Banco Santander México Reports Third Quarter 2021 Net Income of Ps.4,843 Million

Rhea-AI Summary

Banco Santander México reported financial results for 3Q21, with a net income of Ps.4,843 million, reflecting a year-over-year decline of 3.7% but a quarterly rise of 2.8%. For the first nine months of 2021, net income totaled Ps.12,835 million, down 12.5% year-over-year. Key highlights include a net interest income of Ps.15,684 million, a 2.5% decrease YoY, and a decrease in total loans by 2.7%. The bank maintained a strong capital ratio of 21.46% and saw a decrease in non-performing loans (NPLs) to 2.85%. The management remains optimistic about gradual recovery in loan volumes.

Positive

• Capital ratio improved to 21.46%, indicating strong financial health.
• Non-performing loans (NPLs) decreased to 2.85%, reflecting better asset quality.
• Consumer and SME loans showing recovery, aided by improving economic conditions.

Negative

• Year-over-year net income decreased by 12.5%, signaling potential concerns for investors.
• Net interest income declined by 2.5% compared to the previous year.
• Total loans fell by 2.7% year-over-year, indicating weak demand.

MEXICO CITY, Oct. 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 nine-month periods ending September 30^th, 2021.

Banco Santander México reported net income of Ps.4,843 million in 3Q21, representing a YoY decrease of 3.7% and a QoQ increase of 2.8%. On a cumulative basis, net income for 9M21 reached Ps.12,835 million, representing a 12.5% YoY decrease.

HIGHLIGHTS
Results (Million pesos)		3Q21	2Q21	3Q20		%QoQ	%YoY		9M21	9M20		%YoY
Net interest income		15,684	15,770	16,089		(0.5)	(2.5)		47,039	48,916		(3.8)
Fee and commission, net		4,447	4,873	4,690		(8.7)	(5.2)		14,222	13,985		1.7
Core revenues		20,131	20,643	20,779		(2.5)	(3.1)		61,261	62,901		(2.6)
Provisions for loan losses		4,385	5,068	4,596		(13.5)	(4.6)		16,528	18,111		(8.7)
Administrative and promotional expenses		10,750	9,955	10,429		8.0	3.1		30,599	29,813		2.6
Net income		4,843	4,713	5,030		2.8	(3.7)		12,835	14,674		(12.5)
Net income per share1		0.71	0.70	0.74		2.8	(3.7)		1.89	2.17		(12.5)
Balance Sheet Data (Million pesos)		Sep-21	Jun-21	Sep-20		%QoQ	%YoY		Sep-21	Sep-20		%YoY
Total assets		1,669,138	1,634,384	1,858,684		2.1	(10.2)		1,669,138	1,858,684		(10.2)
Total loans		715,759	710,323	735,330		0.8	(2.7)		715,759	735,330		(2.7)
Deposits		766,336	766,663	772,984		(0.0)	(0.9)		766,336	772,984		(0.9)
Shareholders´ equity		165,020	159,941	151,475		3.2	8.9		165,020	151,475		8.9
Key Ratios (%)		3Q21	2Q21	3Q20		bps QoQ	bps YoY		9M21	9M20		bps YoY
Net interest margin		4.64	4.52	4.50		12	14		4.53	4.78		(25)
Net loans to deposits ratio		90.27	89.50	91.78		77	(151)		90.27	91.78		(151)
ROAE		11.96	11.83	13.87		13	(191)		10.57	13.49		(292)
ROAA		1.10	1.08	1.23		2	(13)		0.97	1.20		(23)
Efficiency ratio		50.97	47.59	48.14		338	283		48.39	44.16		423
Capital ratio		21.46	18.91	17.16		255	430		21.46	17.16		430
NPLs ratio		2.85	2.87	2.09		(2)	76		2.85	2.09		76
Cost of Risk		2.75	2.75	3.13		0	(38)		2.75	3.13		(38)
Coverage ratio		117.56	118.39	167.94		(83)	—		117.56	167.94		—
Operating Data		Sep-21	Jun-21	Sep-20		%QoQ	%YoY		Sep-21	Sep-20		%YoY
Branches		1,039	1,039	1,050		0.0	(1.0)		1,039	1,050		(1.0)
Branches and offices2		1,350	1,352	1,407		(0.1)	(4.1)		1,350	1,407		(4.1)
ATMs		9,564	9,534	9,365		0.3	2.1		9,564	9,365		2.1
Customers		19,499,552	19,257,998	18,796,611		1.3	3.7		19,499,552	18,796,611		3.7
Employees		24,901	23,512	20,731		5.9	20.1		24,901	20,731		20.1

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 quarter we continued advancing on our strategic priorities while maintaining a strong balance sheet and liquidity positions. Loan volumes continue lagging, mostly among commercial loans, in line with market trends and still soft demand conditions. However, we are optimistic, as we have started seeing a slight sequential upturn in certain loan segments. Another bright spot is our individual loans, which continue outpacing the market, supported by sustained market share gains in mortgages and auto loans. In addition, consumer and SME loans are now showing signs of a gradual sequential recovery, as economic activity starts to gather speed and our risk appetite in these segments has grown correspondingly.

For the third consecutive quarter, our deposits remained relatively stable sequentially. The high liquidity has allowed us to focus on improving our deposit mix by favoring demand deposits over term ones. In fact, our current deposit mix stands at 74% demand and 26% term, our best ratio ever. Both our individual and corporate demand deposits continue expanding at low double-digit rates year-over-year, underscoring the success of our loyalty and customer acquisition strategies as well as our focus on lowering funding costs.

Our asset quality also improved during the quarter, as NPLs continued falling, aided by improving economic conditions in Mexico and our sound loan portfolio, which still reflects our prudent risk management. We are also approaching a normalized level of provisions as our operating environment becomes healthier. Accordingly, our cost of risk has declined to its lowest level in the last five quarters, and we expect it to continue converging gradually to pre-pandemic levels.

Although domestic and global economic conditions are improving, they will likely remain uneven and challenging. Nevertheless, our strategy remains focused on further strengthening client loyalty and driving digitalization, with the same ambition to become the bank providing the best customer experience in Mexico. 

We continue working on growth initiatives by leveraging a host of new digital tools and methodologies and also by further enhancing our internal operating processes. With a focus on prudent and profitable growth, we continue making new investments in the bank's transformation, mainly in IT and digitalization, while seeking efficiencies and maintaining tight cost controls across business lines."

3Q21 Earnings Call Dial-In Information

Date:	Friday, October, 29th, 2021
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=1504898&tp_key=77ba22d97c
Replay:	Starting: Friday, October 29th, 2021 at 1:00 p.m. (US ET)
	Ending: Friday, November 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: 13724245

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, 2021, Banco Santander México had total assets of Ps.1,669 billion under Mexican Banking GAAP and more than 19.4 million customers. Headquartered in Mexico City, the Company operates 1,350 branches and offices nationwide and has a total of 24,901 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:https://www.prnewswire.com/news-releases/banco-santander-mexico-reports-third-quarter-2021-net-income-of-ps4-843-million-301411542.html

SOURCE Banco Santander México, S.A.

FAQ

What were Banco Santander México's financial results for 3Q21 regarding net income?

Banco Santander México reported a net income of Ps.4,843 million for 3Q21, which is a 3.7% decrease year-over-year.

How did Banco Santander México's net income for the first nine months of 2021 compare to last year?

For the first nine months of 2021, the net income was Ps.12,835 million, down 12.5% compared to the same period last year.

What was the capital ratio reported by Banco Santander México in 3Q21?

The bank reported a capital ratio of 21.46% in 3Q21, reflecting strong capital adequacy.

What trends were observed in loan volumes for Banco Santander México?

Loan volumes are lagging, particularly in commercial loans, but there are signs of a slight recovery in certain segments.

What is the current non-performing loans (NPLs) ratio for Banco Santander México?

The NPLs ratio decreased to 2.85% as of 3Q21.