historically low yields.

The financial system remained solid, liquid and with good risk quality indicators. The international environment has not affected banking activity. Lending grew 16% and savings 12%.

Strategy

The franchise and customer relations continued to be strengthened, particularly the higher income segment, and linkage boosted through cards and consumer products.

The main focuses this year are: boost transactions linked to high income customers and other priority segments, continue to develop the many channels and manage the capturing of customers with payroll projects. At the same time, efficiency in costs will be enhanced and actions taken to improve customer service and satisfaction.

Activity

Lending grew 21% year-on-year. All products grew. Mortgages rose 77% (27% excluding the purchase of the portfolio of GE Capital Corporation in April 2011), commercial credit 11%, consumer loans 38% and cards 26%.

Savings increased 14% year-on-year, with demand deposits up 25% and time deposits 17%. Moderate growth in mutual funds (+3%).

Results

Gross income increased 14.9% year-on-year and net interest income 22.6%. Fee income rose 16.4%, with a positive performance in insurance (+39.7%), the administration of accounts (+27.4%) and transactional banking (+9.3%), while that from cards and mutual funds was lower.

Operating expenses were 12.0% higher, reflecting the new business projects and the increased installed capacity. Provisions declined for the second straight quarter, but were 26.9% higher than those of the first quarter of 2011, although risk premiums remained at very low levels. Net operating income after provisions increased 14.6% year-on-year.

Compared to the fourth quarter, gross income was 12.6% higher (due to net interest income, fee income and trading gains), expenses were 13.7% lower and provisions down 14.7%, all of which produced a 58.1% rise in net operating income after provisions.

Attributable profit was 19.2% higher at EUR 296 million. Retail Banking’s increased 15.4% thanks to the recovery in revenues, and Global Wholesale Banking’s 62.7%, due to good results from markets.

The efficiency ratio was 36.7%, the recurrence ratio 82.0% and ROE 27.0%. The NPL ratio (1.61%) and coverage (195%) continued to be of high quality and evolve well year-on-year.

 

 

Activity

 

Net operating income

 

Attributable profit

% var. Mar’12-Mar’11 (excluding FX)

 

EUR Million

 

EUR Million

 

+13.1%

 

+15.6% Q1’12-Q1’11

 

 

(*)    w/o REPOs.

 

 

(*)    Excluding exchange rate impact: +16.7%

 

 

(*)    Excluding exchange rate impact: +19.2%

[ LOGO   LOGO   LOGO

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   43


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Chile (Changes in local currency)

 

LOGO

Basic revenues rose 12.9% thanks to net interest income (+17.2% y-o-y).

 

LOGO

Operating expenses (+8.0%) grew at a slower pace after declining over the last two quarters.

 

LOGO

Net operating income increased 6.7%, improving the trend in 2011.

 

LOGO

Year-on-year comparison for profits affected by higher provisions and the negative perimeter impact (mainly minority interests) of 15 p.p.

 

LOGO

Lending rose 5% and deposits 6%.

Attributable profit was EUR 133 million, 18.1% less than in the first quarter of 2011 (-20.4% in local currency). On a like-for-like basis, the decline excluding the exchange rate impact was 5.6%, impacted by provisions, as net operating income increased 9.2% (+5.4% over the fourth quarter).

Santander is the largest financial group in Chile in terms of assets. It has 499 branches and more than 3.4 million customers and market shares of 19.7% in loans and 17.5% in savings.

Economic environment

The economy grew 6% at the end of 2011. After the slowdown of the third quarter, the monthly indicators on economic activity show an upturn. Growth in 2012, however, will be lower than last year at around 4.5%.

Inflation has gradually risen in the last few months and eased in March to 3.8%, within the central bank’s target range. The central bank cut its benchmark rate by 25 b.p. in January to 5.0% and remained stable.

Lending rose 16% in the last 12 months, spurred by consumer credit and loans to companies. Savings maintained two-digit growth and rose 12%.

Strategy

The strategy in the first quarter of 2012 has been focused on maintaining its market leadership in a context of strong pressure on spreads, due to increased competition and tougher market regulation.

The strategy centres on taking steps to keep on improving our customer attention models, strengthen the acquisition of new customers and enhance the quality of service substantially. As well as the commercial priorities, management remains focused on boosting productivity in order to be more efficient, prudent in risk management and achieve financial equilibrium.

Activity and results

Savings increased 4% year-on-year. Demand deposits without repos grew 6% and mutual funds dropped 1%.

Lending rose 5% year-on-year, with that via cards up 8%, mortgages 9%, consumer credit 6% and commercial loans 4%.

In results (and always in local currency), gross income rose 7.2% year-on-year:

 

 

Net interest income increased 17.2%, spurred by better spreads, larger volumes and the favourable impact of higher inflation.

 

 

Fee income was almost flat, with that from cards up 6.0%, from insurance down 11.5%, administration of accounts (-20.0%) and mutual funds (-21.2%). Trading gains declined 49.2%.

Operating expenses rose 8.0% year-on-year, higher than inflation, due to the collective bargaining agreement, the increase in the rent for branches and strengthening business activity.

Compared to the fourth quarter of 2011, gross income was slightly higher and costs were 4.2% lower, which increased net operating income by 5.4%.

Net loan-loss provisions rose 61.9% year-on-year, in line with the financial system and the main competitors, due to the worsening of credit quality in the system and the stricter criteria in granting loans. Attributable profit was 20.4% lower at EUR 133 million.

The efficiency ratio was 37.6%, the recurrence ratio 58.3% and ROE 21.6%. The NPL ratio was 4.52% and coverage 68%.

 

 

Activity

  

Net operating income

  

Attributable profit

% var. Mar’12-Mar’11 (excluding FX)

  

EUR Million

  

EUR Million

  

+9.7%

  

-18.1% Q1’12-Q1’11

 

(*)    w/o REPOs.

  

 

(*)    Excluding exchange rate impact: +6.7%

  

(*)    Excluding exchange rate impact: -20.4%

LOGO    LOGO    LOGO

 

44

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

LOGO   Argentina

Attributable profit was EUR 78 million, 12.6% higher year-on-year (+16.6% in local currency), after double-digit growth in net interest income, gross income and net operating income. All of them grew over the fourth quarter of 2011.

Santander Río is one of the country’s leading banks, with market shares of 8.9% in lending and 9.8% in savings. It has 362 branches and 2.5 million customers.

The economy shows greater signs of slowing down. GDP growth is forecast at 3.7% for 2012.

Inflation is still at around 10%, while interest rates have fallen this year (Badlar rate of private banks at around 13% compared to 19% at the end of 2011). The peso depreciated 1.5% against the dollar in the first quarter and 7.3% in the last 12 months. International reserves rose from $46.4 billion at the end of 2011 to $46.7 billion.

The banking system is strong (NPL ratio of 1.2% and coverage of 173%) and had high levels of liquidity and capital. Savings rose 30% and lending 43%.

The bank continued in the first quarter to maintain market leadership, backed by transactions and risk control. Management is mainly focused on key segments, as well as on improving operational processes, which will enhance customer service, while growing selectively in low risk assets and maintaining comfortable levels of liquidity,

Both lending and savings grew at rates of 25% year-on-year, but registered a slight slowdown.

In local currency, gross income rose 33.6% year-on-year, driven by interest income (+45.7%) and fee income (+26.0%). Operating expenses rose 33.3%, due to inflation and growth in transactions. Net operating income increased 33.9% and attributable profit 16.6%. The efficiency ratio was 47.8%, the recurrence ratio 84.9% and ROE 44.8%. The NPL ratio was 1.22% and coverage 196%.

LOGO   Uruguay

Attributable profit was EUR 12 million, 188.1% higher in local currency. Gross income rose 54.8%, driven by net interest income and fee income. Expenses increased 36.1% and provisions dropped 6.6%.

Santander is the largest private sector bank in the country in terms of branches (79) and business (market share of 17.2% in lending and 15.7% in deposits) and has 227,000 customers.

The economy grew 5.7% in 2011, (8.9% in 2010). It is expected to ease to 4.0% in 2012. Domestic demand is less buoyant after high growth in the last two years, and the contribution of external demand will decelerate because of weaker global conditions.

Inflation was 7.5% in March, far from the central bank’s target range of 4%-6%. In this context, the central bank raised its benchmark rate in December by 75 b.p. to 8.75% and held it during the first quarter. The peso appreciated 2.3% against the dollar in the first quarter and international reserves increased to more than 20% of GDP.

In local currency, lending rose 22% and deposits 13%. The Group is focusing on capturing more retail banking customers and linkage, particularly high and medium income customers.

Lending rose 43% year-on-year (31% on a like-for-like basis) and savings 14%.

The efficiency ratio is 69.6% and the recurrence ratio 32.2%. The NPL ratio is very low at only 0.70% and coverage is very high at more than four times the volume of non-performing loans.

LOGO   Puerto Rico

Attributable profit was EUR 11 million (+32.8% y-o-y in dollars). Gross income and operating expenses were basically flat and loan-loss provisions declined 12.5%.

Santander has 121 branches, 393,000 customers and market shares of 10.5% in loans, 11.6% in deposits and 22.3% in mutual funds.

The economy remained in recession, affecting the growth of the financial system and its profitability because of reduced business and higher risk premiums. Lending dropped 4% and savings rose 8%.

In this context, the Group stood out for its profits, as a result of rigorous risk management and a focus on solvent credit segments, appropriate management of prices and strict control of costs.

The efficiency ratio is 52.1% and the recurrence ratio 40.5%. The NPL ratio is 9.04% and coverage 56%.

LOGO   Perú

Activity is focused on companies and tending to the Group’s global customers. Attributable profit was EUR 4 million, up from EUR 2 million in the first quarter of 2011, due to higher net interest income and fee income.

LOGO   Colombia

Attributable profit was EUR 15 million, 23.3% more than in the first quarter of 2011, in local currency. The Group announced in the fourth quarter of 2011 the sale of its businesses in Colombia, a transaction expected to be completed during the second quarter of 2012.

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   45


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

United States

 

LOGO

Santander US includes retail banking, via Sovereign Bank, and consumer finance business through its stake in Santander Consumer USA (SCUSA).

 

LOGO

Sovereign Bank obtained the licence in January to become a national bank, enabling it to sell more products to more customers.

 

LOGO

Attributable profit was $314 million, lower year-on-year because of the reduced stake in SCUSA, as Sovereign Bank’s results were higher over the first and fourth quarters of 2011.

 

LOGO

Lending grew 7% and deposits 7%.

 

LOGO

The NPL ratio and coverage improved for the ninth consecutive quarter.

The perimeter of Santander US corresponds to Santander Holdings USA (SHUSA), a bank holding company with two distinct lines of business: retail banking, via its subsidiary Sovereign Bank, and consumer finance business through its stake in Santander Consumer USA (SCUSA).

Sovereign Bank is a national bank with a strong presence in the northeast of the US. SCUSA is based in Dallas and specialises in consumer finance, mainly cars, in the non-prime segment.

On December 31, 2011, Santander Consumer USA Inc. (SCUSA) increased its capital and gave entry to new shareholders. This reduced Grupo Santander’s stake from 91.5% to around 65%. The Group also signed with these shareholders a contract of partners under which, among other things, they were given representation in the board of SCUSA and a voting system was established so that strategic, financial and operating and other significant decisions associated with the ordinary management of SCUSA are subject to the joint approval of Grupo Santander and said shareholders. As a result, SCUSA is subject to the joint control of all of them and the Group no longer consolidates the company. Instead its stake in it is recorded by the equity accounted method.

In order to be able to compare properly Santander US results with those of 2011, the results of SCUSA were restated on the basis of the equity accounted method (at 91.5%), which in the information published in 2011 was integrated in Santander Consumer Finance in Continental Europe.

Santander US posted an attributable profit of $314 million in the first quarter, 20.6% less than in the same period of 2011 impacted by the reduced stake in SCUSA as Sovereign Bank’s profits ($191 million) were 8.9% and 7.7% higher than the first and fourth quarters of 2011 respectively.

Economic environment

Sovereign conducted its activity in an environment of higher GDP growth but still marked by the weak housing sector and employment despite some recovery. In this environment, the Fed held its low interest rates and implemented other unconventional stimulus measures.

The fourth quarter figures show slight rises in loans to companies (+1% over the third quarter, including real estate) and in consumer loans (+2%) compared to flat year-on-year evolution. In deposits, the flow continued into those of the greatest availability (+4% over the third quarter) from time deposits (-3%).

Of note in auto finance was that car prices held up, reflecting the improvement in the demand for new and used cars. The better labour market figures and credit conditions suggest this upward trend will continue, which could mean greater competition with more aggressive lending policies.

Strategy

Sovereign Bank, with 722 branches, 2,304 ATMs and more than 1.7 million customer-households, is developing a business model focused on retail customers and companies. Its activity, close to $100 billion, is carried out in the northeast of the US, one of the country’s most prosperous areas, where it has significant market shares.

The conversion of Sovereign into a National Bank in January 2012 is an important milestone which, coupled with the unification process and the improvement in the IT platform already begun, will convert a mainly single product bank into a retail franchise with a full range of products, improving both the offer capacity as well as the penetration of customer segments.

These factors, along with rigorous control of risks and optimisation of cost structures, are the foundations of Sovereign Bank for generating consistent results in line with the targets set for 2012 in a low activity environment.

The strategy of Santander Consumer USA is to continue the origination, purchase and securitisation of credits for new and used car and work vehicles generated by dealers for customers with non-prime risk profiles.

SCUSA also developed a platform of direct credits to clients via the Internet (Roadloans.com) and a very efficient instant approval operation of portfolio servicing to other companies with prime to non-prime portfolios, whether in purchase operations or service for third parties.

 

 

Sovereign Bank

US$ Million

 

     Q1’12      Q1’11      Variation
Amount
    (%)  

Gross income

     745         746         (1     (0.1

Net operating income

     385         422         (38     (8.9

Attributable profit to the Group

     191         176         16        8.9   

 

46

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Activity

Sovereign Bank, taking advantage of the new charter enabling it to expand, made progress in the first quarter in the development of new businesses and products.

Thus, it launched Sphere, Santander’s first credit card in the US. Placement of this card in the first two months of 2012 was five times higher than that of third party cards in the same period of 2011.

The new GBM teams were also integrated during the first quarter (around 100 people), which will continue to boost an activity that more than doubled customer revenues in the first quarter of 2012.

In the companies segment, the creation in the fourth quarter of 2011 of two new sectors (energy and technology), together with the experience in real estate, enabled the number of customers to keep on growing.

In the retail segment further steps were taken to develop the franchise by improving the branch network. The skills of employees were improved and new staff hired. Alternative channels such as ATMs, online banking and call centres, key elements for Sovereign Bank’s growth, were also developed.

Loans and funds increased. In dollars, total lending rose 3% over the end of 2011 and 5% year-on-year (7%, excluding the non-strategic portfolio). The improvement in the composition of the portfolio combined with strict risk management produced a further fall in the NPL ratio to 2.46% and an increase in coverage to 107%.

In funds, customer deposits rose in the first quarter (+6%), growth which was higher than that in lending. Compared to March 2011, the rise was 7%. The increase in deposits, together with the management of wholesale borrowings, reduced the cost of funding by 26 b.p. over the first quarter of 2011.

SCUSA registered in the first quarter a surge in new loans (+29% y-o-y), with improved spreads. This evolution coupled with the incorporation of a new portfolio at the end of 2011, produced 12% growth year-on-year in lending and reversed the downward trend of previous quarters.

Results

As a result of the change in the method for consolidating SCUSA, 2011’s results were restated by the equity accounted method (at 91.5%).

Attributable profit for Santander US was $314 million in the first quarter, (-20.6% year-on-year) due to the increase in the profit of Sovereign Bank (+8.9% to $191 million) and to the lower contribution of SCUSA (-44.1% to $123 million).

The evolution of Sovereign Bank is underpinned by more stable revenues and lower provisions resulting from greater credit quality.

Net interest income (-4.8% y-o-y), impacted by lower long-term interest rates and the reduction of the non-strategic portfolio remained unchanged compared to the fourth quarter. Fee income grew at a faster pace (+9.6% over the fourth quarter; -1.4% year-on-year) after absorbing significant regulatory impacts.

The 11.4% growth in expenses reflects the impact of investments in technology, the improvement in sales teams and the regulatory compliance, necessary to take advantage of the new status of a national bank. Net loan-loss provisions were 30.6% lower, thanks to the better quality of the lending portfolio, lower NPLs and higher coverage ratios.

The lower contribution of SCUSA in the quarter was due largely to two effects. On the one hand, the reduction in the Group’s stake to 65% at the end of 2011 (less $56 million). On the other, the release of provisions made in the first quarter of 2011 as a result of the better evolution of the portfolios previously acquired.

Excluding both effects, and in local criteria, SCUSA offered solid trends in the quarter: higher revenues from larger volumes (both from organic growth and acquisitions of portfolios), expenses in line with activity and lower provisions. Net profit increased 6% year-on-year, and was higher than all the quarters of 2011.

 

 

Activity

% var. Mar’12-Mar’11 (excluding FX)

 

 

LOGO

 

Net operating income

EUR Million

 

-17,8%

 

(*)     Excluding exchange rate impact: -21.2%

 

LOGO

  

Attributable profit

EUR Million

 

-17.2% Q1’12-Q1’11

 

(*)     Excluding exchange rate impact: -20.6%

 

LOGO

    
    
    

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   47


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Corporate Activities

EUR Million

 

     Q1’12     Q1’11     Variation
Amount
    (%)  

Income statement

        

Net interest income

     (513     (511     (2     0.3   

Net fees

     (13     (4     (9     216.1   

Gains (losses) on financial transactions

     46        (74     120        —     

Dividends

     14        4        10        242.8   

Income from equity-accounted method

     (16     1        (17     —     

Other operating income/expenses (net)

     31        28        3        9.1   

Gross income

     (452     (556     105        (18.8

Operating expenses

     (249     (245     (4     1.6   

General administrative expenses

     (214     (212     (2     0.9   

Personnel

     (78     (88     11        (12.0

Other general administrative expenses

     (136     (124     (13     10.1   

Depreciation and amortisation

     (35     (33     (2     6.5   

Net operating income

     (700     (801     101        (12.6

Net loan-loss provisions

     (15     (69     54        (78.8

Other income

     (117     (187     70        (37.2

Profit before taxes

     (832     (1,056     224        (21.2

Tax on profit

     56        222        (166     (74.6

Profit from continuing operations

     (776     (834     59        (7.0

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     (776     (834     59        (7.0

Minority interests

     (32     0        (32     —     

Attributable profit to the Group

     (744     (835     91        (10.9

Balance sheet

        

Trading portfolio (w/o loans)

     7,476        4,833        2,643        54.7   

Available-for-sale financial assets

     30,379        21,386        8,993        42.1   

Investments

     900        38        862        —     

Goodwill

     25,200        23,856        1,344        5.6   

Liquidity lent to the Group

     1,806        30,236        (28,429     (94.0

Capital assigned to Group areas

     73,543        69,132        4,411        6.4   

Other assets

     102,191        74,185        28,006        37.8   

Total assets/liabilities & shareholders’ equity

     241,496        223,665        17,831        8.0   

Customer deposits (1)

     17,385        11,448        5,936        51.9   

Marketable debt securities (1)

     66,098        64,020        2,078        3.2   

Subordinated debt (1)

     5,505        10,000        (4,495     (45.0

Other liabilities

     73,418        59,385        14,033        23.6   

Group capital and reserves (2)

     79,091        78,812        279        0.4   

Other customer funds under management

     —          —          —          —     

Mutual funds

     —          —          —          —     

Pension funds

     —          —          —          —     

Managed portfolios

     —          —          —          —     

Savings-insurance policies

     —          —          —          —     

Customer funds under management

     88,988        85,469        3,519        4.1   

 

(1).-

Including all on-balance sheet balances for this item

(2).-

Not including profit of the year

 

48

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY PRINCIPAL SEGMENTS

 

 

Corporate Activities

 

LOGO

The results were in line with those for the first quarter of 2011 because of the net between:

 

   

Positive effect of trading gains (from losses to profits) and the need for fewer provisions.

 

   

Negative impact of the reduced recovery of taxes (EUR 56 million against EUR 222 million in the first quarter of 2011).

The area made a loss of EUR 744 million compared to one of EUR 835 million in the same period of 2011, reflecting the combined centralised activities, on the basis of the criteria set out on page 24 of this report.

The financial management area carries out global balance sheet management functions, both for structural interest rate risk and liquidity risk (the latter through issues and securitisations), as well as the structural position of exchange rates.

 

 

Interest rate risk is actively managed by taking positions in the market. This management seeks to mitigate the impact of changes in interest rates on net interest income and the Bank’s value, and is carried out via bonds and derivatives of high credit quality, high liquidity and low consumption of capital.

 

 

The aim of structural liquidity management is to finance the Group’s recurrent activity in optimum maturity and cost conditions, while maintaining an appropriate profile by diversifying sources.

 

 

The exposure to exchange rate movements is also managed on a centralised basis. This management (dynamic) is carried out through financial derivatives for exchange rates, optimising at all times the cost of hedging.

In this sense, hedging of net investments in the shareholders’ equity of businesses abroad aims to neutralise the impact on them of converting to euros the balances of the main consolidated entities whose functional currency is not the euro. The Group’s policy considers it necessary to immunise the impact which, in situations of high volatility in the markets, sharp movements in exchange rates would have on these exposures of a permanent nature. The currently hedged investments are those in Brazil, the UK, Mexico, Chile and Poland, and the instruments used are spot contracts, FX forwards or tunnel options.

Meanwhile, exposures of a temporary nature (i.e. those regarding the results which the Group’s units will contribute over the next 12 months), when they are in currencies other than the euro, are also hedged on a centralised basis. These results, generated in the local currencies of the units, are hedged with exchange-rate derivatives. The objective is to establish the euros resulting from the exchange rate at the beginning of the year.

The impact of the hedging is registered in gains/losses on financial transactions and the hedging of results compensates, with an opposite sign, the greater or lesser value in euros from the contribution of businesses.

Separately from the financial management activities described here, it manages all capital and reserves and allocations of capital to each of the units as well as providing liquidity that some of the business units might need (mainly the Santander Branch Network and corporate in Spain). The price at which these operations are carried out is the market rate (euribor or swap) plus the premium, which, in terms of liquidity, the Group supports due to the immobilisation of funds during the period of the operation.

Lastly, and more marginally, the equity stakes that the Group takes within its policy of optimising investments are reflected in Corporate Activities. Since 2009, this item has declined significantly.

The main developments were:

 

 

Net interest income was EUR 513 million negative compared to EUR 511 million also negative in the first quarter of 2011. This was largely due to the higher cost of credit of issues in wholesale markets, which was partially absorbed by the reduced recourse to these markets, (i.e. the lower volume effect).

 

 

Gains on financial transactions, which include those from centralised management of interest rate and currency risk of the parent bank as well as from equities, were EUR 46 million positive compared to EUR 74 million negative in the same period of 2011 due to the positive results from the disposal of a small financial stake in 2012 and the larger negative impact in 2011 of the exchange rate differences in the payment of dividends and portfolio valuations.

 

 

Operating expenses rose only 1.6% year-on-year as a result of the rise in general expenses and amortisations, while personnel expenses declined 12.0%.

 

 

Net loan-loss provisions were EUR 15 million compared to EUR 69 million in the first quarter of 2011. This line includes the normal provisions for the fixed-income portfolio (not public debt) which configure the ALCO strategies and which at the time of the purchases and sales produced small movements. Also recorded are those asymmetries in the process of internal consolidation between the various business areas included in the parent bank.

 

 

“Other income” was EUR 117 million negative compared to EUR 187 million also negative in 2011 and is mainly due to writedowns for foreclosures (properties and land), lower in 2012 because of the extraordinary ones made in the first quarter of 2011.

 

 

Lastly, the tax line reflects a recovery of EUR 56 million compared to EUR 222 million in the first quarter of 2011.

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   49


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Retail Banking

 

LOGO

Net interest income grew 10.0% year-on-year and net fee income 6.1%, while basic revenues notched up a new quarterly record.

 

LOGO

Gross income surpassed EUR 10,000 million in a quarter for the first time (+6.0% over the fourth quarter and 7.3% y-o-y).

 

LOGO

Operating expenses rose 7.9% year-on-year, because of new business projects and the increase in installed capacity, and declined 1.7% over the fourth quarter.

 

LOGO

Loan-loss provisions increased, partly due to the non-utilisation of generic provisions in the first quarter.

 

LOGO

Net operating income after provisions declined 19.5% year-on-year, but was higher than in the third and fourth quarters (+5.7% over the fourth quarter of 2011).

Attributable profit was EUR 1,647 million, 24.7% lower than in the first quarter of 2011. This was largely due to the use of generic provisions in 2011 which did not occur in the first quarter of 2012. Profit was 4.9% higher than in the fourth quarter of 2011.

This segment generated 86% of the total gross income of the operating areas and 70% of attributable profit.

Compared to the first quarter of 2011, results were 1% negatively affected by the perimeter effect. This was due to the net between the positive impact of the incorporation of Bank Zachodni WBK in Poland and the SEB business in Germany and the negative effect of the operations of SCUSA and insurance in Latin America commented on in other parts of this report, and the higher minority interests. The impact of exchange rates was negligible.

Gross income increased 7.3% year-on-year to EUR 10,168 million, due to the rise in net interest income (+10%). Fee income rose 6.1%. Trading gains, on the other hand, were lower and income by the equity accounted method was down because of the US (entry of new partners into SCUSA).

Gross income in the first quarter was 6.0% higher than in the fourth quarter of 2011 as net interest income, fee income and also trading gains were higher.

Operating expenses rose 7.9% year-on-year, but were 1.7% lower than in the fourth quarter of 2011. Net operating income grew at rates of 6.9% and 12.5%, respectively.

Net loan-loss provisions increased 52.0% year-on-year and 19.3% in the quarter, in both cases with higher specific provisions. There was also an impact from the release in 2011 of generic provisions, which was not repeated in the first quarter of 2012.

Total lending increased 7% in the last 12 months and customer deposits including retail commercial paper in Spain and letras financeiras in Brazil rose 8%.

 

 

Income statement and business volumes secondary segments

EUR Million

 

    

Operating

business areas

   

Retail

Banking

   

Global

Wholesale banking

   

Asset Management

and Insurance

 
     Q1’12     Var (%)     Q1’12     Var (%)     Q1’12     Var (%)     Q1’12     Var (%)  

Income statement

                

Net interest income

     8,334        9.9        7,693        10.0        612        9.1        30        (5.4

Net fees

     2,635        4.5        2,221        6.1        319        (2.5     96        (6.6

Gains (losses) on financial transactions

     751        1.8        309        (6.7     440        8.7        1        49.8   

Other operating income (1)

     85        (55.7     (55     —          38        29.8        102        (6.0

Gross income

     11,806        7.0        10,168        7.3        1,409        6.6        229        (6.0

Operating expenses

     (4,825     7.5        (4,342     7.9        (407     5.3        (77     (0.5

General administrative expenses

     (4,335     8.0        (3,897     8.4        (370     5.4        (68     (1.0

Personnel

     (2,560     7.3        (2,279     7.9        (242     4.4        (39     (8.5

Other general administrative expenses

     (1,775     9.0        (1,618     9.1        (128     7.3        (29     10.8   

Depreciation and amortisation

     (490     3.9        (445     3.9        (36     4.4        (9     3.6   

Net operating income

     6,980        6.6        5,827        6.9        1,002        7.1        152        (8.6

Net loan-loss provisions

     (3,112     55.9        (3,059     52.0        (54     —          (0     —     

Other income

     (491     20.9        (453     19.3        (33     64.6        (5     (18.8

Profit before taxes

     3,377        (18.6     2,315        (24.3     916        (1.7     146        (8.1

Tax on profit

     (773     (21.2     (477     (32.5     (256     6.6        (40     16.4   

Profit from continuing operations

     2,604        (17.8     1,838        (21.8     660        (4.6     106        (14.8

Net profit from discontinued operations

     1        —          1        —          —          —          —          —     

Consolidated profit

     2,605        (17.6     1,839        (21.6     660        (4.6     106        (14.8

Minority interests

     258        18.1        192        21.3        57        4.3        9        68.2   

Attributable profit to the Group

     2,348        (20.2     1,647        (24.7     602        (5.3     98        (18.4

Business volumes

                

Total assets

     1,193,976        4.9        879,077        5.9        288,486        5.2        26,412        (21.0

Customer loans

     744,164        6.9        670,702        6.9        73,031        7.3        431        (8.7

Customer deposits

     625,401        2.6        542,022        5.7        77,289        (15.8     6,091        31.4   

 

(1).-

Including dividends, income from equity-accounted method and other operating income/expenses

 

50

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Retail Banking. Income statement

EUR Million

 

    

Gross

income

    Net operating
income
    Attributable
profit to the Group
 
     Q1’12      Var (%)     Q1’12      Var (%)     Q1’12      Var (%)  

Continental Europe

     3,019         13.0        1,656         15.7        371         (38.3

o/w: Spain

     1,837         5.5        1,006         12.4        115         (68.3

Portugal

     263         17.2        146         41.2        3         (93.9

United Kingdom

     1,164         (15.5     555         (28.3     201         (50.7

Latin America

     5,361         13.4        3,260         17.0        847         (5.2

o/w: Brazil

     3,812         13.1        2,394         18.1        400         (16.8

Mexico

     558         7.0        335         4.2        230         11.9   

Chile

     489         14.5        299         17.6        99         (8.4

USA

     625         (10.3     356         (22.3     229         (19.5

Total Retail Banking

     10,168         7.3        5,827         6.9        1,647         (24.7

 

The net operating income of Retail Banking in Continental Europe was 15.7% higher than in the first quarter of 2011, benefiting from the incorporation of Bank Zachodni WBK in Poland and SEB’s business in Germany but also reflecting a negative impact of close to EUR 400 million from the release of generic provisions in 2011. Attributable profit was 38.3% lower year-on-year.

Compared to the fourth quarter of 2011, when the impact of the generic provisions was much lower, attributable profit in the first quarter of 2012 was clearly higher.

Attributable profit in the UK was 51.8% lower in sterling, mainly due to lower revenues, hard hit by the higher cost of funding, low interest rates and higher provisions.

Retail banking in Latin America performed the best: revenue growth (+13.4%) and costs decelerated (-1.8% in the first quarter). Net operating income was 17.0% higher year-on-year and 18.3% over the fourth quarter.

Profit before tax declined 2.4% year-on-year but it rose 3.4% in the quarter. Minority interests were higher due to lower equity stakes and reduced attributable profit by 5.2% year-on-year, although it was higher than in the second, third and fourth quarters of 2011.

Retail banking results in the US were conditioned by the lower amount recorded by the equity accounted method, reflecting the reduced stake in SCUSA.

Global Private Banking includes institutions that specialise in financial advice and asset management for high-net-worth clients (Banco Banif in Spain, Santander Private Banking in Latin America and Italy), as well as the units of domestic private banking in Portugal and Latin America, jointly managed with local retail banks.

The division, backed by Santander’s size, strength and international presence, increases the value of the relationship of each customer with the Group.

The drivers are: more than 1,700 qualified professionals, which enables customers to have their own account manager to cover all their needs; more than 80 offices in nine countries in three continents, a full range of products and services and business intelligence systems that facilitate anticipation of customers’ demands.

Attributable profit

EUR Million

-24.7% Q1’12’-Q1’11

 

LOGO

2012 is the year for consolidating the Santander Private Banking Model, the commercial sales processes and customer relationship, training professionals, homogenizing investment strategies, discretionary management and the range of products. The IT platforms for managing customers are already operating in Spain, Italy and Mexico, and are in the process of being implemented in Brazil and Chile. The platforms will cover all units eventually.

Despite the instability in the euro zone, particularly in Spain and Portugal, total assets under management were 2% higher than at the end of 2011. Of note was the growth in Italy, Santander Private Banking International, Banif in Spain, Brazil and Mexico, the result of more efficient management. The volume managed at the end of March was EUR 90,000 million.

Attributable profit was EUR 49 million (EUR 44 million in the first quarter of 2011). The growth in gross income, despite the increased cost of funds, and control of costs produced a 27.0% rise in net operating income, which was mainly absorbed by the reduced release of generic provisions and higher minority interests.

In the first quarter of 2012, Santander received the 2012 Euromoney award for the best private banking in Spain, Portugal and Latin America.

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   51


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Global Wholesale Banking

 

LOGO

Recovery in revenues due to solid ones from clients (86% of the total) and improved markets.

 

LOGO

Strict management of costs to maintain an efficiency ratio that is a benchmark for the sector.

 

LOGO

Growth in net operating income in the first quarter (+63.1%) and 7.1% year-on-year.

 

LOGO

Larger provisions affect the year-on-year profit comparison.

 

LOGO

Rigorous management of risk, liquidity and capital.

Santander Global Banking & Markets (SGB&M) posted an attributable profit of EUR 602 million in the first quarter, 5.3% lower than in the same period of 2011 but 51.7% more than in the fourth quarter. This area contributed 12% of gross income and 26% of attributable profit.

Strategy

Santander Global Banking & Markets is maintaining in 2012 the main drivers of its business model: client-centred, global reach of the division and interconnection with local units.

At the strategic level, the area focuses on strengthening the results of its client franchise while maintaining special attention on risk management and improving the Group’s capital and liquidity positions, particularly in those countries where wholesale funding is more scant and costly.

SGB&M continued to accompany the Group in its international development in Poland and the northeast of the US in order to capture the revenue synergies derived from the new units and manage the commercial flows of current and potential clients where the Group has strong commercial units.

It also continued to invest in operational capacities and distribution of basic treasury products, with a particular focus on forex and fixed income businesses. The generation of recurring revenues and strict management of the costs base enabled the area to absorb these investments and produce an efficiency ratio of 28.9% that remains a reference for Santander’s peers.

Results and activity

The main development in the first quarter was the recovery of revenues (trading gains and fee income), which together with lower costs (-0.9%) absorbed the higher provisions and produced a jump in attributable profit over the three previous quarters (+51.7% over the fourth quarter).

Gross income was 6.6%, higher than all quarters of 2011. Growth was spurred by the recovery in net interest income (+9.1%) and in trading gains (+8.7%), as fee income, though recovering, was still lower than at the beginning of 2011 (-2.5%).

Expenses, although they increased year-on-year (+5.3% y-o-y), were lower than in the three preceding quarters. Net operating income was 7.1% higher than in the first quarter of 2011 at EUR 1,002 million, making it the third highest quarter of the last 12.

 

Higher provisions year-on-year very impacted by releases in the first quarter of 2011. These provisions reduced attributable profit by 5.3% year-on-year.

The results continued to be supported by solid and diversified client revenues (86% of total gross income and notably stable and strong). Client revenues rose 7.9% year-on-year, with a better relative evolution of those generated within the global customer relationship model (+4.9%), which give the area a considerable degree of stability.

All countries contributed to the growth in client revenues: Continental Europe (+3%), because of the recovery in Spain (+4%), the UK (+24%), Latin America (+2%, with Brazil up 7% and Mexico and Chile weaker) and a strong rise in the US from a small base (more than doubled). The US unit is undergoing a process of growth in Sovereign Bank in order to attain its natural market share in corporate business.

The performance of the business areas and their contribution to revenue generation was as follows:

Global Transaction Banking

This area, which includes Cash Management, Trade Finance, Basic Financing and Custody, increased its client revenues 13% year-on-year in an environment of spreads adjustment.

Cash Management revenues grew 32%, due to the efforts made to capture transactional volumes and the increase in commercial finance. Of note were Spain, Brazil and Argentina with growth of more than 25%.

Trade Finance’s client revenues increased 16% year-on-year as a result of the Group’s solid position in natural markets. Mexico, the UK and the US performed the best. The latter two from low volumes.

Basic Financing’s trends remained similar to those in 2011: greater disintermediation and containment of risk assets, partly offset by active management of spreads. All of this produced a decline in client revenues of 2%, very concentrated in Brazil and in Chile.

Lastly, custody and settlement recorded stable client revenues compared to 2011.

Attributable profit

EUR Million

-5.3% Q1’12-Q1’11

 

LOGO

 

 

52

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Corporate Finance

This area (including mergers and acquisitions and equity capital markets) reduced client revenues by 52% year-on-year.

In M&A, Santander participated in the sale of a minority stake in Thames Water Utilities Limited to the sovereign fund China Investment Corporation (CIC), in providing advice to the Companhia Siderúrgica Nacional de Brasil (CSN) over acquiring the German steel producer Stahlwerk Thüringen GmbH of Grupo Alfonso Gallardo and advice on the merger between Antena 3 TV and La Sexta.

In Equity Capital Markets, Santander had a significant role in Unicredito’s capital increase and in placing 7.5% of Amadeus on behalf of Air France.

Credit Markets

Credit Markets, which include origination and distribution of corporate loans or structured finance, bond origination and securitisation teams and asset and capital structuring, boosted its client revenue 18% year-on-year. All areas contributed except for Europe (-6%): the UK (+85%); Latin America (+26%), with Brazil up 44%, and the US where Sovereign Bank doubled its gross income.

In loans, Santander maintained its reference position in Europe and Latin America. In Europe, there was a greater focus on refinancing operations as M&A activity was scant. In Latin America, we participated in financing Grupo Cencosud’s acquisition of Prezunic in Brazil and in the $700 million loan to Ternium to buy 27.7% of Usiminas.

In Project Finance, Santander was also the global reference. Of note was its presence in the operation of Arlington Valley Solar Energy II (a 127 MW photovoltaic park in Arizona) where together with Prudential it led and executed an innovative financing structure with two debt tranches (one for banks and the other institutional).

In bonds, the evolution of primary markets in Europe and Latin America was very good. Of note in Europe was the 78% increase in revenues in the corporate segment and the significant rise in the league tables (from 12th to 6th position). In Latin America, Santander continued to consolidate its activity and that of its client franchise, enabling it to participate in the main operations in the last few years (e.g. the Petrobras bond).

Asset and Capital Structuring focused on increasing the portfolio of clients in Europe, Latin America and the US and consolidating the positions attained in 2011.

Rates

This area, which covers fixed income and FX, increased client revenues 49% over the fourth quarter of 2011 thanks to the good evolution of sales and, above all, management of books in a better market environment. In the year-on-year comparison, the growth in revenues was 1%.

Fixed Income (trading activity and hedging of interest rates and inflation by wholesale clients and clients of commercial banks) reduced its revenues (-7% year-on-year). Sharp increase in Latin America (+12%; Brazil +25%) and the UK (+32%) offset by declines in Spain (-23%) which compares with a record quarter of 2011.

In FX (trading activities and hedging of exchange rates and short-term money markets for the Group’s wholesale and retail clients) client revenues rose 27%, backed by Spain (+50%) and the UK (+37%). Of note was the good evolution of short-term money markets in Europe, the good performance of the corporate segment in main geographic areas and management of books in Latin America.

Equities

Global Equities (activities related to the equity markets) increased its client revenues (+8% year-on-year), following the sharp recovery over the fourth quarter (revenues more than doubled).

The better quarter-on-quarter performance was due to the pick up in the primary market, the recovery of volumes brokered and risk management in derivatives books. Most sub segments, however, declined in year-on-year terms.

Leadership in Latin America and Spain enabled Santander to participate in the main primary market operations in the first quarter, while constructing a pipeline that will be gradually executed if current market conditions hold. Of note in the secondary market was the improvement in retail segment revenues over the first quarter of 2011 which, however, did not offset the fall in institutional revenues.

In investment and hedging solutions, the lower levels of business impacted revenues because of the sales of OTC derivatives. The improvement in management of books is beginning to offset the lower sales. Revenues in the first quarter were higher than the quarterly average in 2011.

Lastly, Santander’s noteworthy activity in the main derivative markets listed in the world, which continued to register double-digit growth in revenues over the first quarter of 2011.

 

 

Gross income performance

EUR Million

 

LOGO

 

Gross income breakdown

EUR Million

 

LOGO

 
 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   53


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Asset Management and Insurance

 

LOGO

Year-on-year comparisons impacted by the sale of Latin American insurance companies.

 

LOGO

Solid gross income (including that paid to the networks) which was 15% higher than in the fourth quarter of 2011 and accounted for 9% of the operating areas’ total.

 

LOGO

Asset management: weak evolution in an environment of growing competition for savings.

 

LOGO

Insurance: revenues and results return to the levels of before the materialisation of the global agreement with Zurich.

Attributable profit was 18.4% lower year-on-year at EUR 98 million (4% of the operating areas’ total) and 1.1% more than the fourth quarter.

Excluding the impact of the sale of 51% of the Latin American insurers to Zurich, under the global agreement reached during the fourth quarter of 2011 and which meant recording the contribution of these companies by the equity accounted method, attributable profit would have been 8.4% higher.

Results

Gross income declined 6.0%, net operating income dropped 8.6% and operating expenses were flat (-0.5% y-o-y). Higher tax rate and minority interests resulted in attributable profit 18.4% lower. These results include an impact of EUR 32 million negative from lower revenues by the equity accounted method after the reduction in the equity stakes in insurers. Deducting that effect, gross income was 7.2% higher, net operating income rose 10.8% and attributable profit 8.4%.

The area’s total revenues contributed to the Group including those recorded by the distribution networks amounted to EUR 1,070 million, 1.1% less than in the first quarter of 2011 but 14.9% more than in the fourth quarter. The total results for the Group (profit before tax plus fees paid to the networks) was EUR 988 million (-1.1% y-o-y and +18.0% over the fourth quarter).

Asset management

Santander Asset Management continued to advance in developing a global business model based on management capacities at the Group level and the strength and knowledge of the market by local managers.

Of note was consolidation of the multimanager team for managing funds of funds, fully operational since 2011, which is the reference at Group level in asset management for all our networks. A similar process is underway with the global management teams for Latin American mandates, which since the end of 2011 have begun to manage retail as well institutional clients. Lastly, the first steps were also taken in global European mandates, as the next phase in developing the institutional segment in Santander Asset Management.

Attributable profit was EUR 17 million (-6.6%) and the total results for the Group (profit before tax plus fees paid to the networks) was stable at EUR 261 million, 0.2% less than in the first quarter of 2011 and 1.1% more than in the fourth quarter. This evolution had a positive impact on the recovery of customer volumes at the beginning of the year and reversed the downward trend. Total revenues amounted to EUR 310 million (-1.0% over the first quarter of 2011 and +3.5% over the fourth quarter).

The total volume of managed funds was EUR 143,370 million, 3% more than at the end of 2011. The growing competition from other forms of saving was offset by improvement in the markets and the new institutional mandates, such as the one in Germany for corporate fixed income.

Of the total volume managed, EUR 115,700 million were mutual funds and pension funds, EUR 7,700 million client portfolios other than mutual funds and institutional mandates and lastly, around EUR 20,000 million of management mandates on behalf of other units of the Group.

The main developments by units and countries were as follows:

 

 

In traditional management of assets, the Group manages over EUR 139,000 million, of which almost EUR 114,000 are funds, investment companies and pension plans (-6% over March 2011 and +3% over December). More than 90% of the total is concentrated in four large markets (Brazil, the UK, Spain and Mexico).

 

 

Attributable profit

EUR Million

 

-18.4% Q1’12-Q1’11

 

LOGO

 

Total Group revenues

EUR Million

 

LOGO

 
 
 

 

54

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

INFORMATION BY SECONDARY SEGMENTS

 

 

Brazil registered an increase of 3% year-on-year in its managed assets in local currency to EUR 49,000 million. The weakness in retail funds (-2% y-o-y) was offset by growth in institutional mandates (+11%), both from third parties and from the Group.

The UK’s managed funds rose to EUR 23,000 million. Growth in retail funds was stronger (+4% y-o-y in sterling), backed by the strong acceptance of funds of multimanager funds. The multimanager team in the UK received the award for Best Manager of the Year from Investment Week in the category of funds of funds. Institutional funds remained stable. Institutional mandates remained stable.

In Spain, the funds industry began the year with net reimbursements. In this context, Santander Asset Management, the market leader (16.0% market share according to Inverco) focused on balanced and guaranteed funds which were well received. Funds under traditional management in Spain, including pension plans and mandates, amounted to EUR 36,000 million (-12% y-o-y).

Mexico continued to launch new balanced and guaranteed funds, which incr–Greater stability in alternative funds after the restructuring in previous years, and in the venture capital segment, which is aimed at institutional clients who invest long term in unlisted companies eased by 3% the volume managed in pesos to more than EUR 10,500 million.

In the rest of markets (all in local currency), volumes recovered in Chile and Poland, although they still registered year-on-year declines (-1% and –20% respectively), because of the greater shift into deposits and, above all, in Portugal where the big shift into deposits and the impact of the markets accelerated the fall in mutual and pension funds (-41%). Mutual funds in Argentina and Puerto Rico rose 48% and 15% respectively.

 

 

In non-traditional management (real estate, alternative management and venture capital funds), Santander Asset Management continued to adjust its activity to the scant demand for these products. Managed funds amounted to around EUR 4,000 million.

Greater stability in alternative funds after the restructuring in previous years, and in the venture capital segment, which is aimed at institutional clients who invest long term in unlisted companies.

Insurance

Santander Insurance continued to construct its global business model by launching units and businesses that respond to the needs of local networks and their clients. The model has a low risk profile and is highly efficient in its operations.

Santander Insurance posted an attributable profit in the first quarter of EUR 81 million, 20.5% less than in the same period of 2011 and impacted by the sale of 51% of the insurers which reduced their contribution by the equity accounted method by EUR 32 million. Eliminating this effect, profit was 11.1% higher year-on-year.

Insurance business generated for the Group total revenues (including fee income paid to the commercial networks) of EUR 760 million in the first quarter (-1.2% y-o-y) because of the aforementioned sale, but 4.7% above the quarterly average in 2011. The total results for the Group (income before taxes of insurers and brokers plus fee income received by the networks) amounted to EUR 727 million (-1.4% y-o-y and 5.6% more than the 2011 average).

Continental Europe maintained its total results (+0.9% y-o-y), offsetting the fall in Spain with greater contributions from other units. Excluding consumer business, Spain declined 3.0% but was 6.7% above the 2011 average. Portugal recovered (+10.9% y-o-y), basically due to savings-investment products, while Poland (BZ WBK) gathered pace (+35.6% above the 2011 average), from a low base and centred on loan protection products.

Santander Consumer Finance’s evolution was weaker, partly due to lower car sales (-8%). Its total results were down 2.3% year-on-year.

The UK’s total results rose 4.1% in sterling while adjusting its range of products to clients’ needs.

Latin America reduced its total results 1.8% year-on-year in local currency because of the impact of the sale of the insurers. Eliminating this effect, it was 6.4% higher. The productivity of the banking networks in placing protection products and intensive use of alternative channels enabled business and results to keep on growing.

Excluding the impact of the sales, Brazil’s was 3.0% higher in local currency and 11.7% above the 2011 quarterly average. In local currency, Mexico’s was up 17.9% and Chile’s was 8.3% lower due to reduced placement of protection products, both in local currency.

The US increased gross fee income 2.2% in dollars due to the placement of insurance products with third parties.

 

 

Asset Management and Insurance. Income statement

EUR Million

 

    

Gross

income

    Net operating
income
    Attributable
profit to the Group
 
     Q1’12      Var (%)     Q1’12      Var (%)     Q1’12      Var (%)  

Mutual funds

     71         (7.9     27         (10.9     14         (12.6

Pension funds

     6         16.1        4         46.6        3         49.5   

Insurance

     152         (5.8     121         (9.0     81         (20.5

Total Asset Management and Insurance

     229         (6.0     152         (8.6     98         (18.4

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   55


Table of Contents

 

CORPORATE GOVERNANCE

 

 

Corporate Governance

The annual general meeting was held on March 30 and was attended by 343,801 shareholders (present or represented) with 4,980,852,134 shares, thereby meeting the quorum with 54.874% of the Bank’s capital stock.

The average percentage of “yes” votes that approved the proposals submitted to the Board was 93.120%.

The agenda had 13 items covering 28 agreements. The large number of proposals was in response to the practice, recommended by the Unified Code and adopted by the Bank, of voting separately on those issues that are substantially independent of one another.

Of note among the agreements adopted was the appointment of the new director, Esther Giménez-Salinas i Colomer, the ratification and re-election of Vittorio Corbo Lioi, named last July to cover the vacancy left by the death of Ángel Rojo Duque, and the re-election of Emilio Botín-Sanz de Sautuola y García de los Ríos, Juan Rodríguez Inciarte, Matías Rodríguez Inciarte and Manuel Soto Serrano. Following the changes in the By-laws approved at the AGM in June 2011, one third of the board is renewed every year.

Esther Giménez-Salinas i Colomer is an independent director and her appointment increases to 18.8% the female presence in the board. The ratification and re-election of Vittorio Corbo Lioi reflects the interest in incorporating to the board a member from a region where the Group has a substantial part of its business. At the same time, the number of directors was reduced from 20 to 16.

As a result of these appointment and re-election agreements, which were proposed and approved for a period of three years, the board now has 16 members, five of whom are executive directors and 11 non-executive. Of the 11 non-executive directors, eight are independent, one proprietary and two, in the board’s opinion, are neither independent nor proprietary.

In order to foster the informed participation of shareholders in meetings, on February 28 all the proposed agreements were published on the Group’s website (www.gruposantander.com), as well as the 2011 annual report and the reports of the auditing and compliance and appointments and remuneration committees. These reports set out the main activities of the board and of its committees in 2011, including detailed information on the rules and procedures upon which the Bank’s corporate governance model is based.

Lastly, as stipulated in the By-laws, the report on the remuneration policy for directors was made available to shareholders on February 28 and submitted to a non-binding vote at the AGM as a separate point on the agenda. The percentage of votes in favour of this report was 88.371%.

 

 

56

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

SIGNIFICANT EVENT IN THE QUARTER AND SUBSEQUENT ONES

 

 

Significant event in the quarter and subsequent ones

Banco Santander and KBC Bank agreed the merger of Bank Zachodni WBK and Kredyt Bank in Poland.

Banco Santander and KBC Bank reached an investment agreement to combine their Polish banking subsidiaries, Bank Zachodni WBK and Kredyt Bank.

Bank Zachodni WBK and Kredyt Bank, with the support of their parent companies, Santander and KBC, also entered in a cooperation agreement with a view to their merger.

 

 

Description of the transaction and key terms

The transaction will entail a share capital increase in Bank Zachodni WBK whose new shares will be offered and rendered to KBC and the other shareholders of Kredyt Bank in exchange for their shares in Kredyt Bank.

Under the agreements, and subject to independent evaluation and final agreement by Bank Zachodni WBK and Kredyt Bank, as well as to obtaining regulatory approval from the Polish Financial Supervision Authority and relevant competition clearance, Bank Zachodni WBK will merge with Kredyt Bank at the ratio of 6.96 Bank Zachodni WBK shares for every 100 Kredyt Bank shares. At current market prices, the transaction values Kredyt Bank at PLN 15.75 a share and Bank Zachodni WBK at PLN 226.4 a share. The combined bank’s total pro-forma value will be PLN 20.8 billion (EUR 5 billion).

Both Bank Zachodni WMK and Kredyt Bank are listed on the Warsaw Stock Exchange. The merged bank will continue to be listed on this exchange.

Following the merger, Santander will hold approximately 76.5% of the merged bank and KBC around 16.4%. The rest will be held by other minority shareholders.

Banco Santander has committed to help KBC lower its stake in the merged bank from 16.4% to below 10% immediately after the merger. For this purpose, Santander will seek to place a stake with investors. In this regard, Santander has also committed to acquire up to 5% of the merged bank to assist KBC. Furthermore, KBC intends to divest its remaining stake, with a view to maximizing its value.

 

 

Strategic rationale

With this transaction, Santander will increase its presence in Poland, one of its 10 core markets. The proposed merger will consolidate the merged bank’s position as Poland’s third largest bank by all measures, with a market share of 9.6% in deposits, 8.0% in loans and 12.9% in branches. The resulting entity will also be the third largest bank by revenues and profit, with 3.5 million customers, significantly closing the gap with the leaders. Including the Santander Consumer Finance business, the Group’s total market share in Poland will amount to around 10%.

The merger will produce business synergies in addition to those already announced following the acquisition of Bank Zachodni WBK by Banco Santander.

Santander estimates the impact of this transaction on its Group core capital ratio under Basel II criteria will be between 0 and 5 basis points.

Dividends

The AGM held on March 30 approved a remuneration of EUR 0.22 per share under the Santander Dividendo Elección programme (scrip dividend), at the date when the final dividend is usually paid (May).

Shareholders can opt to receive the amount equivalent to the fourth dividend in cash or in shares. Each shareholder received a free allotment right of new shares for each share they hold. Shareholders can sell the rights to the Bank at a set price (EUR 0.22 per right), to the stock market between April 13 and 27 at the market price or receive new shares in the proportion of one new share for every 24 rights, in the last two cases without withholding tax.*

In order to accommodate the last category, a rights issue was carried out for a maximum of EUR 189,101,112.50, represented by 378,202,225 shares. The number of new shares issued and thus the amount of the capital increase will depend on the number of shareholders who opt to sell their free allotment rights to the Bank at a set price.

On May 3 shareholders are expected to receive the amount in cash if they have sold the rights to the Bank and on May 9 the new shares for those who chose this option.

 

(*)

The options, maturities and procedures indicated can present special features for shareholders holding Santander shares in the various foreign stock markets where the Bank is listed.

Anticipated conversion of Valores Santander

Banco Santander informs that the Ordinary General Shareholders’ Meeting held on March 30 resolved to grant the holders of Valores Santader an option to convert their securities on four occasions before October 4, 2012, the mandatory conversion date for the Valores Santander outstanding. Specifically, the holders of Valores Santander who so wish may request their conversion within the fifteen calendar days prior to each of June 4, July 4, August 4 and September 4, 2012.

Those who opt for the voluntary conversion will receive the number of new shares of Banco Santander that results from the conversion ratio then prevailing pursuant to the prospectus of the issuance (currently, 365.764447695684 shares for each Valor Santander resulting from dividing the nominal value of each Valor Santander (EUR 5,000) by the reference price (EUR 13.67), as communicated in the relevant fact announcement of last February 6). In addition, they will receive, subject to the same cancellation events provided in the prospectus, the remuneration corresponding to their Valores Santander accrued until the voluntary conversion date in which they request such conversion (this is, the 4th of the relevant month).

Without prejudice to such conversion option, the terms and conditions of the issuance remain unchanged. As a result, the holders of Valores Santander who do not opt for the voluntary conversion in any of the conversion windows will maintain the rights of their securities, which will necessarily convert into new shares of Santander next October 4th pursuant to the terms of the prospectus.

Santander Emisora 150, S.A.U., issuer of the Valores Santander, has also passed the necessary resolution to grant the voluntary conversion options described above.

 

 

LOGO   FINANCIAL REPORT 2012 / JANUARY - MARCH

   57


Table of Contents

 

CORPORATE SOCIAL RESPONSIBILITY

 

 

Corporate Social Responsibility

Grupo Santander continued in the first quarter of 2012 to develop new initiatives within its commitment to corporate social responsibility. The main ones were:

Santander Universities

Under the framework of support for higher education, Banco Santander has signed close to 1,000 cooperation agreements in 17 countries. In line with the international expansion of Santander Universities, Bank Zachodni WBK, Santander’s subsidiary in Poland, signed four cooperation agreements with some of Poland’s main universities.

The agreement with the University of Warsaw, the largest and most important, will enable this institution to strengthen its education offer with new scholarship programmes, international R&D projects and work experience in Banco Santander for the best students.

The agreements signed with three of the main universities in Wroclaw, where the Bank has its headquarters in Poland, will enable ambitious research and educational projects to be launched throughout the country.

In the UK, the Bank renewed its agreement with the University of Surrey to grant scholarships to graduates and postgraduates and travel grants for university students. In the United States, two new agreements were made with Baruch College (New York) and the College of the Holy Cross in Worcester (Massachusetts) to support business training and foster international academic exchanges.

Lastly, Mr. Emilio Botín, the chairman of Banco Santander, and Mr. José Manuel Blecua, chairman of the Royal Spanish Academy, renewed the cooperation agreement to digitize the Academy’s archives. This will facilitate access by more users to the archives and improve the consultation process.

Social and cultural actions

In line with the Bank’s interest in encouraging employees to participate in voluntary activities, the “Voluntarios Santander Comprometidos“ programme was increased by incorporating the NGOs Aldeas Infantiles, the Spanish Association against Cancer, the Red Cross and Entreculturas. This expansion will enable retail banking employees in Spain to take part in a large range of activities via www.voluntariosantander.com.

In the sphere of microcredit’s, Banco Santander Brazil and the “Organización Social Alianza Emprendedora” launched the Parceiras em Ação programme, in order to finance projects carried out by women. Every two years, five projects are chosen and receive funds (up to BRL 40,000 or EUR 17,400) and advice on developing their businesses. The Bank will spread the word about the products and services of these new micro companies.

In Chile, Banco Santander subscribed an alliance with the Integra Foundation, one of the main promoters of primary education in the country, to take mobile schools to rural zones whose location makes it difficult to install permanent schools.

Lastly, Banco Santander in Spain adhered to the Code of Good Practices for the viable restructuring of debts with mortgage guarantee on the usual residence, approved by the government on March 9 to avoid the social problems from evictions. This code sets out a framework for restructuring the mortgages of those families in a dire economic situation who cannot meet their mortgage payments.

The environment and climate change

Banco Santander continued to make progress in its commitment to the environment. In February it launched its environmental footprint portal, an online internal space that gathers the Group’s environmental information by countries and years and regularly updates it. The portal also has news on the environment, the best practices of the countries where the Group operates, the Group’s social and environmental policy, a glossary of terms and a section where employees can calculate the CO2 emissions from its daily activity.

In Portugal, Banco Santander launched significant initiatives to reduce inputs and emissions in its installations. They included detectors to control lighting in branches. These measures improve energy efficiency, in line with the 2011-2013 corporate plan.

Banco Santander’s headquarters in the UK received the ISO 14.001 environmental certification, which guarantees good environmental management in various aspects such as responsible consumption of energy, water, paper and waste recycling practices.

Banco Santander Foundation

The foundation presented in the art centre at Grupo Santander City an exhibition of paintings belonging to the Rubell Family Collection, one of the largest private collections of contemporary art in the world.

Among the 68 paintings in display are those by Andy Warhol, John Baldessari, Elizabeth Peyton, Hernan Bass, Takashi Murakami, Neo Rauch, Francesco Clemente, Kaari Upson, Keith Harina, Adam McEwen and Cecily Brown.

Other developments

Banco Santander published in February its 2011 annual report, auditor’s report and financial statements and the reports of the auditing and compliance and appointments and remuneration committees.

The publication of the annual report is highlighted every year as an example of transparency by socially responsible investment indices, such as the DJSI, or by specialized finance magazines, such as Institutional Investor, and attains leading positions in transparency rankings.

In March, the Sustainability Report was published, which sets out the Bank’s strategy and main actions in this sphere. In 2011, Banco Santander invested EUR 170 million in corporate social responsibility projects.

Lastly, one of the main international conferences on socially responsible investment was held in Paris in March, For the third year running the Bank participated on meetings with analysts and investors to explain the Group’s sustainability strategy and the latest advances which make Banco Santander one of the benchmark institutions in this sphere.

 

 

58

   JANUARY - MARCH / FINANCIAL REPORT 2012   LOGO


Table of Contents

 

LOGO


Table of Contents

LOGO

Key consolidated data

 

                   Variation        
     Q1 ’12      Q1 ’11      Amount     %     2011  

Balance sheet (EUR million)

            

Total assets

     1,283,349         1,208,563         74,786        6.2        1,251,525   

Net customer loans

     746,382         713,871         32,511        4.6        750,100   

Customer deposits

     642,786         620,774         22,013        3.5        632,533   

Customer funds under management

     1,007,804         984,668         23,136        2.3        984,353   

Shareholders’ equity (1)

     80,695         77,590         3,105        4.0        80,629   

Total managed funds

     1,418,528         1,350,922         67,606        5.0        1,382,980   

Income statement (EUR million)

            

Net interest income

     7,821         7,075         746        10.6        29,110   

Gross income

     11,354         10,482         872        8.3        42,754   

Pre-provision profit

     6,280         5,750         530        9.2        23,195   

Profit from continuing operations

     1,829         2,332         (504     (21.6     7,812   

Attributable profit to the Group

     1,604         2,108         (504     (23.9     5,351   

EPS, profitability and efficiency (%)

            

EPS (euro)

     0.17         0.24         (0.07     (28.5     0.60   

Diluted EPS (euro)

     0.17         0.24         (0.07     (28.5     0.60   

ROE

     8.13         11.37             7.14   

ROTE

     11.99         16.90             10.81   

ROA

     0.57         0.77             0.50   

RoRWA

     1.28         1.58             1.06   

Efficiency ratio (with amortisations)

     44.7         45.1             45.7   

BIS II ratios and NPL ratios (%)

            

Core capital

     10.10         9.66             10.02   

Tier I

     11.05         10.93             11.01   

BIS II ratio

     13.50         13.74             13.56   

NPL ratio

     3.98         3.61             3.89   

NPL coverage

     62         71             61   

Market capitalisation and shares

            

Shares (2) (millions at period-end)

     9,077         8,440         637        7.5        8,909   

Share price (euros)

     5.770         8.192         (2.422     (29.6     5.870   

Market capitalisation (EUR million)

     52,373         69,143         (16,769     (24.3     50,290   

Book value (1) (euro)

     8.45         8.72             8.62   

Price / Book value (X)

     0.68         0.94             0.68   

P/E ratio (X)

     8.47         8.60             9.75   

Other data

            

Number of shareholders

     3,269,996         3,149,422         120,574        3.8        3,293,537   

Number of employees

     189,613         177,648         11,965        6.7        189,766   

Continental Europe

     58,506         49,702         8,804        17.7        58,864   

o/w: Spain

     31,809         32,192         (383     (1.2     31,889   

United Kingdom

     27,381         26,902         479        1.8        27,505   

Latin America

     92,244         89,866         2,378        2.6        91,913   

USA

     9,151         8,928         223        2.5        9,187   

Corporate Activities

     2,331         2,250         81        3.6        2,297   

Number of branches

     14,696         14,179         517        3.6        14,756   

Continental Europe

     6,558         6,151         407        6.6        6,608   

o/w: Spain

     4,763         4,794         (31     (0.6     4,781   

United Kingdom

     1,363         1,412         (49     (3.5     1,379   

Latin America

     6,053         5,895         158        2.7        6,046   

USA

     722         721         1        0.1        723   

Note: The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on April, 24 2012, following a favourable report from the Audit and Compliance Committee on April, 18 2012. The Committee verified that the information for the quarter was based on the same principles and practices as those used to draw up the annual financial statements.

 

(1)

In December 2011, estimated data of May 2012 scrip dividend

(2)

In December 2011, includes shares issued to cover the exchange of preferred shares of December 2011


Table of Contents

LOGO

Income statement

EUR million

 

                 Variation           Variation  
     Q1 ’12     Q1 ’11     Amount     %     Q4 ’11     Amount     %  

Net interest income

     7,821        7,075        746        10.6        7,536        285        3.8   

Dividends

     61        40        21        52.6        101        (39     (39.1

Income from equity-accounted method

     136        225        (90     (39.9     176        (41     (23.2

Net fees

     2,622        2,518        104        4.1        2,387        235        9.9   

Gains (losses) on financial transactions

     797        664        134        20.1        474        323        68.1   

Other operating income/expenses

     (83     (40     (43     107.8        (45     (38     83.9   

Gross income

     11,354        10,482        872        8.3        10,629        725        6.8   

Operating expenses

     (5,074     (4,731     (343     7.2        (5,093     19        (0.4

General administrative expenses

     (4,549     (4,227     (322     7.6        (4,563     14        (0.3

Personnel

     (2,637     (2,474     (163     6.6        (2,601     (36     1.4   

Other general administrative expenses

     (1,911     (1,752     (159     9.1        (1,961     50        (2.5

Depreciation and amortisation

     (525     (505     (21     4.1        (530     5        (0.9

Net operating income

     6,280        5,750        530        9.2        5,536        744        13.4   

Net loan-loss provisions

     (3,127     (2,065     (1,061     51.4        (2,577     (549     21.3   

Impairment losses on other assets

     (83     (48     (35     74.2        11        (94     —     

Other income

     (526     (546     20        (3.7     (531     5        (1.0

Profit before taxes (w/o capital gains)

     2,545        3,092        (547     (17.7     2,439        106        4.4   

Tax on profit

     (716     (759     43        (5.6     (545     (171     31.4   

Profit from continuing operations (w/o capital gains)

     1,829        2,332        (504     (21.6     1,894        (65     (3.4

Net profit from discontinued operations

     1        (6     7        —          (3     4        —     

Consolidated profit (w/o capital gains)

     1,829        2,327        (497     (21.4     1,890        (61     (3.2

Minority interests

     226        218        7        3.3        173        53        30.4   

Attributable profit to the Group (w/o capital gains)

     1,604        2,108        (504     (23.9     1,717        (114     (6.6

Net capital gains and provisions

     —          —          —          —          (1,670     1,670        (100.0

Attributable profit to the Group

     1,604        2,108        (504     (23.9     47        1,556        —     

EPS (euros)

     0.17        0.24        (0.07     (28.5     0.00        0.17        —     

Diluted EPS (euros)

     0.17        0.24        (0.07     (28.5     0.00        0.16        —     

Pro memoria:

              

Average total assets

     1,275,368        1,210,814        64,554        5.3        1,243,254        32,114        2.6   

Average shareholders’ equity

     78,894        74,152        4,742        6.4        75,458        3,436        4.6   


Table of Contents

LOGO

Quarterly

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Net interest income

     7,075        7,225        7,275        7,536        7,821   

Dividends

     40        193        60        101        61   

Income from equity-accounted method

     225        204        169        176        136   

Net fees

     2,518        2,667        2,636        2,387        2,622   

Gains (losses) on financial transactions

     664        722        639        474        797   

Other operating income/expenses

     (40     (90     (57     (45     (83

Gross income

     10,482        10,921        10,722        10,629        11,354   

Operating expenses

     (4,731     (4,826     (4,909     (5,093     (5,074

General administrative expenses

     (4,227     (4,303     (4,376     (4,563     (4,549

Personnel

     (2,474     (2,511     (2,569     (2,601     (2,637

Other general administrative expenses

     (1,752     (1,791     (1,807     (1,961     (1,911

Depreciation and amortisation

     (505     (523     (533     (530     (525

Net operating income

     5,750        6,095        5,813        5,536        6,280   

Net loan-loss provisions

     (2,065     (2,546     (2,711     (2,577     (3,127

Impairment losses on other assets

     (48     (52     (84     11        (83

Other income

     (546     (1,378     (357     (531     (526

Profit before taxes (w/o capital gains)

     3,092        2,119        2,661        2,439        2,545   

Tax on profit

     (759     (512     (683     (545     (716

Profit from continuing operations (w/o capital gains)

     2,332        1,607        1,978        1,894        1,829   

Net profit from discontinued operations

     (6     (0     (15     (3     1   

Consolidated profit (w/o capital gains)

     2,327        1,607        1,963        1,890        1,829   

Minority interests

     218        214        161        173        226   

Attributable profit to the Group (w/o capital gains)

     2,108        1,393        1,803        1,717        1,604   

Net capital gains and provisions

     —          —          —          (1,670     —     

Attributable profit to the Group

     2,108        1,393        1,803        47        1,604   

EPS (euros)

     0.24        0.16        0.20        0.00        0.17   

Diluted EPS (euros)

     0.24        0.16        0.20        0.00        0.17   


Table of Contents

LOGO

Exchange rates: 1 euro / currency parity

 

     Average (income statement)      Period-end (balance sheet)  
     Q1 ’12      Q1 ’11      31.03.12      31.12.11      31.03.11  

US$

     1.3105         1.3672         1.3356         1.2939         1.4207   

Pound

     0.8344         0.8537         0.8339         0.8353         0.8837   

Brazilian real

     2.3156         2.2789         2.4323         2.4159         2.3058   

New Mexican peso

     17.0138         16.4943         17.0222         18.0512         16.9276   

Chilean peso

     640.4469         658.8955         649.3019         671.3400         683.1436   

Argentine peso

     5.6878         5.4932         5.8366         5.5686         5.7528   

Polish zloty

     4.2297         3.9450         4.1522         4.4580         4.0106   


Table of Contents

LOGO

Net fees

EUR million

 

                   Variation  
     Q1 ’12      Q1 ’11      Amount     %  

Fees from services

     1,499         1,412         87        6.2   

Mutual & pension funds

     302         307         (5     (1.5

Securities and custody

     184         162         22        13.5   

Insurance

     637         637         (0     (0.0

Net fee income

     2,622         2,518         104        4.1   


Table of Contents

LOGO

Operating expenses

EUR million

 

                   Variation  
     Q1 ’12      Q1 ’11      Amount     %  

Personnel expenses

     2,637         2,474         163        6.6   

General expenses

     1,911         1,752         159        9.1   

Information technology

     249         237         12        5.2   

Communications

     166         169         (2     (1.4

Advertising

     162         142         20        14.1   

Buildings and premises

     436         401         35        8.6   

Printed and office material

     45         41         4        9.6   

Taxes (other than profit tax)

     97         92         6        6.1   

Other expenses

     756         671         85        12.7   

Personnel and general expenses

     4,549         4,227         322        7.6   

Depreciation and amortisation

     525         505         21        4.1   

Total operating expenses

     5,074         4,731         343        7.2   


Table of Contents

LOGO

Net loan-loss provisions

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Non performing loans

     3,401        2,343        1,058        45.1   

Country-risk

     2        3        (1     (21.6

Recovery of written-off assets

     (277     (281     4        (1.4

Total

     3,127        2,065        1,061        51.4   


Table of Contents

LOGO

Balance sheet

EUR million

 

                 Variation        
     31.03.12     31.03.11     Amount     %     31.12.11  

Assets

          

Cash on hand and deposits at central banks

     111,943        86,006        25,937        30.2        96,524   

Trading portfolio

     174,223        148,138        26,085        17.6        172,637   

Debt securities

     53,235        55,426        (2,191     (4.0     52,704   

Customer loans

     13,300        2,080        11,220        539.3        8,056   

Equities

     5,304        8,146        (2,842     (34.9     4,744   

Trading derivatives

     95,495        62,509        32,986        52.8        102,498   

Deposits from credit institutions

     6,889        19,976        (13,087     (65.5     4,636   

Other financial assets at fair value

     20,358        41,907        (21,548     (51.4     19,563   

Customer loans

     12,116        6,892        5,224        75.8        11,748   

Other (deposits at credit institutions, debt securities and equities)

     8,242        35,014        (26,773     (76.5     7,815   

Available-for-sale financial assets

     99,165        85,125        14,040        16.5        86,612   

Debt securities

     94,349        78,741        15,608        19.8        81,589   

Equities

     4,816        6,384        (1,568     (24.6     5,024   

Loans

     780,763        760,084        20,679        2.7        779,525   

Deposits at credit institutions

     52,924        47,414        5,510        11.6        42,389   

Customer loans

     720,965        704,898        16,067        2.3        730,296   

Debt securities

     6,874        7,772        (898     (11.6     6,840   

Investments

     4,685        275        4,411        —          4,154   

Intangible assets and property and equipment

     16,816        17,041        (225     (1.3     16,840   

Goodwill

     25,200        23,856        1,344        5.6        25,089   

Other

     50,195        46,132        4,063        8.8        50,580   

Total assets

     1,283,349        1,208,563        74,786        6.2        1,251,525   

Liabilities and shareholders’ equity

          

Trading portfolio

     149,125        130,191        18,935        14.5        146,949   

Customer deposits

     16,085        7,838        8,247        105.2        16,574   

Marketable debt securities

     74        1,207        (1,133     (93.9     77   

Trading derivatives

     96,889        63,746        33,144        52.0        103,083   

Other

     36,077        57,400        (21,323     (37.1     27,214   

Other financial liabilities at fair value

     47,490        52,786        (5,297     (10.0     44,908   

Customer deposits

     32,068        30,836        1,233        4.0        26,982   

Marketable debt securities

     5,247        5,203        44        0.8        8,185   

Due to central banks and credit institutions

     10,174        16,747        (6,573     (39.2     9,741   

Financial liabilities at amortized cost

     964,252        898,476        65,776        7.3        935,669   

Due to central banks and credit institutions

     124,780        80,790        43,990        54.4        116,368   

Customer deposits

     594,633        582,100        12,533        2.2        588,977   

Marketable debt securities

     201,697        187,861        13,836        7.4        189,110   

Subordinated debt

     22,821        26,431        (3,611     (13.7     22,992   

Other financial liabilities

     20,321        21,293        (972     (4.6     18,221   

Insurance liabilities

     717        10,453        (9,736     (93.1     517   

Provisions

     15,486        15,142        344        2.3        15,571   

Other liability accounts

     22,123        21,762        361        1.7        25,052   

Total liabilities

     1,199,194        1,128,810        70,383        6.2        1,168,666   

Shareholders’ equity

     80,695        77,590        3,105        4.0        80,895   

Capital stock

     4,538        4,220        318        7.5        4,455   

Reserves

     74,552        74,592        (39     (0.1     72,660   

Attributable profit to the Group

     1,604        2,108        (504     (23.9     5,351   

Less: dividends

     —          (3,330     3,330        (100.0     (1,570

Equity adjustments by valuation

     (4,900     (3,813     (1,087     28.5        (4,482

Minority interests

     8,361        5,976        2,385        39.9        6,445   

Total equity

     84,155        79,753        4,402        5.5        82,859   

Total liabilities and equity

     1,283,349        1,208,563        74,786        6.2        1,251,525   


Table of Contents

LOGO

Balance sheet

EUR million

 

     31.03.11     30.06.11     30.09.11     31.12.11     31.03.12  

Assets

          

Cash on hand and deposits at central banks

     86,006        90,003        84,050        96,524        111,943   

Trading portfolio

     148,138        164,301        191,440        172,637        174,223   

Debt securities

     55,426        69,164        60,033        52,704        53,235   

Customer loans

     2,080        694        1,973        8,056        13,300   

Equities

     8,146        8,316        6,432        4,744        5,304   

Trading derivatives

     62,509        68,494        102,217        102,498        95,495   

Deposits from credit institutions

     19,976        17,633        20,785        4,636        6,889   

Other financial assets at fair value

     41,907        30,986        27,875        19,563        20,358   

Customer loans

     6,892        8,574        11,039        11,748        12,116   

Other (deposits at credit institutions, debt securities and equities)

     35,014        22,412        16,836        7,815        8,242   

Available-for-sale financial assets

     85,125        90,476        79,410        86,612        99,165   

Debt securities

     78,741        84,137        73,875        81,589        94,349   

Equities

     6,384        6,339        5,535        5,024        4,816   

Loans

     760,084        764,588        772,144        779,525        780,763   

Deposits at credit institutions

     47,414        42,593        43,778        42,389        52,924   

Customer loans

     704,898        714,701        721,291        730,296        720,965   

Debt securities

     7,772        7,294        7,075        6,840        6,874   

Investments

     275        293        1,212        4,154        4,685   

Intangible assets and property and equipment

     17,041        17,566        17,102        16,840        16,816   

Goodwill

     23,856        26,527        25,914        25,089        25,200   

Other

     46,132        47,168        51,330        50,580        50,195   

Total assets

     1,208,563        1,231,908        1,250,476        1,251,525        1,283,349   

Liabilities and shareholders’ equity

          

Trading portfolio

     130,191        131,909        168,751        146,949        149,125   

Customer deposits

     7,838        13,133        15,368        16,574        16,085   

Marketable debt securities

     1,207        2,214        1,507        77        74   

Trading derivatives

     63,746        68,663        101,557        103,083        96,889   

Other

     57,400        47,900        50,318        27,214        36,077   

Other financial liabilities at fair value

     52,786        72,638        66,940        44,908        47,490   

Customer deposits

     30,836        39,115        43,415        26,982        32,068   

Marketable debt securities

     5,203        8,954        8,432        8,185        5,247   

Deposits at credit institutions

     16,747        24,570        15,093        9,741        10,174   

Financial liabilities at amortized cost

     898,476        898,769        887,244        935,669        964,252   

Due to central banks and credit institutions

     80,790        87,681        93,435        116,368        124,780   

Customer deposits

     582,100        572,166        561,128        588,977        594,633   

Marketable debt securities

     187,861        191,314        187,750        189,110        201,697   

Subordinated debt

     26,431        25,841        25,848        22,992        22,821   

Other financial liabilities

     21,293        21,767        19,082        18,221        20,321   

Insurance liabilities

     10,453        10,775        9,894        517        717   

Provisions

     15,142        16,040        15,198        15,571        15,486   

Other liability accounts

     21,762        22,113        24,160        25,052        22,123   

Total liabilities

     1,128,810        1,152,245        1,172,187        1,168,666        1,199,194   

Shareholders’ equity

     77,590        77,697        79,144        80,895        80,695   

Capital stock

     4,220        4,220        4,220        4,455        4,538   

Reserves

     74,592        71,117        70,762        72,660        74,552   

Attributable profit to the Group

     2,108        3,501        5,303        5,351        1,604   

Less: dividends

     (3,330     (1,141     (1,141     (1,570     —     

Equity adjustments by valuation

     (3,813     (4,165     (6,519     (4,482     (4,900

Minority interests

     5,976        6,131        5,664        6,445        8,361   

Total equity

     79,753        79,663        78,289        82,859        84,155   

Total liabilities and equity

     1,208,563        1,231,908        1,250,476        1,251,525        1,283,349   


Table of Contents

LOGO

Customer loans

EUR million

 

                   Variation        
     31.03.12      31.03.11      Amount     %     31.12.11  

Public sector

     12,801         12,340         461        3.7        12,147   

Other residents

     193,462         210,430         (16,969     (8.1     202,411   

Commercial bills

     8,790         9,320         (530     (5.7     9,679   

Secured loans

     110,731         124,610         (13,879     (11.1     117,946   

Other loans

     73,940         76,500         (2,560     (3.3     74,785   

Non-resident sector

     559,356         510,246         49,111        9.6        554,478   

Secured loans

     343,492         309,769         33,723        10.9        342,676   

Other loans

     215,865         200,476         15,388        7.7        211,802   

Gross customer loans

     765,619         733,016         32,603        4.4        769,036   

Loan-loss allowances

     19,237         19,145         92        0.5        18,936   

Net customer loans

     746,382         713,871         32,511        4.6        750,100   

Pro memoria: Doubtful loans

     31,838         27,871         3,968        14.2        31,287   

Public sector

     139         44         95        212.7        102   

Other residents

     14,613         12,539         2,075        16.5        14,745   

Non-resident sector

     17,086         15,287         1,799        11.8        16,439   


Table of Contents

LOGO

Customer loans

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Public sector

     12,340         12,565         12,340         12,147         12,801   

Other residents

     210,430         208,493         205,225         202,411         193,462   

Commercial bills

     9,320         8,944         9,075         9,679         8,790   

Secured loans

     124,610         122,884         121,016         117,946         110,731   

Other loans

     76,500         76,665         75,135         74,785         73,940   

Non-resident sector

     510,246         522,815         536,267         554,478         559,356   

Secured loans

     309,769         315,370         326,079         342,676         343,492   

Other loans

     200,476         207,445         210,187         211,802         215,865   

Gross customer loans

     733,016         743,874         753,832         769,036         765,619   

Loan-loss allowances

     19,145         19,904         19,529         18,936         19,237   

Net customer loans

     713,871         723,969         734,302         750,100         746,382   

Pro memoria: Doubtful loans

     27,871         29,597         30,124         31,287         31,838   

Public sector

     44         85         88         102         139   

Other residents

     12,539         12,946         13,708         14,745         14,613   

Non-resident sector

     15,287         16,566         16,328         16,439         17,086   


Table of Contents

LOGO

Credit risk management *

EUR million

 

                   Variation        
     31.03.12      31.03.11      Amount     %     31.12.11  

Non-performing loans

     32,560         28,494         4,066        14.3        32,036   

NPL ratio (%)

     3.98         3.61         0.37 p.          3.89   

Loan-loss allowances

     20,035         20,124         (89     (0.4     19,661   

Specific

     15,808         14,992         816        5.4        15,474   

Generic

     4,227         5,132         (905     (17.6     4,187   

NPL coverage (%)

     62         71         (9 p.       61   

Credit cost (%) **

     1.44         1.51         (0.07 p.       1.41   

Ordinary non-performing and doubtful loans ***

     19,213         17,987         1,225        6.8        18,318   

NPL ratio (%) ***

     2.39         2.31         0.08 p.          2.26   

NPL coverage (%) ***

     104         112         (8 p.       107   

 

*

Excluding country-risk

**

Net specific allowance / computable assets

***

Excluding mortgage guarantees

Note: NPL ratio: Non-performing loans / computable assets


Table of Contents

LOGO

Credit risk management *

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Non-performing loans

     28,494         30,186         30,910         32,036         32,560   

NPL ratio (%)

     3.61         3.78         3.86         3.89         3.98   

Loan-loss allowances

     20,124         20,800         20,403         19,661         20,035   

Specific

     14,992         15,512         15,300         15,474         15,808   

Generic

     5,132         5,288         5,103         4,187         4,227   

NPL coverage (%)

     71         69         66         61         62   

Credit cost (%) **

     1.51         1.48         1.44         1.41         1.44   

 

*

Excluding country-risk

**

Net specific allowance / computable assets


Table of Contents

LOGO

Non-performing loans by quarter

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Balance at beginning of period

     28,522        28,494        30,186        30,910        32,036   

Net additions

     3,112        4,015        4,206        4,048        3,638   

Increase in scope of consolidation

     186        739        (0     —          (602

Exchange differences

     (558     (31     (444     671        37   

Write-offs

     (2,767     (3,031     (3,037     (3,594     (2,549

Balance at period-end

     28,494        30,186        30,910        32,036        32,560   


Table of Contents

LOGO

Customer funds under management

EUR million

 

                   Variation        
     31.03.12      31.03.11      Amount     %     31.12.11  

Resident public sector

     10,925         8,640         2,285        26.5        6,528   

Other residents

     137,134         163,246         (26,112     (16.0     144,131   

Demand deposits

     67,382         71,018         (3,635     (5.1     68,389   

Time deposits

     60,511         78,500         (17,989     (22.9     61,185   

Other

     9,241         13,729         (4,488     (32.7     14,557   

Non-resident sector

     494,727         448,888         45,839        10.2        481,875   

Demand deposits

     224,318         211,861         12,456        5.9        220,299   

Time deposits

     194,764         197,313         (2,549     (1.3     197,249   

Other

     75,645         39,713         35,932        90.5        64,328   

Customer deposits

     642,786         620,774         22,013        3.5        632,533   

Debt securities*

     207,018         194,271         12,747        6.6        197,372   

Subordinated debt

     22,821         26,431         (3,611     (13.7     22,992   

On-balance-sheet customer funds

     872,625         841,476         31,149        3.7        852,898   

Mutual funds

     105,914         112,817         (6,903     (6.1     102,611   

Pension funds

     9,765         10,916         (1,151     (10.5     9,645   

Managed portfolios

     19,500         18,626         875        4.7        19,199   

Savings-insurance policies

     —           833         (833     (100.0     —     

Other customer funds under management

     135,179         143,192         (8,013     (5.6     131,456   

Customer funds under management

     1,007,804         984,668         23,136        2.3        984,353   

 

*

Including retail commercial paper. EUR 8,346 million in March 2012


Table of Contents

LOGO

Mutual funds

EUR million

 

                   Variation        
     31.03.12      31.03.11      Amount     %     31.12.11  

Spain

     27,292         31,974         (4,682     (14.6     27,425   

Portugal

     1,809         3,051         (1,242     (40.7     1,866   

Poland

     2,059            2,059       

United Kingdom

     15,674         14,204         1,470        10.3        15,744   

Latin America

     59,080         63,588         (4,508     (7.1     55,829   

Total

     105,914         112,817         (6,903     (6.1     102,611   


Table of Contents

LOGO

Pension funds

EUR million

 

                   Variation        
     31.03.12      31.03.11      Amount     %     31.12.11  

Spain

     8,983         9,602         (619     (6.4     8,884   

Portugal

     782         1,314         (532     (40.5     760   

Total

     9,765         10,916         (1,151     (10.5     9,645   


Table of Contents

LOGO

Customer funds under management

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Resident public sector

     8,640         6,558         6,994         6,528         10,925   

Other residents

     163,246         159,076         161,571         144,131         137,134   

Demand deposits

     71,018         69,482         67,523         68,389         67,382   

Time deposits

     78,500         68,378         64,875         61,185         60,511   

Other

     13,729         21,216         29,172         14,557         9,241   

Non-resident sector

     448,888         458,780         451,346         481,875         494,727   

Demand deposits

     211,861         215,828         215,260         220,299         224,318   

Time deposits

     197,313         200,843         194,539         197,249         194,764   

Other

     39,713         42,109         41,547         64,328         75,645   

Customer deposits

     620,774         624,414         619,911         632,533         642,786   

Debt securities*

     194,271         202,482         197,689         197,372         207,018   

Subordinated debt

     26,431         25,841         25,848         22,992         22,821   

On-balance-sheet customer funds

     841,476         852,737         843,448         852,898         872,625   

Mutual funds

     112,817         112,371         103,755         102,611         105,914   

Pension funds

     10,916         10,744         9,893         9,645         9,765   

Managed portfolios

     18,626         19,005         18,796         19,199         19,500   

Savings-insurance policies

     833         884         707         —           —     

Other customer funds under management

     143,192         143,004         133,150         131,456         135,179   

Customer funds under management

     984,668         995,741         976,598         984,353         1,007,804   

 

*

Including retail commercial paper. EUR 8,346 million in March 2012 ; EUR 6,052 million in December 2011


Table of Contents

LOGO

Mutual funds

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Spain

     31,974         30,209         28,331         27,425         27,292   

Portugal

     3,051         2,755         2,159         1,866         1,809   

Poland

     —           2,443         1,888         1,747         2,059   

United Kingdom

     14,204         14,532         14,686         15,744         15,674   

Latin America

     63,588         62,433         56,691         55,829         59,080   

Total

     112,817         112,371         103,755         102,611         105,914   


Table of Contents

LOGO

Pension funds

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Spain

     9,602         9,477         8,910         8,884         8,983   

Portugal

     1,314         1,266         983         760         782   

Total

     10,916         10,744         9,893         9,645         9,765   


Table of Contents

LOGO

Total equity and capital with the nature of financial liabilities

EUR million

 

                 Variation        
     31.03.12     31.03.11     Amount     %     31.12.11  

Capital stock

     4,538        4,220        318        7.5        4,455   

Additional paid-in surplus

     31,172        29,446        1,726        5.9        31,223   

Reserves

     43,558        45,228        (1,669     (3.7     41,688   

Treasury stock

     (178     (82     (96     116.6        (251

Shareholders’ equity (before profit and dividends)

     79,091        78,812        279        0.4        77,115   

Attributable profit

     1,604        2,108        (504     (23.9     5,351   

Interim dividend distributed

     —          (1,399     1,399        (100.0     (1,429

Interim dividend not distributed (1)

     —          (1,931     1,931        (100.0     (408

Shareholders’ equity (after retained profit)

     80,695        77,590        3,105        4.0        80,629   

Valuation adjustments

     (4,900     (3,813     (1,087     28.5        (4,482

Minority interests

     8,361        5,976        2,385        39.9        6,445   

Total equity (after retained profit)

     84,155        79,753        4,402        5.5        82,592   

Preferred shares and securities in subordinated debt

     5,639        6,917        (1,279     (18.5     5,896   

Total equity and capital with the nature of financial liabilities

     89,794        86,671        3,123        3.6        88,488   

 

(1)

In December 2011, estimated data of May 2012 scrip dividend


Table of Contents

LOGO

Computable capital and BIS II ratio

EUR million

 

                 Variation        
     31.03.12     31.03.11     Amount     %     31.12.11  

Core capital

     57,567        55,478        2,089        3.8        56,694   

Basic capital

     63,031        62,730        301        0.5        62,294   

Supplementary capital

     15,173        18,513        (3,340     (18.0     15,568   

Deductions

     (1,205     (2,398     1,193        (49.7     (1,090

Computable capital

     76,999        78,845        (1,846     (2.3     76,772   

Risk-weighted assets

     570,239        574,036        (3,797     (0.7     565,958   

BIS II ratio

     13.50        13.74        (0.24 p.       13.56   

Tier I (before deductions)

     11.05        10.93        0.12 p.          11.01   

Core capital

     10.10        9.66        0.44 p.          10.02   

Shareholders’ equity surplus (BIS II ratio)

     31,380        32,922        (1,542     (4.7     31,495   


Table of Contents

LOGO

Key data by principal segments

 

    Net operating income     Attributable profit to the Group     Efficiency ratio (%)     ROE (%)  
    Q1 ’12     Q1 ’11     Var (%)     Q1 ’12     Q1 ’11     Var (%)     Q1 ’12     Q1 ’11     Q1 ’12     Q1 ’11  

Income statement (EUR million)

                   

Continental Europe

    2,019        1,826        10.6        584        878        (33.5     43.9        44.4        7.43        12.25   

o/w: Santander Branch Network

    606        588        3.2        75        274        (72.8     45.8        46.6        4.57        15.70   

Banesto

    335        273        22.6        41        101        (59.1     43.1        48.2        3.43        8.70   

Portugal

    192        151        27.3        33        90        (63.8     39.6        46.4        5.09        14.92   

Santander Consumer Finance

    473        486        (2.7     206        183        12.7        41.6        38.8        7.75        8.05   

Retail Poland (BZ WBK)

    114            73            47.9          17.05     

United Kingdom

    698        888        (21.4     306        505        (39.5     49.1        42.7        9.45        15.93   

Latin America

    3,876        3,367        15.1        1,218        1,270        (4.1     37.2        38.7        20.89        22.61   

o/w: Brazil

    2,825        2,445        15.5        647        732        (11.6     35.1        37.1        20.45        24.91   

Mexico

    428        379        13.1        296        256        15.6        36.7        37.7        27.03        22.45   

Chile

    352        321        9.7        133        162        (18.1     37.6        37.3        21.62        23.97   

USA

    387        471        (17.8     240        290        (17.2     41.6        33.8        19.29        29.85   

Operating areas

    6,980        6,551        6.6        2,348        2,943        (20.2     40.9        40.6        12.92        17.39   

Corporate Activities

    (700     (801     (12.6     (744     (835     (10.9        

Total Group

    6,280        5,750        9.2        1,604        2,108        (23.9     44.7        45.1        8.13        11.37   
    Net customer loans     Customer deposits     NPL ratio (%) *     NPL coverage (%) *  
    31.03.12     31.03.11     Var (%)     31.03.12     31.03.11     Var (%)     31.03.12     31.03.11     31.03.12     31.03.11  

Activity (EUR million)

                   

Continental Europe

    301,654        303,460        (0.6     252,781        260,719        (3.0     5.42        4.53        55        62   

o/w: Santander Branch Network *

    100,487        110,051        (8.7     80,355        84,656        (5.1     8.90        5.99        40        50   

Banesto

    67,196        73,326        (8.4     53,875        59,660        (9.7     5.07        4.31        51        52   

Portugal

    27,808        29,744        (6.5     23,321        21,929        6.3        4.59        3.03        58        62   

Santander Consumer Finance

    56,306        56,524        (0.4     33,180        31,618        4.9        4.05        4.99        108        98   

Retail Poland (BZ WBK)

    9,106        —          —          10,028        —          —          4.74          66     

United Kingdom

    261,070        232,186        12.4        191,727        180,382        6.3        1.82        1.73        40        47   

Latin America

    141,411        124,691        13.4        143,065        135,034        5.9        4.67        4.01        92        107   

o/w: Brazil

    78,083        69,447        12.4        76,352        75,605        1.0        5.76        4.85        90        104   

Mexico

    19,146        15,907        20.4        26,120        20,528        27.2        1.61        1.58        195        234   

Chile

    27,257        24,562        11.0        20,547        18,353        12.0        4.52        3.80        68        89   

USA

    40,030        35,850        11.7        37,828        33,190        14.0        2.46        4.15        107        82   

Operating areas

    744,164        696,187        6.9        625,401        609,325        2.6        3.95        3.54        63        71   

Total Group

    746,382        713,871        4.6        642,786        620,774        3.5        3.98        3.61        62        71   

 

*

Santander Branch Network is the retail banking unit of Banco Santander S.A. The NPL ratio of Banco Santander S.A. at the end of March 2012 stood at 6.33% (4.68% in March 2011) and NPL coverage was 41% (49% in March 2011).

 

     Employees      Branches  
     31.03.12      31.03.11      31.03.12      31.03.11  

Operating means

           

Continental Europe

     58,506         49,702         6,558         6,151   

o/w: Santander Branch Network

     17,964         18,234         2,915         2,912   

Banesto

     9,426         9,541         1,702         1,727   

Portugal

     5,753         5,934         694         758   

Santander Consumer Finance

     11,904         11,815         637         662   

Retail Poland (BZ WBK)

     9,200            526      

United Kingdom

     27,381         26,902         1,363         1,412   

Latin America

     92,244         89,866         6,053         5,895   

o/w: Brazil

     54,848         54,144         3,776         3,703   

Mexico

     13,032         12,337         1,125         1,099   

Chile

     12,216         11,815         499         506   

USA

     9,151         8,928         722         721   

Operating areas

     187,282         175,398         14,696         14,179   

Corporate Activities

     2,331         2,250         

Total Group

     189,613         177,648         14,696         14,179   


Table of Contents

LOGO

Operating areas

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     8,334        7,586        748        9.9   

Net fees

     2,635        2,522        113        4.5   

Gains (losses) on financial transactions

     751        738        14        1.8   

Other operating income*

     85        192        (107     (55.7

Gross income

     11,806        11,038        768        7.0   

Operating expenses

     (4,825     (4,487     (339     7.5   

General administrative expenses

     (4,335     (4,015     (320     8.0   

Personnel

     (2,560     (2,386     (173     7.3   

Other general administrative expenses

     (1,775     (1,629     (147     9.0   

Depreciation and amortisation

     (490     (472     (19     3.9   

Net operating income

     6,980        6,551        429        6.6   

Net loan-loss provisions

     (3,112     (1,997     (1,115     55.9   

Other income

     (491     (406     (85     20.9   

Profit before taxes

     3,377        4,148        (771     (18.6

Tax on profit

     (773     (981     208        (21.2

Profit from continuing operations

     2,604        3,167        (562     (17.8

Net profit from discontinued operations

     1        (6     7        —     

Consolidated profit

     2,605        3,161        (556     (17.6

Minority interests

     258        218        39        18.1   

Attributable profit to the Group

     2,348        2,943        (595     (20.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     744,164         696,187         47,977        6.9   

Trading portfolio (w/o loans)

     146,559         121,244         25,315        20.9   

Available-for-sale financial assets

     68,786         63,538         5,247        8.3   

Due from credit institutions**

     93,436         115,197         (21,761     (18.9

Intangible assets and property and equipment

     12,941         12,335         606        4.9   

Other assets

     128,090         129,395         (1,305     (1.0

Total assets/liabilities & shareholders’ equity

     1,193,976         1,137,897         56,079        4.9   

Customer deposits**

     625,401         609,325         16,076        2.6   

Marketable debt securities**

     140,920         123,405         17,516        14.2   

Subordinated debt**

     17,316         16,430         886        5.4   

Insurance liabilities

     717         10,453         (9,736     (93.1

Due to credit institutions**

     170,578         174,581         (4,003     (2.3

Other liabilities

     165,500         135,078         30,422        22.5   

Shareholders’ equity***

     73,543         68,625         4,917        7.2   

Other customer funds under management

     135,179         143,192         (8,013     (5.6

Mutual funds

     105,914         112,817         (6,903     (6.1

Pension funds

     9,765         10,916         (1,151     (10.5

Managed portfolios

     19,500         18,626         875        4.7   

Savings-insurance policies

     —           833         (833     (100.0

Customer funds under management

     918,817         892,352         26,465        3.0   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

          

Ratios (%) and other data

          

ROE**

     12.92         17.39         (4.47 p.  

Efficiency ratio (with amortisations)

     40.9         40.6         0.2 p.     

NPL ratio

     3.95         3.54         0.41 p.     

NPL coverage

     63         71         (8 p.  

Number of employees (direct & indirect)

     187,282         175,398         11,884        6.8   

Number of branches

     14,696         14,179         517        3.6   


Table of Contents

LOGO

Operating areas

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     7,586        7,838        7,828        8,030        8,334   

Net fees

     2,522        2,671        2,638        2,393        2,635   

Gains (losses) on financial transactions

     738        563        353        240        751   

Other operating income*

     192        243        122        189        85   

Gross income

     11,038        11,315        10,941        10,852        11,806   

Operating expenses

     (4,487     (4,618     (4,707     (4,909     (4,825

General administrative expenses

     (4,015     (4,124     (4,203     (4,393     (4,335

Personnel

     (2,386     (2,442     (2,491     (2,552     (2,560

Other general administrative expenses

     (1,629     (1,682     (1,712     (1,841     (1,775

Depreciation and amortisation

     (472     (494     (504     (516     (490

Net operating income

     6,551        6,697        6,235        5,942        6,980   

Net loan-loss provisions

     (1,997     (2,633     (2,732     (2,574     (3,112

Other income

     (406     (1,287     (420     (442     (491

Profit before taxes

     4,148        2,777        3,083        2,926        3,377   

Tax on profit

     (981     (575     (738     (646     (773

Profit from continuing operations

     3,167        2,202        2,345        2,280        2,604   

Net profit from discontinued operations

     (6     (0     3        (22     1   

Consolidated profit

     3,161        2,201        2,349        2,259        2,605   

Minority interests

     218        211        162        195        258   

Attributable profit to the Group

     2,943        1,991        2,187        2,064        2,348   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     696,187         705,521         715,291         741,152         744,164   

Trading portfolio (w/o loans)

     121,244         140,702         163,837         152,218         146,559   

Available-for-sale financial assets

     63,538         68,412         59,443         63,316         68,786   

Due from credit institutions**

     115,197         107,467         110,037         85,157         93,436   

Intangible assets and property and equipment

     12,335         12,732         12,328         12,124         12,941   

Other assets

     129,395         133,932         126,356         125,634         128,090   

Total assets/liabilities & shareholders’ equity

     1,137,897         1,168,765         1,187,291         1,179,601         1,193,976   

Customer deposits**

     609,325         613,158         607,930         612,861         625,401   

Marketable debt securities**

     123,405         133,662         128,895         133,782         140,920   

Subordinated debt**

     16,430         16,639         16,874         17,515         17,316   

Insurance liabilities

     10,453         10,775         9,894         517         717   

Due to credit institutions**

     174,581         169,951         174,475         173,070         170,578   

Other liabilities

     135,078         155,746         181,803         174,362         165,500   

Shareholders’ equity***

     68,625         68,835         67,420         67,494         73,543   

Other customer funds under management

     143,192         143,004         133,150         131,456         135,179   

Mutual funds

     112,817         112,371         103,755         102,611         105,914   

Pension funds

     10,916         10,744         9,893         9,645         9,765   

Managed portfolios

     18,626         19,005         18,796         19,199         19,500   

Savings-insurance policies

     833         884         707         —           —     

Customer funds under management

     892,352         906,463         886,849         895,614         918,817   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

              

Other information

              

NPL ratio

     3.54         3.71         3.78         3.83         3.95   

NPL coverage

     71         69         66         64         63   


Table of Contents

LOGO

Continental Europe

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     2,296        2,042        253        12.4   

Net fees

     921        939        (18     (2.0

Gains (losses) on financial transactions

     335        235        100        42.5   

Other operating income*

     45        68        (22     (33.2

Gross income

     3,597        3,284        312        9.5   

Operating expenses

     (1,578     (1,459     (119     8.2   

General administrative expenses

     (1,419     (1,316     (103     7.8   

Personnel

     (879     (827     (52     6.3   

Other general administrative expenses

     (540     (489     (51     10.4   

Depreciation and amortisation

     (159     (142     (16     11.4   

Net operating income

     2,019        1,826        193        10.6   

Net loan-loss provisions

     (1,085     (496     (588     118.5   

Other income

     (157     (111     (46     41.1   

Profit before taxes

     777        1,218        (441     (36.2

Tax on profit

     (176     (311     135        (43.4

Profit from continuing operations

     601        907        (306     (33.7

Net profit from discontinued operations

     1        (6     7        —     

Consolidated profit

     602        901        (299     (33.2

Minority interests

     18        23        (5     (21.3

Attributable profit to the Group

     584        878        (295     (33.5

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     301,654         303,460         (1,807     (0.6

Trading portfolio (w/o loans)

     78,600         51,350         27,250        53.1   

Available-for-sale financial assets

     29,433         22,240         7,192        32.3   

Due from credit institutions**

     49,609         63,415         (13,806     (21.8

Intangible assets and property and equipment

     5,821         4,904         917        18.7   

Other assets

     27,005         18,362         8,643        47.1   

Total assets/liabilities & shareholders’ equity

     492,122         463,731         28,391        6.1   

Customer deposits**

     252,781         260,719         (7,938     (3.0

Marketable debt securities**

     39,869         40,280         (411     (1.0

Subordinated debt**

     909         1,218         (309     (25.3

Insurance liabilities

     717         1,021         (303     (29.7

Due to credit institutions**

     81,429         64,213         17,216        26.8   

Other liabilities

     84,631         66,975         17,655        26.4   

Shareholders’ equity***

     31,786         29,305         2,480        8.5   

Other customer funds under management

     46,320         51,296         (4,976     (9.7

Mutual funds

     31,160         35,025         (3,865     (11.0

Pension funds

     9,765         10,916         (1,151     (10.5

Managed portfolios

     5,395         5,354         40        0.8   

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     339,879         353,512         (13,633     (3.9

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

          

Ratios (%) and other data

          

ROE

     7.43         12.25         (4.82 p.  

Efficiency ratio (with amortisations)

     43.9         44.4         (0.5 p.  

NPL ratio

     5.42         4.53         0.89 p.     

NPL coverage

     55         62         (7 p.  

Number of employees (direct & indirect)

     58,506         49,702         8,804        17.7   

Number of branches

     6,558         6,151         407        6.6   


Table of Contents

LOGO

Continental Europe

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     2,042        2,338        2,253        2,243        2,296   

Net fees

     939        1,014        990        830        921   

Gains (losses) on financial transactions

     235        8        (28     17        335   

Other operating income*

     68        179        56        95        45   

Gross income

     3,284        3,539        3,270        3,185        3,597   

Operating expenses

     (1,459     (1,603     (1,588     (1,611     (1,578

General administrative expenses

     (1,316     (1,448     (1,435     (1,461     (1,419

Personnel

     (827     (914     (895     (895     (879

Other general administrative expenses

     (489     (534     (540     (566     (540

Depreciation and amortisation

     (142     (154     (153     (150     (159

Net operating income

     1,826        1,936        1,682        1,574        2,019   

Net loan-loss provisions

     (496     (866     (946     (1,105     (1,085

Other income

     (111     (109     (159     (129     (157

Profit before taxes

     1,218        961        578        340        777   

Tax on profit

     (311     (237     (122     (47     (176

Profit from continuing operations

     907        724        456        293        601   

Net profit from discontinued operations

     (6     (0     3        (22     1   

Consolidated profit

     901        724        459        272        602   

Minority interests

     23        24        16        6        18   

Attributable profit to the Group

     878        700        443        266        584   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     303,460         312,420         307,510         305,391         301,654   

Trading portfolio (w/o loans)

     51,350         58,043         77,731         78,802         78,600   

Available-for-sale financial assets

     22,240         24,553         21,293         24,640         29,433   

Due from credit institutions**

     63,415         57,677         50,813         48,491         49,609   

Intangible assets and property and equipment

     4,904         5,250         5,078         5,029         5,821   

Other assets

     18,362         20,727         22,125         26,480         27,005   

Total assets/liabilities & shareholders’ equity

     463,731         478,669         484,551         488,833         492,122   

Customer deposits**

     260,719         259,448         255,020         247,582         252,781   

Marketable debt securities**

     40,280         37,011         34,617         38,053         39,869   

Subordinated debt**

     1,218         1,350         984         964         909   

Insurance liabilities

     1,021         965         930         517         717   

Due to credit institutions**

     64,213         69,996         70,616         83,490         81,429   

Other liabilities

     66,975         79,201         92,163         87,822         84,631   

Shareholders’ equity***

     29,305         30,698         30,222         30,404         31,786   

Other customer funds under management

     51,296         52,169         47,548         45,809         46,320   

Mutual funds

     35,025         35,407         32,377         31,038         31,160   

Pension funds

     10,916         10,744         9,893         9,645         9,765   

Managed portfolios

     5,354         6,019         5,278         5,126         5,395   

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     353,512         349,978         338,168         332,409         339,879   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

              

Other information

              

NPL ratio

           4.53               4.76               5.04               5.18               5.42   

NPL coverage

     62         61         58         56         55   


Table of Contents

LOGO

Santander Branch Network

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     837        780        56        7.2   

Net fees

     279        292        (13     (4.4

Gains (losses) on financial transactions

     35        37        (2     (4.5

Other operating income*

     (33     (10     (23     235.6   

Gross income

     1,118        1,100        19        1.7   

Operating expenses

     (512     (512     (0     0.0   

General administrative expenses

     (475     (474     (0     0.1   

Personnel

     (305     (310     5        (1.8

Other general administrative expenses

     (170     (164     (6     3.6   

Depreciation and amortisation

     (37     (38     0        (1.1

Net operating income

     606        588        19        3.2   

Net loan-loss provisions

     (483     (184     (299     162.0   

Other income

     (21     (27     6        (23.4

Profit before taxes

     102        376        (274     (72.8

Tax on profit

     (28     (101     74        (72.8

Profit from continuing operations

     75        274        (200     (72.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     75        274        (200     (72.8

Minority interests

     0        0        (0     (66.6

Attributable profit to the Group

     75        274        (200     (72.8

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     100,487         110,051         (9,565     (8.7

Trading portfolio (w/o loans)

     —           —           —          —     

Available-for-sale financial assets

     —           —           —          —     

Due from credit institutions**

     59         214         (155     (72.4

Intangible assets and property and equipment

     1,201         1,201         —          —     

Other assets

     1,657         411         1,246        302.8   

Total assets/liabilities & shareholders’ equity

     103,404         111,878         (8,474     (7.6

Customer deposits**

     80,355         84,656         (4,301     (5.1

Marketable debt securities**

     6,344         —           6,344        —     

Subordinated debt**

     —           —           —          —     

Insurance liabilities

     —           —           —          —     

Due to credit institutions**

     650         323         327        101.4   

Other liabilities

     9,597         20,002           (10,406     (52.0

Shareholders’ equity***

     6,459         6,897         (438     (6.4

Other customer funds under management

     23,838         25,478         (1,640     (6.4

Mutual funds

     15,819         18,558         (2,739     (14.8

Pension funds

     6,049         6,225         (176     (2.8

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     1,970         696         1,275        183.2   

Customer funds under management

     110,537         110,134         403        0.4   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

          

Ratios (%) and other data

          

ROE

           4.57             15.70         (11.13 p.  

Efficiency ratio (with amortisations)

     45.8         46.6         (0.8 p.  

NPL ratio

     8.90         5.99         2.91 p.     

NPL coverage

     40         50         (10 p.  

Number of employees (direct & indirect)

     17,964         18,234         (270     (1.5

Number of branches

     2,915         2,912         3            0.1   


Table of Contents

LOGO

Santander Branch Network

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     780        853        824        778        837   

Net fees

     292        283        270        253        279   

Gains (losses) on financial transactions

     37        27        15        29        35   

Other operating income*

     (10     (12     (9     (10     (33

Gross income

     1,100        1,151        1,100        1,050        1,118   

Operating expenses

     (512     (512     (512     (512     (512

General administrative expenses

     (474     (473     (474     (474     (475

Personnel

     (310     (310     (310     (303     (305

Other general administrative expenses

     (164     (163     (164     (170     (170

Depreciation and amortisation

     (38     (39     (38     (38     (37

Net operating income

     588        639        588        538        606   

Net loan-loss provisions

     (184     (339     (447     (467     (483

Other income

     (27     10        (3     9        (21

Profit before taxes

     376        310        139        80        102   

Tax on profit

     (101     (84     (37     (22     (28

Profit from continuing operations

     274        227        101        58        75   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     274        227        101        58        75   

Minority interests

     0        0        (0     0        0   

Attributable profit to the Group

     274        226        101        58        75   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     110,051         107,312         104,671         102,643         100,487   

Trading portfolio (w/o loans)

     —           —           —           —           —     

Available-for-sale financial assets

     —           —           —           —           —     

Due from credit institutions**

     214         185         137         104         59   

Intangible assets and property and equipment

     1,201         1,201         1,201         1,201         1,201   

Other assets

     411         1,692         1,785         1,829         1,657   

Total assets/liabilities & shareholders’ equity

     111,878         110,390         107,794         105,776         103,404   

Customer deposits**

     84,656         80,037         81,063         78,864         80,355   

Marketable debt securities**

     —           —           —           4,965         6,344   

Subordinated debt**

     —           —           —           —           —     

Insurance liabilities

     —           —           —           —           —     

Due to credit institutions**

     323         355         524         543         650   

Other liabilities

     20,002         22,954         19,526         14,780         9,597   

Shareholders’ equity***

     6,897         7,043         6,681         6,625         6,459   

Other customer funds under management

     25,478         25,171         23,883         23,640         23,838   

Mutual funds

     18,558         17,654         16,712         16,158         15,819   

Pension funds

     6,225         6,141         5,628         5,918         6,049   

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     696         1,376         1,543         1,564         1,970   

Customer funds under management

     110,134         105,208         104,946         107,469         110,537   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

              

Other information

              

NPL ratio

           5.99               6.73               7.70               8.47               8.90   

NPL coverage

     50         47         41         40         40   

Spread

     1.95         2.53         2.68         2.54         2.70   

Spread loans

     1.90         1.97         2.03         2.01         2.19   

Spread deposits

     0.05         0.56         0.65         0.53         0.51   


Table of Contents

LOGO

Banesto

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     353        321        31        9.7   

Net fees

     153        155        (3     (1.7

Gains (losses) on financial transactions

     87        41        46        110.7   

Other operating income*

     (3     9        (13     —     

Gross income

     589        527        62        11.7   

Operating expenses

     (254     (254     0        (0.1

General administrative expenses

     (222     (223     1        (0.5

Personnel

     (162     (163     1        (0.7

Other general administrative expenses

     (60     (60     0        (0.1

Depreciation and amortisation

     (32     (31     (1     3.0   

Net operating income

     335        273        62        22.6   

Net loan-loss provisions

     (206     (102     (104     102.7   

Other income

     (90     (16     (74     450.8   

Profit before taxes

     39        155        (116     (74.8

Tax on profit

     7        (38     45        —     

Profit from continuing operations

     46        117        (71     (60.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     46        117        (71     (60.8

Minority interests

     5        16        (11     (71.2

Attributable profit to the Group

     41        101        (60     (59.1

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     67,196         73,326         (6,130     (8.4

Trading portfolio (w/o loans)

     8,071         5,979         2,092        35.0   

Available-for-sale financial assets

     10,325         9,328         997        10.7   

Due from credit institutions**

     11,064         16,597         (5,533     (33.3

Intangible assets and property and equipment

     1,379         1,360         19        1.4   

Other assets

     11,116         5,834         5,282        90.5   

Total assets/liabilities & shareholders’ equity

     109,152         112,426         (3,273     (2.9

Customer deposits**

     53,875         59,660         (5,785     (9.7

Marketable debt securities**

     22,947         27,135         (4,188     (15.4

Subordinated debt**

     735         787         (52     (6.6

Insurance liabilities

     —           —           —          —     

Due to credit institutions**

     15,926         10,822         5,104        47.2   

Other liabilities

     10,875         9,305         1,571        16.9   

Shareholders’ equity***

     4,793         4,717         76        1.6   

Other customer funds under management

     8,308         9,303         (995     (10.7

Mutual funds

     4,357         5,279         (922     (17.5

Pension funds

     1,240         1,344         (104     (7.8

Managed portfolios

     110         114         (4     (3.4

Savings-insurance policies

     2,601         2,566         35        1.4   

Customer funds under management

     85,865         96,884         (11,019     (11.4

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

          

Ratios (%) and other data

          

ROE

           3.43               8.70         (5.27 p.  

Efficiency ratio (with amortisations)

     43.1         48.2         (5.1 p.  

NPL ratio

     5.07         4.31         0.76 p.     

NPL coverage

     51         52         (1 p.  

Number of employees (direct & indirect)

     9,426         9,541         (115     (1.2

Number of branches

     1,702         1,727         (25     (1.4


Table of Contents

LOGO

Banesto

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     321        358        351        321        353   

Net fees

     155        155        152        154        153   

Gains (losses) on financial transactions

     41        41        20        (5     87   

Other operating income*

     9        24        6        8        (3

Gross income

     527        578        529        479        589   

Operating expenses

     (254     (254     (250     (244     (254

General administrative expenses

     (223     (222     (218     (215     (222

Personnel

     (163     (162     (161     (149     (162

Other general administrative expenses

     (60     (60     (58     (65     (60

Depreciation and amortisation

     (31     (32     (31     (29     (32

Net operating income

     273        324        280        235        335   

Net loan-loss provisions

     (102     (173     (187     (200     (206

Other income

     (16     (60     (60     (114     (90

Profit before taxes

     155        91        33        (79     39   

Tax on profit

     (38     (12     (11     15        7   

Profit from continuing operations

     117        79        22        (63     46   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     117        79        22        (63     46   

Minority interests

     16        12        (0     (4     5   

Attributable profit to the Group

     101        67        22        (59     41   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11     30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

             

Customer loans**

     73,326        71,825         69,245         68,850         67,196   

Trading portfolio (w/o loans)

     5,979        5,572         7,699         7,869         8,071   

Available-for-sale financial assets

     9,328        9,189         7,206         8,333         10,325   

Due from credit institutions**

     16,597        10,845         10,286         9,637         11,064   

Intangible assets and property and equipment

     1,360        1,356         1,356         1,328         1,379   

Other assets

     5,834        6,172         5,989         10,215         11,116   

Total assets/liabilities & shareholders’ equity

     112,426        104,959         101,780         106,232         109,152   

Customer deposits**

     59,660        54,047         51,385         50,755         53,875   

Marketable debt securities**

     27,135        26,303         24,608         22,531         22,947   

Subordinated debt**

     787        785         790         784         735   

Insurance liabilities

     —          —           —           —           —     

Due to credit institutions**

     10,822        9,961         9,319         16,591         15,926   

Other liabilities

     9,305        9,158         10,969         10,870         10,875   

Shareholders’ equity***

     4,717        4,704         4,709         4,702         4,793   

Other customer funds under management

     9,303        8,933         8,687         8,375         8,308   

Mutual funds

     5,279        4,902         4,688         4,440         4,357   

Pension funds

     1,344        1,321         1,229         1,237         1,240   

Managed portfolios

     114        118         114         109         110   

Savings-insurance policies

     2,566        2,592         2,656         2,588         2,601   

Customer funds under management

     96,884        90,069         85,470         82,444         85,865   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

             

Other information

             

NPL ratio

     4.31        4.54               4.69               5.01               5.07   

NPL coverage

     52        52         53         53         51   

Spread

     1.67        2.20         2.54         2.52         2.66   

Spread loans

     2.03        2.08         2.12         2.16         2.33   

Spread deposits

     (0.36     0.12         0.42         0.36         0.33   


Table of Contents

LOGO

Portugal

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     147        165        (17     (10.6

Net fees

     90        101        (11     (10.5

Gains (losses) on financial transactions

     70        8        62        795.0   

Other operating income*

     10        8        2        24.0   

Gross income

     318        282        36        12.8   

Operating expenses

     (126     (131     5        (3.8

General administrative expenses

     (108     (114     6        (5.4

Personnel

     (75     (79     3        (4.4

Other general administrative expenses

     (32     (35     3        (7.8

Depreciation and amortisation

     (18     (17     (1     6.8   

Net operating income

     192        151        41        27.3   

Net loan-loss provisions

     (131     (32     (99     304.2   

Other income

     (16     (9     (7     81.9   

Profit before taxes

     45        110        (65     (59.1

Tax on profit

     (12     (19     7        (35.3

Profit from continuing operations

     33        91        (58     (64.1

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     33        91        (58     (64.1

Minority interests

     (0     0        (0     —     

Attributable profit to the Group

     33        90        (58     (63.8

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                  Variation  
     31.03.12     31.03.11      Amount     %  

Balance sheet

         

Customer loans**

     27,808        29,744         (1,936     (6.5

Trading portfolio (w/o loans)

     1,672        1,411         261        18.5   

Available-for-sale financial assets

     5,295        4,584         711        15.5   

Due from credit institutions**

     2,200        3,932         (1,732     (44.1

Intangible assets and property and equipment

     439        472         (33     (7.1

Other assets

     6,580        6,656         (76     (1.1

Total assets/liabilities & shareholders’ equity

     43,993        46,798         (2,805     (6.0

Customer deposits**

     23,321        21,929         1,392        6.3   

Marketable debt securities**

     4,734        7,122         (2,388     (33.5

Subordinated debt**

     (0     0         (1     —     

Insurance liabilities

     70        83         (13     (15.5

Due to credit institutions**

     13,197        14,208         (1,010     (7.1

Other liabilities

     100        843         (743     (88.1

Shareholders’ equity***

     2,571        2,613         (42     (1.6

Other customer funds under management

     2,654        4,500         (1,846     (41.0

Mutual funds

     1,809        3,051         (1,242     (40.7

Pension funds

     782        1,314         (532     (40.5

Managed portfolios

     63        135         (72     (53.2

Savings-insurance policies

     —          —           —          —     

Customer funds under management

     30,708        33,551         (2,843     (8.5

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

         

Ratios (%) and other data

         

ROE

     5.09        14.92         (9.83 p.  

Efficiency ratio (with amortisations)

     39.6        46.4         (6.9 p.  

NPL ratio

     4.59        3.03         1.56 p.     

NPL coverage

     58        62         (4 p.  

Number of employees (direct & indirect)

     5,753        5,934         (181     (3.1

Number of branches

     694        758         (64     (8.4


Table of Contents

LOGO

Portugal

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     165        155        137        136        147   

Net fees

     101        82        87        75        90   

Gains (losses) on financial transactions

     8        0        (1     8        70   

Other operating income*

     8        6        2        5        10   

Gross income

     282        243        225        223        318   

Operating expenses

     (131     (131     (132     (136     (126

General administrative expenses

     (114     (114     (114     (118     (108

Personnel

     (79     (79     (79     (80     (75

Other general administrative expenses

     (35     (35     (35     (38     (32

Depreciation and amortisation

     (17     (17     (18     (18     (18

Net operating income

     151        112        93        88        192   

Net loan-loss provisions

     (32     (40     (50     (84     (131

Other income

     (9     (14     (45     18        (16

Profit before taxes

     110        57        (2     22        45   

Tax on profit

     (19     (17     (0     23        (12

Profit from continuing operations

     91        41        (2     45        33   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     91        41        (2     45        33   

Minority interests

     0        (0     (0     0        (0

Attributable profit to the Group

     90        41        (2     45        33   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11     30.09.11     31.12.11     31.03.12  

Balance sheet

           

Customer loans**

     29,744         29,212        28,945        28,403        27,808   

Trading portfolio (w/o loans)

     1,411         1,263        1,575        1,617        1,672   

Available-for-sale financial assets

     4,584         4,158        4,172        4,496        5,295   

Due from credit institutions**

     3,932         2,119        2,164        2,467        2,200   

Intangible assets and property and equipment

     472         467        460        452        439   

Other assets

     6,656         6,859        6,569        7,120        6,580   

Total assets/liabilities & shareholders’ equity

     46,798         44,078        43,884        44,555        43,993   

Customer deposits**

     21,929         22,228        22,812        23,465        23,321   

Marketable debt securities**

     7,122         5,365        5,170        5,037        4,734   

Subordinated debt**

     0         9        22        (0     (0

Insurance liabilities

     83         81        75        70        70   

Due to credit institutions**

     14,208         13,248        13,079        13,395        13,197   

Other liabilities

     843         630        183        31        100   

Shareholders’ equity***

     2,613         2,516        2,543        2,557        2,571   

Other customer funds under management

     4,500         4,155        3,213        2,686        2,654   

Mutual funds

     3,051         2,755        2,159        1,866        1,809   

Pension funds

     1,314         1,266        983        760        782   

Managed portfolios

     135         133        72        59        63   

Savings-insurance policies

     —           —          —          —          —     

Customer funds under management

     33,551         31,757        31,218        31,188        30,708   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

           

Other information

           

NPL ratio

         3.03             3.25            3.78            4.06            4.59   

NPL coverage

     62         62        53        55        58   

Spread

     2.08         1.75        1.68        1.45        1.43   

Spread loans

     1.96         2.06        2.15        2.23        2.34   

Spread deposits

     0.12         (0.31     (0.47     (0.78     (0.91


Table of Contents

LOGO

Santander Consumer Finance

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     611        582        28        4.9   

Net fees

     204        210        (6     (2.8

Gains (losses) on financial transactions

     (5     (1     (4     331.8   

Other operating income*

     0        2        (2     (90.8

Gross income

     810        793        16        2.1   

Operating expenses

     (337     (308     (30     9.6   

General administrative expenses

     (302     (279     (23     8.4   

Personnel

     (149     (137     (12     8.8   

Other general administrative expenses

     (153     (141     (11     7.9   

Depreciation and amortisation

     (35     (29     (6     21.5   

Net operating income

     473        486        (13     (2.7

Net loan-loss provisions

     (176     (192     16        (8.4

Other income

     (18     (37     19        (50.7

Profit before taxes

     278        256        22        8.6   

Tax on profit

     (62     (60     (2     3.5   

Profit from continuing operations

     216        196        20        10.1   

Net profit from discontinued operations

     1        (6     7        —     

Consolidated profit

     217        190        26        13.9   

Minority interests

     10        7        3        45.8   

Attributable profit to the Group

     206        183        23        12.7   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     56,306         56,524         (218     (0.4

Trading portfolio (w/o loans)

     1,186         968         218        22.5   

Available-for-sale financial assets

     1,174         317         858        270.8   

Due from credit institutions**

     9,149         6,927         2,222        32.1   

Intangible assets and property and equipment

     842         808         34        4.2   

Other assets

     2,792         2,234         558        25.0   

Total assets/liabilities & shareholders’ equity

     71,449         67,777         3,672        5.4   

Customer deposits**

     33,180         31,618         1,562        4.9   

Marketable debt securities**

     5,908         6,020         (112     (1.9

Subordinated debt**

     68         425         (357     (84.0

Insurance liabilities

     —           —           —          —     

Due to credit institutions**

     17,210         17,010         200        1.2   

Other liabilities

     3,909         3,228         681        21.1   

Shareholders’ equity***

     11,173         9,476         1,697        17.9   

Other customer funds under management

     6         7         (1     (9.4

Mutual funds

     2         3         (0     (15.0

Pension funds

     4         4         (0     (6.0

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     39,163         38,070         1,093        2.9   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

 

          

Ratios (%) and other data

          

ROE

       7.75           8.05         (0.30 p.  

Efficiency ratio (with amortisations)

     41.6         38.8           2.9 p.     

NPL ratio

     4.05         4.99         (0.94 p.  

NPL coverage

     108         98         10 p.     

Number of employees (direct & indirect)

     11,904         11,815         89        0.8   

Number of branches

     637         662         (25     (3.8


Table of Contents

LOGO

Santander Consumer Finance

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     582        600        591        598        611   

Net fees

     210        228        234        179        204   

Gains (losses) on financial transactions

     (1     0        (1     (11     (5

Other operating income*

     2        5        (6     2        0   

Gross income

     793        833        818        769        810   

Operating expenses

     (308     (327     (331     (360     (337

General administrative expenses

     (279     (298     (301     (327     (302

Personnel

     (137     (150     (150     (152     (149

Other general administrative expenses

     (141     (147     (151     (175     (153

Depreciation and amortisation

     (29     (29     (30     (34     (35

Net operating income

     486        506        487        408        473   

Net loan-loss provisions

     (192     (203     (220     (238     (176

Other income

     (37     (46     (14     (41     (18

Profit before taxes

     256        258        253        129        278   

Tax on profit

     (60     (65     (44     (4     (62

Profit from continuing operations

     196        193        208        125        216   

Net profit from discontinued operations

     (6     (0     3        (22     1   

Consolidated profit

     190        193        212        103        217   

Minority interests

     7        7        10        7        10   

Attributable profit to the Group

     183        186        201        96        206   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     56,524         57,052         56,486         56,731         56,306   

Trading portfolio (w/o loans)

     968         1,401         1,480         1,335         1,186   

Available-for-sale financial assets

     317         330         226         205         1,174   

Due from credit institutions**

     6,927         7,557         7,565         10,876         9,149   

Intangible assets and property and equipment

     808         873         755         784         842   

Other assets

     2,234         2,467         3,276         2,899         2,792   

Total assets/liabilities & shareholders’ equity

     67,777         69,680         69,788         72,831         71,449   

Customer deposits**

     31,618         32,658         34,181         33,198         33,180   

Marketable debt securities**

     6,020         5,345         4,873         5,410         5,908   

Subordinated debt**

     425         449         65         75         68   

Insurance liabilities

     —           —           —           —           —     

Due to credit institutions**

     17,010         17,811         16,640         18,912         17,210   

Other liabilities

     3,228         3,825         4,466         5,395         3,909   

Shareholders’ equity***

     9,476         9,592         9,564         9,840         11,173   

Other customer funds under management

     7         7         6         6         6   

Mutual funds

     3         2         2         2         2   

Pension funds

     4         4         4         4         4   

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     38,070         38,459         39,125         38,689         39,163   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Other information

              

NPL ratio

         4.99             4.74             4.50             3.97             4.05   

NPL coverage

     98         103         105         109         108   

Spread loans

     4.83         4.43         4.48         4.57         4.51   


Table of Contents

LOGO

Retail Poland (BZ WBK)

EUR million

 

     Q1 ’12  

Income statement

  

Net interest income

     129   

Net fees

     78   

Gains (losses) on financial transactions

     10   

Other operating income*

     1   

Gross income

     218   

Operating expenses

     (105

General administrative expenses

     (96

Personnel

     (57

Other general administrative expenses

     (39

Depreciation and amortisation

     (9

Net operating income

     114   

Net loan-loss provisions

     (20

Other income

     2   

Profit before taxes

     96   

Tax on profit

     (21

Profit from continuing operations

     75   

Net profit from discontinued operations

     —     

Consolidated profit

     75   

Minority interests

     2   

Attributable profit to the Group

     73   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.12  

Balance sheet

  

Customer loans**

     9,106   

Trading portfolio (w/o loans)

     769   

Available-for-sale financial assets

     2,832   

Due from credit institutions**

     368   

Intangible assets and property and equipment

     187   

Other assets

     1,100   

Total assets/liabilities & shareholders’ equity

     14,363   

Customer deposits**

     10,028   

Marketable debt securities**

     —     

Subordinated debt**

     100   

Insurance liabilities

     —     

Due to credit institutions**

     1,690   

Other liabilities

     677   

Shareholders’ equity***

     1,867   

Other customer funds under management

     2,248   

Mutual funds

     2,059   

Pension funds

     —     

Managed portfolios

     188   

Savings-insurance policies

     —     

Customer funds under management

     12,376   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Ratios (%) and other data

  

ROE

     17.05   

Efficiency ratio (with amortisations)

     47.9   

NPL ratio

     4.74   

NPL coverage

     66   

Number of employees (direct & indirect)

     9,200   

Number of branches

     526   


Table of Contents

LOGO

Retail Poland (BZ WBK)

EUR million

 

     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

        

Net interest income

     122        122        127        129   

Net fees

     88        83        76        78   

Gains (losses) on financial transactions

     20        26        12        10   

Other operating income*

     18        (2     (2     1   

Gross income

     248        229        213        218   

Operating expenses

     (114     (103     (108     (105

General administrative expenses

     (105     (94     (99     (96

Personnel

     (61     (58     (61     (57

Other general administrative expenses

     (44     (36     (38     (39

Depreciation and amortisation

     (9     (9     (9     (9

Net operating income

     134        126        105        114   

Net loan-loss provisions

     (16     (23     (21     (20

Other income

     (0     (1     (1     2   

Profit before taxes

     118        101        83        96   

Tax on profit

     (21     (21     (21     (21

Profit from continuing operations

     98        81        62        75   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     98        81        62        75   

Minority interests

     4        2        2        2   

Attributable profit to the Group

     94        78        60        73   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

           

Customer loans**

     8,659         8,219         8,479         9,106   

Trading portfolio (w/o loans)

     920         985         1,304         769   

Available-for-sale financial assets

     3,142         2,639         2,617         2,832   

Due from credit institutions**

     214         410         309         368   

Intangible assets and property and equipment

     302         261         183         187   

Other assets

     823         978         645         1,100   

Total assets/liabilities & shareholders’ equity

     14,061         13,491         13,536         14,363   

Customer deposits**

     10,217         9,936         10,359         10,028   

Marketable debt securities**

     —           —           —           —     

Subordinated debt**

     100         100         99         100   

Insurance liabilities

     —           —           —           —     

Due to credit institutions**

     1,800         1,617         1,163         1,690   

Other liabilities

     595         614         703         677   

Shareholders’ equity***

     1,349         1,224         1,213         1,867   

Other customer funds under management

     2,739         2,091         1,926         2,248   

Mutual funds

     2,443         1,888         1,747         2,059   

Pension funds

     —           —           —           —     

Managed portfolios

     296         203         179         188   

Savings-insurance policies

     —           —           —           —     

Customer funds under management

     13,055         12,127         12,383         12,376   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Other information

           

NPL ratio

         6.43             6.26             4.89             4.74   

NPL coverage

     67         69         65         66   


Table of Contents

LOGO

Retail Poland (BZ WBK)

PLN million

 

     Q1 ’12  

Income statement

  

Net interest income

     546   

Net fees

     330   

Gains (losses) on financial transactions

     41   

Other operating income*

     5   

Gross income

     923   

Operating expenses

     (442

General administrative expenses

     (405

Personnel

     (241

Other general administrative expenses

     (164

Depreciation and amortisation

     (37

Net operating income

     481   

Net loan-loss provisions

     (85

Other income

     8   

Profit before taxes

     404   

Tax on profit

     (88

Profit from continuing operations

     317   

Net profit from discontinued operations

     —     

Consolidated profit

     317   

Minority interests

     9   

Attributable profit to the Group

     308   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.12  

Balance sheet

  

Customer loans**

     37,811   

Trading portfolio (w/o loans)

     3,193   

Available-for-sale financial assets

     11,760   

Due from credit institutions**

     1,528   

Intangible assets and property and equipment

     776   

Other assets

     4,569   

Total assets/liabilities & shareholders’ equity

     59,638   

Customer deposits**

     41,640   

Marketable debt securities**

     —     

Subordinated debt**

     416   

Insurance liabilities

     —     

Due to credit institutions**

     7,017   

Other liabilities

     2,811   

Shareholders’ equity***

     7,753   

Other customer funds under management

     9,332   

Mutual funds

     8,550   

Pension funds

     —     

Managed portfolios

     783   

Savings-insurance policies

     —     

Customer funds under management

     51,388   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Retail Poland (BZ WBK)

PLN million

 

     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

        

Net interest income

     483        499        543        546   

Net fees

     349        339        330        330   

Gains (losses) on financial transactions

     78        106        55        41   

Other operating income*

     71        (8     (9     5   

Gross income

     980        936        919        923   

Operating expenses

     (449     (421     (463     (442

General administrative expenses

     (413     (386     (426     (405

Personnel

     (239     (237     (261     (241

Other general administrative expenses

     (174     (149     (166     (164

Depreciation and amortisation

     (36     (35     (37     (37

Net operating income

     531        515        457        481   

Net loan-loss provisions

     (62     (95     (90     (85

Other income

     (2     (5     (5     8   

Profit before taxes

     468        415        362        404   

Tax on profit

     (82     (85     (91     (88

Profit from continuing operations

     386        330        272        317   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     386        330        272        317   

Minority interests

     15        9        8        9   

Attributable profit to the Group

     370        321        264        308   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

           

Customer loans**

     34,554         36,204         37,801         37,811   

Trading portfolio (w/o loans)

     3,671         4,337         5,812         3,193   

Available-for-sale financial assets

     12,539         11,624         11,665         11,760   

Due from credit institutions**

     855         1,806         1,376         1,528   

Intangible assets and property and equipment

     1,206         1,149         816         776   

Other assets

     3,285         4,309         2,876         4,569   

Total assets/liabilities & shareholders’ equity

     56,109         59,429         60,345         59,638   

Customer deposits**

     40,770         43,769         46,178         41,640   

Marketable debt securities**

     —           —           —           —     

Subordinated debt**

     398         441         441         416   

Insurance liabilities

     —           —           —           —     

Due to credit institutions**

     7,182         7,123         5,183         7,017   

Other liabilities

     2,376         2,705         3,134         2,811   

Shareholders’ equity***

     5,383         5,392         5,409         7,753   

Other customer funds under management

     10,928         9,212         8,586         9,332   

Mutual funds

     9,748         8,316         7,789         8,550   

Pension funds

     —           —           —           —     

Managed portfolios

     1,180         896         797         783   

Savings-insurance policies

     —           —           —           —     

Customer funds under management

     52,095         53,422         55,205         51,388   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

United Kingdom

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     959        1,152        (193     (16.8

Net fees

     292        234        59        25.2   

Gains (losses) on financial transactions

     111        157        (46     (29.1

Other operating income*

     8        6        2        39.2   

Gross income

     1,371        1,549        (178     (11.5

Operating expenses

     (673     (661     (12     1.8   

General administrative expenses

     (579     (570     (9     1.6   

Personnel

     (360     (347     (12     3.5   

Other general administrative expenses

     (220     (223     3        (1.3

Depreciation and amortisation

     (94     (91     (3     3.1   

Net operating income

     698        888        (190     (21.4

Net loan-loss provisions

     (215     (152     (63     41.7   

Other income

     (67     (45     (22     47.5   

Profit before taxes

     416        691        (275     (39.8

Tax on profit

     (110     (185     75        (40.7

Profit from continuing operations

     306        505        (199     (39.5

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     306        505        (199     (39.5

Minority interests

     0        (0     0        —     

Attributable profit to the Group

     306        505        (199     (39.5

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans***

     261,070         232,186         28,884        12.4   

Trading portfolio (w/o loans)

     36,225         40,965         (4,741     (11.6

Available-for-sale financial assets

     996         36         960        —     

Due from credit institutions***

     17,748         29,975         (12,227     (40.8

Intangible assets and property and equipment

     2,286         2,255         31        1.4   

Other assets

     47,962         47,557         405        0.9   

Total assets/liabilities & shareholders’ equity

     366,287         352,975         13,312        3.8   

Customer deposits***

     191,727         180,382         11,345        6.3   

Marketable debt securities***

     74,322         62,944         11,378        18.1   

Subordinated debt***

     8,086         7,352         735        10.0   

Insurance liabilities

     —           1         (1     (100.0

Due to credit institutions***

     42,165         63,159         (20,995     (33.2

Other liabilities

     37,011         26,458         10,553        39.9   

Shareholders’ equity****

     12,976         12,679         297        2.3   

Other customer funds under management

     15,674         14,204         1,470        10.3   

Mutual funds

     15,674         14,204         1,470        10.3   

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     289,809         264,882         24,927        9.4   

 

***

Including all on-balance sheet balances for this item

****

Not including profit of the year

 

Ratios (%) and other data

          

ROE**

     9.45         15.93         (6.48 p.  

Efficiency ratio (with amortisations)

     49.1         42.7         6.4 p.     

NPL ratio

     1.82         1.73         0.09 p.     

NPL coverage

     40         47         (7 p.  

Number of employees (direct & indirect)

       27,381           26,902         479             1.8   

Number of branches

     1,363         1,412         (49     (3.5


Table of Contents

LOGO

United Kingdom

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     1,152        1,066        1,058        1,079        959   

Net fees

     234        296        281        269        292   

Gains (losses) on financial transactions

     157        130        87        31        111   

Other operating income*

     6        6        5        9        8   

Gross income

     1,549        1,498        1,431        1,388        1,371   

Operating expenses

     (661     (636     (634     (665     (673

General administrative expenses

     (570     (547     (545     (581     (579

Personnel

     (347     (332     (358     (378     (360

Other general administrative expenses

     (223     (215     (187     (204     (220

Depreciation and amortisation

     (91     (88     (90     (84     (94

Net operating income

     888        863        797        723        698   

Net loan-loss provisions

     (152     (143     (173     (165     (215

Other income

     (45     (879     (30     (12     (67

Profit before taxes

     691        (160     594        546        416   

Tax on profit

     (185     36        (164     (134     (110

Profit from continuing operations

     505        (124     429        413        306   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     505        (124     429        413        306   

Minority interests

     (0     0        (0     0        0   

Attributable profit to the Group

     505        (124     429        413        306   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans***

     232,186         225,599         238,557         255,699         261,070   

Trading portfolio (w/o loans)

     40,965         46,625         49,693         41,440         36,225   

Available-for-sale financial assets

     36         48         1,108         55         996   

Due from credit institutions***

     29,975         26,441         34,134         16,808         17,748   

Intangible assets and property and equipment

     2,255         2,198         2,238         2,290         2,286   

Other assets

     47,557         47,332         43,592         39,855         47,962   

Total assets/liabilities & shareholders’ equity

     352,975         348,243         369,322         356,147         366,287   

Customer deposits***

     180,382         182,338         187,141         194,318         191,727   

Marketable debt securities***

     62,944         72,406         70,438         70,823         74,322   

Subordinated debt***

     7,352         7,283         7,939         8,260         8,086   

Insurance liabilities

     1         1         —           —           —     

Due to credit institutions***

     63,159         44,281         50,816         31,203         42,165   

Other liabilities

     26,458         29,513         40,110         38,511         37,011   

Shareholders’ equity****

     12,679         12,422         12,877         13,032         12,976   

Other customer funds under management

     14,204         14,532         14,686         15,744         15,674   

Mutual funds

     14,204         14,532         14,686         15,744         15,674   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     264,882         276,558         280,205         289,145         289,809   

 

***

Including all on-balance sheet balances for this item

****

Not including profit of the year

 

Other information

          

NPL ratio

     1.73        1.81        1.86        1.84        1.82   

NPL coverage

     47        43        42        40        40   

Spread (Retail Banking)

     2.08        2.00        2.01        2.03        1.98   

Spread loans

          2.40              2.40              2.46              2.53             2.57   

Spread deposits

     (0.32     (0.40     (0.45     (0.50     (0.59


Table of Contents

LOGO

United Kingdom

£ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     800        984        (183     (18.6

Net fees

     244        199        45        22.4   

Gains (losses) on financial transactions

     93        134        (41     (30.6

Other operating income*

     7        5        2        36.0   

Gross income

     1,144        1,322        (178     (13.5

Operating expenses

     (562     (564     3        (0.5

General administrative expenses

     (483     (486     3        (0.6

Personnel

     (300     (297     (4     1.2   

Other general administrative expenses

     (183     (190     7        (3.6

Depreciation and amortisation

     (78     (78     (1     0.8   

Net operating income

     582        758        (176     (23.2

Net loan-loss provisions

     (179     (129     (50     38.5   

Other income

     (56     (39     (17     44.2   

Profit before taxes

     347        590        (243     (41.1

Tax on profit

     (92     (158     67        (42.0

Profit from continuing operations

     255        431        (176     (40.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     255        431        (176     (40.8

Minority interests

     0        (0     0        —     

Attributable profit to the Group

     255        431        (176     (40.8

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans***

     217,706         205,183         12,523        6.1   

Trading portfolio (w/o loans)

     30,208         36,201         (5,993     (16.6

Available-for-sale financial assets

     831         32         799        —     

Due from credit institutions***

     14,800         26,489         (11,689     (44.1

Intangible assets and property and equipment

     1,906         1,993         (87     (4.3

Other assets

     39,996         42,026         (2,030     (4.8

Total assets/liabilities & shareholders’ equity

     305,446         311,924         (6,477     (2.1

Customer deposits***

     159,881         159,403         478        0.3   

Marketable debt securities***

     61,977         55,624         6,353        11.4   

Subordinated debt***

     6,743         6,497         246        3.8   

Insurance liabilities

     —           1         (1     (100.0

Due to credit institutions***

     35,161         55,814         (20,653     (37.0

Other liabilities

     30,863         23,381         7,482        32.0   

Shareholders’ equity****

     10,821         11,204         (384     (3.4

Other customer funds under management

     13,070         12,552         518        4.1   

Mutual funds

     13,070         12,552         518        4.1   

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     241,672         234,076         7,595        3.2   

 

***

Including all on-balance sheet balances for this item

****

Not including profit of the year


Table of Contents

LOGO

United Kingdom

£ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     984        942        929        924        800   

Net fees

     199        260        246        230        244   

Gains (losses) on financial transactions

     134        115        77        26        93   

Other operating income*

     5        6        4        8        7   

Gross income

     1,322        1,322        1,256        1,188        1,144   

Operating expenses

     (564     (561     (557     (570     (562

General administrative expenses

     (486     (483     (478     (498     (483

Personnel

     (297     (293     (314     (324     (300

Other general administrative expenses

     (190     (190     (164     (174     (183

Depreciation and amortisation

     (78     (78     (79     (72     (78

Net operating income

     758        761        700        618        582   

Net loan-loss provisions

     (129     (127     (152     (141     (179

Other income

     (39     (764     (29     (7     (56

Profit before taxes

     590        (129     519        470        347   

Tax on profit

     (158     28        (144     (115     (92

Profit from continuing operations

     431        (101     375        355        255   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     431        (101     375        355        255   

Minority interests

     (0     0        (0     0        0   

Attributable profit to the Group

     431        (101     375        355        255   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans***

     205,183         203,614         206,745         213,586         217,706   

Trading portfolio (w/o loans)

     36,201         42,081         43,066         34,615         30,208   

Available-for-sale financial assets

     32         43         960         46         831   

Due from credit institutions***

     26,489         23,864         29,582         14,040         14,800   

Intangible assets and property and equipment

     1,993         1,984         1,940         1,913         1,906   

Other assets

     42,026         42,720         37,779         33,291         39,996   

Total assets/liabilities & shareholders’ equity

     311,924         314,307         320,073         297,490         305,446   

Customer deposits***

     159,403         164,569         162,186         162,314         159,881   

Marketable debt securities***

     55,624         65,350         61,045         59,159         61,977   

Subordinated debt***

     6,497         6,573         6,881         6,899         6,743   

Insurance liabilities

     1         1         —           —           —     

Due to credit institutions***

     55,814         39,966         44,040         26,064         35,161   

Other liabilities

     23,381         26,637         34,761         32,169         30,863   

Shareholders’ equity****

     11,204         11,212         11,160         10,886         10,821   

Other customer funds under management

     12,552         13,116         12,728         13,151         13,070   

Mutual funds

     12,552         13,116         12,728         13,151         13,070   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     234,076         249,608         242,839         241,523         241,672   

 

***

Including all on-balance sheet balances for this item

****

Not including profit of the year


Table of Contents

LOGO

Latin America

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     4,650        3,950        700        17.7   

Net fees

     1,327        1,256        71        5.6   

Gains (losses) on financial transactions

     247        309        (62     (20.0

Other operating income*

     (49     (21     (28     130.6   

Gross income

     6,175        5,494        681        12.4   

Operating expenses

     (2,298     (2,127     (171     8.1   

General administrative expenses

     (2,090     (1,913     (177     9.3   

Personnel

     (1,184     (1,092     (92     8.4   

Other general administrative expenses

     (907     (821     (85     10.4   

Depreciation and amortisation

     (208     (214     6        (2.8

Net operating income

     3,876        3,367        510        15.1   

Net loan-loss provisions

     (1,742     (1,251     (491     39.2   

Other income

     (248     (223     (25     11.2   

Profit before taxes

     1,887        1,893        (6     (0.3

Tax on profit

     (430     (429     (1     0.3   

Profit from continuing operations

     1,457        1,465        (7     (0.5

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,457        1,465        (7     (0.5

Minority interests

     239        195        44        22.7   

Attributable profit to the Group

     1,218        1,270        (52     (4.1

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     141,411         124,691         16,720        13.4   

Trading portfolio (w/o loans)

     31,489         28,754         2,735        9.5   

Available-for-sale financial assets

     24,935         31,659         (6,724     (21.2

Due from credit institutions**

     25,567         21,288         4,279        20.1   

Intangible assets and property and equipment

     4,355         4,669         (314     (6.7

Other assets

     47,729         58,413         (10,684     (18.3

Total assets/liabilities & shareholders’ equity

     275,486         269,474         6,012        2.2   

Customer deposits**

     143,065         135,034         8,031        5.9   

Marketable debt securities**

     26,167         18,681         7,485        40.1   

Subordinated debt**

     6,100         5,586         514        9.2   

Insurance liabilities

     —           9,431         (9,431     (100.0

Due to credit institutions**

     34,622         38,597         (3,976     (10.3

Other liabilities

     41,855         39,616         2,239        5.7   

Shareholders’ equity***

     23,677         22,527         1,149        5.1   

Other customer funds under management

     73,185         77,673         (4,488     (5.8

Mutual funds

     59,080         63,588         (4,508     (7.1

Pension funds

     —           —           —          —     

Managed portfolios

     14,105         13,252         853        6.4   

Savings-insurance policies

     —           833         (833     (100.0

Customer funds under management

     248,518         236,975         11,543        4.9   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Ratios (%) and other data

          

ROE

     20.89         22.61         (1.72 p.  

Efficiency ratio (with amortisations)

     37.2         38.7         (1.5 p.  

NPL ratio

     4.67         4.01         0.66 p.     

NPL coverage

     92         107         (16 p.  

Number of employees (direct & indirect)

       92,244           89,866         2,378             2.6   

Number of branches

     6,053         5,895         158        2.7   


Table of Contents

LOGO

Latin America

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     3,950        4,014        4,096        4,289        4,650   

Net fees

     1,256        1,264        1,266        1,207        1,327   

Gains (losses) on financial transactions

     309        399        255        104        247   

Other operating income*

     (21     (63     (30     (29     (49

Gross income

     5,494        5,614        5,586        5,571        6,175   

Operating expenses

     (2,127     (2,150     (2,242     (2,350     (2,298

General administrative expenses

     (1,913     (1,927     (2,011     (2,098     (2,090

Personnel

     (1,092     (1,081     (1,118     (1,157     (1,184

Other general administrative expenses

     (821     (846     (893     (940     (907

Depreciation and amortisation

     (214     (223     (231     (252     (208

Net operating income

     3,367        3,464        3,345        3,221        3,876   

Net loan-loss provisions

     (1,251     (1,474     (1,535     (1,187     (1,742

Other income

     (223     (277     (208     (312     (248

Profit before taxes

     1,893        1,713        1,602        1,722        1,887   

Tax on profit

     (429     (339     (385     (397     (430

Profit from continuing operations

     1,465        1,374        1,217        1,325        1,457   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     1,465        1,374        1,217        1,325        1,457   

Minority interests

     195        186        146        189        239   

Attributable profit to the Group

     1,270        1,188        1,071        1,136        1,218   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     124,691         132,095         131,288         139,867         141,411   

Trading portfolio (w/o loans)

     28,754         35,839         36,144         31,705         31,489   

Available-for-sale financial assets

     31,659         34,417         26,604         26,186         24,935   

Due from credit institutions**

     21,288         22,667         24,282         19,181         25,567   

Intangible assets and property and equipment

     4,669         4,766         4,443         4,312         4,355   

Other assets

     58,413         60,547         55,828         53,594         47,729   

Total assets/liabilities & shareholders’ equity

     269,474         290,331         278,590         274,845         275,486   

Customer deposits**

     135,034         138,596         130,628         134,078         143,065   

Marketable debt securities**

     18,681         22,495         22,224         23,253         26,167   

Subordinated debt**

     5,586         5,864         5,658         6,015         6,100   

Insurance liabilities

     9,431         9,809         8,965         —           —     

Due to credit institutions**

     38,597         47,058         44,206         46,813         34,622   

Other liabilities

     39,616         44,823         46,931         45,170         41,855   

Shareholders’ equity***

     22,527         21,687         19,978         19,516         23,677   

Other customer funds under management

     77,673         76,290         70,913         69,902         73,185   

Mutual funds

     63,588         62,433         56,691         55,829         59,080   

Pension funds

     —           —           —           —           —     

Managed portfolios

     13,252         12,973         13,515         14,073         14,105   

Savings-insurance policies

     833         884         707         —           —     

Customer funds under management

     236,975         243,244         229,422         233,248         248,518   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Other information

              

NPL ratio

           4.01               4.20               4.10               4.32               4.67   

NPL coverage

     107         105         102         97         92   


Table of Contents

LOGO

Latin America

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     6,094        5,401        693        12.8   

Net fees

     1,739        1,717        22        1.3   

Gains (losses) on financial transactions

     324        422        (98     (23.3

Other operating income*

     (64     (29     (35     121.0   

Gross income

     8,092        7,511        581        7.7   

Operating expenses

     (3,012     (2,908     (104     3.6   

General administrative expenses

     (2,740     (2,616     (124     4.7   

Personnel

     (1,552     (1,493     (59     3.9   

Other general administrative expenses

     (1,188     (1,123     (65     5.8   

Depreciation and amortisation

     (272     (292     20        (6.8

Net operating income

     5,080        4,603        477        10.4   

Net loan-loss provisions

     (2,282     (1,710     (572     33.5   

Other income

     (325     (305     (20     6.6   

Profit before taxes

     2,473        2,588        (115     (4.5

Tax on profit

     (563     (586     23        (3.9

Profit from continuing operations

     1,910        2,002        (92     (4.6

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,910        2,002        (92     (4.6

Minority interests

     314        267        47        17.7   

Attributable profit to the Group

     1,596        1,736        (140     (8.0

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     188,868         177,149         11,720        6.6   

Trading portfolio (w/o loans)

     42,057         40,851         1,206        3.0   

Available-for-sale financial assets

     33,304         44,978         (11,674     (26.0

Due from credit institutions**

     34,147         30,244         3,903        12.9   

Intangible assets and property and equipment

     5,817         6,633         (817     (12.3

Other assets

     63,746         82,987         (19,240     (23.2

Total assets/liabilities & shareholders’ equity

     367,939         382,841         (14,902     (3.9

Customer deposits**

     191,078         191,843         (765     (0.4

Marketable debt securities**

     34,948         26,541         8,407        31.7   

Subordinated debt**

     8,148         7,936         212        2.7   

Insurance liabilities

     —           13,399         (13,399     (100.0

Due to credit institutions**

     46,241         54,835         (8,595     (15.7

Other liabilities

     55,902         56,283         (381     (0.7

Shareholders’ equity***

     31,623         32,005         (382     (1.2

Other customer funds under management

     97,746         110,350         (12,604     (11.4

Mutual funds

     78,908         90,340         (11,432     (12.7

Pension funds

     —           —           —          —     

Managed portfolios

     18,838         18,827         12        0.1   

Savings-insurance policies

     —           1,184         (1,184     (100.0

Customer funds under management

     331,920         336,670         (4,750     (1.4

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Latin America

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     5,401        5,767        5,783        5,780        6,094   

Net fees

     1,717        1,816        1,788        1,620        1,739   

Gains (losses) on financial transactions

     422        571        360        131        324   

Other operating income*

     (29     (89     (43     (39     (64

Gross income

     7,511        8,064        7,888        7,492        8,092   

Operating expenses

     (2,908     (3,089     (3,165     (3,168     (3,012

General administrative expenses

     (2,616     (2,769     (2,839     (2,827     (2,740

Personnel

     (1,493     (1,554     (1,578     (1,559     (1,552

Other general administrative expenses

     (1,123     (1,215     (1,260     (1,268     (1,188

Depreciation and amortisation

     (292     (320     (326     (341     (272

Net operating income

     4,603        4,975        4,724        4,324        5,080   

Net loan-loss provisions

     (1,710     (2,111     (2,167     (1,586     (2,282

Other income

     (305     (396     (294     (423     (325

Profit before taxes

     2,588        2,468        2,263        2,315        2,473   

Tax on profit

     (586     (490     (544     (534     (563

Profit from continuing operations

     2,002        1,978        1,720        1,781        1,910   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     2,002        1,978        1,720        1,781        1,910   

Minority interests

     267        268        206        255        314   

Attributable profit to the Group

     1,736        1,710        1,513        1,526        1,596   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     177,149         190,917         177,279         180,974         188,868   

Trading portfolio (w/o loans)

     40,851         51,798         48,805         41,023         42,057   

Available-for-sale financial assets

     44,978         49,743         35,923         33,882         33,304   

Due from credit institutions**

     30,244         32,761         32,788         24,819         34,147   

Intangible assets and property and equipment

     6,633         6,888         6,000         5,579         5,817   

Other assets

     82,987         87,509         75,385         69,346         63,746   

Total assets/liabilities & shareholders’ equity

     382,841         419,616         376,179         355,622         367,939   

Customer deposits**

     191,843         200,313         176,387         173,483         191,078   

Marketable debt securities**

     26,541         32,512         30,010         30,087         34,948   

Subordinated debt**

     7,936         8,475         7,639         7,783         8,148   

Insurance liabilities

     13,399         14,177         12,105         —           —     

Due to credit institutions**

     54,835         68,012         59,692         60,571         46,241   

Other liabilities

     56,283         64,783         63,372         58,446         55,902   

Shareholders’ equity***

     32,005         31,344         26,976         25,251         31,623   

Other customer funds under management

     110,350         110,262         95,753         90,446         97,746   

Mutual funds

     90,340         90,234         76,550         72,237         78,908   

Pension funds

     —           —           —           —           —     

Managed portfolios

     18,827         18,749         18,249         18,209         18,838   

Savings-insurance policies

     1,184         1,278         954         —           —     

Customer funds under management

     336,670         351,561         309,789         301,800         331,920   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Latin America. Results

EUR million

 

     Gross income     Net operating income      Attributable profit to the Group  
     Q1 ’12      Q1 ’11      Var. (%)     Q1 ’12     Q1 ’11      Var. (%)      Q1 ’12     Q1 ’11     Var. (%)  

Brazil

     4,353         3,886         12.0        2,825        2,445         15.5         647        732        (11.6

Mexico

     677         608         11.4        428        379         13.1         296        256        15.6   

Chile

     564         511         10.3        352        321         9.7         133        162        (18.1

Argentina

     279         217         29.0        146        113         29.3         78        70        12.6   

Uruguay

     59         36         61.9        18        8         136.0         12        4        201.4   

Puerto Rico

     89         84         4.9        42        41         2.5         11        8        38.5   

Colombia

     63         46         37.8        31        18         72.0         15        11        34.3   

Rest

     12         33         (63.7     (12     3         —           (9     (4     112.7   

Subtotal

     6,095         5,421         12.4        3,831        3,327         15.1         1,184        1,239        (4.5

Santander Private Banking

     79         73         8.9        46        40         15.4         34        31        11.6   

Total

     6,175         5,494         12.4        3,876        3,367         15.1         1,218        1,270        (4.1


Table of Contents

LOGO

Latin America. Results

US$ million

 

     Gross income     Net operating income     Attributable profit to the Group  
     Q1 ’12      Q1 ’11      Var. (%)     Q1 ’12     Q1 ’11      Var. (%)     Q1 ’12     Q1 ’11     Var. (%)  

Brazil

     8,092         7,511         7.7        5,080        4,603         10.4        1,596        1,736        (8.0

Mexico

     887         831         6.8        561        518         8.4        388        350        10.8   

Chile

     739         699         5.7        461        438         5.2        174        222        (21.5

Argentina

     366         296         23.7        191        154         23.9        103        95        7.9   

Uruguay

     77         50         55.2        23        10         126.2        16        6        188.9   

Puerto Rico

     116         115         0.5        56        57         (1.8     14        11        32.8   

Colombia

     82         62         32.1        41        25         64.8        20        15        28.7   

Rest

     16         46         (65.2     (15     4         —          (12     (6     103.9   

Subtotal

     7,988         7,411         7.8        5,020        4,549         10.4        1,551        1,694        (8.4

Santander Private Banking

     104         100         4.4        60        54         10.6        45        42        7.0   

Total

     5,705         5,313         7.4        3,702        3,343         10.8        848        1,001        (15.2


Table of Contents

LOGO

Brazil

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     3,376        2,911        464        15.9   

Net fees

     848        810        38        4.7   

Gains (losses) on financial transactions

     170        195        (25     (12.8

Other operating income*

     (41     (31     (10     32.1   

Gross income

     4,353        3,886        467        12.0   

Operating expenses

     (1,528     (1,441     (87     6.1   

General administrative expenses

     (1,393     (1,295     (98     7.6   

Personnel

     (777     (726     (51     7.0   

Other general administrative expenses

     (616     (569     (47     8.3   

Depreciation and amortisation

     (135     (146     11        (7.2

Net operating income

     2,825        2,445        380        15.5   

Net loan-loss provisions

     (1,490     (1,046     (444     42.5   

Other income

     (222     (227     5        (2.2

Profit before taxes

     1,112        1,172        (59     (5.1

Tax on profit

     (285     (290     5        (1.7

Profit from continuing operations

     827        881        (54     (6.2

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     827        881        (54     (6.2

Minority interests

     179        149        30        20.3   

Attributable profit to the Group

     647        732        (85     (11.6

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     78,083         69,447         8,636        12.4   

Trading portfolio (w/o loans)

     10,977         10,567         410        3.9   

Available-for-sale financial assets

     15,261         22,584         (7,322     (32.4

Due from credit institutions**

     12,965         10,966         1,999        18.2   

Intangible assets and property and equipment

     3,262         3,679         (417     (11.3

Other assets

     34,293         40,534         (6,240     (15.4

Total assets/liabilities & shareholders’ equity

     154,841         157,776         (2,935     (1.9

Customer deposits**

     76,352         75,605         747        1.0   

Marketable debt securities**

     18,872         11,780         7,092        60.2   

Subordinated debt**

     4,604         4,325         279        6.4   

Insurance liabilities

     —           8,679         (8,679     (100.0

Due to credit institutions**

     17,193         22,091         (4,897     (22.2

Other liabilities

     24,731         23,612         1,119        4.7   

Shareholders’ equity***

     13,089         11,684         1,405        12.0   

Other customer funds under management

     44,407         50,822         (6,416     (12.6

Mutual funds

     41,247         46,705         (5,459     (11.7

Pension funds

     —           —           —          —     

Managed portfolios

     3,160         3,568         (408     (11.4

Savings-insurance policies

     —           549         (549     (100.0

Customer funds under management

     144,235         142,533         1,702        1.2   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Ratios (%) and other data

          

ROE

     20.45         24.91         (4.46 p.  

Efficiency ratio (with amortisations)

     35.1         37.1         (2.0 p.  

NPL ratio

     5.76         4.85         0.91 p.     

NPL coverage

     90         104         (14 p.  

Number of employees (direct & indirect)

     54,848           54,144         704        1.3   

Number of branches

     3,776         3,703         73             2.0   


Table of Contents

LOGO

Brazil

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     2,911        2,938        2,997        3,133        3,376   

Net fees

     810        840        826        778        848   

Gains (losses) on financial transactions

     195        277        219        66        170   

Other operating income*

     (31     (85     (35     (25     (41

Gross income

     3,886        3,969        4,007        3,951        4,353   

Operating expenses

     (1,441     (1,446     (1,499     (1,567     (1,528

General administrative expenses

     (1,295     (1,288     (1,337     (1,387     (1,393

Personnel

     (726     (706     (732     (760     (777

Other general administrative expenses

     (569     (582     (606     (627     (616

Depreciation and amortisation

     (146     (157     (162     (180     (135

Net operating income

     2,445        2,524        2,508        2,384        2,825   

Net loan-loss provisions

     (1,046     (1,255     (1,239     (968     (1,490

Other income

     (227     (272     (283     (309     (222

Profit before taxes

     1,172        997        986        1,106        1,112   

Tax on profit

     (290     (217     (282     (337     (285

Profit from continuing operations

     881        780        704        769        827   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     881        780        704        769        827   

Minority interests

     149        131        112        132        179   

Attributable profit to the Group

     732        649        592        637        647   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     69,447         73,320         71,736         78,408         78,083   

Trading portfolio (w/o loans)

     10,567         14,407         13,327         12,994         10,977   

Available-for-sale financial assets

     22,584         24,596         18,221         18,422         15,261   

Due from credit institutions**

     10,966         10,134         9,818         8,490         12,965   

Intangible assets and property and equipment

     3,679         3,773         3,469         3,228         3,262   

Other assets

     40,534         44,696         42,127         36,612         34,293   

Total assets/liabilities & shareholders’ equity

     157,776         170,927         158,697         158,157         154,841   

Customer deposits**

     75,605         78,188         71,211         72,405         76,352   

Marketable debt securities**

     11,780         14,553         15,379         16,154         18,872   

Subordinated debt**

     4,325         4,547         4,230         4,515         4,604   

Insurance liabilities

     8,679         8,980         8,178         —           —     

Due to credit institutions**

     22,091         27,218         24,777         28,847         17,193   

Other liabilities

     23,612         25,954         24,800         25,795         24,731   

Shareholders’ equity***

     11,684         11,488         10,123         10,440         13,089   

Other customer funds under management

     50,822         49,756         44,481         42,785         44,407   

Mutual funds

     46,705         45,397         40,623         39,414         41,247   

Pension funds

     —           —           —           —           —     

Managed portfolios

     3,568         3,791         3,449         3,371         3,160   

Savings-insurance policies

     549         567         410         —           —     

Customer funds under management

     142,533         147,043         135,300         135,859         144,235   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Other information

              

NPL ratio

           4.85               5.05               5.05               5.38               5.76   

NPL coverage

     104         102         100         95         90   

Spread (Retail Banking)

     15.84         16.17         15.41         15.44         15.17   

Spread loans

     14.72         15.05         14.23         14.44         14.44   

Spread deposits

     1.12         1.12         1.18         1.00         0.73   


Table of Contents

LOGO

Brazil

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     4,424        3,980        444        11.1   

Net fees

     1,112        1,108        4        0.3   

Gains (losses) on financial transactions

     222        266        (44     (16.4

Other operating income*

     (53     (42     (11     26.6   

Gross income

     5,705        5,313        392        7.4   

Operating expenses

     (2,003     (1,970     (33     1.7   

General administrative expenses

     (1,826     (1,771     (55     3.1   

Personnel

     (1,018     (993     (25     2.5   

Other general administrative expenses

     (808     (778     (30     3.8   

Depreciation and amortisation

     (177     (199     22        (11.1

Net operating income

     3,702        3,343        359        10.8   

Net loan-loss provisions

     (1,953     (1,430     (523     36.6   

Other income

     (291     (311     20        (6.3

Profit before taxes

     1,458        1,602        (144     (9.0

Tax on profit

     (374     (397     23        (5.7

Profit from continuing operations

     1,084        1,205        (121     (10.1

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,084        1,205        (121     (10.1

Minority interests

     235        204        31        15.3   

Attributable profit to the Group

     848        1,001        (153     (15.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     104,287         98,663         5,625        5.7   

Trading portfolio (w/o loans)

     14,661         15,012         (351     (2.3

Available-for-sale financial assets

     20,383         32,085         (11,702     (36.5

Due from credit institutions**

     17,316         15,580         1,736        11.1   

Intangible assets and property and equipment

     4,357         5,227         (870     (16.6

Other assets

     45,802         57,586         (11,784     (20.5

Total assets/liabilities & shareholders’ equity

     206,806         224,153         (17,346     (7.7

Customer deposits**

     101,976         107,412         (5,436     (5.1

Marketable debt securities**

     25,205         16,736         8,470        50.6   

Subordinated debt**

     6,149         6,145         4        0.1   

Insurance liabilities

     —           12,330         (12,330     (100.0

Due to credit institutions**

     22,964         31,384         (8,421     (26.8

Other liabilities

     33,031         33,546         (515     (1.5

Shareholders’ equity***

     17,481         16,599         882        5.3   

Other customer funds under management

     59,310         72,203         (12,894     (17.9

Mutual funds

     55,089         66,354         (11,265     (17.0

Pension funds

     —           —           —          —     

Managed portfolios

     4,220         5,069         (849     (16.8

Savings-insurance policies

     —           779         (779     (100.0

Customer funds under management

     192,640         202,497         (9,856     (4.9

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Brazil

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     3,980        4,222        4,232        4,221        4,424   

Net fees

     1,108        1,206        1,166        1,043        1,112   

Gains (losses) on financial transactions

     266        395        310        81        222   

Other operating income*

     (42     (121     (50     (33     (53

Gross income

     5,313        5,702        5,658        5,313        5,705   

Operating expenses

     (1,970     (2,078     (2,116     (2,112     (2,003

General administrative expenses

     (1,771     (1,852     (1,888     (1,869     (1,826

Personnel

     (993     (1,016     (1,033     (1,024     (1,018

Other general administrative expenses

     (778     (836     (855     (845     (808

Depreciation and amortisation

     (199     (226     (228     (243     (177

Net operating income

     3,343        3,624        3,542        3,201        3,702   

Net loan-loss provisions

     (1,430     (1,796     (1,749     (1,292     (1,953

Other income

     (311     (390     (400     (418     (291

Profit before taxes

     1,602        1,439        1,392        1,490        1,458   

Tax on profit

     (397     (314     (398     (457     (374

Profit from continuing operations

     1,205        1,125        995        1,034        1,084   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     1,205        1,125        995        1,034        1,084   

Minority interests

     204        190        158        178        235   

Attributable profit to the Group

     1,001        935        837        856        848   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     98,663         105,970         96,865         101,452         104,287   

Trading portfolio (w/o loans)

     15,012         20,822         17,996         16,814         14,661   

Available-for-sale financial assets

     32,085         35,548         24,604         23,837         20,383   

Due from credit institutions**

     15,580         14,647         13,257         10,986         17,316   

Intangible assets and property and equipment

     5,227         5,454         4,684         4,177         4,357   

Other assets

     57,586         64,600         56,883         47,373         45,802   

Total assets/liabilities & shareholders’ equity

     224,153         247,041         214,288         204,639         206,806   

Customer deposits**

     107,412         113,005         96,156         93,685         101,976   

Marketable debt securities**

     16,736         21,033         20,766         20,902         25,205   

Subordinated debt**

     6,145         6,572         5,711         5,842         6,149   

Insurance liabilities

     12,330         12,979         11,043         —           —     

Due to credit institutions**

     31,384         39,338         33,456         37,325         22,964   

Other liabilities

     33,546         37,511         33,488         33,376         33,031   

Shareholders’ equity***

     16,599         16,604         13,669         13,509         17,481   

Other customer funds under management

     72,203         71,912         60,063         55,359         59,310   

Mutual funds

     66,354         65,613         54,853         50,997         55,089   

Pension funds

     —           —           —           —           —     

Managed portfolios

     5,069         5,479         4,657         4,362         4,220   

Savings-insurance policies

     779         820         554         —           —     

Customer funds under management

     202,497         212,521         182,696         175,788         192,640   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Brazil

R$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     7,817        6,635        1,182        17.8   

Net fees

     1,964        1,847        117        6.4   

Gains (losses) on financial transactions

     393        444        (51     (11.4

Other operating income*

     (94     (70     (24     34.2   

Gross income

     10,080        8,855        1,225        13.8   

Operating expenses

     (3,539     (3,284     (255     7.8   

General administrative expenses

     (3,225     (2,951     (274     9.3   

Personnel

     (1,798     (1,655     (144     8.7   

Other general administrative expenses

     (1,427     (1,296     (131     10.1   

Depreciation and amortisation

     (313     (332     19        (5.7

Net operating income

     6,541        5,571        970        17.4   

Net loan-loss provisions

     (3,450     (2,383     (1,067     44.8   

Other income

     (515     (518     3        (0.7

Profit before taxes

     2,576        2,670        (94     (3.5

Tax on profit

     (661     (662     1        (0.1

Profit from continuing operations

     1,914        2,008        (94     (4.7

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,914        2,008        (94     (4.7

Minority interests

     416        340        76        22.3   

Attributable profit to the Group

     1,499        1,668        (169     (10.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     189,921         160,130         29,791        18.6   

Trading portfolio (w/o loans)

     26,699         24,365         2,334        9.6   

Available-for-sale financial assets

     37,120         52,074         (14,953     (28.7

Due from credit institutions**

     31,534         25,286         6,249        24.7   

Intangible assets and property and equipment

     7,935         8,484         (549     (6.5

Other assets

     83,411         93,462         (10,051     (10.8

Total assets/liabilities & shareholders’ equity

     376,621         363,800         12,820        3.5   

Customer deposits**

     185,712         174,331         11,381        6.5   

Marketable debt securities**

     45,902         27,162         18,740        69.0   

Subordinated debt**

     11,199         9,974         1,225        12.3   

Insurance liabilities

     —           20,011         (20,011     (100.0

Due to credit institutions**

     41,820         50,937         (9,117     (17.9

Other liabilities

     60,153         54,445         5,708        10.5   

Shareholders’ equity***

     31,835         26,941         4,894        18.2   

Other customer funds under management

     108,010         117,186         (9,176     (7.8

Mutual funds

     100,325         107,693         (7,369     (6.8

Pension funds

     —           —           —          —     

Managed portfolios

     7,685         8,228         (542     (6.6

Savings-insurance policies

     —           1,265         (1,265     (100.0

Customer funds under management

     350,823         328,653         22,171        6.7   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Brazil

R$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     6,635        6,745        6,905        7,562        7,817   

Net fees

     1,847        1,927        1,902        1,886        1,964   

Gains (losses) on financial transactions

     444        635        506        174        393   

Other operating income*

     (70     (196     (82     (63     (94

Gross income

     8,855        9,112        9,231        9,558        10,080   

Operating expenses

     (3,284     (3,319     (3,453     (3,781     (3,539

General administrative expenses

     (2,951     (2,958     (3,080     (3,348     (3,225

Personnel

     (1,655     (1,621     (1,685     (1,835     (1,798

Other general administrative expenses

     (1,296     (1,336     (1,395     (1,513     (1,427

Depreciation and amortisation

     (332     (361     (372     (433     (313

Net operating income

     5,571        5,793        5,778        5,778        6,541   

Net loan-loss provisions

     (2,383     (2,878     (2,854     (2,362     (3,450

Other income

     (518     (625     (652     (744     (515

Profit before taxes

     2,670        2,290        2,272        2,671        2,576   

Tax on profit

     (662     (498     (649     (808     (661

Profit from continuing operations

     2,008        1,791        1,623        1,863        1,914   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     2,008        1,791        1,623        1,863        1,914   

Minority interests

     340        302        257        320        416   

Attributable profit to the Group

     1,668        1,489        1,366        1,543        1,499   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     160,130         165,711         179,820         189,427         189,921   

Trading portfolio (w/o loans)

     24,365         32,561         33,407         31,393         26,699   

Available-for-sale financial assets

     52,074         55,588         45,674         44,507         37,120   

Due from credit institutions**

     25,286         22,905         24,610         20,512         31,534   

Intangible assets and property and equipment

     8,484         8,528         8,695         7,800         7,935   

Other assets

     93,462         101,018         105,599         88,452         83,411   

Total assets/liabilities & shareholders’ equity

     363,800         386,312         397,805         382,090         376,621   

Customer deposits**

     174,331         176,713         178,504         174,923         185,712   

Marketable debt securities**

     27,162         32,890         38,549         39,027         45,902   

Subordinated debt**

     9,974         10,276         10,603         10,908         11,199   

Insurance liabilities

     20,011         20,295         20,500         —           —     

Due to credit institutions**

     50,937         61,515         62,107         69,691         41,820   

Other liabilities

     54,445         58,658         62,167         62,318         60,153   

Shareholders’ equity***

     26,941         25,964         25,374         25,222         31,835   

Other customer funds under management

     117,186         112,453         111,501         103,364         108,010   

Mutual funds

     107,693         102,603         101,829         95,220         100,325   

Pension funds

     —           —           —           —           —     

Managed portfolios

     8,228         8,568         8,644         8,144         7,685   

Savings-insurance policies

     1,265         1,282         1,028         —           —     

Customer funds under management

     328,653         332,332         339,157         328,222         350,823   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Mexico

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     477        401        76        18.8   

Net fees

     180        159        20        12.8   

Gains (losses) on financial transactions

     31        51        (20     (39.1

Other operating income*

     (10     (4     (7     188.6   

Gross income

     677        608        69        11.4   

Operating expenses

     (249     (229     (20     8.6   

General administrative expenses

     (219     (202     (17     8.7   

Personnel

     (127     (118     (9     7.7   

Other general administrative expenses

     (92     (84     (8     10.0   

Depreciation and amortisation

     (30     (27     (2     8.3   

Net operating income

     428        379        50        13.1   

Net loan-loss provisions

     (78     (63     (15     23.0   

Other income

     (2     (6     4        (65.0

Profit before taxes

     348        310        39        12.5   

Tax on profit

     (52     (53     1        (2.4

Profit from continuing operations

     296        256        40        15.6   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     296        256        40        15.6   

Minority interests

     0        0        0        16.5   

Attributable profit to the Group

     296        256        40        15.6   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     19,146         15,907         3,239        20.4   

Trading portfolio (w/o loans)

     15,296         12,232         3,064        25.0   

Available-for-sale financial assets

     3,647         3,272         375        11.5   

Due from credit institutions**

     6,328         3,739         2,589        69.2   

Intangible assets and property and equipment

     378         382         (4     (1.1

Other assets

     4,411         4,120         292        7.1   

Total assets/liabilities & shareholders’ equity

     49,205         39,651         9,555        24.1   

Customer deposits**

     26,120         20,528         5,592        27.2   

Marketable debt securities**

     1,312         1,202         110        9.1   

Subordinated debt**

     —           —           —          —     

Insurance liabilities

     —           415         (415     (100.0

Due to credit institutions**

     8,784         5,873         2,911        49.6   

Other liabilities

     8,551         6,939         1,612        23.2   

Shareholders’ equity***

     4,438         4,693         (255     (5.4

Other customer funds under management

     10,503         10,481         22        0.2   

Mutual funds

     10,503         10,257         246        2.4   

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           224         (224     (100.0

Customer funds under management

     37,936         32,211         5,724        17.8   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Ratios (%) and other data

          

ROE

     27.03         22.45         4.58 p.     

Efficiency ratio (with amortisations)

     36.7         37.7         (0.9 p.  

NPL ratio

     1.61         1.58         0.03 p.     

NPL coverage

     195         234         (39 p.  

Number of employees (direct & indirect)

     13,032         12,337         695             5.6   

Number of branches

     1,125         1,099         26        2.4   


Table of Contents

LOGO

Mexico

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     401        409        430        423        477   

Net fees

     159        147        154        143        180   

Gains (losses) on financial transactions

     51        59        (7     (5     31   

Other operating income*

     (4     2        (3     (4     (10

Gross income

     608        618        575        557        677   

Operating expenses

     (229     (239     (251     (270     (249

General administrative expenses

     (202     (211     (224     (243     (219

Personnel

     (118     (117     (115     (116     (127

Other general administrative expenses

     (84     (94     (109     (127     (92

Depreciation and amortisation

     (27     (27     (27     (27     (30

Net operating income

     379        380        324        287        428   

Net loan-loss provisions

     (63     (93     (95     (85     (78

Other income

     (6     (1     60        (20     (2

Profit before taxes

     310        285        289        182        348   

Tax on profit

     (53     (54     (44     24        (52

Profit from continuing operations

     256        231        245        205        296   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     256        231        245        205        296   

Minority interests

     0        0        0        1        0   

Attributable profit to the Group

     256        230        245        205        296   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     15,907         17,722         17,477         18,185         19,146   

Trading portfolio (w/o loans)

     12,232         14,772         14,377         12,171         15,296   

Available-for-sale financial assets

     3,272         2,775         2,514         3,410         3,647   

Due from credit institutions**

     3,739         5,795         7,462         4,463         6,328   

Intangible assets and property and equipment

     382         374         339         369         378   

Other assets

     4,120         4,820         3,890         4,253         4,411   

Total assets/liabilities & shareholders’ equity

     39,651         46,257         46,058         42,852         49,205   

Customer deposits**

     20,528         20,824         19,615         21,459         26,120   

Marketable debt securities**

     1,202         2,209         1,504         1,324         1,312   

Subordinated debt**

     —           —           —           —           —     

Insurance liabilities

     415         456         428         —           —     

Due to credit institutions**

     5,873         9,460         10,009         7,591         8,784   

Other liabilities

     6,939         8,792         10,253         8,715         8,551   

Shareholders’ equity***

     4,693         4,516         4,248         3,763         4,438   

Other customer funds under management

     10,481         10,933         9,765         9,432         10,503   

Mutual funds

     10,257         10,698         9,545         9,432         10,503   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     224         235         220         —           —     

Customer funds under management

     32,211         33,966         30,884         32,214         37,936   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year

 

Other information

              

NPL ratio

     1.58         2.45         1.78         1.82         1.61   

NPL coverage

     234         165         176         176         195   

Spread (Retail Banking)

       10.67           10.44           10.26           10.32           10.65   

Spread loans

     8.58         8.40         8.27         8.36         8.69   

Spread deposits

     2.09         2.04         1.99         1.96         1.96   


Table of Contents

LOGO

Mexico

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     625        549        76        13.9   

Net fees

     235        218        18        8.1   

Gains (losses) on financial transactions

     41        69        (29     (41.6

Other operating income*

     (14     (5     (9     176.6   

Gross income

     887        831        56        6.8   

Operating expenses

     (326     (313     (13     4.1   

General administrative expenses

     (287     (276     (11     4.2   

Personnel

     (166     (161     (5     3.3   

Other general administrative expenses

     (121     (115     (6     5.4   

Depreciation and amortisation

     (39     (37     (1     3.8   

Net operating income

     561        518        44        8.4   

Net loan-loss provisions

     (102     (87     (16     17.9   

Other income

     (3     (8     5        (66.4

Profit before taxes

     457        424        33        7.8   

Tax on profit

     (68     (73     5        (6.5

Profit from continuing operations

     388        351        38        10.8   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     388        351        38        10.8   

Minority interests

     1        0        0        11.7   

Attributable profit to the Group

     388        350        38        10.8   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     25,571         22,599         2,972        13.2   

Trading portfolio (w/o loans)

     20,429         17,378         3,051        17.6   

Available-for-sale financial assets

     4,871         4,648         223        4.8   

Due from credit institutions**

     8,452         5,312         3,140        59.1   

Intangible assets and property and equipment

     504         542         (38     (7.0

Other assets

     5,892         5,853         39        0.7   

Total assets/liabilities & shareholders’ equity

     65,719         56,332         9,387        16.7   

Customer deposits**

     34,886         29,165         5,722        19.6   

Marketable debt securities**

     1,752         1,708         44        2.6   

Subordinated debt**

     —           —           —          —     

Insurance liabilities

     —           590         (590     (100.0

Due to credit institutions**

     11,731         8,344         3,388        40.6   

Other liabilities

     11,421         9,858         1,563        15.9   

Shareholders’ equity***

     5,928         6,668         (740     (11.1

Other customer funds under management

     14,028         14,890         (862     (5.8

Mutual funds

     14,028         14,573         (544     (3.7

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           318         (318     (100.0

Customer funds under management

     50,667         45,763         4,904        10.7   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Mexico

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     549        588        608        570        625   

Net fees

     218        212        217        191        235   

Gains (losses) on financial transactions

     69        85        (10     (9     41   

Other operating income*

     (5     3        (4     (5     (14

Gross income

     831        888        812        747        887   

Operating expenses

     (313     (343     (354     (364     (326

General administrative expenses

     (276     (304     (316     (328     (287

Personnel

     (161     (168     (162     (156     (166

Other general administrative expenses

     (115     (135     (154     (172     (121

Depreciation and amortisation

     (37     (39     (38     (36     (39

Net operating income

     518        546        458        383        561   

Net loan-loss provisions

     (87     (133     (135     (114     (102

Other income

     (8     (2     85        (29     (3

Profit before taxes

     424        410        408        239        457   

Tax on profit

     (73     (78     (62     35        (68

Profit from continuing operations

     351        332        346        274        388   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     351        332        346        274        388   

Minority interests

     0        0        0        1        1   

Attributable profit to the Group

     350        332        346        273        388   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     22,599         25,614         23,599         23,530         25,571   

Trading portfolio (w/o loans)

     17,378         21,351         19,413         15,749         20,429   

Available-for-sale financial assets

     4,648         4,010         3,394         4,412         4,871   

Due from credit institutions**

     5,312         8,375         10,076         5,775         8,452   

Intangible assets and property and equipment

     542         540         458         478         504   

Other assets

     5,853         6,966         5,252         5,502         5,892   

Total assets/liabilities & shareholders’ equity

     56,332         66,856         62,192         55,446         65,719   

Customer deposits**

     29,165         30,097         26,486         27,765         34,886   

Marketable debt securities**

     1,708         3,193         2,032         1,713         1,752   

Subordinated debt**

     —           —           —           —           —     

Insurance liabilities

     590         659         578         —           —     

Due to credit institutions**

     8,344         13,673         13,515         9,822         11,731   

Other liabilities

     9,858         12,707         13,845         11,277         11,421   

Shareholders’ equity***

     6,668         6,528         5,736         4,869         5,928   

Other customer funds under management

     14,890         15,802         13,185         12,204         14,028   

Mutual funds

     14,573         15,462         12,889         12,204         14,028   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     318         340         297         —           —     

Customer funds under management

     45,763         49,092         41,702         41,681         50,667   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Mexico

Million pesos

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     8,113        6,618        1,495        22.6   

Net fees

     3,056        2,626        430        16.4   

Gains (losses) on financial transactions

     526        837        (311     (37.1

Other operating income*

     (179     (60     (119     197.7   

Gross income

     11,517        10,022        1,496        14.9   

Operating expenses

     (4,228     (3,774     (454     12.0   

General administrative expenses

     (3,726     (3,324     (402     12.1   

Personnel

     (2,157     (1,941     (216     11.1   

Other general administrative expenses

     (1,569     (1,383     (186     13.4   

Depreciation and amortisation

     (502     (450     (53     11.7   

Net operating income

     7,289        6,248        1,041        16.7   

Net loan-loss provisions

     (1,327     (1,045     (281     26.9   

Other income

     (34     (93     59        (63.9

Profit before taxes

     5,929        5,110        819        16.0   

Tax on profit

     (886     (881     (6     0.6   

Profit from continuing operations

     5,043        4,229        814        19.2   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     5,043        4,229        814        19.2   

Minority interests

     7        6        1        20.2   

Attributable profit to the Group

     5,036        4,224        812        19.2   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     325,901         269,266         56,636        21.0   

Trading portfolio (w/o loans)

     260,365         207,056         53,309        25.7   

Available-for-sale financial assets

     62,076         55,381         6,695        12.1   

Due from credit institutions**

     107,719         63,293         44,426        70.2   

Intangible assets and property and equipment

     6,427         6,461         (34     (0.5

Other assets

     75,093         69,734         5,360        7.7   

Total assets/liabilities & shareholders’ equity

     837,582         671,191         166,391        24.8   

Customer deposits**

     444,626         347,496         97,129        28.0   

Marketable debt securities**

     22,332         20,349         1,984        9.7   

Subordinated debt**

     —           —           —          —     

Insurance liabilities

     —           7,026         (7,026     (100.0

Due to credit institutions**

     149,517         99,415         50,103        50.4   

Other liabilities

     145,559         117,458         28,101        23.9   

Shareholders’ equity***

     75,547         79,447         (3,900     (4.9

Other customer funds under management

     178,789         177,415         1,374        0.8   

Mutual funds

     178,789         173,631         5,157        3.0   

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           3,784         (3,784     (100.0

Customer funds under management

     645,746         545,260         100,486        18.4   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Mexico

Million pesos

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     6,618        6,902        7,461        7,729        8,113   

Net fees

     2,626        2,487        2,674        2,619        3,056   

Gains (losses) on financial transactions

     837        1,001        (94     (52     526   

Other operating income*

     (60     38        (44     (69     (179

Gross income

     10,022        10,427        9,997        10,226        11,517   

Operating expenses

     (3,774     (4,024     (4,348     (4,900     (4,228

General administrative expenses

     (3,324     (3,566     (3,884     (4,405     (3,726

Personnel

     (1,941     (1,977     (1,996     (2,121     (2,157

Other general administrative expenses

     (1,383     (1,589     (1,889     (2,285     (1,569

Depreciation and amortisation

     (450     (458     (463     (495     (502

Net operating income

     6,248        6,403        5,649        5,326        7,289   

Net loan-loss provisions

     (1,045     (1,571     (1,649     (1,554     (1,327

Other income

     (93     (20     1,020        (333     (34

Profit before taxes

     5,110        4,812        5,020        3,438        5,929   

Tax on profit

     (881     (916     (763     354        (886

Profit from continuing operations

     4,229        3,896        4,257        3,793        5,043   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     4,229        3,896        4,257        3,793        5,043   

Minority interests

     6        5        6        12        7   

Attributable profit to the Group

     4,224        3,891        4,251        3,780        5,036   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     269,266         300,865         324,961         328,268         325,901   

Trading portfolio (w/o loans)

     207,056         250,785         267,312         219,709         260,365   

Available-for-sale financial assets

     55,381         47,103         46,739         61,549         62,076   

Due from credit institutions**

     63,293         98,371         138,749         80,569         107,719   

Intangible assets and property and equipment

     6,461         6,344         6,303         6,668         6,427   

Other assets

     69,734         81,820         72,320         76,764         75,093   

Total assets/liabilities & shareholders’ equity

     671,191         785,288         856,384         773,527         837,582   

Customer deposits**

     347,496         353,517         364,709         387,352         444,626   

Marketable debt securities**

     20,349         37,501         27,974         23,894         22,332   

Subordinated debt**

     —           —           —           —           —     

Insurance liabilities

     7,026         7,746         7,962         —           —     

Due to credit institutions**

     99,415         160,598         186,106         137,027         149,517   

Other liabilities

     117,458         149,252         190,647         157,321         145,559   

Shareholders’ equity***

     79,447         76,674         78,988         67,932         75,547   

Other customer funds under management

     177,415         185,612         181,559         170,252         178,789   

Mutual funds

     173,631         181,618         177,476         170,252         178,789   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     3,784         3,994         4,083         —           —     

Customer funds under management

     545,260         576,630         574,241         581,498         645,746   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Chile

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     432        358        74        20.6   

Net fees

     111        110        2        1.5   

Gains (losses) on financial transactions

     16        30        (14     (47.7

Other operating income*

     5        13        (8     (64.4

Gross income

     564        511        52        10.3   

Operating expenses

     (212     (191     (21     11.1   

General administrative expenses

     (191     (168     (23     13.8   

Personnel

     (117     (104     (14     13.3   

Other general administrative expenses

     (73     (64     (9     14.8   

Depreciation and amortisation

     (21     (23     2        (8.6

Net operating income

     352        321        31        9.7   

Net loan-loss provisions

     (125     (75     (50     66.6   

Other income

     (4     2        (6     —     

Profit before taxes

     223        247        (25     (10.0

Tax on profit

     (31     (40     9        (23.3

Profit from continuing operations

     192        207        (15     (7.4

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     192        207        (15     (7.4

Minority interests

     59        45        14        31.4   

Attributable profit to the Group

     133        162        (29     (18.1

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     27,257         24,562           2,695        11.0   

Trading portfolio (w/o loans)

     1,816         2,782         (966     (34.7

Available-for-sale financial assets

     4,127         2,944           1,183        40.2   

Due from credit institutions**

     2,625         2,471         154        6.2   

Intangible assets and property and equipment

     365         332         34        10.1   

Other assets

     2,845         4,108         (1,263     (30.7

Total assets/liabilities & shareholders’ equity

     39,035         37,198           1,837        4.9   

Customer deposits**

     20,547         18,353           2,193        12.0   

Marketable debt securities**

     5,819         5,462         357        6.5   

Subordinated debt**

     1,288         1,046         242        23.2   

Insurance liabilities

     —           314         (314     (100.0

Due to credit institutions**

     4,825         4,207         618        14.7   

Other liabilities

     3,928         5,054         (1,127     (22.3

Shareholders’ equity***

     2,629         2,761         (132     (4.8

Other customer funds under management

     5,091         4,929         162        3.3   

Mutual funds

     5,091         4,868         223        4.6   

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           61         (61     (100.0

Customer funds under management

     32,745         29,791           2,954        9.9   

 

**

  Including all on-balance sheet balances for this item

***

  Not including profit of the year

 

Ratios (%) and other data

          

ROE

     21.62          23.97          (2.35 p.  

Efficiency ratio (with amortisations)

     37.6          37.3          0.3 p.     

NPL ratio

     4.52          3.80          0.72 p.     

NPL coverage

     68          89          (21 p.  

Number of employees (direct & indirect)

     12,216          11,815          401        3.4   

Number of branches

     499          506          (7     (1.4


Table of Contents

LOGO

Chile

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     358        388        366        406        432   

Net fees

     110        110        103        99        111   

Gains (losses) on financial transactions

     30        29        10        9        16   

Other operating income*

     13        18        9        1        5   

Gross income

     511        545        487        516        564   

Operating expenses

     (191     (201     (211     (206     (212

General administrative expenses

     (168     (179     (188     (184     (191

Personnel

     (104     (115     (121     (117     (117

Other general administrative expenses

     (64     (64     (67     (67     (73

Depreciation and amortisation

     (23     (22     (23     (22     (21

Net operating income

     321        344        277        311        352   

Net loan-loss provisions

     (75     (85     (131     (89     (125

Other income

     2        3        21        14        (4

Profit before taxes

     247        262        167        236        223   

Tax on profit

     (40     (22     (16     (37     (31

Profit from continuing operations

     207        241        151        199        192   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     207        241        151        199        192   

Minority interests

     45        54        33        55        59   

Attributable profit to the Group

     162        187        118        145        133   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     24,562         25,555         25,176         25,709         27,257   

Trading portfolio (w/o loans)

     2,782         3,360         3,283         3,019         1,816   

Available-for-sale financial assets

     2,944         4,402         3,512         2,572         4,127   

Due from credit institutions**

     2,471         2,713         2,860         2,049         2,625   

Intangible assets and property and equipment

     332         332         326         350         365   

Other assets

     4,108         2,534         3,405         5,208         2,845   

Total assets/liabilities & shareholders’ equity

     37,198         38,895         38,563         38,906         39,035   

Customer deposits**

     18,353         18,829         19,305         20,175         20,547   

Marketable debt securities**

     5,462         5,558         5,174         5,601         5,819   

Subordinated debt**

     1,046         1,124         1,223         1,285         1,288   

Insurance liabilities

     314         349         333         —           —     

Due to credit institutions**

     4,207         5,063         4,874         4,851         4,825   

Other liabilities

     5,054         5,609         5,430         5,112         3,928   

Shareholders’ equity***

     2,761         2,364         2,224         1,882         2,629   

Other customer funds under management

     4,929         4,757         4,712         4,846         5,091   

Mutual funds

     4,868         4,675         4,635         4,846         5,091   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     61         82         77         —           —     

Customer funds under management

     29,791         30,267         30,414         31,908         32,745   

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

              

Other information

              

NPL ratio

     3.80         3.65         3.63         3.85         4.52   

NPL coverage

     89         89         88         73         68   

Spread (Retail Banking)

     7.47         7.04         6.83         6.87         7.01   

Spread loans

     4.38         4.14         4.18         4.35         4.56   

Spread deposits

     3.09         2.90         2.65         2.52         2.45   


Table of Contents

LOGO

Chile

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     566        490        76        15.6   

Net fees

     146        150        (4     (2.7

Gains (losses) on financial transactions

     21        41        (21     (49.9

Other operating income*

     6        18        (12     (65.9

Gross income

     739        699        40        5.7   

Operating expenses

     (278     (261     (17     6.5   

General administrative expenses

     (250     (229     (21     9.1   

Personnel

     (154     (142     (12     8.6   

Other general administrative expenses

     (96     (87     (9     10.0   

Depreciation and amortisation

     (28     (31     4        (12.3

Net operating income

     461        438        23        5.2   

Net loan-loss provisions

     (164     (103     (61     59.7   

Other income

     (6     2        (8     —     

Profit before taxes

     292        338        (46     (13.7

Tax on profit

     (40     (55     15        (26.5

Profit from continuing operations

     251        283        (32     (11.2

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     251        283        (32     (11.2

Minority interests

     77        61        16        25.9   

Attributable profit to the Group

     174        222        (48     (21.5

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     36,405         34,896         1,509        4.3   

Trading portfolio (w/o loans)

     2,425         3,952         (1,527     (38.6

Available-for-sale financial assets

     5,512         4,182         1,330        31.8   

Due from credit institutions**

     3,506         3,510         (4     (0.1

Intangible assets and property and equipment

     488         471         17        3.5   

Other assets

     3,800         5,836         (2,037     (34.9

Total assets/liabilities & shareholders’ equity

     52,136         52,848         (712     (1.3

Customer deposits**

     27,442         26,074         1,368        5.2   

Marketable debt securities**

     7,772         7,760         11        0.1   

Subordinated debt**

     1,721         1,486         235        15.8   

Insurance liabilities

     —           447         (447     (100.0

Due to credit institutions**

     6,444         5,977         467        7.8   

Other liabilities

     5,246         7,181         (1,935     (26.9

Shareholders’ equity***

     3,511         3,923         (411     (10.5

Other customer funds under management

     6,800         7,003         (203     (2.9

Mutual funds

     6,800         6,916         (116     (1.7

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           87         (87     (100.0

Customer funds under management

     43,734         42,323         1,411        3.3   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Chile

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     490        557        516        548        566   

Net fees

     150        158        146        133        146   

Gains (losses) on financial transactions

     41        42        14        12        21   

Other operating income*

     18        26        12        1        6   

Gross income

     699        782        688        694        739   

Operating expenses

     (261     (288     (297     (277     (278

General administrative expenses

     (229     (257     (265     (247     (250

Personnel

     (142     (165     (171     (158     (154

Other general administrative expenses

     (87     (93     (95     (90     (96

Depreciation and amortisation

     (31     (31     (32     (30     (28

Net operating income

     438        494        391        417        461   

Net loan-loss provisions

     (103     (122     (185     (119     (164

Other income

     2        5        30        19        (6

Profit before taxes

     338        376        236        318        292   

Tax on profit

     (55     (32     (23     (50     (40

Profit from continuing operations

     283        345        214        268        251   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     283        345        214        268        251   

Minority interests

     61        77        47        74        77   

Attributable profit to the Group

     222        267        166        194        174   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     34,896         36,934         33,996         33,265         36,405   

Trading portfolio (w/o loans)

     3,952         4,856         4,433         3,907         2,425   

Available-for-sale financial assets

     4,182         6,363         4,743         3,328         5,512   

Due from credit institutions**

     3,510         3,921         3,861         2,651         3,506   

Intangible assets and property and equipment

     471         479         440         453         488   

Other assets

     5,836         3,663         4,598         6,739         3,800   

Total assets/liabilities & shareholders’ equity

     52,848         56,215         52,071         50,341         52,136   

Customer deposits**

     26,074         27,213         26,068         26,105         27,442   

Marketable debt securities**

     7,760         8,033         6,986         7,247         7,772   

Subordinated debt**

     1,486         1,625         1,651         1,663         1,721   

Insurance liabilities

     447         505         449         —           —     

Due to credit institutions**

     5,977         7,317         6,581         6,277         6,444   

Other liabilities

     7,181         8,107         7,332         6,614         5,246   

Shareholders’ equity***

     3,923         3,416         3,003         2,435         3,511   

Other customer funds under management

     7,003         6,875         6,363         6,271         6,800   

Mutual funds

     6,916         6,757         6,259         6,271         6,800   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     87         118         104         —           —     

Customer funds under management

     42,323         43,746         41,068         41,285         43,734   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Chile

Ch$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     276,624        236,045        40,579        17.2   

Net fees

     71,257        72,223        (966     (1.3

Gains (losses) on financial transactions

     10,143        19,966        (9,824     (49.2

Other operating income*

     2,981        8,618        (5,637     (65.4

Gross income

     361,004        336,852        24,152        7.2   

Operating expenses

     (135,622     (125,548     (10,074     8.0   

General administrative expenses

     (122,154     (110,395     (11,758     10.7   

Personnel

     (75,162     (68,269     (6,892     10.1   

Other general administrative expenses

     (46,992     (42,126     (4,866     11.6   

Depreciation and amortisation

     (13,468     (15,153     1,685        (11.1

Net operating income

     225,382        211,304        14,079        6.7   

Net loan-loss provisions

     (80,018     (49,410     (30,609     61.9   

Other income

     (2,746     1,055        (3,801     —     

Profit before taxes

     142,618        162,949        (20,331     (12.5

Tax on profit

     (19,721     (26,455     6,734        (25.5

Profit from continuing operations

     122,897        136,494        (13,597     (10.0

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     122,897        136,494        (13,597     (10.0

Minority interests

     37,741        29,553        8,188        27.7   

Attributable profit to the Group

     85,155        106,940        (21,785     (20.4

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     17,698,244         16,779,549         918,695        5.5   

Trading portfolio (w/o loans)

     1,179,112         1,900,341         (721,228     (38.0

Available-for-sale financial assets

     2,679,752         2,011,073         668,679        33.2   

Due from credit institutions**

     1,704,231         1,687,726         16,504        1.0   

Intangible assets and property and equipment

     237,232         226,689         10,544        4.7   

Other assets

     1,847,166         2,806,379         (959,213     (34.2

Total assets/liabilities & shareholders’ equity

     25,345,737         25,411,757         (66,019     (0.3

Customer deposits**

     13,340,968         12,537,904         803,064        6.4   

Marketable debt securities**

     3,778,230         3,731,600         46,629        1.2   

Subordinated debt**

     836,527         714,574         121,952        17.1   

Insurance liabilities

     —           214,729         (214,729     (100.0

Due to credit institutions**

     3,132,636         2,873,973         258,664        9.0   

Other liabilities

     2,550,263         3,452,794         (902,531     (26.1

Shareholders’ equity***

     1,707,114         1,886,182         (179,069     (9.5

Other customer funds under management

     3,305,670         3,367,169         (61,499     (1.8

Mutual funds

     3,305,670         3,325,336         (19,666     (0.6

Pension funds

     —           —           —          —     

Managed portfolios

     —           —           —          —     

Savings-insurance policies

     —           41,833         (41,833     (100.0

Customer funds under management

     21,261,394         20,351,248         910,146        4.5   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Chile

Ch$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     236,045        261,700        243,326        279,199        276,624   

Net fees

     72,223        74,253        68,609        68,344        71,257   

Gains (losses) on financial transactions

     19,966        19,767        6,591        6,750        10,143   

Other operating income*

     8,618        12,132        5,662        1,172        2,981   

Gross income

     336,852        367,853        324,188        355,466        361,004   

Operating expenses

     (125,548     (135,471     (140,143     (141,588     (135,622

General administrative expenses

     (110,395     (120,885     (125,134     (126,380     (122,154

Personnel

     (68,269     (77,392     (80,416     (80,574     (75,162

Other general administrative expenses

     (42,126     (43,493     (44,717     (45,805     (46,992

Depreciation and amortisation

     (15,153     (14,586     (15,009     (15,208     (13,468

Net operating income

     211,304        232,381        184,045        213,878        225,382   

Net loan-loss provisions

     (49,410     (57,574     (87,269     (61,113     (80,018

Other income

     1,055        2,145        14,288        9,569        (2,746

Profit before taxes

     162,949        176,953        111,064        162,335        142,618   

Tax on profit

     (26,455     (14,758     (10,659     (24,979     (19,721

Profit from continuing operations

     136,494        162,195        100,405        137,355        122,897   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     136,494        162,195        100,405        137,355        122,897   

Minority interests

     29,553        36,460        22,221        37,647        37,741   

Attributable profit to the Group

     106,940        125,735        78,184        99,709        85,155   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     16,779,549         17,312,815         17,716,827         17,259,426         17,698,244   

Trading portfolio (w/o loans)

     1,900,341         2,276,042         2,310,269         2,026,907         1,179,112   

Available-for-sale financial assets

     2,011,073         2,982,570         2,471,693         1,726,478         2,679,752   

Due from credit institutions**

     1,687,726         1,837,839         2,012,385         1,375,240         1,704,231   

Intangible assets and property and equipment

     226,689         224,592         229,232         234,882         237,232   

Other assets

     2,806,379         1,717,032         2,396,458         3,496,311         1,847,166   

Total assets/liabilities & shareholders’ equity

     25,411,757         26,350,891         27,136,863         26,119,245         25,345,737   

Customer deposits**

     12,537,904         12,756,046         13,585,435         13,544,388         13,340,968   

Marketable debt securities**

     3,731,600         3,765,250         3,640,664         3,759,916         3,778,230   

Subordinated debt**

     714,574         761,731         860,474         863,006         836,527   

Insurance liabilities

     214,729         236,550         234,117         —           —     

Due to credit institutions**

     2,873,973         3,429,883         3,429,901         3,256,723         3,132,636   

Other liabilities

     3,452,794         3,800,166         3,821,126         3,431,580         2,550,263   

Shareholders’ equity**

     1,886,182         1,601,266         1,565,146         1,263,632         1,707,114   

Other customer funds under management

     3,367,169         3,222,683         3,316,065         3,253,601         3,305,670   

Mutual funds

     3,325,336         3,167,316         3,261,897         3,253,601         3,305,670   

Pension funds

     —           —           —           —           —     

Managed portfolios

     —           —           —           —           —     

Savings-insurance policies

     41,833         55,367         54,168         —           —     

Customer funds under management

     20,351,248         20,505,709         21,402,638         21,420,910         21,261,394   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

USA

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     430        441        (12     (2.6

Net fees

     95        93        2        2.3   

Gains (losses) on financial transactions

     58        37        21        57.2   

Other operating income*

     81        140        (59     (42.5

Gross income

     663        711        (48     (6.7

Operating expenses

     (276     (240     (36     15.0   

General administrative expenses

     (246     (216     (31     14.2   

Personnel

     (137     (120     (17     14.3   

Other general administrative expenses

     (109     (96     (13     14.0   

Depreciation and amortisation

     (30     (24     (6     22.5   

Net operating income

     387        471        (84     (17.8

Net loan-loss provisions

     (71     (98     27        (27.6

Other income

     (19     (27     8        (28.4

Profit before taxes

     297        346        (49     (14.2

Tax on profit

     (57     (57     (1     1.0   

Profit from continuing operations

     240        290        (50     (17.2

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     240        290        (50     (17.2

Minority interests

     —          —          —          —     

Attributable profit to the Group

     240        290        (50     (17.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     40,030         35,850         4,180        11.7   

Trading portfolio (w/o loans)

     245         175         70        39.8   

Available-for-sale financial assets

     13,421         9,603         3,819        39.8   

Due from credit institutions**

     512         518         (6     (1.2

Intangible assets and property and equipment

     479         507         (29     (5.6

Other assets

     5,393         5,063         330        6.5   

Total assets/liabilities & shareholders’ equity

     60,081         51,717         8,364        16.2   

Customer deposits**

     37,828         33,190         4,637        14.0   

Marketable debt securities**

     563         1,499         (936     (62.5

Subordinated debt**

     2,220         2,274         (55     (2.4

Insurance liabilities

     0         —           0        —     

Due to credit institutions**

     12,363         8,611         3,751        43.6   

Other liabilities

     2,003         2,028         (25     (1.2

Shareholders’ equity***

     5,105         4,114         991        24.1   

Other customer funds under management

     1         19         (19     (97.3

Mutual funds

     —           —           —          —     

Pension funds

     —           —           —          —     

Managed portfolios

     1         19         (19     (97.3

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     40,611         36,983         3,628        9.8   

**     Including all on-balance sheet balances for this item

***   Not including profit of the year

        

     

Ratios (%) and other data

          

ROE

     19.29         29.85         (10.56 p.  

Efficiency ratio (with amortisations)

     41.6         33.8         7.9 p.     

NPL ratio

     2.46         4.15         (1.69 p.  

NPL coverage

     107         82         26 p.     

Number of employees (direct & indirect)

     9,151         8,928         223        2.5   

Number of branches

     722         721         1        0.1   


Table of Contents

LOGO

USA

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     441        420        422        419        430   

Net fees

     93        97        102        87        95   

Gains (losses) on financial transactions

     37        27        39        87        58   

Other operating income*

     140        121        91        114        81   

Gross income

     711        664        654        708        663   

Operating expenses

     (240     (231     (243     (284     (276

General administrative expenses

     (216     (201     (213     (253     (246

Personnel

     (120     (115     (121     (122     (137

Other general administrative expenses

     (96     (86     (92     (132     (109

Depreciation and amortisation

     (24     (29     (30     (30     (30

Net operating income

     471        434        411        424        387   

Net loan-loss provisions

     (98     (149     (78     (118     (71

Other income

     (27     (22     (23     11        (19

Profit before taxes

     346        263        310        318        297   

Tax on profit

     (57     (35     (66     (68     (57

Profit from continuing operations

     290        228        244        249        240   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     290        228        244        249        240   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     290        228        244        249        240   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     35,850         35,407         37,936         40,194         40,030   

Trading portfolio (w/o loans)

     175         196         269         271         245   

Available-for-sale financial assets

     9,603         9,394         10,438         12,435         13,421   

Due from credit institutions**

     518         682         807         677         512   

Intangible assets and property and equipment

     507         518         568         493         479   

Other assets

     5,063         5,325         4,810         5,705         5,393   

Total assets/liabilities & shareholders’ equity

     51,717         51,522         54,829         59,776         60,081   

Customer deposits**

     33,190         32,776         35,141         36,884         37,828   

Marketable debt securities**

     1,499         1,751         1,617         1,653         563   

Subordinated debt**

     2,274         2,142         2,293         2,275         2,220   

Insurance liabilities

     —           —           —           —           0   

Due to credit institutions**

     8,611         8,616         8,837         11,564         12,363   

Other liabilities

     2,028         2,209         2,599         2,859         2,003   

Shareholders’ equity***

     4,114         4,027         4,342         4,542         5,105   

Other customer funds under management

     19         14         3         1         1   

Mutual funds

     —           —           —           —           —     

Pension funds

     —           —           —           —           —     

Managed portfolios

     19         14         3         1         1   

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     36,983         36,682         39,054         40,812         40,611   

**     Including all on-balance sheet balances for this item

***   Not including profit of the year

        

     

Other information

              

NPL ratio

     4.15         3.76         3.22         2.85         2.46   

NPL coverage

     82         85         93         96         107   

Spread (Retail Banking)

     2.94         2.90         2.62         2.75         2.82   

Spread loans

     2.16         2.24         2.22         2.29         2.36   

Spread deposits

     0.78         0.66         0.40         0.46         0.46   


Table of Contents

LOGO

USA

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     563        603        (40     (6.7

Net fees

     125        128        (2     (2.0

Gains (losses) on financial transactions

     76        50        26        50.7   

Other operating income*

     106        191        (86     (44.9

Gross income

     869        972        (103     (10.6

Operating expenses

     (362     (328     (34     10.3   

General administrative expenses

     (323     (295     (28     9.4   

Personnel

     (180     (164     (16     9.5   

Other general administrative expenses

     (143     (131     (12     9.3   

Depreciation and amortisation

     (39     (33     (6     17.4   

Net operating income

     507        644        (137     (21.2

Net loan-loss provisions

     (93     (134     41        (30.6

Other income

     (25     (36     11        (31.4

Profit before taxes

     389        474        (84     (17.8

Tax on profit

     (75     (78     3        (3.2

Profit from continuing operations

     314        396        (82     (20.6

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     314        396        (82     (20.6

Minority interests

     —          —          —          —     

Attributable profit to the Group

     314        396        (82     (20.6

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     53,464         50,932         2,532        5.0   

Trading portfolio (w/o loans)

     328         249         78        31.4   

Available-for-sale financial assets

     17,926         13,643         4,283        31.4   

Due from credit institutions**

     684         736         (52     (7.1

Intangible assets and property and equipment

     640         721         (81     (11.3

Other assets

     7,203         7,193         10        0.1   

Total assets/liabilities & shareholders’ equity

     80,244         73,474         6,770        9.2   

Customer deposits**

     50,523         47,154         3,369        7.1   

Marketable debt securities**

     752         2,130         (1,378     (64.7

Subordinated debt**

     2,965         3,231         (266     (8.2

Insurance liabilities

     0         —           0        —     

Due to credit institutions**

     16,511         12,234         4,278        35.0   

Other liabilities

     2,676         2,882         (206     (7.1

Shareholders’ equity***

     6,818         5,844         973        16.7   

Other customer funds under management

     1         27         (27     (97.4

Mutual funds

     —           —           —          —     

Pension funds

     —           —           —          —     

Managed portfolios

     1         27         (27     (97.4

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     54,240         52,542         1,698        3.2   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

USA

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     603        604        595        564        563   

Net fees

     128        140        143        116        125   

Gains (losses) on financial transactions

     50        39        56        120        76   

Other operating income*

     191        174        129        154        106   

Gross income

     972        957        924        953        869   

Operating expenses

     (328     (332     (342     (383     (362

General administrative expenses

     (295     (290     (300     (343     (323

Personnel

     (164     (166     (170     (164     (180

Other general administrative expenses

     (131     (124     (130     (179     (143

Depreciation and amortisation

     (33     (42     (42     (41     (39

Net operating income

     644        625        581        570        507   

Net loan-loss provisions

     (134     (213     (111     (158     (93

Other income

     (36     (32     (33     16        (25

Profit before taxes

     474        380        438        428        389   

Tax on profit

     (78     (51     (93     (93     (75

Profit from continuing operations

     396        329        344        335        314   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     396        329        344        335        314   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     396        329        344        335        314   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     50,932         51,174         51,225         52,007         53,464   

Trading portfolio (w/o loans)

     249         283         363         351         328   

Available-for-sale financial assets

     13,643         13,578         14,095         16,089         17,926   

Due from credit institutions**

     736         985         1,090         875         684   

Intangible assets and property and equipment

     721         748         768         639         640   

Other assets

     7,193         7,697         6,495         7,382         7,203   

Total assets/liabilities & shareholders’ equity

     73,474         74,464         74,035         77,344         80,244   

Customer deposits**

     47,154         47,371         47,451         47,724         50,523   

Marketable debt securities**

     2,130         2,531         2,183         2,138         752   

Subordinated debt**

     3,231         3,096         3,096         2,944         2,965   

Insurance liabilities

     —           —           —           —           0   

Due to credit institutions**

     12,234         12,453         11,932         14,963         16,511   

Other liabilities

     2,882         3,193         3,510         3,699         2,676   

Shareholders’ equity***

     5,844         5,821         5,863         5,877         6,818   

Other customer funds under management

     27         20         4         1         1   

Mutual funds

     —           —           —           —           —     

Pension funds

     —           —           —           —           —     

Managed portfolios

     27         20         4         1         1   

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     52,542         53,017         52,735         52,807         54,240   

 

**

Including all on-balance sheet balances for this item

***

Not including profit of the year


Table of Contents

LOGO

Sovereign Bank

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     430        432        (3     (0.7

Net fees

     95        93        3        2.9   

Gains (losses) on financial transactions

     58        37        21        57.2   

Other operating income*

     (14     (16     2        (13.8

Gross income

     569        546        23        4.2   

Operating expenses

     (275     (237     (38     16.2   

General administrative expenses

     (245     (213     (33     15.4   

Personnel

     (137     (118     (19     15.8   

Other general administrative expenses

     (109     (95     (14     14.9   

Depreciation and amortisation

     (30     (24     (6     23.7   

Net operating income

     293        309        (15     (5.0

Net loan-loss provisions

     (71     (98     27        (27.6

Other income

     (19     (27     8        (28.4

Profit before taxes

     203        184        19        10.4   

Tax on profit

     (58     (56     (2     3.2   

Profit from continuing operations

     146        128        17        13.6   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     146        128        17        13.6   

Minority interests

     —          —          —          —     

Attributable profit to the Group

     146        128        17        13.6   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Sovereign Bank

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     432        411        417        418        430   

Net fees

     93        96        100        85        95   

Gains (losses) on financial transactions

     37        27        39        87        58   

Other operating income*

     (16     (16     (12     (11     (14

Gross income

     546        518        545        579        569   

Operating expenses

     (237     (227     (239     (272     (275

General administrative expenses

     (213     (198     (210     (242     (245

Personnel

     (118     (113     (119     (120     (137

Other general administrative expenses

     (95     (85     (91     (123     (109

Depreciation and amortisation

     (24     (29     (30     (30     (30

Net operating income

     309        291        306        307        293   

Net loan-loss provisions

     (98     (81     (78     (117     (71

Other income

     (27     (22     (23     11        (19

Profit before taxes

     184        187        204        201        203   

Tax on profit

     (56     (60     (66     (69     (58

Profit from continuing operations

     128        128        138        132        146   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     128        128        138        132        146   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     128        128        138        132        146   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Sovereign Bank

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     563        591        (28     (4.8

Net fees

     125        127        (2     (1.4

Gains (losses) on financial transactions

     76        50        26        50.7   

Other operating income*

     (18     (22     4        (17.4

Gross income

     745        746        (1     (0.1

Operating expenses

     (361     (324     (37     11.4   

General administrative expenses

     (322     (291     (31     10.6   

Personnel

     (179     (161     (18     11.0   

Other general administrative expenses

     (143     (130     (13     10.1   

Depreciation and amortisation

     (39     (33     (6     18.6   

Net operating income

     385        422        (38     (8.9

Net loan-loss provisions

     (93     (134     41        (30.6

Other income

     (25     (36     11        (31.4

Profit before taxes

     266        252        15        5.9   

Tax on profit

     (75     (76     1        (1.1

Profit from continuing operations

     191        176        16        8.9   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     191        176        16        8.9   

Minority interests

     —          —          —          —     

Attributable profit to the Group

     191        176        16        8.9   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Sovereign Bank

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     591        591        589        562        563   

Net fees

     127        138        141        114        125   

Gains (losses) on financial transactions

     50        39        56        120        76   

Other operating income*

     (22     (23     (17     (14     (18

Gross income

     746        745        770        781        745   

Operating expenses

     (324     (327     (338     (368     (361

General administrative expenses

     (291     (285     (296     (328     (322

Personnel

     (161     (163     (168     (161     (179

Other general administrative expenses

     (130     (123     (129     (167     (143

Depreciation and amortisation

     (33     (42     (42     (40     (39

Net operating income

     422        418        432        413        385   

Net loan-loss provisions

     (134     (117     (111     (158     (93

Other income

     (36     (32     (33     16        (25

Profit before taxes

     252        269        288        271        266   

Tax on profit

     (76     (86     (93     (93     (75

Profit from continuing operations

     176        183        195        177        191   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     176        183        195        177        191   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     176        183        195        177        191   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Corporate Activities

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     (513     (511     (2     0.3   

Net fees

     (13     (4     (9     216.1   

Gains (losses) on financial transactions

     46        (74     120        —     

Dividends

     14        4        10        242.8   

Income from equity-accounted method

     (16     1        (17     —     

Other operating income/expenses

     31        28        3        9.1   

Gross income

     (452     (556     105        (18.8

Operating expenses

     (249     (245     (4     1.6   

General administrative expenses

     (214     (212     (2     0.9   

Personnel

     (78     (88     11        (12.0

Other general administrative expenses

     (136     (124     (13     10.1   

Depreciation and amortisation

     (35     (33     (2     6.5   

Net operating income

     (700     (801     101        (12.6

Net loan-loss provisions

     (15     (69     54        (78.8

Other income

     (117     (187     70        (37.2

Profit before taxes

     (832     (1,056     224        (21.2

Tax on profit

     56        222        (166     (74.6

Profit from continuing operations

     (776     (834     59        (7.0

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     (776     (834     59        (7.0

Minority interests

     (32     0        (32     —     

Attributable profit to the Group

     (744     (835     91        (10.9
                 Variation  
     31.03.12     31.03.11     Amount     %  

Balance sheet

        

Trading portfolio (w/o loans)

     7,476        4,833        2,643        54.7   

Available-for-sale financial assets

     30,379        21,386        8,993        42.1   

Investments

     900        38        862        —     

Goodwill

     25,200        23,856        1,344        5.6   

Liquidity lent to the Group

     1,806        30,236        (28,429     (94.0

Capital assigned to Group areas

     73,543        69,132        4,411        6.4   

Other assets

     102,191        74,185        28,006        37.8   

Total assets/liabilities & shareholders’ equity

     241,496        223,665        17,831        8.0   

Customer deposits*

     17,385        11,448        5,936        51.9   

Marketable debt securities*

     66,098        64,020        2,078        3.2   

Subordinated debt

     5,505        10,000        (4,495     (45.0

Other liabilities

     73,418        59,385        14,033        23.6   

Group capital and reserves**

     79,091        78,812        279        0.4   

Other customer funds under management

     —          —          —          —     

Mutual funds

     —          —          —          —     

Pension funds

     —          —          —          —     

Managed portfolios

     —          —          —          —     

Savings-insurance policies

     —          —          —          —     

Customer funds under management

     88,988        85,469        3,519        4.1   

*       Including all on-balance sheet balances for this item

**     Not including profit of the year

        

Resources

        

Number of employees (direct & indirect)

     2,331        2,250        81        3.6   


Table of Contents

LOGO

Corporate Activities

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     (511     (613     (553     (495     (513

Net fees

     (4     (4     (2     (6     (13

Gains (losses) on financial transactions

     (74     159        286        234        46   

Dividends

     4        17        20        15        14   

Income from equity-accounted method

     1        1        0        3        (16

Other operating income/expenses

     28        46        30        24        31   

Gross income

     (556     (394     (219     (223     (452

Operating expenses

     (245     (207     (203     (183     (249

General administrative expenses

     (212     (179     (173     (169     (214

Personnel

     (88     (69     (78     (49     (78

Other general administrative expenses

     (124     (110     (95     (120     (136

Depreciation and amortisation

     (33     (28     (30     (14     (35

Net operating income

     (801     (601     (422     (406     (700

Net loan-loss provisions

     (69     87        22        (3     (15

Other income

     (187     (143     (21     (78     (117

Profit before taxes (w/o capital gains)

     (1,056     (657     (422     (487     (832

Tax on profit

     222        63        55        101        56   

Profit from continuing operations (w/o capital gains)

     (834     (594     (367     (387     (776

Net profit from discontinued operations

     —          —          (19     19        —     

Consolidated profit (w/o capital gains)

     (834     (594     (386     (368     (776

Minority interests

     0        4        (2     (22     (32

Attributable profit to the Group (w/o capital gains)

     (835     (598     (384     (346     (744

Net capital gains and provisions

     —          —          —          (1,670     —     

Attributable profit to the Group

     (835     (598     (384     (2,016     (744
     31.03.11     30.06.11     30.09.11     31.12.11     31.03.12  

Balance sheet

          

Trading portfolio (w/o loans)

     4,833        5,268        4,842        7,727        7,476   

Available-for-sale financial assets

     21,386        21,890        19,806        23,297        30,379   

Investments

     38        39        959        908        900   

Goodwill

     23,856        26,527        25,914        25,089        25,200   

Liquidity lent to the Group

     30,236        23,035        15,621        10,440        1,806   

Capital assigned to Group areas

     69,132        69,199        67,798        67,699        73,543   

Other assets

     74,185        72,618        91,989        101,749        102,191   

Total assets/liabilities & shareholders’ equity

     223,665        218,575        226,930        236,908        241,496   

Customer deposits*

     11,448        11,256        11,981        19,672        17,385   

Marketable debt securities*

     64,020        61,598        61,382        62,253        66,098   

Subordinated debt

     10,000        9,202        8,973        5,477        5,505   

Other liabilities

     59,385        61,182        69,612        72,391        73,418   

Group capital and reserves**

     78,812        75,337        74,982        77,115        79,091   

Other customer funds under management

     —          —          —          —          —     

Mutual funds

     —          —          —          —          —     

Pension funds

     —          —          —          —          —     

Managed portfolios

     —          —          —          —          —     

Savings-insurance policies

     —          —          —          —          —     

Customer funds under management

     85,469        82,056        82,336        87,402        88,988   

 

*

Including all on-balance sheet balances for this item


Table of Contents

LOGO

Spain

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     1,478        1,339        138        10.3   

Net fees

     533        621        (87     (14.1

Gains (losses) on financial transactions

     258        227        31        13.5   

Other operating income*

     37        61        (24     (39.8

Gross income

     2,306        2,248        58        2.6   

Operating expenses

     (1,009     (1,027     17        (1.7

General administrative expenses

     (912     (929     17        (1.8

Personnel

     (590     (610     20        (3.2

Other general administrative expenses

     (322     (319     (3     1.0   

Depreciation and amortisation

     (97     (98     1        (0.6

Net operating income

     1,296        1,222        75        6.1   

Net loan-loss provisions

     (774     (312     (462     148.4   

Other income

     (150     (75     (75     99.8   

Profit before taxes

     373        835        (462     (55.4

Tax on profit

     (84     (226     142        (63.0

Profit from continuing operations

     289        609        (320     (52.5

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     289        609        (320     (52.5

Minority interests

     6        16        (10     (63.5

Attributable profit to the Group

     283        593        (310     (52.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Balance sheet

          

Customer loans**

     208,480         217,413         (8,933     (4.1

Trading portfolio (w/o loans)

     69,715         42,226         27,489        65.1   

Available-for-sale financial assets

     17,969         14,620         3,348        22.9   

Due from credit institutions**

     16,669         20,324         (3,656     (18.0

Intangible assets and property and equipment

     4,539         3,952         587        14.9   

Other assets

     15,516         8,351         7,165        85.8   

Total assets/liabilities & shareholders’ equity

     332,887         306,886         26,001        8.5   

Customer deposits**

     179,237         192,573         (13,336     (6.9

Marketable debt securities**

     32,076         29,045         3,031        10.4   

Subordinated debt**

     803         1,215         (412     (33.9

Insurance liabilities

     511         889         (378     (42.6

Due to credit institutions**

     24,044         3,280         20,764        633.1   

Other liabilities

     76,171         59,498         16,673        28.0   

Shareholders’ equity***

     20,045         20,386         (341     (1.7

Other customer funds under management

     40,660         46,795         (6,135     (13.1

Mutual funds

     27,292         31,974         (4,682     (14.6

Pension funds

     8,983         9,602         (619     (6.4

Managed portfolios

     4,385         5,220         (834     (16.0

Savings-insurance policies

     —           —           —          —     

Customer funds under management

     252,776         269,629         (16,852     (6.3

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

          

Ratios (%) and other data

          

ROE

     5.65         11.70         (6.05 p.  

Efficiency ratio (with amortisations)

     43.8         45.7         (1.9 p.  

NPL ratio

     5.75         4.57         1.18 p.     

NPL coverage

     46         53         (7 p.  

Number of employees (direct & indirect)

     31,809         32,192         (383     (1.2

Number of branches

     4,763         4,794         (31     (0.6


Table of Contents

LOGO

Spain

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     1,339        1,506        1,451        1,440        1,478   

Net fees

     621        607        573        493        533   

Gains (losses) on financial transactions

     227        (10     (46     16        258   

Other operating income*

     61        152        61        90        37   

Gross income

     2,248        2,256        2,038        2,039        2,306   

Operating expenses

     (1,027     (1,028     (1,018     (1,015     (1,009

General administrative expenses

     (929     (927     (919     (923     (912

Personnel

     (610     (614     (604     (590     (590

Other general administrative expenses

     (319     (313     (315     (334     (322

Depreciation and amortisation

     (98     (101     (99     (92     (97

Net operating income

     1,222        1,229        1,020        1,024        1,296   

Net loan-loss provisions

     (312     (595     (724     (838     (774

Other income

     (75     (101     (96     (133     (150

Profit before taxes

     835        532        199        53        373   

Tax on profit

     (226     (132     (51     (27     (84

Profit from continuing operations

     609        400        148        25        289   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     609        400        148        25        289   

Minority interests

     16        13        7        (3     6   

Attributable profit to the Group

     593        387        141        29        283   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Balance sheet

              

Customer loans**

     217,413         216,456         213,585         212,104         208,480   

Trading portfolio (w/o loans)

     42,226         47,412         66,688         68,791         69,715   

Available-for-sale financial assets

     14,620         14,691         12,156         15,229         17,969   

Due from credit institutions**

     20,324         16,728         15,582         14,836         16,669   

Intangible assets and property and equipment

     3,952         3,937         3,792         3,796         4,539   

Other assets

     8,351         9,849         8,114         13,894         15,516   

Total assets/liabilities & shareholders’ equity

     306,886         309,074         319,917         328,651         332,887   

Customer deposits**

     192,573         182,192         179,225         174,268         179,237   

Marketable debt securities**

     29,045         28,138         26,703         29,603         32,076   

Subordinated debt**

     1,215         1,236         858         855         803   

Insurance liabilities

     889         837         793         382         511   

Due to credit institutions**

     3,280         7,186         10,836         25,937         24,044   

Other liabilities

     59,498         68,946         81,535         77,921         76,171   

Shareholders’ equity***

     20,386         20,538         19,967         19,686         20,045   

Other customer funds under management

     46,795         45,276         42,244         41,197         40,660   

Mutual funds

     31,974         30,209         28,331         27,425         27,292   

Pension funds

     9,602         9,477         8,910         8,884         8,983   

Managed portfolios

     5,220         5,590         5,003         4,888         4,385   

Savings-insurance policies

     —           —           —           —           —     

Customer funds under management

     269,629         256,842         249,029         245,923         252,776   

 

**      Including all on-balance sheet balances for this item

***    Not including profit of the year

              

Other information

              

NPL ratio

     4.57         4.81         5.15         5.49         5.75   

NPL coverage

     53         49         46         45         46   


Table of Contents

LOGO

Retail Banking

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     7,693        6,994        699        10.0   

Net fees

     2,221        2,093        128        6.1   

Gains (losses) on financial transactions

     309        332        (22     (6.7

Other operating income*

     (55     55        (110     —     

Gross income

     10,168        9,473        695        7.3   

Operating expenses

     (4,342     (4,023     (319     7.9   

General administrative expenses

     (3,897     (3,595     (302     8.4   

Personnel

     (2,279     (2,112     (167     7.9   

Other general administrative expenses

     (1,618     (1,483     (135     9.1   

Depreciation and amortisation

     (445     (428     (17     3.9   

Net operating income

     5,827        5,450        377        6.9   

Net loan-loss provisions

     (3,059     (2,013     (1,046     52.0   

Other income

     (453     (380     (73     19.3   

Profit before taxes

     2,315        3,057        (742     (24.3

Tax on profit

     (477     (707     230        (32.5

Profit from continuing operations

     1,838        2,351        (512     (21.8

Net profit from discontinued operations

     1        (6     7        —     

Consolidated profit

     1,839        2,345        (506     (21.6

Minority interests

     192        158        34        21.3   

Attributable profit to the Group

     1,647        2,187        (539     (24.7

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount      %  

Business volumes

           

Total assets

     879,077         830,146         48,931         5.9   

Customer loans

     670,702         627,624         43,079         6.9   

Customer deposits

     542,022         512,922         29,099         5.7   


Table of Contents

LOGO

Retail Banking

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     6,994        7,180        7,190        7,369        7,693   

Net fees

     2,093        2,250        2,248        2,073        2,221   

Gains (losses) on financial transactions

     332        430        213        127        309   

Other operating income*

     55        23        (22     27        (55

Gross income

     9,473        9,883        9,629        9,596        10,168   

Operating expenses

     (4,023     (4,125     (4,215     (4,415     (4,342

General administrative expenses

     (3,595     (3,674     (3,755     (3,940     (3,897

Personnel

     (2,112     (2,151     (2,203     (2,249     (2,279

Other general administrative expenses

     (1,483     (1,523     (1,552     (1,691     (1,618

Depreciation and amortisation

     (428     (451     (460     (476     (445

Net operating income

     5,450        5,758        5,414        5,181        5,827   

Net loan-loss provisions

     (2,013     (2,527     (2,691     (2,563     (3,059

Other income

     (380     (1,287     (361     (443     (453

Profit before taxes

     3,057        1,943        2,363        2,175        2,315   

Tax on profit

     (707     (365     (543     (445     (477

Profit from continuing operations

     2,351        1,578        1,820        1,729        1,838   

Net profit from discontinued operations

     (6     (0     3        (22     1   

Consolidated profit

     2,345        1,578        1,823        1,708        1,839   

Minority interests

     158        151        96        138        192   

Attributable profit to the Group

     2,187        1,427        1,727        1,570        1,647   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Business volumes

              

Total assets

     830,146         849,019         851,198         872,710         879,077   

Customer loans

     627,624         631,470         639,764         659,573         670,702   

Customer deposits

     512,922         520,807         522,405         532,034         542,022   


Table of Contents

LOGO

Retail Banking Continental Europe

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     2,078        1,857        221        11.9   

Net fees

     788        746        42        5.7   

Gains (losses) on financial transactions

     196        77        119        154.3   

Other operating income*

     (43     (8     (35     468.1   

Gross income

     3,019        2,673        347        13.0   

Operating expenses

     (1,363     (1,241     (122     9.8   

General administrative expenses

     (1,228     (1,123     (105     9.4   

Personnel

     (763     (706     (57     8.1   

Other general administrative expenses

     (466     (417     (49     11.6   

Depreciation and amortisation

     (135     (118     (16     13.9   

Net operating income

     1,656        1,431        225        15.7   

Net loan-loss provisions

     (1,045     (522     (522     100.0   

Other income

     (135     (79     (56     71.1   

Profit before taxes

     476        830        (354     (42.6

Tax on profit

     (90     (201     111        (55.1

Profit from continuing operations

     386        629        (243     (38.6

Net profit from discontinued operations

     1        (6     7        —     

Consolidated profit

     387        623        (236     (37.9

Minority interests

     16        22        (6     (27.3

Attributable profit to the Group

     371        601        (230     (38.3

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Continental Europe

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     1,857        2,101        2,056        1,989        2,078   

Net fees

     746        845        830        748        788   

Gains (losses) on financial transactions

     77        85        72        33        196   

Other operating income*

     (8     20        (21     (16     (43

Gross income

     2,673        3,051        2,937        2,754        3,019   

Operating expenses

     (1,241     (1,376     (1,362     (1,397     (1,363

General administrative expenses

     (1,123     (1,246     (1,233     (1,265     (1,228

Personnel

     (706     (783     (774     (762     (763

Other general administrative expenses

     (417     (464     (459     (503     (466

Depreciation and amortisation

     (118     (130     (129     (133     (135

Net operating income

     1,431        1,674        1,575        1,356        1,656   

Net loan-loss provisions

     (522     (773     (945     (1,073     (1,045

Other income

     (79     (118     (103     (126     (135

Profit before taxes

     830        783        526        157        476   

Tax on profit

     (201     (184     (99     (0     (90

Profit from continuing operations

     629        600        427        157        386   

Net profit from discontinued operations

     (6     (0     3        (22     1   

Consolidated profit

     623        599        430        135        387   

Minority interests

     22        22        14        4        16   

Attributable profit to the Group

     601        578        416        132        371   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Spain

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     1,310        1,191        118        9.9   

Net fees

     442        478        (36     (7.6

Gains (losses) on financial transactions

     127        78        49        62.3   

Other operating income*

     (41     (7     (35     512.5   

Gross income

     1,837        1,741        96        5.5   

Operating expenses

     (831     (847     15        (1.8

General administrative expenses

     (754     (770     15        (2.0

Personnel

     (496     (510     14        (2.7

Other general administrative expenses

     (258     (259     1        (0.5

Depreciation and amortisation

     (77     (77     (0     0.1   

Net operating income

     1,006        894        111        12.4   

Net loan-loss provisions

     (743     (313     (430     137.6   

Other income

     (126     (68     (58     85.7   

Profit before taxes

     137        514        (377     (73.4

Tax on profit

     (18     (135     117        (87.0

Profit from continuing operations

     119        379        (260     (68.5

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     119        379        (260     (68.5

Minority interests

     4        15        (11     (73.9

Attributable profit to the Group

     115        364        (248     (68.3

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Spain

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     1,191        1,318        1,304        1,233        1,310   

Net fees

     478        478        460        438        442   

Gains (losses) on financial transactions

     78        68        51        28        127   

Other operating income*

     (7     0        (15     (11     (41

Gross income

     1,741        1,865        1,801        1,689        1,837   

Operating expenses

     (847     (847     (838     (837     (831

General administrative expenses

     (770     (768     (760     (759     (754

Personnel

     (510     (513     (504     (489     (496

Other general administrative expenses

     (259     (255     (256     (270     (258

Depreciation and amortisation

     (77     (79     (78     (78     (77

Net operating income

     894        1,018        963        852        1,006   

Net loan-loss provisions

     (313     (542     (711     (792     (743

Other income

     (68     (95     (72     (130     (126

Profit before taxes

     514        381        180        (70     137   

Tax on profit

     (135     (88     (43     9        (18

Profit from continuing operations

     379        294        137        (61     119   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     379        294        137        (61     119   

Minority interests

     15        11        5        (5     4   

Attributable profit to the Group

     364        283        132        (56     115   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Portugal

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     124        154        (30     (19.3

Net fees

     73        71        2        2.6   

Gains (losses) on financial transactions

     65        (1     66        —     

Other operating income*

     1        1        0        40.3   

Gross income

     263        224        38        17.2   

Operating expenses

     (117     (121     4        (3.3

General administrative expenses

     (100     (105     5        (4.8

Personnel

     (71     (73     3        (3.8

Other general administrative expenses

     (29     (32     2        (7.0

Depreciation and amortisation

     (17     (16     (1     6.4   

Net operating income

     146        103        42        41.2   

Net loan-loss provisions

     (130     (33     (96     289.4   

Other income

     (16     (8     (7     87.8   

Profit before taxes

     0        61        (61     (99.7

Tax on profit

     3        (4     8        —     

Profit from continuing operations

     3        57        (54     (94.3

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     3        57        (54     (94.3

Minority interests

     (0     0        (0     —     

Attributable profit to the Group

     3        57        (53     (93.9

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Portugal

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     154        136        117        114        124   

Net fees

     71        66        69        65        73   

Gains (losses) on financial transactions

     (1     (5     (4     3        65   

Other operating income*

     1        0        2        (4     1   

Gross income

     224        198        183        179        263   

Operating expenses

     (121     (122     (123     (127     (117

General administrative expenses

     (105     (106     (106     (110     (100

Personnel

     (73     (73     (74     (75     (71

Other general administrative expenses

     (32     (32     (32     (35     (29

Depreciation and amortisation

     (16     (16     (17     (17     (17

Net operating income

     103        76        60        52        146   

Net loan-loss provisions

     (33     (39     (46     (84     (130

Other income

     (8     (14     (19     21        (16

Profit before taxes

     61        24        (5     (11     0   

Tax on profit

     (4     (7     8        28        3   

Profit from continuing operations

     57        17        3        16        3   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     57        17        3        16        3   

Minority interests

     0        (0     (0     (0     (0

Attributable profit to the Group

     57        17        3        17        3   

 

*    Including dividends, income from equity-accounted method and other operating income/expenses

 

  

Other information

          

Spread

     2.08        1.75        1.68        1.45        1.43   

Spread loans

     1.96        2.06        2.15        2.23        2.34   

Spread deposits

     0.12        (0.31     (0.47     (0.78     (0.91


Table of Contents

LOGO

Retail Banking United Kingdom

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     958        1,147        (188     (16.4

Net fees

     224        211        13        6.2   

Gains (losses) on financial transactions

     (20     16        (36     —     

Other operating income*

     2        4        (2     (42.4

Gross income

     1,164        1,377        (213     (15.5

Operating expenses

     (609     (603     (6     1.0   

General administrative expenses

     (516     (513     (3     0.7   

Personnel

     (321     (312     (9     2.8   

Other general administrative expenses

     (196     (201     5        (2.6

Depreciation and amortisation

     (93     (90     (3     3.0   

Net operating income

     555        774        (219     (28.3

Net loan-loss provisions

     (223     (153     (70     45.9   

Other income

     (53     (43     (10     24.5   

Profit before taxes

     279        579        (300     (51.8

Tax on profit

     (78     (171     93        (54.3

Profit from continuing operations

     201        408        (207     (50.7

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     201        408        (207     (50.7

Minority interests

     0        (0     0        —     

Attributable profit to the Group

     201        408        (207     (50.7

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking United Kingdom

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     1,147        1,064        1,051        1,071        958   

Net fees

     211        265        253        223        224   

Gains (losses) on financial transactions

     16        35        (7     (34     (20

Other operating income*

     4        4        2        4        2   

Gross income

     1,377        1,367        1,299        1,263        1,164   

Operating expenses

     (603     (572     (574     (598     (609

General administrative expenses

     (513     (485     (486     (516     (516

Personnel

     (312     (294     (318     (337     (321

Other general administrative expenses

     (201     (190     (168     (179     (196

Depreciation and amortisation

     (90     (88     (89     (82     (93

Net operating income

     774        795        725        665        555   

Net loan-loss provisions

     (153     (139     (171     (176     (223

Other income

     (43     (874     (28     (15     (53

Profit before taxes

     579        (218     526        474        279   

Tax on profit

     (171     42        (149     (116     (78

Profit from continuing operations

     408        (176     377        358        201   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     408        (176     377        358        201   

Minority interests

     (0     0        (0     0        0   

Attributable profit to the Group

     408        (176     377        358        201   

 

*    Including dividends, income from equity-accounted method and other operating income/expenses

 

  

Other information

          

Spread

     2.08        2.00        2.01        2.03        1.98   

Spread loans

     2.40        2.40        2.46        2.53        2.57   

Spread deposits

     (0.32     (0.40     (0.45     (0.50     (0.59


Table of Contents

LOGO

Retail Banking United Kingdom

£ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     800        979        (179     (18.3

Net fees

     187        180        7        3.8   

Gains (losses) on financial transactions

     (17     14        (31     —     

Other operating income*

     2        3        (1     (43.7

Gross income

     971        1,176        (204     (17.4

Operating expenses

     (508     (515     7        (1.3

General administrative expenses

     (431     (438     7        (1.6

Personnel

     (267     (266     (1     0.5   

Other general administrative expenses

     (163     (171     8        (4.8

Depreciation and amortisation

     (78     (77     (0     0.6   

Net operating income

     463        661        (198     (29.9

Net loan-loss provisions

     (186     (130     (56     42.7   

Other income

     (44     (36     (8     21.7   

Profit before taxes

     233        494        (261     (52.9

Tax on profit

     (65     (146     81        (55.3

Profit from continuing operations

     168        348        (181     (51.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     168        348        (181     (51.8

Minority interests

     0        (0     0        —     

Attributable profit to the Group

     168        348        (181     (51.8

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking United Kingdom

£ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     979        940        923        917        800   

Net fees

     180        233        222        190        187   

Gains (losses) on financial transactions

     14        30        (6     (30     (17

Other operating income*

     3        4        2        3        2   

Gross income

     1,176        1,206        1,141        1,081        971   

Operating expenses

     (515     (505     (504     (513     (508

General administrative expenses

     (438     (428     (426     (442     (431

Personnel

     (266     (260     (279     (289     (267

Other general administrative expenses

     (171     (168     (147     (153     (163

Depreciation and amortisation

     (77     (77     (78     (70     (78

Net operating income

     661        701        636        568        463   

Net loan-loss provisions

     (130     (123     (150     (151     (186

Other income

     (36     (759     (27     (10     (44

Profit before taxes

     494        (181     459        408        233   

Tax on profit

     (146     34        (131     (100     (65

Profit from continuing operations

     348        (147     329        308        168   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     348        (147     329        308        168   

Minority interests

     (0     0        (0     0        0   

Attributable profit to the Group

     348        (147     329        308        168   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Latin America

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     4,247        3,557        689        19.4   

Net fees

     1,127        1,048        79        7.5   

Gains (losses) on financial transactions

     82        204        (122     (59.7

Other operating income*

     (95     (81     (13     16.4   

Gross income

     5,361        4,727        633        13.4   

Operating expenses

     (2,101     (1,941     (160     8.2   

General administrative expenses

     (1,914     (1,746     (168     9.6   

Personnel

     (1,063     (975     (88     9.0   

Other general administrative expenses

     (851     (771     (80     10.4   

Depreciation and amortisation

     (187     (195     8        (4.0

Net operating income

     3,260        2,786        474        17.0   

Net loan-loss provisions

     (1,734     (1,243     (491     39.5   

Other income

     (246     (232     (14     6.2   

Profit before taxes

     1,280        1,312        (32     (2.4

Tax on profit

     (257     (282     25        (8.8

Profit from continuing operations

     1,022        1,029        (7     (0.7

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,022        1,029        (7     (0.7

Minority interests

     175        135        40        29.3   

Attributable profit to the Group

     847        894        (47     (5.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Latin America

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     3,557        3,606        3,671        3,904        4,247   

Net fees

     1,048        1,050        1,067        1,019        1,127   

Gains (losses) on financial transactions

     204        286        111        49        82   

Other operating income*

     (81     (122     (95     (75     (95

Gross income

     4,727        4,820        4,755        4,896        5,361   

Operating expenses

     (1,941     (1,948     (2,039     (2,140     (2,101

General administrative expenses

     (1,746     (1,744     (1,827     (1,910     (1,914

Personnel

     (975     (960     (992     (1,030     (1,063

Other general administrative expenses

     (771     (784     (835     (880     (851

Depreciation and amortisation

     (195     (204     (212     (230     (187

Net operating income

     2,786        2,872        2,716        2,756        3,260   

Net loan-loss provisions

     (1,243     (1,467     (1,499     (1,205     (1,734

Other income

     (232     (273     (206     (313     (246

Profit before taxes

     1,312        1,132        1,010        1,238        1,280   

Tax on profit

     (282     (193     (232     (266     (257

Profit from continuing operations

     1,029        939        778        973        1,022   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     1,029        939        778        973        1,022   

Minority interests

     135        129        82        134        175   

Attributable profit to the Group

     894        810        696        839        847   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Latin America

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     5,565        4,863        702        14.4   

Net fees

     1,477        1,433        44        3.1   

Gains (losses) on financial transactions

     107        279        (171     (61.4

Other operating income*

     (124     (111     (13     11.6   

Gross income

     7,025        6,463        562        8.7   

Operating expenses

     (2,753     (2,654     (99     3.7   

General administrative expenses

     (2,508     (2,387     (121     5.1   

Personnel

     (1,393     (1,334     (60     4.5   

Other general administrative expenses

     (1,115     (1,054     (61     5.8   

Depreciation and amortisation

     (245     (266     21        (8.0

Net operating income

     4,272        3,810        463        12.1   

Net loan-loss provisions

     (2,272     (1,699     (573     33.7   

Other income

     (322     (317     (6     1.8   

Profit before taxes

     1,677        1,793        (116     (6.5

Tax on profit

     (337     (386     49        (12.6

Profit from continuing operations

     1,340        1,408        (68     (4.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,340        1,408        (68     (4.8

Minority interests

     230        185        44        24.0   

Attributable profit to the Group

     1,110        1,222        (112     (9.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Latin America

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     4,863        5,181        5,184        5,263        5,565   

Net fees

     1,433        1,509        1,507        1,369        1,477   

Gains (losses) on financial transactions

     279        408        158        58        107   

Other operating income*

     (111     (174     (134     (100     (124

Gross income

     6,463        6,924        6,715        6,590        7,025   

Operating expenses

     (2,654     (2,799     (2,879     (2,885     (2,753

General administrative expenses

     (2,387     (2,507     (2,579     (2,574     (2,508

Personnel

     (1,334     (1,380     (1,401     (1,387     (1,393

Other general administrative expenses

     (1,054     (1,127     (1,178     (1,187     (1,115

Depreciation and amortisation

     (266     (292     (300     (311     (245

Net operating income

     3,810        4,125        3,836        3,705        4,272   

Net loan-loss provisions

     (1,699     (2,101     (2,117     (1,611     (2,272

Other income

     (317     (391     (292     (424     (322

Profit before taxes

     1,793        1,633        1,428        1,669        1,677   

Tax on profit

     (386     (280     (328     (359     (337

Profit from continuing operations

     1,408        1,353        1,100        1,311        1,340   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     1,408        1,353        1,100        1,311        1,340   

Minority interests

     185        185        116        181        230   

Attributable profit to the Group

     1,222        1,168        984        1,130        1,110   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Brazil

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     3,097        2,622        474        18.1   

Net fees

     727        684        42        6.2   

Gains (losses) on financial transactions

     68        127        (59     (46.6

Other operating income*

     (80     (65     (15     22.5   

Gross income

     3,812        3,369        443        13.1   

Operating expenses

     (1,418     (1,342     (76     5.7   

General administrative expenses

     (1,297     (1,208     (89     7.4   

Personnel

     (707     (663     (44     6.6   

Other general administrative expenses

     (590     (545     (45     8.3   

Depreciation and amortisation

     (122     (134     12        (9.3

Net operating income

     2,394        2,027        366        18.1   

Net loan-loss provisions

     (1,485     (1,037     (448     43.2   

Other income

     (220     (228     7        (3.3

Profit before taxes

     688        762        (75     (9.8

Tax on profit

     (161     (181     21        (11.4

Profit from continuing operations

     527        581        (54     (9.3

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     527        581        (54     (9.3

Minority interests

     127        101        26        26.3   

Attributable profit to the Group

     400        480        (81     (16.8

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Brazil

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     2,622        2,653        2,683        2,865        3,097   

Net fees

     684        689        696        649        727   

Gains (losses) on financial transactions

     127        215        94        31        68   

Other operating income*

     (65     (112     (73     (56     (80

Gross income

     3,369        3,445        3,400        3,490        3,812   

Operating expenses

     (1,342     (1,339     (1,389     (1,452     (1,418

General administrative expenses

     (1,208     (1,194     (1,239     (1,287     (1,297

Personnel

     (663     (641     (663     (688     (707

Other general administrative expenses

     (545     (553     (577     (599     (590

Depreciation and amortisation

     (134     (146     (150     (166     (122

Net operating income

     2,027        2,106        2,011        2,038        2,394   

Net loan-loss provisions

     (1,037     (1,249     (1,213     (979     (1,485

Other income

     (228     (269     (282     (307     (220

Profit before taxes

     762        589        516        752        688   

Tax on profit

     (181     (107     (155     (237     (161

Profit from continuing operations

     581        481        361        515        527   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     581        481        361        515        527   

Minority interests

     101        83        54        89        127   

Attributable profit to the Group

     480        399        307        426        400   

 

*    Including dividends, income from equity-accounted method and other operating income/expenses

 

  

Other information

          

Spread

     15.84        16.17        15.41        15.44        15.17   

Spread loans

     14.72        15.05        14.23        14.44        14.44   

Spread deposits

     1.12        1.12        1.18        1.00        0.73   


Table of Contents

LOGO

Retail Banking Brazil

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     4,059        3,585        473        13.2   

Net fees

     952        936        16        1.8   

Gains (losses) on financial transactions

     89        174        (85     (48.9

Other operating income*

     (104     (89     (15     17.4   

Gross income

     4,996        4,607        389        8.4   

Operating expenses

     (1,859     (1,835     (24     1.3   

General administrative expenses

     (1,699     (1,651     (48     2.9   

Personnel

     (926     (907     (20     2.2   

Other general administrative expenses

     (773     (745     (28     3.8   

Depreciation and amortisation

     (159     (183     24        (13.1

Net operating income

     3,137        2,772        365        13.2   

Net loan-loss provisions

     (1,947     (1,418     (529     37.3   

Other income

     (289     (312     23        (7.3

Profit before taxes

     901        1,042        (141     (13.5

Tax on profit

     (211     (248     37        (15.1

Profit from continuing operations

     691        794        (104     (13.1

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     691        794        (104     (13.1

Minority interests

     167        138        29        21.0   

Attributable profit to the Group

     524        657        (133     (20.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Brazil

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     3,585        3,812        3,789        3,863        4,059   

Net fees

     936        991        982        871        952   

Gains (losses) on financial transactions

     174        306        133        37        89   

Other operating income*

     (89     (159     (103     (74     (104

Gross income

     4,607        4,949        4,801        4,697        4,996   

Operating expenses

     (1,835     (1,925     (1,961     (1,957     (1,859

General administrative expenses

     (1,651     (1,716     (1,750     (1,733     (1,699

Personnel

     (907     (922     (936     (927     (926

Other general administrative expenses

     (745     (794     (814     (807     (773

Depreciation and amortisation

     (183     (209     (212     (224     (159

Net operating income

     2,772        3,024        2,840        2,740        3,137   

Net loan-loss provisions

     (1,418     (1,787     (1,712     (1,308     (1,947

Other income

     (312     (385     (398     (415     (289

Profit before taxes

     1,042        852        730        1,017        901   

Tax on profit

     (248     (157     (219     (323     (211

Profit from continuing operations

     794        695        511        694        691   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     794        695        511        694        691   

Minority interests

     138        119        77        120        167   

Attributable profit to the Group

     657        576        434        574        524   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Brazil

R$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     7,171        5,976        1,195        20.0   

Net fees

     1,682        1,560        123        7.9   

Gains (losses) on financial transactions

     157        291        (133     (45.8

Other operating income*

     (185     (148     (36     24.5   

Gross income

     8,827        7,678        1,148        15.0   

Operating expenses

     (3,284     (3,058     (226     7.4   

General administrative expenses

     (3,003     (2,752     (250     9.1   

Personnel

     (1,637     (1,511     (126     8.3   

Other general administrative expenses

     (1,366     (1,241     (125     10.0   

Depreciation and amortisation

     (282     (306     24        (7.8

Net operating income

     5,542        4,620        922        20.0   

Net loan-loss provisions

     (3,440     (2,364     (1,076     45.5   

Other income

     (510     (519     9        (1.7

Profit before taxes

     1,592        1,737        (145     (8.3

Tax on profit

     (372     (413     41        (10.0

Profit from continuing operations

     1,220        1,324        (104     (7.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     1,220        1,324        (104     (7.8

Minority interests

     294        229        65        28.3   

Attributable profit to the Group

     926        1,095        (169     (15.4

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Brazil

R$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     5,976        6,090        6,181        6,911        7,171   

Net fees

     1,560        1,582        1,602        1,575        1,682   

Gains (losses) on financial transactions

     291        493        218        87        157   

Other operating income*

     (148     (256     (168     (137     (185

Gross income

     7,678        7,908        7,833        8,436        8,827   

Operating expenses

     (3,058     (3,075     (3,200     (3,505     (3,284

General administrative expenses

     (2,752     (2,741     (2,854     (3,106     (3,003

Personnel

     (1,511     (1,472     (1,526     (1,661     (1,637

Other general administrative expenses

     (1,241     (1,269     (1,328     (1,445     (1,366

Depreciation and amortisation

     (306     (334     (346     (399     (282

Net operating income

     4,620        4,834        4,633        4,931        5,542   

Net loan-loss provisions

     (2,364     (2,864     (2,793     (2,387     (3,440

Other income

     (519     (617     (649     (738     (510

Profit before taxes

     1,737        1,353        1,191        1,807        1,592   

Tax on profit

     (413     (247     (358     (565     (372

Profit from continuing operations

     1,324        1,106        834        1,242        1,220   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     1,324        1,106        834        1,242        1,220   

Minority interests

     229        190        125        215        294   

Attributable profit to the Group

     1,095        916        709        1,027        926   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Mexico

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     422        349        73        20.8   

Net fees

     137        124        13        10.4   

Gains (losses) on financial transactions

     7        58        (51     (88.4

Other operating income*

     (8     (9     2        (18.2

Gross income

     558        521        36        7.0   

Operating expenses

     (223     (200     (23     11.5   

General administrative expenses

     (196     (175     (20     11.5   

Personnel

     (111     (100     (11     11.3   

Other general administrative expenses

     (85     (76     (9     11.9   

Depreciation and amortisation

     (27     (24     (3     11.0   

Net operating income

     335        322        14        4.2   

Net loan-loss provisions

     (77     (74     (3     4.1   

Other income

     (2     (6     4        (65.0

Profit before taxes

     256        242        14        5.9   

Tax on profit

     (25     (36     10        (28.8

Profit from continuing operations

     230        206        24        11.9   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     230        206        24        11.9   

Minority interests

     0        0        0        16.6   

Attributable profit to the Group

     230        206        24        11.9   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Mexico

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     349        350        372        373        422   

Net fees

     124        119        121        121        137   

Gains (losses) on financial transactions

     58        43        5        7        7   

Other operating income*

     (9     (5     (13     (8     (8

Gross income

     521        506        485        493        558   

Operating expenses

     (200     (210     (224     (244     (223

General administrative expenses

     (175     (186     (199     (219     (196

Personnel

     (100     (100     (98     (101     (111

Other general administrative expenses

     (76     (86     (102     (118     (85

Depreciation and amortisation

     (24     (24     (24     (25     (27

Net operating income

     322        296        261        249        335   

Net loan-loss provisions

     (74     (89     (95     (85     (77

Other income

     (6     (1     60        (20     (2

Profit before taxes

     242        205        226        144        256   

Tax on profit

     (36     (34     (29     33        (25

Profit from continuing operations

     206        172        197        176        230   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     206        172        197        176        230   

Minority interests

     0        0        0        1        0   

Attributable profit to the Group

     206        171        197        176        230   

 

*    Including dividends, income from equity-accounted method and other operating income/expenses

 

  

Other information

          

Spread

     10.67        10.44        10.26        10.32        10.65   

Spread loans

     8.58        8.40        8.27        8.36        8.69   

Spread deposits

     2.09        2.04        1.99        1.96        1.96   


Table of Contents

LOGO

Retail Banking Mexico

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     552        477        75        15.8   

Net fees

     180        170        10        5.8   

Gains (losses) on financial transactions

     9        79        (70     (88.9

Other operating income*

     (10     (13     3        (21.6

Gross income

     731        713        18        2.6   

Operating expenses

     (292     (273     (19     6.9   

General administrative expenses

     (256     (240     (17     6.9   

Personnel

     (145     (136     (9     6.7   

Other general administrative expenses

     (111     (103     (7     7.2   

Depreciation and amortisation

     (35     (33     (2     6.4   

Net operating income

     439        440        (0     (0.1

Net loan-loss provisions

     (101     (101     0        (0.2

Other income

     (3     (8     5        (66.4

Profit before taxes

     335        331        5        1.5   

Tax on profit

     (33     (49     16        (31.7

Profit from continuing operations

     302        282        20        7.2   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     302        282        20        7.2   

Minority interests

     1        0        0        11.8   

Attributable profit to the Group

     302        281        20        7.2   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Mexico

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     477        503        525        502        552   

Net fees

     170        171        171        162        180   

Gains (losses) on financial transactions

     79        62        7        8        9   

Other operating income*

     (13     (7     (18     (10     (10

Gross income

     713        728        685        662        731   

Operating expenses

     (273     (302     (316     (329     (292

General administrative expenses

     (240     (267     (281     (296     (256

Personnel

     (136     (143     (138     (135     (145

Other general administrative expenses

     (103     (124     (143     (161     (111

Depreciation and amortisation

     (33     (35     (34     (33     (35

Net operating income

     440        426        369        333        439   

Net loan-loss provisions

     (101     (128     (135     (114     (101

Other income

     (8     (2     85        (29     (3

Profit before taxes

     331        296        319        189        335   

Tax on profit

     (49     (48     (41     47        (33

Profit from continuing operations

     282        248        279        236        302   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     282        248        279        236        302   

Minority interests

     0        0        0        1        1   

Attributable profit to the Group

     281        247        278        235        302   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Mexico

Million pesos

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     7,172        5,754        1,418        24.6   

Net fees

     2,337        2,053        284        13.8   

Gains (losses) on financial transactions

     114        949        (835     (88.0

Other operating income*

     (132     (156     24        (15.6

Gross income

     9,491        8,599        891        10.4   

Operating expenses

     (3,789     (3,295     (494     15.0   

General administrative expenses

     (3,328     (2,893     (435     15.0   

Personnel

     (1,889     (1,646     (243     14.8   

Other general administrative expenses

     (1,440     (1,247     (192     15.4   

Depreciation and amortisation

     (460     (402     (58     14.5   

Net operating income

     5,702        5,304        398        7.5   

Net loan-loss provisions

     (1,314     (1,223     (90     7.4   

Other income

     (34     (93     59        (63.9

Profit before taxes

     4,355        3,988        367        9.2   

Tax on profit

     (433     (590     156        (26.5

Profit from continuing operations

     3,921        3,398        523        15.4   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     3,921        3,398        523        15.4   

Minority interests

     7        6        1        20.3   

Attributable profit to the Group

     3,914        3,393        522        15.4   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Mexico

Million pesos

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     5,754        5,900        6,446        6,796        7,172   

Net fees

     2,053        2,005        2,106        2,205        2,337   

Gains (losses) on financial transactions

     949        723        99        160        114   

Other operating income*

     (156     (87     (223     (139     (132

Gross income

     8,599        8,541        8,428        9,022        9,491   

Operating expenses

     (3,295     (3,545     (3,876     (4,423     (3,789

General administrative expenses

     (2,893     (3,134     (3,454     (3,970     (3,328

Personnel

     (1,646     (1,681     (1,698     (1,837     (1,889

Other general administrative expenses

     (1,247     (1,453     (1,756     (2,132     (1,440

Depreciation and amortisation

     (402     (411     (422     (453     (460

Net operating income

     5,304        4,996        4,552        4,599        5,702   

Net loan-loss provisions

     (1,223     (1,506     (1,649     (1,558     (1,314

Other income

     (93     (20     1,020        (333     (34

Profit before taxes

     3,988        3,470        3,922        2,708        4,355   

Tax on profit

     (590     (568     (500     529        (433

Profit from continuing operations

     3,398        2,902        3,422        3,237        3,921   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     3,398        2,902        3,422        3,237        3,921   

Minority interests

     6        5        6        12        7   

Attributable profit to the Group

     3,393        2,896        3,416        3,225        3,914   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Chile

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     403        332        71        21.5   

Net fees

     97        96        0        0.2   

Gains (losses) on financial transactions

     (7     3        (10     —     

Other operating income*

     (5     (5     0        (6.4

Gross income

     489        427        62        14.5   

Operating expenses

     (190     (173     (17     10.1   

General administrative expenses

     (171     (152     (19     12.7   

Personnel

     (105     (93     (12     12.7   

Other general administrative expenses

     (66     (58     (7     12.7   

Depreciation and amortisation

     (19     (21     2        (8.6

Net operating income

     299        254        45        17.6   

Net loan-loss provisions

     (125     (87     (38     43.7   

Other income

     (4     4        (8     —     

Profit before taxes

     169        171        (2     (0.9

Tax on profit

     (24     (30     6        (20.4

Profit from continuing operations

     146        141        4        3.2   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     146        141        4        3.2   

Minority interests

     47        34        13        39.7   

Attributable profit to the Group

     99        108        (9     (8.4

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Chile

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     332        358        343        377        403   

Net fees

     96        98        91        85        97   

Gains (losses) on financial transactions

     3        12        (7     1        (7

Other operating income*

     (5     (3     (6     (9     (5

Gross income

     427        464        421        454        489   

Operating expenses

     (173     (179     (189     (183     (190

General administrative expenses

     (152     (159     (168     (163     (171

Personnel

     (93     (102     (108     (104     (105

Other general administrative expenses

     (58     (57     (60     (59     (66

Depreciation and amortisation

     (21     (20     (21     (20     (19

Net operating income

     254        286        233        271        299   

Net loan-loss provisions

     (87     (91     (135     (90     (125

Other income

     4        2        21        13        (4

Profit before taxes

     171        197        119        194        169   

Tax on profit

     (30     (14     (10     (32     (24

Profit from continuing operations

     141        183        109        163        146   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     141        183        109        163        146   

Minority interests

     34        45        27        43        47   

Attributable profit to the Group

     108        138        82        120        99   

*    Including dividends, income from equity-accounted method and other operating income/expenses

  

Other information

          

Spread

     7.47        7.04        6.83        6.87        7.01   

Spread loans

     4.38        4.14        4.18        4.35        4.56   

Spread deposits

     3.09        2.90        2.65        2.52        2.45   


Table of Contents

LOGO

Retail Banking Chile

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     529        454        75        16.5   

Net fees

     127        132        (5     (4.0

Gains (losses) on financial transactions

     (9     4        (13     —     

Other operating income*

     (6     (7     1        (10.2

Gross income

     641        584        57        9.8   

Operating expenses

     (249     (236     (13     5.5   

General administrative expenses

     (224     (207     (17     8.0   

Personnel

     (138     (128     (10     8.0   

Other general administrative expenses

     (86     (80     (6     8.0   

Depreciation and amortisation

     (25     (29     4        (12.4

Net operating income

     391        347        44        12.7   

Net loan-loss provisions

     (164     (119     (45     37.7   

Other income

     (6     5        (11     —     

Profit before taxes

     222        234        (12     (5.0

Tax on profit

     (31     (40     10        (23.7

Profit from continuing operations

     191        193        (2     (1.1

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     191        193        (2     (1.1

Minority interests

     62        46        16        33.9   

Attributable profit to the Group

     129        147        (18     (12.2

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Chile

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     454        513        485        509        529   

Net fees

     132        140        129        114        127   

Gains (losses) on financial transactions

     4        17        (10     1        (9

Other operating income*

     (7     (4     (9     (13     (6

Gross income

     584        666        595        612        641   

Operating expenses

     (236     (257     (266     (247     (249

General administrative expenses

     (207     (228     (237     (220     (224

Personnel

     (128     (146     (152     (140     (138

Other general administrative expenses

     (80     (82     (85     (80     (86

Depreciation and amortisation

     (29     (29     (30     (27     (25

Net operating income

     347        410        329        365        391   

Net loan-loss provisions

     (119     (130     (190     (121     (164

Other income

     5        3        29        18        (6

Profit before taxes

     234        283        168        263        222   

Tax on profit

     (40     (21     (14     (43     (31

Profit from continuing operations

     193        262        154        219        191   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     193        262        154        219        191   

Minority interests

     46        65        38        58        62   

Attributable profit to the Group

     147        197        116        161        129   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Chile

Ch$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     258,325        218,735        39,589        18.1   

Net fees

     61,893        63,572        (1,679     (2.6

Gains (losses) on financial transactions

     (4,173     2,162        (6,335     —     

Other operating income*

     (2,902     (3,188     287        (9.0

Gross income

     313,143        281,281        31,862        11.3   

Operating expenses

     (121,825     (113,859     (7,966     7.0   

General administrative expenses

     (109,413     (99,884     (9,529     9.5   

Personnel

     (67,361     (61,491     (5,870     9.5   

Other general administrative expenses

     (42,052     (38,392     (3,659     9.5   

Depreciation and amortisation

     (12,412     (13,976     1,564        (11.2

Net operating income

     191,319        167,422        23,896        14.3   

Net loan-loss provisions

     (79,990     (57,274     (22,715     39.7   

Other income

     (2,874     2,460        (5,334     —     

Profit before taxes

     108,455        112,608        (4,153     (3.7

Tax on profit

     (15,069     (19,466     4,397        (22.6

Profit from continuing operations

     93,387        93,142        245        0.3   

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     93,387        93,142        245        0.3   

Minority interests

     30,268        22,287        7,981        35.8   

Attributable profit to the Group

     63,119        70,855        (7,737     (10.9

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking Chile

Ch$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     218,735        241,346        228,448        259,366        258,325   

Net fees

     63,572        65,958        60,862        58,755        61,893   

Gains (losses) on financial transactions

     2,162        8,004        (4,768     806        (4,173

Other operating income*

     (3,188     (2,039     (4,030     (6,247     (2,902

Gross income

     281,281        313,270        280,511        312,681        313,143   

Operating expenses

     (113,859     (120,617     (125,589     (126,194     (121,825

General administrative expenses

     (99,884     (107,238     (111,680     (112,365     (109,413

Personnel

     (61,491     (68,520     (71,623     (71,499     (67,361

Other general administrative expenses

     (38,392     (38,718     (40,057     (40,865     (42,052

Depreciation and amortisation

     (13,976     (13,379     (13,910     (13,829     (12,412

Net operating income

     167,422        192,653        154,922        186,488        191,319   

Net loan-loss provisions

     (57,274     (61,113     (89,847     (62,317     (79,990

Other income

     2,460        1,478        13,895        9,052        (2,874

Profit before taxes

     112,608        133,019        78,969        133,223        108,455   

Tax on profit

     (19,466     (9,781     (6,718     (21,550     (15,069

Profit from continuing operations

     93,142        123,238        72,252        111,673        93,387   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     93,142        123,238        72,252        111,673        93,387   

Minority interests

     22,287        30,492        17,825        29,496        30,268   

Attributable profit to the Group

     70,855        92,746        54,427        82,177        63,119   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking USA

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     410        433        (23     (5.3

Net fees

     82        88        (6     (6.9

Gains (losses) on financial transactions

     52        35        17        48.1   

Other operating income*

     81        140        (59     (42.3

Gross income

     625        696        (71     (10.3

Operating expenses

     (268     (238     (31     13.0   

General administrative expenses

     (238     (213     (25     11.9   

Personnel

     (133     (119     (13     11.2   

Other general administrative expenses

     (106     (94     (12     12.8   

Depreciation and amortisation

     (30     (24     (5     22.3   

Net operating income

     356        458        (102     (22.3

Net loan-loss provisions

     (58     (95     38        (39.5

Other income

     (19     (27     8        (28.4

Profit before taxes

     279        337        (57     (17.0

Tax on profit

     (51     (53     2        (3.0

Profit from continuing operations

     229        284        (55     (19.5

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     229        284        (55     (19.5

Minority interests

     —          —          —          —     

Attributable profit to the Group

     229        284        (55     (19.5

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking USA

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     433        409        411        406        410   

Net fees

     88        91        99        83        82   

Gains (losses) on financial transactions

     35        24        37        80        52   

Other operating income*

     140        121        91        115        81   

Gross income

     696        645        639        683        625   

Operating expenses

     (238     (228     (240     (279     (268

General administrative expenses

     (213     (199     (210     (249     (238

Personnel

     (119     (114     (120     (120     (133

Other general administrative expenses

     (94     (85     (90     (130     (106

Depreciation and amortisation

     (24     (29     (30     (30     (30

Net operating income

     458        416        399        404        356   

Net loan-loss provisions

     (95     (148     (75     (109     (58

Other income

     (27     (22     (23     11        (19

Profit before taxes

     337        246        301        305        279   

Tax on profit

     (53     (31     (62     (63     (51

Profit from continuing operations

     284        215        239        242        229   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     284        215        239        242        229   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     284        215        239        242        229   

 

*    Including dividends, income from equity-accounted method and other operating income/expenses

 

  

Other information

          

Spread

     2.94        2.90        2.62        2.75        2.82   

Spread loans

     2.16        2.24        2.22        2.29        2.36   

Spread deposits

     0.78        0.66        0.40        0.46        0.46   


Table of Contents

LOGO

Retail Banking USA

US$ million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     537        592        (54     (9.2

Net fees

     108        121        (13     (10.8

Gains (losses) on financial transactions

     68        48        20        42.0   

Other operating income*

     106        191        (86     (44.7

Gross income

     818        951        (133     (14.0

Operating expenses

     (352     (325     (27     8.3   

General administrative expenses

     (313     (291     (21     7.3   

Personnel

     (174     (163     (11     6.6   

Other general administrative expenses

     (139     (128     (10     8.2   

Depreciation and amortisation

     (39     (33     (6     17.2   

Net operating income

     467        627        (160     (25.5

Net loan-loss provisions

     (75     (130     55        (42.0

Other income

     (25     (36     11        (31.4

Profit before taxes

     366        460        (94     (20.4

Tax on profit

     (67     (72     5        (7.0

Profit from continuing operations

     300        388        (89     (22.9

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     300        388        (89     (22.9

Minority interests

     —          —          —          —     

Attributable profit to the Group

     300        388        (89     (22.9

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Retail Banking USA

US$ million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     592        589        581        545        537   

Net fees

     121        130        139        111        108   

Gains (losses) on financial transactions

     48        35        53        109        68   

Other operating income*

     191        174        129        154        106   

Gross income

     951        928        902        919        818   

Operating expenses

     (325     (329     (338     (378     (352

General administrative expenses

     (291     (286     (296     (337     (313

Personnel

     (163     (164     (169     (161     (174

Other general administrative expenses

     (128     (122     (127     (176     (139

Depreciation and amortisation

     (33     (42     (42     (41     (39

Net operating income

     627        600        564        542        467   

Net loan-loss provisions

     (130     (211     (106     (147     (75

Other income

     (36     (32     (33     16        (25

Profit before taxes

     460        356        425        411        366   

Tax on profit

     (72     (45     (87     (86     (67

Profit from continuing operations

     388        311        337        325        300   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     388        311        337        325        300   

Minority interests

     —          —          —          —          —     

Attributable profit to the Group

     388        311        337        325        300   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses


Table of Contents

LOGO

Global Wholesale Banking

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     612        561        51        9.1   

Net fees

     319        327        (8     (2.5

Gains (losses) on financial transactions

     440        405        35        8.7   

Other operating income*

     38        30        9        29.8   

Gross income

     1,409        1,322        87        6.6   

Operating expenses

     (407     (386     (20     5.3   

General administrative expenses

     (370     (351     (19     5.4   

Personnel

     (242     (232     (10     4.4   

Other general administrative expenses

     (128     (119     (9     7.3   

Depreciation and amortisation

     (36     (35     (2     4.4   

Net operating income

     1,002        936        67        7.1   

Net loan-loss provisions

     (54     16        (70     —     

Other income

     (33     (20     (13     64.6   

Profit before taxes

     916        932        (16     (1.7

Tax on profit

     (256     (241     (16     6.6   

Profit from continuing operations

     660        691        (32     (4.6

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     660        691        (32     (4.6

Minority interests

     57        55        2        4.3   

Attributable profit to the Group

     602        636        (34     (5.3

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Business volumes

          

Total assets

     288,486         274,311         14,175        5.2   

Customer loans

     73,031         68,092         4,939        7.3   

Customer deposits

     77,289         91,767         (14,478     (15.8


Table of Contents

LOGO

Global Wholesale Banking

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     561        625        605        624        612   

Net fees

     327        320        284        219        319   

Gains (losses) on financial transactions

     405        126        146        112        440   

Other operating income*

     30        112        43        69        38   

Gross income

     1,322        1,183        1,078        1,025        1,409   

Operating expenses

     (386     (414     (411     (410     (407

General administrative expenses

     (351     (380     (376     (380     (370

Personnel

     (232     (249     (245     (261     (242

Other general administrative expenses

     (119     (131     (131     (120     (128

Depreciation and amortisation

     (35     (34     (35     (30     (36

Net operating income

     936        769        667        614        1,002   

Net loan-loss provisions

     16        (106     (42     (12     (54

Other income

     (20     1        (29     12        (33

Profit before taxes

     932        664        597        615        916   

Tax on profit

     (241     (176     (165     (171     (256

Profit from continuing operations

     691        488        431        443        660   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     691        488        431        443        660   

Minority interests

     55        53        60        46        57   

Attributable profit to the Group

     636        435        372        397        602   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Business volumes

              

Total assets

     274,311         283,465         300,640         280,664         288,486   

Customer loans

     68,092         73,602         75,076         81,148         73,031   

Customer deposits

     91,767         86,999         80,018         75,100         77,289   


Table of Contents

LOGO

Asset Management and Insurance

EUR million

 

                 Variation  
     Q1 ’12     Q1 ’11     Amount     %  

Income statement

        

Net interest income

     30        31        (2     (5.4

Net fees

     96        103        (7     (6.6

Gains (losses) on financial transactions

     1        1        0        49.8   

Other operating income*

     102        108        (7     (6.0

Gross income

     229        243        (15     (6.0

Operating expenses

     (77     (77     0        (0.5

General administrative expenses

     (68     (69     1        (1.0

Personnel

     (39     (42     4        (8.5

Other general administrative expenses

     (29     (27     (3     10.8   

Depreciation and amortisation

     (9     (9     (0     3.6   

Net operating income

     152        166        (14     (8.6

Net loan-loss provisions

     (0     (0     (0     —     

Other income

     (5     (7     1        (18.8

Profit before taxes

     146        159        (13     (8.1

Tax on profit

     (40     (34     (6     16.4   

Profit from continuing operations

     106        125        (19     (14.8

Net profit from discontinued operations

     —          —          —          —     

Consolidated profit

     106        125        (19     (14.8

Minority interests

     9        5        3        68.2   

Attributable profit to the Group

     98        120        (22     (18.4

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

                   Variation  
     31.03.12      31.03.11      Amount     %  

Business volumes

          

Total assets

     26,412         33,439         (7,027     (21.0

Customer loans

     431         472         (41     (8.7

Customer deposits

     6,091         4,636         1,455        31.4   


Table of Contents

LOGO

Asset Management and Insurance

EUR million

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Income statement

          

Net interest income

     31        33        33        37        30   

Net fees

     103        101        106        100        96   

Gains (losses) on financial transactions

     1        8        (6     2        1   

Other operating income*

     108        108        101        93        102   

Gross income

     243        250        234        231        229   

Operating expenses

     (77     (79     (80     (84     (77

General administrative expenses

     (69     (70     (71     (73     (68

Personnel

     (42     (43     (43     (43     (39

Other general administrative expenses

     (27     (27     (29     (30     (29

Depreciation and amortisation

     (9     (9     (9     (11     (9

Net operating income

     166        170        154        147        152   

Net loan-loss provisions

     (0     0        (0     0        (0

Other income

     (7     (1     (30     (11     (5

Profit before taxes

     159        170        124        137        146   

Tax on profit

     (34     (34     (30     (29     (40

Profit from continuing operations

     125        136        94        108        106   

Net profit from discontinued operations

     —          —          —          —          —     

Consolidated profit

     125        136        94        108        106   

Minority interests

     5        7        6        11        9   

Attributable profit to the Group

     120        129        88        97        98   

 

*

Including dividends, income from equity-accounted method and other operating income/expenses

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Business volumes

              

Total assets

     33,439         36,281         35,453         26,227         26,412   

Customer loans

     472         448         450         432         431   

Customer deposits

     4,636         5,352         5,508         5,727         6,091   


Table of Contents

LOGO

NPL ratio

%

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Continental Europe

     4.53         4.76         5.04         5.18         5.42   

Santander Branch Network

     5.99         6.73         7.70         8.47         8.90   

Banesto

     4.31         4.54         4.69         5.01         5.07   

Portugal

     3.03         3.25         3.78         4.06         4.59   

Santander Consumer Finance

     4.99         4.74         4.50         3.97         4.05   

Retail Poland (BZ WBK)

     #¡DIV/0!         6.43         6.26         4.89         4.74   

United Kingdom

     1.73         1.81         1.86         1.84         1.82   

Latin America

     4.01         4.20         4.10         4.32         4.67   

Brazil

     4.85         5.05         5.05         5.38         5.76   

Mexico

     1.58         2.45         1.78         1.82         1.61   

Chile

     3.80         3.65         3.63         3.85         4.52   

USA

     4.15         3.76         3.22         2.85         2.46   

Operating Areas

     3.54         3.71         3.78         3.83         3.95   

Total Group

     3.61         3.78         3.86         3.89         3.98   

Spain

     4.57         4.81         5.15         5.49         5.75   


Table of Contents

LOGO

NPL coverage

%

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Continental Europe

     62         61         58         56         55   

Santander Branch Network

     50         47         41         40         40   

Banesto

     52         52         53         53         51   

Portugal

     62         62         53         55         58   

Santander Consumer Finance

     98         103         105         109         108   

Retail Poland (BZ WBK)

     #¡DIV/0!         67         69         65         66   

United Kingdom

     47         43         42         40         40   

Latin America

     107         105         102         97         92   

Brazil

     104         102         100         95         90   

Mexico

     234         165         176         176         195   

Chile

     89         89         88         73         68   

USA

     82         85         93         96         107   

Operating Areas

     71         69         66         64         63   

Total Group

     71         69         66         61         62   

Spain

     53         49         46         45         46   


Table of Contents

LOGO

Spreads loans and deposits

%

 

     Q1 ’11     Q2 ’11     Q3 ’11     Q4 ’11     Q1 ’12  

Santander Branch Network

          

Spread loans

     1.90        1.97        2.03        2.01        2.19   

Spread deposits

     0.05        0.56        0.65        0.53        0.51   

SUM

     1.95        2.53        2.68        2.54        2.70   

Retail Banking Banesto

          

Spread loans

     2.03        2.08        2.12        2.16        2.33   

Spread deposits

     (0.36     0.12        0.42        0.36        0.33   

SUM

     1.67        2.20        2.54        2.52        2.66   

Retail Banking Portugal

          

Spread loans

     1.96        2.06        2.15        2.23        2.34   

Spread deposits

     0.12        (0.31     (0.47     (0.78     (0.91

SUM

     2.08        1.75        1.68        1.45        1.43   

Santander Consumer Finance

          

Spread loans

     4.83        4.43        4.48        4.57        4.51   

Retail Banking United Kingdom

          

Spread loans

     2.40        2.40        2.46        2.53        2.57   

Spread deposits

     (0.32     (0.40     (0.45     (0.50     (0.59

SUM

     2.08        2.00        2.01        2.03        1.98   

Retail Banking Brazil

          

Spread loans

     14.72        15.05        14.23        14.44        14.44   

Spread deposits

     1.12        1.12        1.18        1.00        0.73   

SUM

     15.84        16.17        15.41        15.44        15.17   

Retail Banking Mexico

          

Spread loans

     8.58        8.40        8.27        8.36        8.69   

Spread deposits

     2.09        2.04        1.99        1.96        1.96   

SUM

     10.67        10.44        10.26        10.32        10.65   

Retail Banking Chile

          

Spread loans

     4.38        4.14        4.18        4.35        4.56   

Spread deposits

     3.09        2.90        2.65        2.52        2.45   

SUM

     7.47        7.04        6.83        6.87        7.01   

Retail Banking USA

          

Spread loans

     2.16        2.24        2.22        2.29        2.36   

Spread deposits

     0.78        0.66        0.40        0.46        0.46   

SUM

     2.94        2.90        2.62        2.75        2.82   


Table of Contents

LOGO

Risk-weighted assets

EUR million

 

     31.03.11      30.06.11      30.09.11      31.12.11      31.03.12  

Continental Europe

     235,191         240,008         236,164         229,586         225,553   

Santander Branch Network

     67,886         64,870         62,006         59,224         59,200   

Banesto

     53,818         52,122         53,885         51,251         49,293   

Portugal

     22,339         22,412         22,396         20,660         19,960   

Santander Consumer

     47,556         47,760         46,434         47,410         47,232   

Retail Poland (BZ WBK)

     —           9,353         7,677         8,003         8,756   

United Kingdom

     87,286         86,432         90,445         93,604         93,128   

Latin America

     171,431         176,039         155,566         162,195         167,495   

Brazil

     105,612         109,717         92,448         99,073         101,848   

Mexico

     21,786         22,537         19,745         18,990         20,450   

Chile

     23,217         23,520         21,191         22,556         23,746   

USA

     46,433         46,058         47,358         47,570         48,151   

Operating Areas

     540,341         548,537         529,533         532,955         534,327   

Corporate Activities

     33,695         31,942         29,254         33,003         35,912   

Total Group

     574,036         580,480         558,787         565,958         570,239   


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    Banco Santander, S.A.

Date: April 26, 2012

   

By:

 

/s/ José Antonio Álvarez

     

Name:

 

José Antonio Álvarez

     

Title:

 

Executive Vice President