Banco Santander México Reports First Quarter 2022 Net Income of Ps.5,111 Million

Rhea-AI Summary

Banco Santander México reported a net income of Ps.5,111 million for 1Q22, showing a significant 55.9% year-over-year increase. The growth was primarily driven by a rise in net interest income and lower provisions for loan losses. Total loans reached Ps.770,440 million, while total deposits grew to Ps.787,057 million. The bank's individual deposit contribution improved to 37.7% from 24.2% in 2016, reflecting enhanced funding strategies. However, net income decreased by 2.6% compared to the previous quarter.

Positive

• Net income increased by 55.9% YoY, reaching Ps.5,111 million.
• Total loans grew to Ps.770,440 million.
• Total deposits reached Ps.787,057 million, marking healthy growth.
• Contribution of individuals in total deposits increased to 37.7%, the best mix in the bank's history.
• Decrease in provisions for loan losses by 45.2% YoY, indicating improved asset quality.

Negative

• Net income decreased by 2.6% QoQ.
• Softer fees and lower market-related income partially offset gains.

• Total loan portfolio growth continued to outpace YoY market performance, highlighting solid performance in consumer and credit card loans. While loan volumes in the commercial portfolio were driven by a double-digit pick-up in middle-market loans, meanwhile SMEs, Corporate and Government loans remained soft.
• Total deposits continued growing at a solid pace while the Bank carefully manages funding costs by improving funding mix by favoring demand deposits over term deposits. Meanwhile, contribution of individuals in total deposits represented 37.7%, compared with 24.2% in 2016, this is the best mix the Bank has ever had versus previous years' first quarters.
• Net income increased 55.9% YoY in 1Q22, mainly due to the solid increase in NII, lower provisions for loan losses and expenses, partially offset by softer fees and lower market related income.

MEXICO CITY, April 28, 2022 /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 ending March 31^st, 2022.   

Banco Santander México reported net income of Ps.5,111 million in 1Q22, representing a YoY increase of 55.9% and a QoQ decrease of 2.6%.  

HIGHLIGHTS
Results (Million pesos)		1Q22	4Q21	1Q21		%QoQ	%YoY
Net interest income		16,416	16,046	15,585		2.3	5.3
Fee and commission, net		4,876	4,760	4,902		2.4	(0.5)
Core revenues		21,292	20,806	20,487		2.3	3.9
Provisions for loan losses		3,874	4,289	7,075		(9.7)	(45.2)
Administrative and promotional expenses		9,475	12,636	9,894		(25.0)	(4.2)
Net income		5,111	5,245	3,279		(2.6)	55.9
Net income per share1		0.75	0.77	0.48		(2.6)	55.7
Balance Sheet Data (Million pesos)		Mar-22	Dec-21	Mar-21		%QoQ	%YoY
Total assets		1,734,268	1,639,652	1,748,298		5.8	(0.8)
Total loans		770,440	750,966	713,989		2.6	7.9
Deposits		787,057	783,118	767,627		0.5	2.5
Shareholders´ equity		166,102	165,894	159,654		0.1	4.0
Key Ratios (%)		1Q22	4Q21	1Q21		bps QoQ	bps YoY
Net interest margin		4.59	4.46	4.42		13	17
Net loans to deposits ratio		94.99	92.94	89.76		205	523
ROAE		12.32	12.92	8.24		(60)	408
ROAA		1.21	1.20	0.73		1	48
Efficiency ratio		47.28	56.00	46.62		(872)	66
Capital ratio		20.21	21.56	19.73		(135)	48
NPLs ratio		2.79	2.18	2.91		—	—
Cost of Risk		2.41	2.90	3.15		(49)	(74)
Coverage ratio		114.63	141.38	120.12		—	—
Operating Data		Mar-22	Dec-21	Mar-21		%QoQ	%YoY
Branches		1,036	1,036	1,007		0.0	2.9
Branches and offices2		1,345	1,346	1,352		(0.1)	(0.5)
ATMs		9,522	9,498	9,497		0.3	0.3
Customers		20,127,593	19,664,670	19,140,296		2.4	5.2
Employees		25,342	25,276	22,280		0.3	13.7

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 began the year maintaining very strong dynamics in our core businesses along with a healthy balance sheet and liquidity positions. Volumes were again boosted by individual loans, which continue outpacing the market, driven by sustained market share gains in mortgages and auto loans. In the consumer segment, we experienced a strong recovery, especially in credit cards. The renewed growth was mainly due to the solid performance of our unique LikeU credit card, which is experiencing excellent market acceptance. Additionally, in auto loans, we are very close to become the number three player in the market, thanks to our attractive commercial offering and the various alliances we have with leading automakers. Bear in mind that we started from scratch our auto loans business not that long ago. In the commercial segment, we are beginning to see a positive trend in loan volumes, with middle-market and government loans growing 10% and 4% sequentially.

We continue growing deposits at a solid pace while carefully managing funding costs by improving our mix in favor of demand over term deposits. In line with our strategy, the contribution of individuals has increased considerably in both categories of deposits. Currently, the contribution of individuals represents close to 38% of our total deposits, compared with 24% in 2016, which is the best mix we have had in the Bank's history compared to previous years' first quarters. At the same time, our individual and corporate demand deposits continue expanding at high single-digit rates, underscoring the success of our loyalty and customer acquisition strategies as well as our continued focus on reducing high deposit costs.

Regarding asset quality, our NPL ratio reflects the implementation of IFRS-9 regulation in Mexico. Despite our higher risk appetite in certain business lines, our portfolio remains healthy, thanks to prudent risk management. Further, provisions should remain stable, as we are not seeing any deterioration that could impact any of our loan portfolio segments. As Mexico's improving operating environment gains more traction, we are pointing to further improvements in asset quality and, therefore to levels of provisions and cost of risk more similar to pre-pandemic levels.

Looking ahead, we will continue executing our many growth initiatives and making new investments in the bank's transformation. We will maintain our strategy focused on strengthening customer loyalty by increasing the digitalization of our products and operations, mainly through innovation and market-leading technology advancements that enable us to significantly enhance the value of our products and digital offerings. Our ambition to become the bank known for superior customer experience in Mexico remains."

VIII.1Q22 Earnings Call Dial-In Information
Date:	Friday, April,29th, 2022
Time:	09:00 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:	https://viavid.webcasts.com/starthere.jsp?ei=1542851&tp_key=087f719f6e
Replay:	Starting: Friday, April 29th, 2022 at 1:00 p.m. (US ET)
	Ending: Friday, May 6th, 2022 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: 13728962

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, 2022, Banco Santander México had total assets of Ps.1,734 billion under Mexican Banking GAAP and more than 20.1 million customers. Headquartered in Mexico City, the Company operates 1,345 branches and offices nationwide and has a total of 25,342 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.

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SOURCE Banco Santander México, S.A.

FAQ

What were Banco Santander México's net income results for 1Q22?

Banco Santander México reported a net income of Ps.5,111 million for 1Q22, a 55.9% increase year-over-year.

How much did total deposits grow for Banco Santander México in 1Q22?

Total deposits grew to Ps.787,057 million in 1Q22.

What contributed to the growth in net income at Banco Santander México?

The growth was primarily driven by increased net interest income and lower provisions for loan losses.

What was the year-over-year increase in total loans for Banco Santander México?

Total loans increased to Ps.770,440 million.

What percentage of total deposits came from individuals at Banco Santander México?

The contribution of individuals in total deposits rose to 37.7%.

How did the net income for Banco Santander México compare to the previous quarter?

Net income decreased by 2.6% compared to the previous quarter.

What was the status of provisions for loan losses in 1Q22 for Banco Santander México?

Provisions for loan losses decreased by 45.2% year-over-year.