Banco Santander México Reports First Quarter 2021 Net Income of Ps.3,279 Million

Rhea-AI Summary

Banco Santander México reported financial results for 1Q21 showing a net income of Ps.3,279 million, down 39.4% YoY and 40.2% QoQ. Key highlights include a 7.8% decrease in net interest income and a significant rise of 124.5% in provisions for loan losses. While individual demand deposits grew by over 20%, total loans decreased by 8% YoY. The bank's NPLs ratio rose to 2.91%, and ROAE fell to 8.24%. The parent company plans a tender offer for the remaining shares and intends to de-list the bank from stock exchanges, reaffirming trust in its operations.

Positive

• Individual demand deposits increased by over 20%.
• Mortgage and auto loans showed strong performance, growing above market.
• The bank expects a gradual turnaround in loan volumes.
• NPLs have started to decline, signaling improving asset quality.

Negative

• Net income decreased by 39.4% YoY and 40.2% QoQ.
• Provisions for loan losses increased by 124.5% YoY.
• The NPLs ratio rose to 2.91%, reflecting asset quality concerns.
• Total loans decreased by 8% YoY.

MEXICO CITY, April 28, 2021 /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 period ending March 31^st, 2021.

Banco Santander México reported net income of Ps.3,279 million in 1Q21, representing decreases of 39.4% YoY and 40.2% QoQ.

HIGHLIGHTS
Results (Million pesos)		1Q21	4Q20	1Q20		%QoQ	%YoY
Net interest income		15,585	16,272	16,896		(4.2)	(7.8)
Fee and commission, net		4,902	4,709	4,697		4.1	4.4
Core revenues		20,487	20,981	21,593		(2.4)	(5.1)
Provisions for loan losses		7,075	3,152	5,165		124.5	37.0
Administrative and promotional expenses		9,894	11,102	9,785		(10.9)	1.1
Net income		3,279	5,480	5,414		(40.2)	(39.4)
Net income per share1		0.48	0.81	0.80		(40.2)	(39.4)
Balance Sheet Data (Million pesos)		Mar-21	Dec-20	Mar-20		%QoQ	%YoY
Total assets		1,748,298	1,856,213	1,802,210		(5.8)	(3.0)
Total loans		713,989	702,769	775,809		1.6	(8.0)
Deposits		767,627	764,444	810,340		0.4	(5.3)
Shareholders´ equity		159,654	158,871	141,041		0.5	13.2
Key Ratios (%)		1Q21	4Q20	1Q20		bps QoQ	bps YoY
Net interest margin		4.42	4.50	5.45		(8)	(103)
Net loans to deposits ratio		89.76	88.62	92.94		114	(318)
ROAE		8.24	14.73	15.48		(649)	(724)
ROAA		0.73	1.34	1.35		(61)	(62)
Efficiency ratio		46.62	52.06	43.95		(544)	267
Capital ratio		19.73	19.01	16.23		72	350
NPLs ratio		2.91	3.08	2.16		(17)	75
Cost of Risk		3.15	2.89	2.65		26	50
Coverage ratio		120.12	116.87	135.17		325	—
Operating Data		Mar-21	Dec-20	Mar-20		%QoQ	%YoY
Branches		1,007	1,013	1,211		(0.6)	(16.8)2
Branches and offices3		1,352	1,350	1,406		0.1	(3.8)
ATMs		9,497	9,448	9,096		0.5	4.4
Customers		19,068,219	18,707,976	18,374,690		1.9	3.8
Employees		22,280	21,183	19,469		5.2	14.4

1)	Accumulated EPS, net of treasury shares (compensation plan) and discontinued operations. Calculated by using weighted number of shares.
2)	Reflects the internal reclassification as of 2Q20 and the closing of certain branches.
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: "We continued to advance on our strategic initiatives, while closing the quarter with a strong balance sheet and ample liquidity, despite the pandemic continuing to weigh on our results. Loan volumes reflect difficult YoY comps, mainly in corporates which is in line with market trends and, soft demand conditions.  Mortgages and auto loans continue to perform extremely well, as we again grew above market and gained share while maintaining prudent origination criteria.  We have fully absorbed the negative impact of the pandemic, mainly in consumer loans, credit cards and SMEs and we are well positioned to support our customers on the recovery path ahead.  While loan volumes in these segments show year on year contractions, we expect to see a gradual turnaround moving forward.

Deposits also reflect difficult base effects, mainly in corporates as companies' liquidity needs have normalized compared with year ago levels. By contrast, individual demand deposits continued to expand above 20%, underscoring the success of our loyalty and customer acquisition strategy. In this context, our strategy remains focused on reinforcing loyalty and advancing digitalization. We remain committed to further improving our digital customer journeys and building ecosystems, while keeping a sustained focus on driving cross selling, non-credit products and insurance to support fee income growth.

In terms of asset quality, NPLs have started to decline benefiting from improving conditions for our customers together with write-offs taken mainly in the segments mostly impacted by the pandemic, such as, consumer, credit cards and SME loans. Although provisions increased this quarter due to specific corporate exposures, we estimate that cost of risk has peaked and should start declining from this point onwards. 

During the quarter, our parent company announced that it intends to launch a tender offer for the 8.3% of outstanding shares that it does not currently own in Santander Mexico. Our parent company also stated that it intends to de-list Banco Santander Mexico from the Mexican Stock Exchange and the New York Stock Exchange.  This offer reaffirms our parent company's trust in the country and in our business.

Looking ahead, the recent evidence of a quick recovery in the U.S. supported by a strong fiscal stimulus package and a swift vaccination program has improved GDP expectations for the year. While we anticipate an improvement in activity fueled by the external sector and private consumption, we expect the recovery to be gradual. Under this operational environment, we will continue to work to further strengthen our business by reducing costs, while we make additional headway improving our deposit mix and capitalizing on growth opportunities to become a stronger organization."

VIII.1Q21 Earnings Call Dial-In Information 

Date:	Thursday, April, 29th, 2021
Time:	9:00 a.m. (MCT); 10:00 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=144457
Replay:	Starting: Thursday, April 29th, 2021 at 1:00 p.m. (US ET)
	Ending: Thursday, May 6th, 2021 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: 13718888

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 March 31^st, 2021, Banco Santander México had total assets of Ps.1,748 billion under Mexican Banking GAAP and more than 19.0 million customers. Headquartered in Mexico City, the Company operates 1,352 branches and offices nationwide and has a total of 22,280 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.

FAQ

What were Banco Santander México's net income results for 1Q21?

Banco Santander México reported a net income of Ps.3,279 million for 1Q21, a decrease of 39.4% YoY.

How did the net interest income perform in 1Q21 for BSMX?

The net interest income for Banco Santander México in 1Q21 was Ps.15,585 million, down 7.8% YoY.

What are the provisions for loan losses reported by BSMX for 1Q21?

Banco Santander México reported provisions for loan losses of Ps.7,075 million in 1Q21, a 124.5% increase YoY.

What is the current NPLs ratio for Banco Santander México?

The NPLs ratio for Banco Santander México rose to 2.91% in 1Q21.

What plans does the parent company have regarding BSMX shares?

The parent company intends to launch a tender offer for the 8.3% of outstanding shares and plans to de-list Banco Santander México from stock exchanges.