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Banco Santander México Reports Second Quarter 2019 Net Income of Ps.5,608 Million

- Progress on execution of investment plan driving sustained expansion of loyal customers base

- Well balanced growth across loan segments and robust growth in individual deposits drive net interest income

- Net interest and fee income drove solid growth in core earnings

- Healthy asset quality throughout the loan book

MEXICO CITY, July 25, 2019 /PRNewswire/ -- Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (NYSE: BSMX; BMV: BSMX), ("Banco Santander México" or "the Bank"), today announced financial results for the three-month and six-month periods ending June 30th, 2019.

Banco Santander México reported net income of Ps.5,608 million in 2Q19, representing increases of 8.5% YoY and 6.0% QoQ. On a cumulative basis, net income for the first half of the year, reached Ps.10,899 million, representing a 10.1% YoY increase.

HIGHLIGHTS













Results (Million pesos)


2Q19

1Q19

2Q18


%QoQ

%YoY


6M19

6M18


%YoY

Net interest income


16,588

16,449

14,795


0.8

12.1


33,037

29,410


12.3

Fee and commission, net


4,697

4,426

4,262


6.1

10.2


9,123

8,331


9.5

Core revenues


21,285

20,875

19,057


2.0

11.7


42,160

37,741


11.7

Provisions for loan losses


4,454

4,318

3,980


3.1

11.9


8,772

8,117


8.1

Administrative and promotional expenses


9,482

9,256

8,845


2.4

7.2


18,738

17,063


9.8

Net income


5,608

5,291

5,171


6.0

8.5


10,899

9,898


10.1

Net income per share1


0.83

0.78

0.76


6.0

8.5


1.61

1.46


10.3














Balance Sheet Data
(Million pesos)


Jun-19

Mar-19

Jun-18


%QoQ

%YoY


Jun-19

Jun-18


%YoY

Total assets


1,368,187

1,304,294

1,378,611


4.9

(0.8)


1,368,187

1,378,611


(0.8)

Total loans


700,329

691,226

652,251


1.3

7.4


700,329

652,251


7.4

Deposits


721,288

702,644

698,118


2.7

3.3


721,288

698,118


3.3

Shareholders´ equity


133,829

132,366

122,520


1.1

9.2


133,829

122,520


9.2














Key Ratios (%)


2Q19

1Q19

2Q18


bps QoQ

bps YoY


6M19

6M18


bps YoY

Net interest margin


5.76

5.58

5.27


18

49


5.67

5.39


28

Net loans to deposits ratio


94.13

95.41

90.56


(128)

357


94.13

90.56


357

ROAE


17.29

16.40

17.33


89

(4)


16.80

16.58


22

ROAA


1.63

1.58

1.53


5

10


1.59

1.47


12

Efficiency ratio


44.29

44.81

44.98


(52)

(69)


44.55

44.88


(33)

Capital ratio


16.50

16.90

15.52


(40)

98


16.50

15.52


98

NPLs ratio


2.23

2.15

2.46


8

(23)


2.23

2.46


(23)

Cost of Risk


2.70

2.69

2.90


1

(20)


2.70

2.90


(20)

Coverage ratio


136.56

140.06

124.79


(350)

1,177


136.56

124.79


1,177














Operating Data


Jun-19

Mar-19

Jun-18


%QoQ

%YoY


Jun-19

Jun-18


%YoY

Branches


1,216

1,214

1,220


0.2

(0.3)


1,216

1,220


(0.3)

Branches and offices2


1,394

1,390

1,376


0.3

1.3


1,394

1,376


1.3

ATMs


8,749

8,507

7,778


2.8

12.5


8,749

7,778


12.5

Customers


17,220,259

17,034,317

16,231,111


1.1

6.1


17,220,259

16,231,111


6.1

Employees


19,403

19,291

18,268


0.6

6.2


19,403

18,268


6.2

 

1) Accumulated EPS, net of treasury shares (compensation plan) and discontinued operations. Calculated by using weighted number of shares.

2) Includes cash desks (espacios select, box select and corner select) and SMEs business centers. Excluding brokerage house offices.

Héctor Grisi, Banco Santander México's Executive President and CEO, commented: "We are pleased with the high quality results achieved this quarter, in light of the recent deceleration of loan growth in Mexico, a smaller contribution of market-related income to our gross operating income, and a higher effective tax rate. While expanding our loan book further, we kept asset quality at prudent levels. Coupled with improved efficiency levels, our net income grew around 9% vs. 2Q18, raising ROAE above 17%.

As you know, one of our key strategic goals is attracting more retail clients, and we continue to make significant progress on this front. Solid growth in our retail deposits reflects the investments we have been making to enhance our offering, including customers' digital and branch experiences. These investments also strengthen customer loyalty, helping us become the primary bank of our customers and enabling us to sell a broader array of financial products and services. The use of digital channels has also increased its importance in the country, as exemplified by the CODI initiative to boost digital payments through the use of QR technology, sponsored by Banco de Mexico. On this front, I am glad to share with you that Banco Santander Mexico was one of the first banks to comply with all requirements set by the Central Bank, reinforcing our commitment of offering the best in class services to our customers.

Looking ahead, we remain cautiously optimistic for the remainder of the year. And while we plan to normalize the level of investments in the coming years, we are fully committed to continue enhancing the customer experience and driving innovation across our franchise."

2Q19 EARNINGS CALL DIAL-IN INFORMATION

Date:                       

Friday, July, 26th, 2019

Time:                        

10:00 a.m. (MCT); 11:00 a.m. (US ET)

Dial-in Numbers:       

1-877-407-4018 US & Canada 1-201-689-8471 International & Mexico

Access Code:             

Please ask for Santander México Earnings Call

Webcast:                    

http://public.viavid.com/index.php?id=135260

Replay:                       

Starting: Friday, July 26th, 2019 at 2:00 p.m. (US ET)


Ending: Friday, August 2nd, 2019 at 11:59 p.m. (US ET)


ET Dial-in number: 1-844-512-2921 US & Canada; 1-412-317-6671 International & Mexico Access Code: 13692420

ABOUT BANCO SANTANDER MÉXICO (NYSE: BSMX; BMV: BSMX)
Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (Banco Santander México), one of Mexico's leading banking institutions, provides a wide range of financial and related services, including retail and commercial banking, financial advisory and other related investment activities. Banco Santander México offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of June 30, 2019, Banco Santander México had total assets of Ps.1,368 billion under Mexican Banking GAAP and more than 17.2 million customers. Headquartered in Mexico City, the Company operates 1,394 branches and offices nationwide and has a total of 19,403 employees.

We, the undersigned under oath to tell the truth declare that, in the area of our corresponding functions, we prepared the information of Banco Santander México contained in this quarterly report, which to the best of our knowledge reasonably reflects its situation.

LEGAL DISCLAIMER
Banco Santander México cautions that this presentation may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in various places throughout this presentation and include, without limitation, statements regarding our intent, belief, targets or current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion of our distribution network; financing plans; competition; impact of regulation and the interpretation thereof; action to modify or revoke our banking license; exposure to market risks including interest rate risk, foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk; projected capital expenditures; capitalization requirements and level of reserves; investment in our information technology platform; liquidity; trends affecting the economy generally; and trends affecting our financial condition and our results of operations. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, many important factors could cause actual results to differ substantially from those anticipated in forward-looking statements. These factors include, among other things: changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de México); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes and tax laws; competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of allowance for impairment losses and other losses; increased default by borrowers; our inability to successfully and effectively integrate acquisitions or to evaluate risks arising from asset acquisitions; technological changes; changes in consumer spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations or their interpretation; and certain other risk factors included in our annual report on Form 20-F. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could adversely affect our business and financial performance. The words "believe," "may," "will," "aim," "estimate," "continue," "anticipate," "intend," "expect," "forecast" and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. We undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this presentation because of new information, future events or other factors. In light of the risks and uncertainties described above, the future events and circumstances discussed herein might not occur and are not guarantees of future performance.

Note: The information contained in this presentation is not audited. Nevertheless, the consolidated accounts are prepared on the basis of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in millions of Mexican pesos, unless otherwise indicated. Historical figures are not adjusted by inflation.

Cision

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