Banco Santander México Reports Third Quarter 2020 Net Income of Ps.5,030 Million

Rhea-AI Summary

Banco Santander México (NYSE: BSMX) reported financial results for Q3 and the first nine months of 2020. The bank recorded a net income of Ps.5,030 million for Q3 2020, an 8.8% decline YoY but an 18.9% increase QoQ. Cumulative net income for the first nine months fell 10.6% YoY to Ps.14,674 million. Key metrics included a net interest income of Ps.16,089 million, indicating a 3.0% YoY decrease, while total assets grew by 27.2% YoY to Ps.1,858,684 million. The NPL ratio stood at 2.09%, and the bank maintains strong capital ratios despite challenging conditions.

Positive

• Net income increased by 18.9% QoQ.
• Total assets grew by 27.2% YoY, reaching Ps.1,858,684 million.
• Deposits increased by 13.1% YoY, reflecting strong customer confidence.
• Net interest margin improved slightly QoQ to 4.50%.
• NPL ratio improved to 2.09%, indicating better asset quality.

Negative

• Net income decreased by 8.8% YoY for Q3 2020.
• Core revenues fell by 1.8% YoY.
• Provisions for loan losses surged 36.7% YoY.
• Administrative expenses rose by 4.5% YoY, affecting profitability.
• YoY decline in net income per share by 10.8%.

MEXICO CITY, Oct. 28, 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 nine-month periods ending September 30^th, 2020.

Banco Santander México reported net income of Ps.5,030 million in 3Q20, representing a YoY decrease of 8.8% and a QoQ increase of 18.9%. On a cumulative basis, net income for 9M20 reached Ps.14,674 million, representing a 10.6% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		3Q20	2Q20	3Q19		%QoQ	%YoY		9M20	9M19		%YoY
Net interest income		16,089	15,931	16,589		1.0	(3.0)		48,916	49,626		(1.4)
Fee and commission, net		4,690	4,598	4,580		2.0	2.4		13,985	13,703		2.1
Core revenues		20,779	20,529	21,169		1.2	(1.8)		62,901	63,329		(0.7)
Provisions for loan losses		4,596	8,350	4,478		(45.0)	2.6		18,111	13,250		36.7
Administrative and promotional expenses		10,429	9,599	9,783		8.6	6.6		29,813	28,521		4.5
Net income		5,030	4,230	5,517		18.9	(8.8)		14,674	16,416		(10.6)
Net income per share1		0.74	0.62	0.81		18.9	(8.9)		2.16	2.42		(10.8)
Balance Sheet Data (Million pesos)		Sep-20	Jun-20	Sep-19		%QoQ	%YoY		Sep-20	Sep-19		%YoY
Total assets		1,858,684	1,929,350	1,460,741		(3.7)	27.2		1,858,684	1,460,741		27.2
Total loans		735,330	751,219	697,326		(2.1)	5.4		735,330	697,326		5.4
Deposits		772,984	789,740	683,590		(2.1)	13.1		772,984	683,590		13.1
Shareholders´ equity		151,475	146,536	139,700		3.4	8.4		151,475	139,700		8.4
Key Ratios (%)		3Q20	2Q20	3Q19		bps QoQ	bps YoY		9M20	9M19		bps YoY
Net interest margin		4.50	4.48	5.74		2	(124)		4.78	5.69		(91)
Net loans to deposits ratio		91.78	91.81	98.89		(3)	(711)		91.78	98.89		(711)
ROAE		13.87	11.86	16.63		201	(276)		13.49	16.49		(300)
ROAA		1.23	1.01	1.55		22	(32)		1.20	1.54		(34)
Efficiency ratio		48.14	40.71	45.11		743	303		44.16	44.74		(58)
Capital ratio		17.16	16.69	16.89		47	28		17.16	16.89		28
NPLs ratio		2.09	2.51	2.33		(42)	(24)		2.09	2.33		(24)
Cost of Risk		3.13	3.14	2.62		(1)	51		3.13	2.62		51
Coverage ratio		167.94	138.81	130.82		2,913	3,712		167.94	130.82		3,712
Operating Data		Sep-20	Jun-20	Sep-19		%QoQ	%YoY		Sep-20	Sep-19		%YoY
Branches2		1,050	1,050	1,223		0.0	(14.1)		1,050	1,223		(14.1)
Branches and offices3		1,407	1,406	1,411		0.1	(0.3)		1,407	1,411		(0.3)
ATMs		9,365	9,142	8,866		2.4	5.6		9,365	8,866		5.6
Customers		18,796,611	18,641,282	17,739,345		0.8	6.0		18,796,611	17,739,345		6.0
Employees		20,922	20,062	19,876		4.3	5.3		20,922	19,876		5.3

1)  Accumulated EPS, net of treasury shares (compensation plan) and discontinued operations. Calculated by using weighted number of shares.

2)  Internal reclassification as of 2Q20. The bank continues to operate with the same number of customer offices.

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 delivered robust financial and operating results that were achieved in a still very weak and complex operating environment. Our loan book grew mid-single-digits year-over-year, while demand for mortgages, auto and commercial loans was healthy. Consumer and SME loans, on the other hand, continued contracting, consistent with market trends and weak demand conditions. Deposits have proven resilient, though, registering double-digit growth which, together with our prudent balance sheet strategy, have enabled us to maintain ample levels of liquidity while growing net income around 19% sequentially and increasing ROAE +201 bps to 13.9%. On top of this, we closed 3Q20 with the strongest capital ratio since becoming a listed company. 

In terms of asset quality, we are pleased to report that close to 85% of the loan portfolio under the payment holiday program, which is supporting our retail and SMEs customers, remains current. Only 8% of these loans have missed one or two payments and 7% is being restructured. The program has not had a negative impact, yet, on our NPL ratio. Performance has been better-than-expected and we estimate that the preemptive loan loss provisions of Ps.3.9 billion that we made in the previous quarter are adequate at this time. Furthermore, we continue executing our recoveries and restructuring plan, which has enabled us to act swiftly and preemptively to effectively respond to the challenging operating environment, as well as help customers overcome temporary financial difficulties.

In addition to our focus on managing risk under this environment, we continue advancing our core strategy, such as growing our base of loyal customers. We also continue making new investments under the bank's transformation plan, mainly in IT and digitalization, while seeking efficiencies in other lines and maintaining tight control of costs in support of our bottom line. 

I would like to thank all our employees for the extraordinary work they have done throughout these challenging times. Their commitment to executing our growth plans with excellence, in addition to our bank's strong liquidity and capital positions, make us confident that we are not only well positioned to continue effectively weathering the current economic challenges but to capitalize on growth opportunities that will undoubtedly arise under current circumstances. Our commitment and financial strength also mean our Bank can continue supporting our customers, as we recover together from these unprecedented challenges."

3Q20 Earnings Call Dial-In Information

Date: Thursday, October 29^th, 2020

Time: 10:00 a.m. (MCT); 12:00 p.m. (US ET)

Dial-in Numbers: 1-866-777-2509 US & Canada 1-412-317-5413 International & Mexico

Access Code: Please ask for Santander México Earnings Call

Pre-Register: https://dpregister.com/sreg/10149495/dc20f56520 

Webcast: https://services.choruscall.com/links/bsmx201029.html 

Replay: Starting: Thursday, October 29th, 2020 at 2:00 p.m. (US ET); Ending: Thursday, November 5th, 2020 at 11:59 p.m. (US ET). Dial-in number: 1-877-344-7529 US & Canada; 1-412-317-0088 International & Mexico Access Code: 10149495

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 September 30^th, 2020, Banco Santander México had total assets of Ps.1,859 billion under Mexican Banking GAAP and more than 18.7 million customers. Headquartered in Mexico City, the Company operates 1,407 branches and offices nationwide and has a total of 20,922 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.

View original content:http://www.prnewswire.com/news-releases/banco-santander-mexico-reports-third-quarter-2020-net-income-of-ps5-030-million-301162338.html

SOURCE Banco Santander México, S.A.

FAQ

What were Banco Santander México's Q3 2020 financial results?

Banco Santander México reported a net income of Ps.5,030 million for Q3 2020, an 8.8% decrease YoY but an 18.9% increase QoQ.

How did Banco Santander México's total assets change in Q3 2020?

Total assets increased by 27.2% YoY, reaching Ps.1,858,684 million by the end of September 2020.

What is the NPL ratio reported by Banco Santander México?

The NPL (Non-Performing Loans) ratio for Q3 2020 was 2.09%, showing improvement compared to previous quarters.

How did deposits perform for Banco Santander México in Q3 2020?

Deposits increased by 13.1% YoY, indicating strong customer confidence in the bank.

What was the trend in provisions for loan losses for Banco Santander México?

Provisions for loan losses for Q3 2020 surged by 36.7% YoY, reflecting increased risk management measures.