Banco Santander México Reports Fourth Quarter 2020 Net Income of Ps.5,480 Million

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Banco Santander México (NYSE: BSMX) announced its 4Q20 financial results, reporting a net income of Ps.5,480 million, up 11.5% YoY and 8.9% QoQ. However, for 12M20, net income decreased by 5.5% YoY to Ps.20,154 million. Key figures include a net interest income of Ps.16,272 million, a slight decline of 2.7% YoY, and total assets increasing by 31.5% YoY. Provisions for loan losses fell significantly by 35.2% QoQ. The bank noted strong performance in mortgages and auto loans despite challenges in the market, with digital transactions accounting for 34% of total transactions.

Positive

• Net income grew by 11.5% YoY and 8.9% QoQ in 4Q20.
• Provisions for loan losses decreased by 35.2% QoQ, indicating improved asset quality.
• Deposits rose by 10.4% YoY, reflecting resilience in individual demand deposits.
• Significant growth in digital transactions, which increased to 34% of total transactions.

Negative

• Net income for 12M20 decreased by 5.5% YoY.
• Net interest income declined by 2.7% YoY.
• Total loans decreased by 1.5% YoY.
• ROAA decreased to 1.34%, down from 1.41% YoY.

MEXICO CITY, Feb. 3, 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 and twelve-month periods ending December 31^st, 2020.

Banco Santander México reported net income of Ps.5,480 million in 4Q20, representing increases of 11.5% YoY and 8.9% QoQ. On a cumulative basis, net income for 12M20 reached Ps.20,154 million, representing a 5.5% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		4Q20	3Q20	4Q19		%QoQ	%YoY		12M20	12M19		%YoY
Net interest income		16,272	16,089	16,727		1.1	(2.7)		65,188	66,353		(1.8)
Fee and commission, net		4,709	4,690	4,325		0.4	8.9		18,694	18,028		3.7
Core revenues		20,981	20,779	21,052		1.0	(0.3)		83,882	84,381		(0.6)
Provisions for loan losses		3,152	4,596	4,862		(31.4)	(35.2)		21,263	18,112		17.4
Administrative and promotional expenses		11,102	10,429	10,344		6.5	7.3		40,915	38,865		5.3
Net income		5,480	5,030	4,916		8.9	11.5		20,154	21,332		(5.5)
Net income per share1		0.81	0.74	0.73		8.9	11.4		2.97	3.14		(5.4)
Balance Sheet Data (Million pesos)		Dec-20	Sep-20	Dec-19		%QoQ	%YoY		Dec-20	Dec-19		%YoY
Total assets		1,856,213	1,858,684	1,411,994		(0.1)	31.5		1,856,213	1,411,994		31.5
Total loans		702,769	735,330	713,680		(4.4)	(1.5)		702,769	713,680		(1.5)
Deposits		764,444	772,984	692,537		(1.1)	10.4		764,444	692,537		10.4
Shareholders´ equity		158,871	151,475	138,695		4.9	14.5		158,871	138,695		14.5
Key Ratios (%)		4Q20	3Q20	4Q19		bps QoQ	bps YoY		12M20	12M19		bps YoY
Net interest margin		4.50	4.50	5.39		0	(89)		4.71	5.61		(90)
Net loans to deposits ratio		88.62	91.78	99.95		(316)	(1,133)		88.62	99.95		(1,133)
ROAE		14.73	13.87	14.88		86	(15)		13.55	16.14		(259)
ROAA		1.34	1.23	1.41		11	(7)		1.23	1.53		(30)
Efficiency ratio		52.06	48.14	47.21		392	485		46.06	45.37		69
Capital ratio		19.01	17.16	16.37		185	264		19.01	16.37		264
NPLs ratio		3.08	2.09	2.28		99	80		3.08	2.28		80
Cost of Risk		2.89	3.13	2.60		(24)	29		2.89	2.60		29
Coverage ratio		116.87	167.94	132.02		—	—		116.87	132.02		—
Operating Data		Dec-20	Sep-20	Dec-19		%QoQ	%YoY		Dec-20	Dec-19		%YoY
Branches		1,013	1,050	1,209		(3.5)	(16.2)2		1,013	1,209		(16.2)2
Branches and offices3		1,350	1,407	1,402		(4.1)	(3.7)		1,350	1,402		(3.7)
ATMs		9,448	9,365	9,015		0.9	4.8		9,448	9,015		4.8
Customers		18,707,976	18,796,611	18,134,468		(0.5)	3.2		18,707,976	18,134,468		3.2
Employees		21,422	20,922	19,975		2.4	7.2		21,422	19,975		7.2

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: "This quarter we concluded an extraordinarily challenging year, delivering solid and robust results in a still very weak and complex operating environment. Despite the small contraction of our loan book, we maintained strong performance levels in mortgages and auto loans, registering historically-high origination levels, while other consumer and commercial loans continued contracting in line with market trends and weak demand conditions. On the other hand, deposits remained resilient, particularly individual demand deposits, which increased over 20%, due in part to our successful loyalty and customer acquisition strategies. Corporate demand deposits also registered double-digit growth, as companies continued favoring liquidity over investments. As well, a prudent balance sheet approach enabled us to maintain ample levels of liquidity and capital, providing meaningful capacity for additional investments in our business and communities. 

In terms of asset quality, we are pleased to report that 75% of the loan portfolio under the payment holiday program, which supports retail and SME customers, remains current. Only 9% are late in their payments, and we have restructured the other 16% of these loans; these levels are better than we initially forecasted and in line with the system. At the same time, we will continue executing the recoveries and restructurings plan that has enabled us to act swiftly and preemptively to effectively respond to adverse developments, while helping customers overcome temporary financial difficulties. Due to the better-than-expected performance in our asset quality, we are confident that the nearly Ps.4 billion of anticipated provisions that were built into second quarter 2020 should be sufficient to address any further deterioration in the portfolio associated with the holiday program. 

Our focus on effectively managing risk in the current environment hasn't displaced our strategic priorities, which remain centered on building a stronger bank for the future. We continue shifting the business mix toward a higher share of retail loans and lower-cost deposits, while advancing our core plan to grow our base of loyal customers even more. Further digitalization of our operations also remains a priority as we continue investing in technology. Part of our digitalization strategy is collaborating with fintechs and other tech companies to produce tools and functionalities within our digital offering that are increasing customer engagement and driving higher transaction level and digital sales. During the most recent quarter, almost half of our total sales were completed through digital channels, compared to one-third only a year ago. Further, digital transactions accounted for 34% of total transactions, compared to 20% the previous year. 

Even though visibility is better than in recent quarters, we expect the speed of an economic recovery will be largely dependent on the pace of the vaccination program.  Because this variable remains uncertain, we anticipate anemic loan demand during most of the year, although likely accelerating during the second half as the vaccination program's progress starts improving consumer and business confidence. Nevertheless, the consistent execution of our strategy, in addition to our bank's strong liquidity and capital position, mean we remain well positioned to continue effectively weathering a still harsh economic environment as well as to capitalize on growth opportunities that will invariably arise as the pandemic subsides and eventually ends."

4Q20 Earnings Call Dial-In Information 

Date:	Thursday, February, 4th, 2020
Time:	10:00 a.m. (MCT); 11:00 p.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=143157
Replay:	Starting: Thursday, February 4th, 2021 at 2:00 p.m. (US ET)
	Ending: Thursday, February 11th, 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: 13715461

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 31^st, 2020, Banco Santander México had total assets of Ps.1,856 billion under Mexican Banking GAAP and more than 18.7 million customers. Headquartered in Mexico City, the Company operates 1,350 branches and offices nationwide and has a total of 21,422 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 financial results for 4Q20?

Banco Santander México reported a net income of Ps.5,480 million for 4Q20, an 11.5% increase YoY.

How did net income for 12M20 compare to the previous year for BSMX?

Net income for 12M20 decreased by 5.5% YoY to Ps.20,154 million.

What was the net interest income reported by BSMX for 4Q20?

Net interest income for 4Q20 was Ps.16,272 million, reflecting a 2.7% YoY decline.

What were the provisions for loan losses in 4Q20 for Banco Santander México?

Provisions for loan losses fell by 35.2% QoQ to Ps.3,152 million in 4Q20.

How much did deposits grow for Banco Santander México in 12M20?

Deposits increased by 10.4% YoY in 12M20.