Banco Santander México Reports Second Quarter 2021 Net Income of Ps.4,713 Million

Rhea-AI Summary

Banco Santander México reported a net income of Ps.4,713 million in 2Q21, marking an 11.4% year-over-year increase and a 43.7% quarter-over-quarter rise. However, cumulative net income for the first half is down 17.1% YoY at Ps.7,992 million. Total assets decreased 6.5% QoQ and 15.3% YoY, while deposits fell 2.9% YoY. Notably, net interest income grew slightly by 1.2% QoQ but fell 1.0% YoY. A 28.4% reduction in provisions for loan losses indicated improved risk management. Digital transactions rose to 41% of total transactions, reflecting ongoing digital banking advancements.

Positive

• Net income increased by 11.4% YoY and 43.7% QoQ in 2Q21.
• Digital customers grew by 11% YoY, with digital transactions now at 41% of total.
• Provisions for loan losses decreased by 28.4% QoQ, indicating better risk management.
• ROE stood at 11.83%, similar to 2Q20 levels.

Negative

• Cumulative net income for 1H21 decreased by 17.1% YoY.
• Total assets down by 15.3% YoY.
• Total loans decreased by 5.4% YoY.
• Deposits contracted by 2.9% YoY.

MEXICO CITY, July 28, 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 six-month periods ending June 30^th, 2021.

Banco Santander México reported net income of Ps.4,713 million in 2Q21, representing increases of 11.4% YoY and 43.7% QoQ. On a cumulative basis, net income for the first half of the year, reached Ps.7,992 million, representing a 17.1% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		2Q21	1Q21	2Q20		%QoQ	%YoY		6M21	6M20		%YoY
Net interest income		15,770	15,585	15,931		1.2	(1.0)		31,355	32,827		(4.5)
Fee and commission, net		4,873	4,902	4,598		(0.6)	6.0		9,775	9,295		5.2
Core revenues		20,643	20,487	20,529		0.8	0.6		41,130	42,122		(2.4)
Provisions for loan losses		5,068	7,075	8,350		(28.4)	(39.3)		12,143	13,515		(10.2)
Administrative and promotional expenses		9,955	9,894	9,599		0.6	3.7		19,849	19,384		2.4
Net income		4,713	3,279	4,230		43.7	11.4		7,992	9,644		(17.1)
Net income per share1		0.70	0.48	0.62		43.7	11.4		1.18	1.42		(17.1)
Balance Sheet Data (Million pesos)		Jun-21	Mar-21	Jun-20		%QoQ	%YoY		Jun-21	Jun-20		%YoY
Total assets		1,634,384	1,748,298	1,929,350		(6.5)	(15.3)		1,634,384	1,929,350		(15.3)
Total loans		710,323	713,989	751,219		(0.5)	(5.4)		710,323	751,219		(5.4)
Deposits		766,663	767,627	789,740		(0.1)	(2.9)		766,663	789,740		(2.9)
Shareholders´ equity		159,941	159,654	146,536		0.2	9.1		159,941	146,536		9.1
Key Ratios (%)		2Q21	1Q21	2Q20		bps QoQ	bps YoY		6M21	6M20		bps YoY
Net interest margin		4.52	4.42	4.48		10	4		4.47	4.93		(46)
Net loans to deposits ratio		89.50	89.76	91.81		(26)	(231)		89.50	91.81		(231)
ROAE		11.83	8.24	11.86		359	(3)		10.03	13.52		(349)
ROAA		1.08	0.73	1.01		35	7		0.92	1.15		(23)
Efficiency ratio		47.59	46.62	40.71		97	688		47.10	42.28		482
Capital ratio		18.91	19.73	16.69		(82)	222		18.91	16.69		222
NPLs ratio		2.87	2.91	2.51		(4)	36		2.87	2.51		36
Cost of Risk		2.75	3.15	3.14		(40)	(39)		2.75	3.14		(39)
Coverage ratio		118.39	120.12	138.81		(173)	—		118.39	138.81		—
Operating Data		Jun-21	Mar-21	Jun-20		%QoQ	%YoY		Jun-21	Jun-20		%YoY
Branches		1,039	1,007	1,050		3.2	(1.0)		1,039	1,050		(1.0)
Branches and offices2		1,352	1,352	1,406		0.0	(3.8)		1,352	1,406		(3.8)
ATMs		9,534	9,497	9,142		0.4	4.3		9,534	9,142		4.3
Customers		19,257,998	19,068,219	18,641,282		1.0	3.3		19,257,998	18,641,282		3.3
Employees		23,512	22,280	20,007		5.5	17.5		23,512	20,007		17.5

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 quarter's bottom line exceeded 2Q20's level by 11% and was 44% higher than in the previous quarter. Although the wide ranging impact of the pandemic continues to affect the comparability of our results, this quarter we delivered a solid performance across the main line items of our P&L: NII and commissions were slightly higher than last year's levels, we maintained tight control of expenses, and cost of risk converged to pre-pandemic levels. Together, this resulted in an ROE of 11.83%, very similar to the second quarter of 2020 and it was achieved despite the excess capital we had accumulated due to the regulatory restriction imposed on dividend payments.

In terms of individual loans, we continue to deliver the best performance among Mexican banks, with growth close to 10% and with market share gains in both mortgage and auto loans. Additionally, it appears we have reached an inflection point in credit cards, as balances have started to show modest growth. In commercial loans, we still reported a relevant contraction of 14%. Practically 60% of this contraction is explained by the reduction in loans to large corporates, with borrowings growing strongly last year when businesses drew down their committed lines of credit as a precautionary measure. By contrast, middle market loans grew compared to previous quarters, and in SMEs we expect to see a better performance in the second half of the year since the entire portfolio is not bound by the support program and we now have a greater risk appetite.

Deposits contracted by almost 3%, but with differentiated behavior. We expanded Demand deposits by 8%, while Term deposits decreased 23%. This market dynamic resulted from the significant reduction in interest rates. It is noteworthy that both Demand and Term deposits from individuals performed better than corporates. The former is in line with our strategy to continue attracting and building scale among individuals.

We continue to benefit from the boost that the pandemic has given banking digitalization. Digital customers grew 11% over the year, with digital transactions now representing 41% of our total transactions, up from 30% a year ago. Although the pandemic and the economic environment are still challenging us, we are making additional headway with our strategy, by continuing to execute with focus and discipline and by keeping intact our ambition to offer the best customer banking experience in Mexico. To that end, we continue to work on strengthening customer loyalty, seeking to consistently improve the quality of service and increase customer satisfaction levels. Further, we have certain plans and launches scheduled for the second half of the year that will take advantage of new digital tools and processes with which we continue to build a stronger franchise and seize the many growth opportunities ahead of us."  

2Q21 Earnings Call Dial-In Information 

Date:	Thursday, July, 29th, 2021
Time:	10:00 a.m. (MCT); 11:00 a.m. (US ET)
Dial-in Numbers:	1-855-327-6837 US & Canada 1-631-891-4304 International & Mexico
Access Code:	Please ask for Santander México Earnings Call
Webcast:	http://public.viavid.com/index.php?id=145735
Replay:	Starting: Thursday, July 29th, 2021 at 2:00 p.m. (US ET)
	Ending: Thursday, August 5th, 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: 10015639

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^th, 2021, Banco Santander México had total assets of Ps.1,634 billion under Mexican Banking GAAP and more than 19.2 million customers. Headquartered in Mexico City, the Company operates 1,352 branches and offices nationwide and has a total of 23,512 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 net income results for the second quarter of 2021?

Banco Santander México reported a net income of Ps.4,713 million in 2Q21.

How did Banco Santander México's net income in 1H21 compare to the previous year?

Cumulative net income for the first half of 2021 reached Ps.7,992 million, down 17.1% YoY.

What is the trend in Banco Santander México's total assets as of June 2021?

Total assets decreased by 15.3% year-over-year.

How did digital transactions change for Banco Santander México?

Digital transactions increased to 41% of total transactions, up from 30% a year ago.

What was the change in provisions for loan losses in 2Q21 for Banco Santander México?

Provisions for loan losses decreased by 28.4% quarter-over-quarter.