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Banco Santander México Reports Third Quarter 2020 Net Income of Ps.5,030 Million

·10 min read

- Started moving towards normalizing our operations

- Focused on secured segments, such as mortgages, government and auto loans, which have smaller margins, but lower risk profiles

- Maintaining strong capital and liquidity positions

- Net income down 8.8% YoY, with sequential recovery of 18.9%, mainly impacted by soft net interest income and benefited by resilent fees and market related income

MEXICO CITY, Oct. 28, 2020 /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 nine-month periods ending September 30th, 2020.

Banco Santander México reported net income of Ps.5,030 million in 3Q20, representing a YoY decrease of 8.8% and a QoQ increase of 18.9%. On a cumulative basis, net income for 9M20 reached Ps.14,674 million, representing a 10.6% YoY decrease.

HIGHLIGHTS













Results (Million pesos)


3Q20

2Q20

3Q19


%QoQ

%YoY


9M20

9M19


%YoY

Net interest income


16,089

15,931

16,589


1.0

(3.0)


48,916

49,626


(1.4)

Fee and commission, net


4,690

4,598

4,580


2.0

2.4


13,985

13,703


2.1

Core revenues


20,779

20,529

21,169


1.2

(1.8)


62,901

63,329


(0.7)

Provisions for loan losses


4,596

8,350

4,478


(45.0)

2.6


18,111

13,250


36.7

Administrative and promotional expenses


10,429

9,599

9,783


8.6

6.6


29,813

28,521


4.5

Net income


5,030

4,230

5,517


18.9

(8.8)


14,674

16,416


(10.6)

Net income per share1


0.74

0.62

0.81


18.9

(8.9)


2.16

2.42


(10.8)














Balance Sheet Data (Million pesos)


Sep-20

Jun-20

Sep-19


%QoQ

%YoY


Sep-20

Sep-19


%YoY

Total assets


1,858,684

1,929,350

1,460,741


(3.7)

27.2


1,858,684

1,460,741


27.2

Total loans


735,330

751,219

697,326


(2.1)

5.4


735,330

697,326


5.4

Deposits


772,984

789,740

683,590


(2.1)

13.1


772,984

683,590


13.1

Shareholders´ equity


151,475

146,536

139,700


3.4

8.4


151,475

139,700


8.4














Key Ratios (%)


3Q20

2Q20

3Q19


bps QoQ

bps YoY


9M20

9M19


bps YoY

Net interest margin


4.50

4.48

5.74


2

(124)


4.78

5.69


(91)

Net loans to deposits ratio


91.78

91.81

98.89


(3)

(711)


91.78

98.89


(711)

ROAE


13.87

11.86

16.63


201

(276)


13.49

16.49


(300)

ROAA


1.23

1.01

1.55


22

(32)


1.20

1.54


(34)

Efficiency ratio


48.14

40.71

45.11


743

303


44.16

44.74


(58)

Capital ratio


17.16

16.69

16.89


47

28


17.16

16.89


28

NPLs ratio


2.09

2.51

2.33


(42)

(24)


2.09

2.33


(24)

Cost of Risk


3.13

3.14

2.62


(1)

51


3.13

2.62


51

Coverage ratio


167.94

138.81

130.82


2,913

3,712


167.94

130.82


3,712














Operating Data


Sep-20

Jun-20

Sep-19


%QoQ

%YoY


Sep-20

Sep-19


%YoY

Branches2


1,050

1,050

1,223


0.0

(14.1)


1,050

1,223


(14.1)

Branches and offices3


1,407

1,406

1,411


0.1

(0.3)


1,407

1,411


(0.3)

ATMs


9,365

9,142

8,866


2.4

5.6


9,365

8,866


5.6

Customers


18,796,611

18,641,282

17,739,345


0.8

6.0


18,796,611

17,739,345


6.0

Employees


20,922

20,062

19,876


4.3

5.3


20,922

19,876


5.3

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

2) Internal reclassification as of 2Q20. The bank continues to operate with the same number of customer offices.

3) 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: "This quarter, we delivered robust financial and operating results that were achieved in a still very weak and complex operating environment. Our loan book grew mid-single-digits year-over-year, while demand for mortgages, auto and commercial loans was healthy. Consumer and SME loans, on the other hand, continued contracting, consistent with market trends and weak demand conditions. Deposits have proven resilient, though, registering double-digit growth which, together with our prudent balance sheet strategy, have enabled us to maintain ample levels of liquidity while growing net income around 19% sequentially and increasing ROAE +201 bps to 13.9%. On top of this, we closed 3Q20 with the strongest capital ratio since becoming a listed company.

In terms of asset quality, we are pleased to report that close to 85% of the loan portfolio under the payment holiday program, which is supporting our retail and SMEs customers, remains current. Only 8% of these loans have missed one or two payments and 7% is being restructured. The program has not had a negative impact, yet, on our NPL ratio. Performance has been better-than-expected and we estimate that the preemptive loan loss provisions of Ps.3.9 billion that we made in the previous quarter are adequate at this time. Furthermore, we continue executing our recoveries and restructuring plan, which has enabled us to act swiftly and preemptively to effectively respond to the challenging operating environment, as well as help customers overcome temporary financial difficulties.

In addition to our focus on managing risk under this environment, we continue advancing our core strategy, such as growing our base of loyal customers. We also continue making new investments under the bank's transformation plan, mainly in IT and digitalization, while seeking efficiencies in other lines and maintaining tight control of costs in support of our bottom line.

I would like to thank all our employees for the extraordinary work they have done throughout these challenging times. Their commitment to executing our growth plans with excellence, in addition to our bank's strong liquidity and capital positions, make us confident that we are not only well positioned to continue effectively weathering the current economic challenges but to capitalize on growth opportunities that will undoubtedly arise under current circumstances. Our commitment and financial strength also mean our Bank can continue supporting our customers, as we recover together from these unprecedented challenges."

3Q20 Earnings Call Dial-In Information

Date: Thursday, October 29th, 2020

Time: 10:00 a.m. (MCT); 12:00 p.m. (US ET)

Dial-in Numbers: 1-866-777-2509 US & Canada 1-412-317-5413 International & Mexico

Access Code: Please ask for Santander México Earnings Call

Pre-Register: https://dpregister.com/sreg/10149495/dc20f56520

Webcast: https://services.choruscall.com/links/bsmx201029.html

Replay: Starting: Thursday, October 29th, 2020 at 2:00 p.m. (US ET); Ending: Thursday, November 5th, 2020 at 11:59 p.m. (US ET). Dial-in number: 1-877-344-7529 US & Canada; 1-412-317-0088 International & Mexico Access Code: 10149495

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 September 30th, 2020, Banco Santander México had total assets of Ps.1,859 billion under Mexican Banking GAAP and more than 18.7 million customers. Headquartered in Mexico City, the Company operates 1,407 branches and offices nationwide and has a total of 20,922 employees.

INVESTOR RELATIONS CONTACT
Héctor Chávez Lopez – Managing Director - IRO
+ 52 (55) 5269-1925
hchavez@santander.com.mx

Investor Relations Team
investor@santander.com.mx
www.santander.com.mx

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.

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SOURCE Banco Santander México, S.A.