Banco Santander México Reports First Quarter 2023 Net Income of Ps.7,626 Million

Rhea-AI Summary

Banco Santander México reported a significant financial performance for the first quarter of 2023, achieving a net income of Ps.7,626 million, marking a 49.2% year-on-year increase. The total loans saw a growth of 5.2%, primarily driven by individual loans with strong demand in credit cards, payroll, and auto loans. Total deposits increased by 14.6% year-on-year, supported by a rise in term deposits, which grew by nearly 52%. The non-performing loans (NPL) ratio improved to 1.96%, down 83 basis points from the previous year. Despite increased provisions and expenses, the bank's net interest income rose to Ps.20,172 million. Key ratios also showed improvement with a ROAE of 17.92% and a net interest margin of 5.26%, reflecting effective risk management and a solid growth strategy.

Positive

• Net income increased 49.2% YoY to Ps.7,626 million.
• Total loans grew 5.2% YoY, driven by strong credit card, payroll, and auto loan demand.
• Total deposits rose 14.6% YoY, with term deposits up nearly 52%.
• NPL ratio improved to 1.96%, reflecting strong asset quality.
• Net interest income reached Ps.20,172 million, indicating robust revenue growth.
• ROAE increased to 17.92%, showing improved efficiency.
• Net interest margin of 5.26%, supporting profitability.

Negative

• Provisions for loan losses increased despite strong performance.
• Total expenses rose, potentially impacting future profitability.

• Total loans grew 5.2% YoY, with strong increase in individual loans, mainly due to double-digit growth in credit cards, payroll and auto loans.
• In terms of total deposits, we had solid growth of 14.6% YoY, driven by the good performance of term deposits, on the back of a higher interest rate environment. Meanwhile, contribution of individuals in total deposits represented 40.1%, compared with 24.2% in 2016.
• Net income increased 49.2% YoY, mainly due to the solid increase in NII and fees, despite increases in provisions and expenses. Thus, demonstrating that our strategy has significant potential in this current environment.

MEXICO CITY, April 26, 2023 /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, 2023.  

Banco Santander México reported net income of Ps.7,626 million in 1Q23, representing a YoY increase of 49.2% and a QoQ of 21.5%.

HIGHLIGHTS
Results (Million pesos)		1Q23		4Q22	1Q22				%QoQ	%YoY
Net interest income		20,172		19,945	16,416				1.1	22.9
Fee and commission, net		5,290		5,118	4,876				3.4	8.5
Core revenues		25,462		25,063	21,292				1.6	19.6
Provisions for loan losses		4,512		4,712	3,874				(4.2)	16.5
Administrative and promotional expenses		10,352		12,310	9,475				(15.9)	9.3
Net income		7,626		6,277	5,111				21.5	49.2
Net income per share1		1.12		0.92	0.75				21.7	49.3
Balance Sheet Data (Million pesos)		Mar-23		Dec-22	Mar-22				%QoQ	%YoY
Total assets		1,995,143		1,844,169	1,734,268				8.2	15.0
Total loans		810,655		810,081	770,440				0.1	5.2
Deposits		901,955		837,389	787,057				7.7	14.6
Shareholders´ equity		174,175		166,308	166,102				4.7	4.9
Key Ratios (%)		1Q23		4Q22	1Q22				bps QoQ	bps YoY
Net interest margin		5.26		5.28	4.59				(2)	67
Net loans to deposits ratio		87.59		94.39	94.99				(680)	(740)
ROAE		17.92		15.12	12.32				280	560
ROAA		1.59		1.44	1.21				15	38
Efficiency ratio		40.84		48.01	47.28				(717)	(644)
Capital ratio		22.06		19.38	20.21				268	185
NPLs ratio		1.96		1.88	2.79				8	(83)
Cost of Risk		1.62		1.56	2.41				6	(79)
Coverage ratio		146.29		145.82	114.63				47	—
Operating Data		Mar-23		Dec-22	Mar-22				%QoQ	%YoY
Branches		1,034		1,037	1,036				(0.3)	(0.2)
Branches and offices2		1,346		1,345	1,345				0.1	0.1
ATMs		9,781		9,689	9,522				0.9	2.7
Customers		20,282,987		20,238,104	19,032,490				0.2	6.6
Employees		26,461		25,990	25,342				1.8	4.4

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.

Felipe García, Banco Santander México CEO, commented: "I am pleased to share with you that we started the year with very strong results, with a net income of Ps.7.6 billion pesos during 1Q23, slightly more than 49% compared to the same period of the previous year, demonstrating the good results of our strategy, as well as excellent and consistent risk management. Consequently, our ROE was 17.9%, 560 bp higher than the previous year.

During the first quarter, total loans grew more than 5% year on year, with strong performance mainly in individual loans supported by double-digit growth in credit cards, payroll, and auto loans.

In terms of deposits, we had significant growth of 14.6% compared to 1Q22, mainly due to the good performance of term deposits, which grew close to 52% year-on-year, thanks to our strategy focused on increasing the deposit balance of our clients and attracting resources from the competition. However, our main opportunity continues to be increasing our share of individual demand deposits.

On the other hand, the asset quality of the portfolio remained at excellent levels despite the significant growth of individual loans. NPL ratio stood at 1.96%, improving 83 bps compared to 1Q22, while the cost of risk decreased 79 bps annually, to settle at 1.62%. These good results are due to the correct management of the portfolio carried out by the risk team, in coordination with all the bank's business units.

Looking ahead, we will continue advancing in our multiple growth initiatives, promoting the bank's transformation, digitization and simplifying our product offering and processes to offer the best experience to our customers."

I. 1Q23 Earnings Call Dial-In Information

Date:	Thursday, April 27th, 2023
Time:	10:00 a.m. (MCT); 12:00 p.m. (US ET)
Dial-in Numbers:	1-844-826-3035 US & Canada 1-412-317-5195 International & Mexico
Access Code:	Please ask for Santander México Earnings Call
Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1610715&tp_key=3d1cf0b35d
Replay:	Starting: Thursday, April 27th, 2023 at 3:00 p.m. (US ET)
	Ending: Thursday, May 11th, 2023 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: 10178174

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, 2023, Banco Santander México had total assets of Ps.1,995 billion under Mexican Banking GAAP and more than 20.2 million customers. Headquartered in Mexico City, the Company operates 1,346 branches and offices nationwide and has a total of 26,461 employees.

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 figures for Q1 2023?

Banco Santander México reported a net income of Ps.7,626 million for Q1 2023.

How much did total loans grow for Banco Santander México in Q1 2023?

Total loans for Banco Santander México grew by 5.2% year-on-year in Q1 2023.

What was the growth rate of total deposits for Banco Santander México in Q1 2023?

Total deposits increased by 14.6% year-on-year for Banco Santander México in Q1 2023.

What is the NPL ratio for Banco Santander México as of Q1 2023?

The NPL ratio for Banco Santander México improved to 1.96% as of Q1 2023.

What are the key financial highlights for Banco Santander México in Q1 2023?

Key highlights include a net income increase of 49.2%, total loans growing by 5.2%, and a net interest margin of 5.26%.