Banco Santander México Reports Fourth Quarter 2021 Net Income of Ps.5,245 Million

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Banco Santander México (BSMX) reported 4Q21 net income of Ps.5,245 million, a YoY decrease of 4.3% but a QoQ increase of 8.3%. For 12M21, net income fell by 10.3% to Ps.18,080 million. Key metrics included net interest income of Ps.16,046 million, a 1.4% YoY decline, and core revenues of Ps.20,806 million, down 0.8% YoY. Total assets dropped 11.7% YoY to Ps.1,639,652 million. The bank's loan portfolio saw a 6.9% increase in total loans. Despite facing challenges from the pandemic, the bank emphasized strengthening client loyalty and digital product enhancements.

Positive

• Commercial loans increased by nearly 18% YoY.
• Corporate loans grew by 14% YoY.
• Individual loans surpassed market rates, particularly in mortgages and auto loans.
• Demand deposits contributed 72% of total deposits.
• NPLs reached their lowest levels since early 2020.

Negative

• Net income decreased by 10.3% YoY for 12M21.
• Net interest income declined 1.4% YoY.
• Core revenues saw a decrease of 0.8% YoY.
• Total assets fell by 11.7% YoY.

MEXICO CITY, Feb. 3, 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 and twelve -month periods ending December 31^st, 2021.  

Banco Santander México reported net income of Ps.5,245 million in 4Q21, representing a YoY decrease of 4.3% and a QoQ increase of 8.3%. On a cumulative basis, net income for 12M21 reached Ps.18,080 million, representing a 10.3% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		4Q21	3Q21	4Q20		%QoQ	%YoY		12M21	12M20		%YoY
Net interest income		16,046	15,684	16,272		2.3	(1.4)		63,085	65,188		(3.2)
Fee and commission, net		4,760	4,447	4,709		7.0	1.1		18,982	18,694		1.5
Core revenues		20,806	20,131	20,981		3.4	(0.8)		82,067	83,882		(2.2)
Provisions for loan losses		4,289	4,385	3,152		(2.2)	36.1		20,817	21,263		(2.1)
Administrative and promotional expenses		12,636	10,750	11,102		17.5	13.8		43,235	40,915		5.7
Net income		5,245	4,843	5,480		8.3	(4.3)		18,080	20,154		(10.3)
Net income per share1		0.77	0.71	0.81		8.3	(4.3)		2.66	2.97		(10.3)
Balance Sheet Data (Million pesos)		Dec-21	Sep-21	Dec-20		%QoQ	%YoY		Dec-21	Dec-20		%YoY
Total assets		1,639,652	1,669,138	1,856,213		(1.8)	(11.7)		1,639,652	1,856,213		(11.7)
Total loans		750,966	715,759	702,769		4.9	6.9		750,966	702,769		6.9
Deposits		783,118	766,336	764,444		2.2	2.4		783,118	764,444		2.4
Shareholders´ equity		165,894	165,020	158,871		0.5	4.4		165,894	158,871		4.4
Key Ratios (%)		4Q21	3Q21	4Q20		bps QoQ	bps YoY		12M21	12M20		bps YoY
Net interest margin		4.46	4.64	4.50		(18)	(4)		4.51	4.71		(20)
Net loans to deposits ratio		92.94	90.27	88.62		267	432		92.94	88.62		432
ROAE		12.92	11.96	14.73		96	(181)		11.13	13.55		(242)
ROAA		1.20	1.10	1.34		10	(14)		1.03	1.23		(20)
Efficiency ratio		56.00	50.97	52.06		503	394		50.39	46.06		433
Capital ratio		21.56	21.46	19.01		10	255		21.56	19.01		255
NPLs ratio		2.18	2.85	3.08		(67)	(90)		2.18	3.08		(90)
Cost of Risk		2.90	2.75	2.89		15	1		2.90	2.89		1
Coverage ratio		141.38	117.56	116.87		—	—		141.38	116.87		—
Operating Data		Dec-21	Sep-21	Dec-20		%QoQ	%YoY		Dec-21	Dec-20		%YoY
Branches		1,036	1,039	1,013		(0.3)	2.3		1,036	1,013		2.3
Branches and offices2		1,346	1,350	1,350		(0.3)	(0.3)		1,346	1,350		(0.3)
ATMs		9,498	9,564	9,448		(0.7)	0.5		9,498	9,448		0.5
Customers		19,592,102	19,470,357	18,707,976		0.6	4.7		19,592,102	18,707,976		4.7
Employees		25,276	24,901	21,183		1.5	19.3		25,276	21,183		19.3

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: "During the fourth quarter, we maintained a strong balance sheet and liquidity position. We also started to see strengthening loan volumes, mostly boosted by commercial loans, with corporate loans increasing nearly 18% year-over-year while government loans grew 14%. Our individual loans continue outpacing the market, supported by sustained market share gains in mortgages and auto loans. In the consumer segment, we have been seeing signs of a solid sequential recovery, especially in credit cards, as economic activity starts to gather momentum. The segment was also helped by effective cross-selling within our commercial network and by promotional campaigns that we launched throughout the year.

Our deposits continue growing at a solid pace, while our funding mix improves as we favor demand over term deposits. In fact, our current deposit mix, with 72% demand and 28% term, is one of the best blends we have ever achieved. Also, it is worth highlighting that the contribution of individuals has increased considerably in both demand and term deposits. Currently, the contribution of individuals in total deposits represents close to 39%. Additionally, both our individual and corporate demand deposits are still expanding at high single-digit rates versus fourth quarter 2020, underscoring the success of our loyalty and customer acquisition strategies as well as our focus on lowering funding costs even further.

NPLs maintained their downward trend, reaching levels not seen since early 2020, reflecting our prudent risk management and resulting in a healthier loan portfolio. As Mexico's economic activity picks up and our operating environment gains traction, we are pointing to more normalized levels of provisions and cost of risk, and therefore to further improvements in asset quality.

We ended another year during which we again faced the enormous, unpredictable and myriad challenges of the pandemic. Yet we remained resolute, quickly adapting and continuing to support many customers and businesses. As we enter the new year, we continue executing our strategy to strengthen client loyalty and further digitalize our products and operations, with the same ambition to become the bank that provides the best customer experience in Mexico. We also continue implementing many other growth initiatives, making new investments in our bank's transformation, mainly in IT and digitalization, while seeking higher efficiency levels across business lines. Although we made additional progress this year, we are mindful that we must accelerate the pace of transformation."

VIII.4Q21 Earnings Call Dial-In Information 

Date:	Friday, February,4th, 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=1524386&tp_key=b9f6ed27f0
Replay:	Starting: Friday, February 4th, 2022 at 1:00 p.m. (US ET)
	Ending: Friday, February 12th, 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: 13726355

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, 2021, Banco Santander México had total assets of Ps.   1,640 billion under Mexican Banking GAAP and more than 19.5 million customers. Headquartered in Mexico City, the Company operates 1,346 branches and offices nationwide and has a total of 25,276 employees.

We, the undersigned under oath to tell the truth declare that, in the area of our corresponding functions, we prepared the information of Banco Santander México contained in this quarterly report, which to the best of our knowledge reasonably reflects its situation.

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.