Banco Santander México Reports Second Quarter 2020 Net Income of Ps.4,230 Million

Rhea-AI Summary

Banco Santander México reported financial results for Q2 2020, revealing a net income of Ps.4,230 million, down 24.6% YoY and 21.9% QoQ. For the first half of 2020, net income reached Ps.9,644 million, an 11.5% decrease from the previous year. Key highlights include a 5.7% decline in net interest income and a significant increase in provisions for loan losses by 61.7% QoQ, amounting to Ps.8,350 million. Despite challenges, total assets grew 7.1% QoQ, and total deposits increased 9.5% YoY. Digital channels saw substantial engagement with digital sales nearly doubling.

Positive

• Total assets grew 7.1% QoQ, reaching Ps.1,929,350 million.
• Total deposits increased 9.5% YoY, driven by individual demand deposits growing 23%.
• Digital sales nearly doubled, now accounting for 44% of total product sales.

Negative

• Net income decreased 24.6% YoY and 21.9% QoQ.
• Provisions for loan losses surged 61.7% QoQ, indicating potential future losses.
• Net interest income fell 5.7% QoQ, impacting overall revenue.

MEXICO CITY, July 29, 2020 /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 six-month periods ending June 30^th, 2020.

Banco Santander México reported net income of Ps.4,230 million in 2Q20, representing decreases of 24.6% YoY and 21.9% QoQ. On a cumulative basis, net income for the first half of the year, reached Ps.9,644 million, representing a 11.5% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		2Q20	1Q20	2Q19		%QoQ	%YoY		6M20	6M19		%YoY
Net interest income		15,931	16,896	16,588		(5.7)	(4.0)		32,827	33,037		(0.6)
Fee and commission, net		4,598	4,697	4,697		(2.1)	(2.1)		9,295	9,123		1.9
Core revenues		20,529	21,593	21,285		(4.9)	(3.6)		42,122	42,160		(0.1)
Provisions for loan losses		8,350	5,165	4,454		61.7	87.5		13,515	8,772		54.1
Administrative and promotional expenses		9,599	9,785	9,482		(1.9)	1.2		19,384	18,738		3.4
Net income		4,230	5,414	5,608		(21.9)	(24.6)		9,644	10,899		(11.5)
Net income per share1		0.62	0.80	0.83		(21.8)	(24.8)		1.42	1.61		(11.7)
Balance Sheet Data (Million pesos)		Jun-20	Mar-20	Jun-19		%QoQ	%YoY		Jun-20	Jun-19		%YoY
Total assets		1,929,350	1,802,210	1,368,187		7.1	41.0		1,929,350	1,368,187		41.0
Total loans		751,219	775,809	700,329		(3.2)	7.3		751,219	700,329		7.3
Deposits		789,740	810,340	721,288		(2.5)	9.5		789,740	721,288		9.5
Shareholders´ equity		146,536	141,041	133,829		3.9	9.5		146,536	133,829		9.5
Key Ratios (%)		2Q20	1Q20	2Q19		bps QoQ	bps YoY		6M20	6M19		bps YoY
Net interest margin		4.48	5.45	5.76		(97)	(128)		4.93	5.67		(74)
Net loans to deposits ratio		91.81	92.94	94.13		(113)	(232)		91.81	94.13		(232)
ROAE		11.86	15.48	17.29		(362)	(543)		13.52	16.80		(328)
ROAA		1.01	1.35	1.63		(34)	(62)		1.15	1.59		(44)
Efficiency ratio		40.71	43.95	44.29		(324)	(358)		42.28	44.55		(227)
Capital ratio		16.69	16.23	16.50		46	19		16.69	16.50		19
NPLs ratio		2.51	2.16	2.23		35	28		2.51	2.23		28
Cost of Risk		3.14	2.65	2.70		49	44		3.14	2.70		44
Coverage ratio		138.81	135.17	136.56		364	225		138.81	136.56		225
Operating Data		Jun-20	Mar-20	Jun-19		%QoQ	%YoY		Jun-20	Jun-19		%YoY
Branches		1,050	1,050	1,220		0.0	(13.9)		1,050	1,220		(13.9)
Branches and offices2		1,406	1,406	1,394		0.0	0.9		1,406	1,394		0.9
ATMs		9,142	9,096	8,749		0.5	4.5		9,142	8,749		4.5
Customers		18,641,282	18,374,959	17,220,259		1.4	8.3		18,641,282	17,220,259		8.3
Employees		20,062	19,638	19,403		2.2	3.4		20,062	19,403		3.4

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.

Héctor Grisi, Banco Santander México's Executive President and CEO, commented: "This past quarter was quite challenging, as we began seeing the impact of the Covid-19 pandemic on the Mexican economy, our business and, of course, our financial results. Despite these adverse developments, our bank remains strong and focused principally on three key areas: first, executing our strategy to support customers and minimize the impact of the pandemic on their finances; second, closely monitoring the asset quality of our portfolio; and third, continue strengthening our capital and liquidity levels, which remain solid and well above minimum regulatory levels.

During the second quarter, loan volumes grew over 7% year-over-year, while we experienced a shift in our portfolio mix toward lower yielding segments. Consumer and SME loans started to contract, in line with market trends. Although asset quality deteriorated only slightly in the quarter, we decided to book precautionary loan loss provisions of Ps.3.9 billion in addition to normal quarterly provisions, in preparation for higher future losses. On the other hand, total deposits continued to expand, increasing 9.5% during the quarter, with individual demand deposits growing at 23%, driven partly by our promotion campaigns and strengthening our liquidity profile.

The solid growth in our retail deposits also reflects our ongoing investments to enhance our bank's value offering, including better digital experiences for customers. In this new environment, the use of digital channels has increased steadily, with digital sales almost doubling and now accounting for 44% of total product sales. These investments have also strengthened customer loyalty, helping us make significant progress in expanding our base of both loyal and digital customers. 

In response to the current health and economic crisis, we have acted swiftly and decisively to fortify our bank, with the goal of mitigating its impact on our operations and customers' finances.  In addition to maintaining protocols and measures that help safeguard our employees and customers, we have continued serving clients with high standards at our branches and via digital channels.  Our bank is well-positioned to help support customers as they recover from this unprecedented crisis. That confidence lies in our strong capital base and high levels of liquidity, which will allow us to effectively meet the complex and temporary challenges that we are facing."

2Q20 Earnings Call Dial-In Information
Date:	Thursday, July, 30st, 2020
Time:	09:00 a.m. (MCT); 10:00 a.m. (US ET)
Dial-in Numbers:	1-866-548-4713 US & Canada 1-323-794-2093 International & Mexico
Access Code:	Please ask for Santander México Earnings Call
Webcast:	http://public.viavid.com/index.php?id=140791
Replay:	Starting: Thursday, July 30st, 2020 at 1:00 p.m. (US ET)
	Ending: Thursday, August 6th, 2020 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: 6173068

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

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 June 30, 2020, Banco Santander México had total assets of Ps.1,929 billion under Mexican Banking GAAP and more than 18.6 million customers. Headquartered in Mexico City, the Company operates 1,406 branches and offices nationwide and has a total of 20,062 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 Q2 2020?

Banco Santander México reported a net income of Ps.4,230 million for Q2 2020.

How much did total deposits increase for Banco Santander México in Q2 2020?

Total deposits increased by 9.5% year-over-year in Q2 2020.

What is the provision for loan losses reported by Banco Santander México for Q2 2020?

Banco Santander México reported provisions for loan losses of Ps.8,350 million, a 61.7% increase QoQ.

What percentage did digital sales account for in Banco Santander México's total product sales?

Digital sales accounted for 44% of total product sales as of Q2 2020.

What was the YoY decrease in Banco Santander México's cumulative net income for the first half of 2020?

The cumulative net income for the first half of 2020 decreased by 11.5% year-over-year.