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Banco Santander México Reports Fourth Quarter 2018 Net Income of Ps.4,590 Million

- Executed the second year of our strategy to become a customer-focused organization

- Strategy based on operational and digital transformation

- Continued expansion of higher margin loans; retail and SME deposits continue to outperform the other segments

- Solid performance driven by healthy asset quality and strategy execution

- Net income growth supported mainly by strong net interest income, partially offset by trading losses and higher effective tax rate

MEXICO CITY, Jan. 30, 2019 /PRNewswire/ -- Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México, as succesor of Grupo Financiero Santander México, S.A.B de C.V. (NYSE: BSMX; BMV: BSMX before SANMEX), ("Banco Santander México" or the "Bank"), today announced financial results for the three-month and twelve-month periods ending December 31st, 2018.

Banco Santander México reported net income for 4Q18 of Ps.4,590 million, representing a YoY increase of 2.4% and a QoQ decrease of 9.9%. On a cumulative basis, net income for 12M18 reached Ps.19,584 million, representing an 11.0% YoY increase.

HIGHLIGHTS













Results (Million pesos)


4Q18

3Q18

4Q17


% QoQ

% YoY


12M18

12M17


% YoY

Net interest income


16,203

15,795

13,847


2.6

17.0


61,408

55,015


11.6

Fee and commission, net


4,230

4,271

3,933


(1.0)

7.6


16,832

15,633


7.7

Core revenues


20,433

20,066

17,780


1.8

14.9


78,240

70,648


10.7

Provisions for loan losses


5,580

5,463

5,431


2.1

2.7


20,656

21,409


(3.5)

Administrative and promotional expenses


9,228

9,003

8,186


2.5

12.7


35,294

31,215


13.1

Net income


4,590

5,096

4,481


(9.9)

2.4


19,584

17,645


11.0

Net income per share1 / 3


0.68

0.75

0.06


(9.3)


2.89

0.22















Balance Sheet Data (Million pesos)


Dec-18

Sep-18

Dec-17


% QoQ

% YoY


Dec-18

Dec-17


% YoY

Total assets


1,381,570

1,375,294

1,322,987


0.5

4.4


1,381,570

1,322,987


4.4

Total loans


682,848

680,120

617,871


0.4

10.5


682,848

617,871


10.5

Deposits


693,812

680,143

647,854


2.0

7.1


693,812

647,854


7.1

Shareholders´ equity


125,693

127,385

116,205


(1.3)

8.2


125,693

116,205


8.2














Key Ratios (%)


4Q18

3Q18

4Q17


bps QoQ

bps YoY


12M18

12M17


bps YoY

Net interest margin


5.44

5.66

5.32


(22)

12


5.47

5.41


6

Net loans to deposits ratio


95.38

97.00

92.28


(162)

310


95.38

92.28


310

ROAE


15.18

16.74

16.04


(156)

(86)


16.19

15.79


40

ROAA


1.36

1.51

1.33


(15)

3


1.45

1.31


14

Efficiency ratio


44.94

42.78

43.51


216

143


43.53

41.81


172

Capital ratio


15.93

16.02

15.73


(9)

20


15.93

15.73


20

NPLs ratio


2.36

2.35

2.54


1

(18)


2.36

2.54


(18)

Cost of Risk


3.43

3.37

3.59


6

(16)


3.18

3.54


(36)

Coverage ratio


131.16

127.60

127.94


356

322


131.16

127.94


322














Operating Data


Dec-18

Sep-18

Dec-17


% QoQ

% YoY


Dec-18

Dec-17


% YoY

Branches


1,219

1,218

1,220


0.1

(0.1)


1,219

1,220


(0.1)

Branches and offices2


1,393

1,385

1,375


0.6

1.3


1,393

1,375


1.3

ATMs


8,384

8,003

7,323


4.8

14.5


8,384

7,323


14.5

Customers


16,690,402

16,480,106

15,446,314


1.3

8.1


16,690,402

15,446,314


8.1

Employees3


18,979

18,629

15,116


1.9

25.6


18,979

15,116


25.6

Employees - Group


18,979

18,629

17,826


1.9

6.5


18,979

17,826


6.5














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.

3) 2017 information refers to Banco Santander México before corporate reorganization. As of 1Q18, all employees from the rest of subsidiaries are already registered at the bank.

Héctor Grisi, Banco Santander México's Executive President and CEO, commented: "We delivered a third consecutive year of ROAE expansion, supported by strong core earnings growth and prudent risk management that generated an 11% increase in net income. This was achieved despite challenging market conditions in México and our ongoing investment in various strategic initiatives to become a more customer-centric organization.

Our strategy remains focused on improving the experience of our customers and becoming their primary bank. We are doing this by transforming our distribution network and infrastructure and launching new financial products and services, the results of which clearly demonstrate the effectiveness of our strategy. The number of loyal and digital customers expanded 23% and 38%, respectively, while our base of mobile customers grew an impressive forty-nine percent.

Gaining traction in another key area of our strategy, we achieved an eighth consecutive quarter of double-digit growth in retail deposits, which now represent 31% of total deposits. We also expanded our loan book 11% during the year, while maintaining a disciplined approach to lending and reporting healthy asset quality across key risk metrics.

Entering 2019, we remain fully focused on executing the final stage of our three-year investment plan. Although we see slower economic growth ahead, consumer confidence remains strong which, coupled with sound employment levels, should support loan growth and stable asset quality. We are confident in our strategy to build a stronger and more profitable franchise and look forward to updating you on our progress."

4Q18 EARNINGS CALL DIAL-IN INFORMATION


Date:

Thursday, January 31st, 2019

Time:                 

8:00 a.m. (MCT); 9:00 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=132848

Replay:                 

Starting: Thursday, January 31st, 2019 at 12:00 p.m. (US ET)


Ending: Thursday, February 7th, 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: 13686526

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 December 31st, 2018, Banco Santander México had total assets of Ps.1,381 billion under Mexican Banking GAAP and more than 16.6 million customers. Headquartered in Mexico City, the Company operates 1,393 branches and offices nationwide and has a total of 18,979 employees.

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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