UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2020
Commission File Number: 000-55899
BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO
(Exact Name of Registrant as Specified in Its Charter)
Avenida Prolongación Paseo de la Reforma 500
Colonia Lomas de Santa Fe
Alcaldía Álvaro Obregón
01219, Ciudad de México
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F | X | Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No | X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | No | X |
BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO
TABLE OF CONTENTS
ITEM | |
1. | First quarter 2020 earnings release of Banco Santander México, S.A., Institución De Banca Múltiple, Grupo Financiero Santander México |
2. | First quarter 2020 earnings presentation of Banco Santander México, S.A., Institución De Banca Múltiple, Grupo Financiero Santander México |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO | |||
By: | /s/ Hector Chávez Lopez | ||
Name: | Hector Chávez Lopez | ||
Title: | Executive Director of Investor Relations |
Date: April 30, 2020
Item 1
TABLE OF CONTENTS
I. | CEO Message / Key Highlights for the Quarter |
II. | Summary of 1Q20 Consolidated Results |
III. | Analysis of 1Q20 Consolidated Results |
IV. | Relevant Events, Transactions and Activities |
V. | Awards and Recognitions |
VI. | Responsible Banking |
VII. | Credit Ratings |
VIII. | 1Q20 Earnings Call Dial-In Information |
IX. | Analyst Coverage |
X. | Definition of Ratios |
XI. | Consolidated Financial Statements |
XII. | Notes to Consolidated Financial Statements |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
1 |
Banco Santander México Reports First Quarter 2020 Net Income of Ps.5,414 Million
- | Net income growth supported by fees and market related income that compensated for the softer net interest income growth and a material non-recurrent increase in provisions |
- | Loan growth mainly driven by commercial loans, mortgages, and payroll loans |
- | Strong deposit growth owing to significant increase in commercial deposits, while individual deposits continue to grow supported by our loyalty strategy |
- | Non material impact from the COVID-19 pandemic; well positioned to face coronavirus impact |
Mexico City – April 29th, 2020, 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 period ending March 31st, 2020.
Banco Santander México reported net income of Ps.5,414 million in 1Q20, representing increases of 2.3% YoY and 10.1% QoQ.
HIGHLIGHTS | ||||||||
Results(Million pesos) | 1Q20 | 4Q19 | 1Q19 | %QoQ | %YoY | |||
Net interest income | 16,896 | 16,727 | 16,449 | 1.0 | 2.7 | |||
Fee and commission, net | 4,697 | 4,325 | 4,426 | 8.6 | 6.1 | |||
Core revenues | 21,593 | 21,052 | 20,875 | 2.6 | 3.4 | |||
Provisions for loan losses | 5,165 | 4,862 | 4,318 | 6.2 | 19.6 | |||
Administrative and promotional expenses | 9,785 | 10,344 | 9,256 | (5.4) | 5.7 | |||
Net income | 5,414 | 4,916 | 5,291 | 10.1 | 2.3 | |||
Net income per share1 | 0.80 | 0.73 | 0.78 | 9.9 | 2.1 | |||
Balance Sheet Data(Million pesos) | Mar-20 | Dec-19 | Mar-19 | %QoQ | %YoY | |||
Total assets | 1,802,210 | 1,411,994 | 1,304,294 | 27.6 | 38.2 | |||
Total loans | 775,809 | 713,680 | 691,226 | 8.7 | 12.2 | |||
Deposits | 810,340 | 692,537 | 702,644 | 17.0 | 15.3 | |||
Shareholders´ equity | 141,041 | 138,695 | 132,366 | 1.7 | 6.6 | |||
Key Ratios(%) | 1Q20 | 4Q19 | 1Q19 | bps QoQ | bps YoY | |||
Net interest margin | 5.45 | 5.39 | 5.58 | 6 | (13) | |||
Net loans to deposits ratio | 92.94 | 99.95 | 95.41 | (701) | (247) | |||
ROAE | 15.48 | 14.88 | 16.40 | 60 | (92) | |||
ROAA | 1.35 | 1.41 | 1.58 | (6) | (23) | |||
Efficiency ratio | 43.95 | 47.21 | 44.81 | (326) | (86) | |||
Capital ratio | 16.23 | 16.37 | 16.90 | (14) | (67) | |||
NPLs ratio | 2.16 | 2.28 | 2.15 | (12) | 1 | |||
Cost of Risk | 2.65 | 2.60 | 2.69 | 5 | (4) | |||
Coverage ratio | 135.17 | 132.02 | 140.06 | 315 | (489) | |||
Operating Data | Mar-20 | Dec-19 | Mar-19 | %QoQ | %YoY | |||
Branches | 1,211 | 1,209 | 1,214 | 0.2 | (0.2) | |||
Branches and offices2 | 1,406 | 1,402 | 1,390 | 0.3 | 1.2 | |||
ATMs | 9,096 | 9,015 | 8,507 | 0.9 | 6.9 | |||
Customers | 18,374,959 | 18,134,468 | 17,034,317 | 1.3 | 7.9 | |||
Employees | 19,638 | 19,975 | 19,291 | (1.7) | 1.8 |
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:“In these unprecedented times, we have responded with determination to the COVID-19 pandemic by focusing on three key priorities: safeguarding the health of our bank’s employees, ensuring the wellbeing of our customers, and strengthening business continuity. We have implemented various measures to help prevent the spread of the coronavirus, such as stricter sanitization procedures and work-from-home protocols using enhanced IT resources. We also initiated a debt relief program for our retail and SME customers, offering deferred payments
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
2 |
on their loan’s principal and interest for up to six months without any penalty or cost. And we have launched ongoing communications campaigns encouraging people to stay at home and expressing our appreciation for the invaluable work being done by healthcare professionals today.
Despite this challenging period, we delivered a solid first quarter with no material impact from the pandemic on our results. Net income grew 2% year-over-year, supported by fees and market related income that compensated for softer net interest income growth and a material non-recurrent increase in provisions, which are not related to higher expected loan losses. Loan and deposit volumes, on the other hand, started to reflect the new environment, with loans expanding 12% during the quarter to a much higher level than we had anticipated. Commercial loans registered a significant spike of 16% year-over-year, as our clients drew upon their committed lines of credit to cope with the expected economic effects of the pandemic. As a result of this lending activity, our commercial deposits increased substantially, expanding total deposits 15% compared to last year. Despite the sudden increase in loan demand in March, our capital and liquidity positions remain at high levels.
I wish to emphasize that we are operating from a position of strength as we enter this crisis period, owning to our robust liquidity and capital positions as well as healthy asset quality. This strength is reflected in our successful issuance of debt this month, which demonstrates the market’s confidence in our bank. Equally important, the steps we have taken to protect our employees and the robust digital platform that we now have in place will help ensure that we continue delivering the high levels of customer service that distinguish our bank. Our aim is to emerge from this crisis as a stronger organization.”
SUMMARY OF FIRST QUARTER 2020 CONSOLIDATED RESULTS
Loan portfolio
Banco Santander México’s total loan portfolio, as of March 2020, increased 12.2% YoY, or Ps.84,583 million, to Ps.775,809 million, and 8.7%, or Ps.62,129 million, on a sequential basis.
During the quarter, the Bank experienced strong loan growth, explained by a 15.8% expansion of the commercial loans where corporate, middle-market and government clients drew on their committed lines of credit generating significant increases in these segments.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
3 |
Deposits
Deposits, which represent 85.8% of Banco Santander México’s total funding1, increased 15.3% YoY in March 2020, and 17.0% sequentially. In turn, term deposits increased 17.0% YoY, while demand deposits increased 14.5% YoY. It is worth noting that deposits from corporates and individuals expanded by 18.2%, and 8.9% YoY, respectively. These increases reflect the results of several campaigns to compensate for the significant increase in corporate loans in March 2020.
In March 2020, term deposits from individuals represented 30.8% of total term deposits, compared with 34.5% in March 2019. Demand deposits from individuals represented 28.4% of total demand deposits, compared with 29.1% in Mar-19.
As a consecuence of the solid deposit growth, the loans-to-deposits ratio stood at 92.94% in March 2020, which compares with 95.41% in March 2019, and 99.95% in December 2019, maintaining a sound funding position.
Net income
Banco Santander México reported 1Q20 net income of Ps.5,414 million, representing increases of 2.3% YoY, and 10.1% QoQ. Higher fee income along with market related income compensated softer net interest income, an significan non-recurrent increase in provisions for loan losses and a higher effective tax rate.
1Total funding includes: deposits, credit instruments issued, bank and other loans and subordinated credit notes.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
4 |
Net income statement | |||||||||||
Million pesos | % Variation | % Variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Net interest income | 16,896 | 16,727 | 16,449 | 1.0 | 2.7 | 16,896 | 16,449 | 2.7 | |||
Provisions for loan losses | (5,165) | (4,862) | (4,318) | 6.2 | 19.6 | (5,165) | (4,318) | 19.6 | |||
Net interest income after provisions for loan losses | 11,731 | 11,865 | 12,131 | (1.1) | (3.3) | 11,731 | 12,131 | (3.3) | |||
Commission and fee income, net | 4,697 | 4,325 | 4,426 | 8.6 | 6.1 | 4,697 | 4,426 | 6.1 | |||
Net gain (loss) on financial assets and liabilities | 883 | 1,461 | 332 | (39.6) | 166.0 | 883 | 332 | 166.0 | |||
Other operating income | (212) | (601) | (551) | (64.7) | (61.5) | (212) | (551) | (61.5) | |||
Administrative and promotional expenses | (9,785) | (10,344) | (9,256) | (5.4) | 5.7 | (9,785) | (9,256) | 5.7 | |||
Operating income | 7,314 | 6,706 | 7,082 | 9.1 | 3.3 | 7,314 | 7,082 | 3.3 | |||
Equity in results of associated companies | 4 | 0 | 0 | 100.0 | 100.0 | 4 | 0 | 100.0 | |||
Operating income before income taxes | 7,318 | 6,706 | 7,082 | 9.1 | 3.3 | 7,318 | 7,082 | 3.3 | |||
Income taxes (net) | (1,904) | (1,790) | (1,791) | 6.4 | 6.3 | (1,904) | (1,791) | 6.3 | |||
Net income | 5,414 | 4,916 | 5,291 | 10.1 | 2.3 | 5,414 | 5,291 | 2.3 | |||
Effective tax rate (%) | 26.02 | 26.69 | 25.29 | 26.02 | 25.29 |
1Q20 vs 1Q19
The 2.3% year-on-year increase in net income was principally driven by:
i) | A Ps.551 million, increase in net gains on financial assets and liabilities, mainly resulting from heightened market volatility and strong client volumes; |
ii) | A 2.7%, or Ps.447 million, increase in net interest income, reflecting lower interest rates and modest growth in in consumer loans (including credit card loans); |
iii) | A 61.5%, or Ps.339 million, decrease in other operating expenses, mostly resulting from higher profit from sale of foreclosed assets, lower expenses related to portfolio recoveries and lower write-offs, partialy offset by an increase of higher premiums paid for SMEs loan guarantees; and |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
5 |
iv) | A 6.1%, or Ps.271 million, increase in net commissions and fees, mainly due to increases in collection and payments, financial advisory services and foreign trade fees. |
The increase in net income was partially offset by:
i) | A 19.6%, or Ps.847 million, increase in provisions for loan losses, mainly due to the coming-up implementation of internal rating based (IRB) model for mortgages; |
ii) | A 5.7%, or Ps.529 million, increase in administrative and promotional expenses, mainly due to higher taxes and duties, depreciation and amortization, professional fees, technology services and personnel expenses; |
iii) | A 6.3%, or Ps.113 million, increase in income taxes, which resulted in a 26.02% effective tax rate in the quarter, compared to 25.29% in 1Q19; |
Gross operating income
Banco Santander México’s gross operating income for 1Q20 totaled Ps.22,476 million, representing an increase of 6.0% YoY, and a decrease of 0.2% QoQ, supported by fee income and market related income, that compensated for the softer net interest income growth.
Gross operating income is broken down as follows.
Breakdown gross operating Income (%) | |||||||
Variation (bps) | |||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | |||
Net Interest Income | 75.17 | 74.30 | 77.56 | 87 | (239) | ||
Net Commissions and Fees | 20.90 | 19.21 | 20.87 | 169 | 3 | ||
Market related revenue | 3.93 | 6.49 | 1.57 | (256) | 236 | ||
Gross Operating Income* | 100.00 | 100.00 | 100.00 |
*Does not include other income
Return on average equity (ROAE)
ROAE for 1Q20 decreased 92 basis points to 15.48%, from 16.40% reported in 1Q19 and an increase of 60 basis points from 14.88% in 4Q19. The annual decrease is a consequence of the 8.4% YoY expansion in shareholders’ equity, which outpaced the 2.3% YoY increase in net income.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
6 |
Strategic initiatives and commercial actions
After concluding the investment program last year and despite the challenging economic environment looking ahead, the Bank’s strategy continues focused in strengthen loyalty of active customers thru cross selling and digitalization and will continue investing in technology as we seek to improve our customer service and customer satisfaction levels.
The main highlights of the quarter include:
§ | Alliance with Mazda Motor, one of the fastest growing automotive groups in the country with 4.4% market share, to be the financial arm of the brand in Mexico. With this alliance, Mazda’s customers will receive their auto financing through “Súper Auto Santander”. This alliance, together with the established ones the Bank has with Peugeot, Suzuki and KTM are starting to position the Bank as a relevant player in auto loans in Mexico. |
§ | Banco Santander México continues enhancing its customer journey through its digital platforms, like the “Hipoteca Online” platform. |
§ | The Bank aims to increase cybersecurity for its customers by launching several strategies and products, like the first “Infoless” credit cards in the market aiming to protect customer’s information when purchasing. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
7 |
Security improvements include dynamic CVV codes for online purchases as well as shuffle plastic number and expiration date, and the integration of chip & pin in new and renewed credit and debit cards.
§ | The bank continues experiencing strong growth in loyal, digital, and mobile customers. |
Customers | ||||||
(Thousands) | % Variation | |||||
Mar-20 | Dec-19 | Mar-19 | QoQ | YoY | ||
Loyal Customers1 | 3,300 | 3,168 | 2,652 | 4.2 | 24.4 | |
Digital Customers2 | 4,448 | 4,170 | 3,227 | 6.7 | 37.8 | |
Mobile Customers3 | 4,215 | 3,803 | 2,784 | 10.8 | 51.4 |
1 | Loyal customers = Clients with non-zero balance and depending on the segment should have between two and four products and between three and ten transactions in the last 90 days. |
2 | Digital customers = Clients with at least one digital transaction per month in SuperNet or SuperMóvil. |
3 | Mobile customers = Clients using Supermóvil and/or Superwallet in the last 30 days. |
Initiatives implemented to mitigate the COVID-19 pandemic
Very early during this COVID-19 pandemic the Bank began implementing a business continuity plan to help prevent the spread of the corona virus by halting non-essential travel, limiting the number of people at gatherings and group events, guaranteeing service from critical suppliers and enhancing sanitization measures at branches, corporate offices, ATMs and contact centers. Santander Mexico has benefited from the experience that the Santander Group is facing in other countries.
Over the past six weeks, Santander Mexico has been implementing a series of measures to help protect the health and safety of its employees, the wellbeing of its customers, as well as maintain business continuity.
Ø | Employees |
The Bank has established work-from-home protocols and divided and assigned teams to alternate work schedules at the branch network. Branch employees have been separated into teams, with 50% of them alternating between the branch and home. These protocols will remain in place for as long as the current health emergency continues. Further, additional IT resources have been channeled into remote operating tools, taking cybersecurity into consideration.
As of today, approximately 90% of corporate employees are working from home, while only essential personnel are working onsite. Approximately 93% of the Bank’s branches are open and 91% of our ATMs are working normally. However, all of the bank’s digital channels and contact centers have been operating normally and are servicing our customers well. The Bank has also been actively promoting customers’ use of digital channels, with very successful results.
Ø | Customers |
Operational readiness has been key for servicing customers through all digital channels and contact centers. To support customers, a debt relief program was launched, offering deferred payments for individuals and SMEs. This program is intended to help clients recover their cash flows and avoid default. Clients that enroll in the relief program will not be reported to the credit bureau. As of April 27th, nearly 406 thousand customers have registered in the program and the total amount of loans under the support program reached Ps.122 billion, approximately. Also, together with two other financial institutions, Santander will participate in the Federal Government's small business support program. The Bank will leverage its expertise developed through its financial inclusion program, Tuiio, to assist the Government in distributing the funds at no cost.
Loan portfolio under support program | ||||
Segment | % of total loans in program | % of the product’s total loan book | ||
Mortgage | 46 | 36 | ||
SMEs | 31 | 52 | ||
Consumer | 15 | 31 | ||
Credit cards | 8 | 17 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
8 |
Additionally, the Bank is offering its customers zero interest payments for purchases at on-line supermarkets, pharmacies, laboratories and hospitals, while its health insurance products offer coverage for COVID-19.
Ø | Government & Regulators |
In order for banks to continue supporting loan demand, authorities have put in place temporary measures that allow banks that fall below the minimum regulatory liquidity ratio level of 100% not to have consequences and exclude the impact of the volatility experienced in March from the liquidity ratio. This will provide financial institutions more flexibility in managing their liquidity and avoid generating distortions in financial markets, while serving customers more swiftly.
To support banks’ capital, the regulator recommended banks to preserve capital by not paying dividends associated with 2019 and 2020 results. Also, banks will be able to use their capital conservation buffer of 2.5% without triggering any corrective regulatory measure. These two actions will allow banks to continue supporting loan demand with greater comfort.
The CNBV has issued temporary accounting rules allowing banks to offer retail borrowers and SMEs a grace period of between 4 to 6 months on their loans. These restructured loans will not require provisions, nor will they be considered non-performing during the grace period. (Please refer to section “Special accounting criteria“ of this report).
The Central Bank announced 10 actions to provide liquidity to the financial markets for up to Ps. 750 billion. Most of these actions are focused to enhance liquidity in the secondary market and allow banks to monetize certain assets in order for them to increase lending to SMEs. The Central Bank is expected to release soon the rules of these programs.
Ø | Community |
The Bank has launched continuous communications campaigns to update our employees on the pandemic and encourage people to stay at home, together with an appreciation campaign aimed at healthcare professionals.
More than Ps.55 million from the Santander Universidades program have been channeled to support digital learning platforms, scholarships and emergency research initiatives.
Finally, the Bank has launched a fund to collect employee donations to aid those in need, and will double the amount collected to make donations of medical equipment.
The bank withdrews its full year 2020 guidance
The Bank’s fundamentals remain strong and our first quarter results are on track with the guidance provided in January. Results have not been materially affected by the pandemic, yet. However, given the unprecedented nature of this health crisis and the uncertainty surrounding its duration, its impact on the future operating and economic environment and the related effects on volume growth, interest rates, asset quality and market related income, the Bank has withdrawn on April 13th its full year 2020 guidance that was provided on January 30th, 2020.
When the degree of uncertainty in respect of COVID-19 eases sufficiently and Santander México feels it is in a more comfortable position to offer reliable performance guidance, the Bank will do so, in line with its ongoing commitment to be transparent with shareholders and the rest of the financial community.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
9 |
ANALYSIS OF FIRST QUARTER 2020 CONSOLIDATED RESULTS
(Amounts expressed in millions of pesos, except where otherwise stated)
Loan portfolio
The evolution of the loan portfolio showed a significant expansion, due to higher increases in corporate, middle-market and government loans.
Portfolio Breakdown | ||||||
Million pesos | % Variation | |||||
Mar-20 | Dec-19 | Mar-19 | QoQ | YoY | ||
Commercial | 504,684 | 444,629 | 435,994 | 13.5 | 15.8 | |
Middle-market | 214,054 | 186,615 | 183,691 | 14.7 | 16.5 | |
Corporates | 122,347 | 94,506 | 95,410 | 29.5 | 28.2 | |
SMEs | 74,587 | 76,344 | 78,229 | (2.3) | (4.7) | |
Government & Financial Entities | 93,696 | 87,165 | 78,664 | 7.5 | 19.1 | |
Individuals | 271,125 | 269,051 | 255,232 | 0.8 | 6.2 | |
Consumer | 115,911 | 117,122 | 112,050 | (1.0) | 3.4 | |
Credit cards | 57,624 | 59,478 | 56,473 | (3.1) | 2.0 | |
Other consumer | 58,287 | 57,644 | 55,577 | 1.1 | 4.9 | |
Mortgages | 155,214 | 151,929 | 143,182 | 2.2 | 8.4 | |
Total | 775,809 | 713,680 | 691,226 | 8.7 | 12.2 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
10 |
Total loan portfolio rose 12.2% YoY, or Ps.84,583 million, to Ps.775,809 million in March 2020. On a sequential basis, total loan portfolio increased 8.7%, or Ps.62,129 million.
Thecommercial loan portfolio is comprised of loans to business and commercial entities, as well as loans to government entities and financial institutions, and represented 65.1% of the total loan portfolio. Excluding loans to government entities and financial institutions, the commercial loan portfolio accounted for 53.0% of the total. Middle-market, Corporate and SME loans represented 27.6%, 15.8% and 9.6% of the total loan portfolio, respectively.
Theindividuals loan portfolio, comprised of mortgages, consumer and credit card loans, represented 34.9% of the total loan portfolio. Mortgage, credit card and consumer loans, represented 20.0%, 7.4% and 7.5% of the total loan portfolio, respectively. The Bank continues with the strategy of prioritizing payroll loans over unsecured personal loans and taking advantage of its strong position in the middle market and SME segments.
Loan portfolio breakdown | ||||||||
Million pesos | ||||||||
Mar-20 | % | Dec-19 | % | Mar-19 | % | |||
Performing loans | ||||||||
Commercial | 498,956 | 64.3 | 439,076 | 61.5 | 430,571 | 62.3 | ||
Individuals | 260,086 | 33.5 | 258,323 | 36.2 | 245,779 | 35.6 | ||
Consumer | 111,592 | 14.4 | 112,663 | 15.8 | 107,959 | 15.6 | ||
Credit cards | 55,236 | 7.1 | 57,014 | 8.0 | 54,170 | 7.8 | ||
Other consumer | 56,356 | 7.3 | 55,649 | 7.8 | 53,789 | 7.8 | ||
Mortgages | 148,494 | 19.1 | 145,660 | 20.4 | 137,820 | 19.9 | ||
Total performing loans | 759,042 | 97.8 | 697,399 | 97.7 | 676,350 | 97.8 | ||
Non-performing loans | ||||||||
Commercial | 5,728 | 0.7 | 5,553 | 0.8 | 5,423 | 0.8 | ||
Individuals | 11,039 | 1.4 | 10,728 | 1.5 | 9,453 | 1.4 | ||
Consumer | 4,319 | 0.6 | 4,459 | 0.6 | 4,091 | 0.6 | ||
Credit cards | 2,388 | 0.3 | 2,463 | 0.3 | 2,303 | 0.3 | ||
Other consumer | 1,931 | 0.2 | 1,996 | 0.3 | 1,788 | 0.3 | ||
Mortgages | 6,720 | 0.9 | 6,269 | 0.9 | 5,362 | 0.8 | ||
Total non-performing loans | 16,767 | 2.2 | 16,281 | 2.3 | 14,876 | 2.2 | ||
Total loan portfolio | ||||||||
Commercial | 504,684 | 65.1 | 444,629 | 62.3 | 435,994 | 63.1 | ||
Individuals | 271,125 | 34.9 | 269,051 | 37.7 | 255,232 | 36.9 | ||
Consumer | 115,911 | 14.9 | 117,122 | 16.4 | 112,050 | 16.2 | ||
Credit cards | 57,624 | 7.4 | 59,478 | 8.3 | 56,473 | 8.2 | ||
Other consumer | 58,287 | 7.5 | 57,644 | 8.1 | 55,577 | 8.0 | ||
Mortgages | 155,214 | 20.0 | 151,929 | 21.3 | 143,182 | 20.7 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
11 |
Total loan portfolio | 775,809 | 100.0 | 713,680 | 100.0 | 691,226 | 100.0 |
As of March 2020, commercial loans increased 15.8% YoY, driven by middle-market, corporate, government and financial institutions loans, which grew 16.5%, 28.2%, 22.1% and 7.5% YoY, respectively, principally from clients that drew upon their committed lines of credit during the last two weeks of March 2020 in response to the COVID-19 pandemic. Note that approximately 30% of the expansion in commercial loans was related to the 22% depreciation of the Mexican peso, which affects U.S. dollar denominated loans that make up 12% of the Bank total portfolio. In contrast, SME loans decreased 4.7% YoY, reflecting a weakening economic environment.
Mortgage loans continued showing robust growth, increasing 8.4% YoY and 2.2% sequentially. The Hipoteca Plus product remains the main driver behind this strong performance, accounting for 63% of total mortgage origination in the quarter. However, mortgage loans were still affected by the run-off of acquired portfolios. Excluding this effect, the mortgage portfolio would have increased 12.6% YoY, higher than average market growth.
Credit card loans increased 2.0% YoY and decreased 3.1% QoQ, due to lower usage and lower balances during the last two weeks of March 2020, affected by the pandemic. The Bank further expanded this product by cross-selling credit cards to its payroll and Hipoteca Plus customers, while also supporting healthy asset quality and good levels of profitability.
The Bank´s strategy of prioritizing payroll loans over unsecured personal loans and leveraging its strong position in the middle market and SME segments is driving robust growth in consumer loans. Payroll loans continued expanding at a solid rate during the quarter, increasing 8.2% YoY and 1.5% QoQ, which was above-market growth. In contrast, personal loans decreased 8.3% YoY and 1.8% QoQ, as the Bank focused on further strengthening its payroll franchise.
Total Deposits
Total deposits in March 2020 were Ps.810,340 million, an increase of 15.3% YoY and 17.0% sequentially. Term deposits increased 17.0% YoY and 12.8% QoQ to Ps.279,246 million. Demand deposits reached Ps.531,094 million, increasing 14.5% YoY and 19.4% sequentially. Deposits from corporates and individuals expanded by 18.2%, and 8.9% YoY, respectively. These increases reflect the results of several campaigns to compensate for the significant increase in corporate loans in March.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
12 |
Net interest income
Net interest income | |||||||||||
Million pesos | % variation | % variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Interest on funds available | 717 | 863 | 859 | (16.9) | (16.5) | 717 | 859 | (16.5) | |||
Interest on margin accounts | 170 | 188 | 308 | (9.6) | (44.8) | 170 | 308 | (44.8) | |||
Interest and yield on securities | 6,454 | 6,657 | 4,634 | (3.0) | 39.3 | 6,454 | 4,634 | 39.3 | |||
Interest and yield on loan portfolio – excluding credit cards | 18,183 | 18,524 | 18,106 | (1.8) | 0.4 | 18,183 | 18,106 | 0.4 | |||
Interest and yield on loan portfolio related to credit cards | 3,850 | 3,898 | 3,514 | (1.2) | 9.6 | 3,850 | 3,514 | 9.6 | |||
Commissions collected on loan originations | 139 | 142 | 132 | (2.1) | 5.3 | 139 | 132 | 5.3 | |||
Interest and premium on sale and repurchase agreements and securities loans | 1,334 | 1,272 | 3,220 | 4.9 | (58.6) | 1,334 | 3,220 | (58.6) | |||
Interest income | 30,847 | 31,544 | 30,773 | (2.2) | 0.2 | 30,847 | 30,773 | 0.2 | |||
Daily average interest- earnings assets | 1,240,567 | 1,241,874 | 1,178,368 | (0.1) | 5.3 | 1,240,567 | 1,178,368 | 5.3 | |||
Interest from customer deposits – demand deposits | (2,423) | (2,760) | (3,013) | (12.2) | (19.6) | (2,423) | (3,013) | (19.6) | |||
Interest from customer deposits – time deposits | (4,421) | (4,450) | (4,302) | (0.7) | 2.8 | (4,421) | (4,302) | 2.8 | |||
Interest from credit instruments issued | (799) | (839) | (706) | (4.8) | 13.2 | (799) | (706) | 13.2 | |||
Interest on bank and other loans | (1,030) | (1,101) | (1,012) | (6.4) | 1.8 | (1,030) | (1,012) | 1.8 | |||
Interest on subordinated capital notes | (413) | (395) | (415) | 4.6 | (0.5) | (413) | (415) | (0.5) | |||
Interest and premium on sale and repurchase agreements and securities loans | (4,865) | (5,272) | (4,876) | (7.7) | (0.2) | (4,865) | (4,876) | (0.2) | |||
Interest expense | (13,951) | (14,817) | (14,324) | (5.8) | (2.6) | (13,951) | (14,324) | (2.6) | |||
Daily average interest-bearing liabilities | 1,114,756 | 1,113,806 | 1,045,069 | 0.1 | 6.7 | 1,114,756 | 1,045,069 | 6.7 | |||
Net interest income | 16,896 | 16,727 | 16,449 | 1.0 | 2.7 | 16,896 | 16,449 | 2.7 |
Net interest income in 1Q20 totaled Ps.16,896 million, increasing 2.7% YoY, or Ps.447 million, and 1.0% QoQ, or Ps.169 million.
The 2.7% YoY increase in net interest income resulted from the combination of:
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
13 |
i) | A 0.2%, or Ps.74 million, increase in interest income, to Ps.30,847 million, which resulted from the combined effect of a 5.3%, or Ps.62,199 million, increase in average interest-earning assets and an 61 basis points decrease in the average interest rate received; and |
ii) | A 2.6%, or Ps.373 million, decrease in interest expense, to Ps.13,951 million, stemming from a 53 basis points decrease in the average interest rate paid and a 6.7%, or Ps.69,687 million, increase in interest-bearing liabilities. |
The net interest margin ratio (NIM), calculated using daily average interest-earning assets for 1Q20, stood at 5.45%, compared to 5.58% in 1Q19 and 5.39% in 4Q19. The YoY decrease in NIM mainly reflects lower interest rates, while the sequential growth reflects modest growth in consumer loans (including credit card loans).
Interest Income
Total average interest earning assets in 1Q20 amounted to Ps.1,240,567 million, increasing 5.3%, or Ps.62,199 million, YoY, mainly driven by 44.6% growth, or Ps.108,553 million, in the average amount of investment in securities, and by 6.3% growth, or Ps.42,762 million, in the average loan portfolio, partly offset by a 52.5% decrease, or Ps.82,617 million, in repurchase agreements, a 20.6% decrease, or Ps.6,291 million, in margin accounts, and by a 0.3% decrease, or Ps.208 million, in funds available. Banco Santander México’s interest earning assets are broken down as follows:
Average Assets (Interest-Earnings Assets) | |||||
Breakdown (%) | |||||
1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | |
Loan portfolio | 57.6 | 59.9 | 59.9 | 56.3 | 58.2 |
Investment in securities | 20.7 | 21.1 | 22.6 | 29.9 | 28.4 |
Repurchase agreements | 13.4 | 8.6 | 6.8 | 5.2 | 6.0 |
Funds available | 5.7 | 8.1 | 8.6 | 7.0 | 5.4 |
Margin accounts | 2.6 | 2.3 | 2.1 | 1.6 | 2.0 |
Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
Banco Santander México’s interest income consists mainly of interest from the loan portfolio and commissions on loan originations, which in 1Q20 generated Ps.22,172 million and accounted for 71.9% of total interest income. The remaining interest income of Ps.8,675 million is broken down as follows: 20.9% from investment in securities, 4.3% from repurchase agreements, 2.3% from funds available, and 0.6% from margin accounts.
Interest income for 1Q20 increased 0.2%, or Ps.74 million YoY, to Ps.30,847 million, mainly reflecting higher interest income from investment in securities and total loan portfolio, which increased 39.3%, or Ps.1,820 million, and 1.9%, or Ps.413 million, respectively, partly offset by a 58.6%, or Ps.1,886 million, decrease in repurchase agreements, a 16.5%, or 142 million, decrease in funds available, and a 44.8%, or 138 million, decrease in margin accounts.
The average interest yield on interest-earning assets in 1Q20 stood at 9.84%, decreasing 61 basis points from 10.45% in 1Q19. Sequentially, the average interest yield on interest-earning assets decreased 10 basis points
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
14 |
from 9.94% in 4Q19. During the quarter, the Mexican Central Bank (Banxico) made two interest rate cuts of 25 and 50 basis points each, totaling 75 basis points.
In 1Q20, the average interest rate on the total loan portfolio stood at 12.07%, a decrease of 66 basis points YoY, reflecting lower interest rates, which declined 119 basis points YoY. The average interest rate on the commercial portfolio stood at 9.41%, a decrease of 97 basis points YoY, while the yield of mortgage loans stood at 9.36%, a decrease of 53 basis points YoY. The average interest rate on the investment in securities portfolio stood at 7.25%, decreasing 37 basis points YoY.
Interest income | |||||||||||
Million Pesos | 1Q20 | 1Q19 | Var YoY | ||||||||
Average Balance | Interest | Yield (%) | Average Balance | Interest | Yield (%) | Average Balance | Interest (%) | Yield (bps) | |||
Funds available | 67,528 | 717 | 4.20 | 67,736 | 859 | 5.07 | (0.3) | (16.5) | (87) | ||
Margin accounts | 24,317 | 170 | 2.77 | 30,608 | 308 | 4.03 | (20.6) | (44.8) | (126) | ||
Investment in securities | 351,965 | 6,454 | 7.25 | 243,412 | 4,634 | 7.62 | 44.6 | 39.3 | (37) | ||
Loan portfolio | 722,091 | 22,033 | 12.07 | 679,329 | 21,620 | 12.73 | 6.3 | 1.9 | (66) | ||
Commissions collected on loan originations | 0 | 139 | n.a. | 0 | 132 | n.a. | n.a. | 5.3 | n.a. | ||
Sale and repurchase agreements and securities loans | 74,666 | 1,334 | 7.07 | 157,283 | 3,220 | 8.19 | (52.5) | (58.6) | (112) | ||
Interest income | 1,240,567 | 30,847 | 9.84 | 1,178,368 | 30,773 | 10.45 | 5.3 | 0.2 | (61) |
Interest income growth from the total loan portfolio was 1.9%, or Ps.413 million, which resulted from the combined effect of a 6.3%, or Ps.42,762 million, rise in average loan portfolio volume, and a 66 basis points decrease in the average interest rate. The increase in interest income from the loan portfolio resulted from the following YoY increases by product:
§ | Commercial: 5.8%, or Ps.24,999 million, with a 9.41% interest yield, which decreased 97 bps; |
§ | Mortgages: 8.1%, or Ps.11,397 million, with a 9.36% interest yield, which decreased 53 bps; |
§ | Credit Cards: 6.0%, or Ps.3,340 million, with a 25.82% interest yield, which increased 56 bps; and |
§ | Consumer: 5.6%, or Ps.3,026 million, with a 26.17% interest yield, which increased 40 bps. |
Interest income from investment in securities increased 39.3%, or Ps.1,820 million, which resulted from the combined effect of an increase of 44.6%, or Ps.108,553 million, in average volume, and a 37 basis points decrease in the average interest rate. Interest income from repurchase agreements decreased 58.6%, or Ps.1,886 million, which resulted from the decrease of 52.5%, or Ps.82,617 million, in average volume, and a 112 basis points decrease in the average interest rate.
Interest expense
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
15 |
Total average interest-bearing liabilities amounted to Ps.1,114,756 million, increasing 6.7%, or Ps.69,687 million YoY, and were driven by increases of 22.9%, or Ps.55,817 million, in repurchase agreements, 1.8%, or Ps.7,276 million, in demand deposits, 2.6%, or Ps.6,939 million, in term deposits, 11.1%, or Ps.5,005 million, in credit instruments issued, and a 2.2%, or Ps.547 million, in subordinated capital notes. These increases were partly offset by a 10.4%, or Ps.5,897 million, decrease in bank and other loans.
Banco Santander México’s interest-bearing liabilities are broken down as follows:
Average liabilities (interest-bearing liabilities) | |||||
Breakdown (%) | |||||
1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | |
Demand deposits | 39.1 | 40.9 | 42.2 | 37.7 | 37.3 |
Time deposits | 25.4 | 25.9 | 26.5 | 24.2 | 24.4 |
Sale and repurchase agreements and securities loans | 23.3 | 19.4 | 18.3 | 26.4 | 26.9 |
Bank and other loans | 5.4 | 6.1 | 5.2 | 4.7 | 4.6 |
Credit instruments issued | 4.3 | 5.2 | 5.3 | 4.8 | 4.5 |
Subordinated capital notes | 2.5 | 2.5 | 2.5 | 2.2 | 2.3 |
Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
Banco Santander México’s interest expense consists mainly of interest paid on customer deposits and repurchase agreements, which in 1Q20 amounted to Ps.6,844 million and Ps.4,865 million, respectively, accounting for 49.1% and 34.9% of interest expenses. The remaining Ps.2,242 million was paid as follows: 7.4% on bank and other loans, 5.7% on credit instruments issued, and 2.9% on subordinated debentures.
Interest expense for 1Q20 decreased 2.6% YoY, or Ps.373 million, to Ps.13,951 million, mainly driven by lower interest expenses on term deposits, credit instruments issued and bank and other loans.
The average interest rate on interest-bearing liabilities decreased 53 basis points to 4.95% in 1Q20. For 1Q20, the average interest rate on the main sources of funding decreased YoY as follows:
§ | 158 basis points in repurchase agreements, at an average interest rate paid of 6.42%; |
§ | 65 basis points in demand deposits, at an average interest rate paid of 2.30%; and |
§ | 24 basis points in subordinated debentures, at an average interest rate paid of 6.29%. |
Interest expense | |||||||||||
Million pesos | 1Q20 | 1Q19 | Var YoY | ||||||||
Average Balance | Interest | Yield (%) | Average Balance | Interest | Yield (%) | Average Balance | Interest (%) | Yield (bps) | |||
Demand deposits | 415,992 | 2,423 | 2.30 | 408,716 | 3,013 | 2.95 | 1.8 | (19.6) | (65) |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
16 |
Time deposits | 272,213 | 4,421 | 6.42 | 265,274 | 4,302 | 6.49 | 2.6 | 2.8 | (7) | ||
Credit instruments issued | 50,174 | 799 | 6.30 | 45,169 | 706 | 6.25 | 11.1 | 13.2 | 5 | ||
Bank and other loans | 50,824 | 1,030 | 8.02 | 56,721 | 1,012 | 7.14 | (10.4) | 1.8 | 88 | ||
Subordinated capital notes | 25,984 | 413 | 6.29 | 25,437 | 415 | 6.53 | 2.2 | (0.5) | (24) | ||
Sale and repurchase agreements and securities loans | 299,569 | 4,865 | 6.42 | 243,752 | 4,876 | 8.00 | 22.9 | (0.2) | (158) | ||
Interest expense | 1,114,756 | 13,951 | 4.95 | 1,045,069 | 14,324 | 5.48 | 6.7 | (2.6) | (53) |
Increases in retail deposits continue to reflect the Bank’s focus on driving profitability in its deposit base. The average balance of term deposits expanded 2.6% YoY, while the average balance of demand deposits increased 1.8% YoY. Interest paid on term deposits increased 2.8% YoY, and interest paid on demand deposits decreased 19.6% YoY.
Provisions for loan losses and asset quality
During 1Q20, provisions for loan losses amounted to Ps.5,165 million, which represented an increase of 19.6%, or Ps.847 million, YoY, and a 6.2%, or Ps.303 million, on a sequential basis, these increases were principally due to the implementation of the Bank internal ratings based (IRB) model for mortgages, which were partially offset by a reversal of provisions in the corporate and investment banking segment and financial institutions as the parallel excercise of internal ratings based (IRB) finalized.
Loan Loss Reserves | |||||||
Million pesos | % Variation | ||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | |||
Commercial | 784 | 1,704 | 1,069 | (54.0) | (26.7) | ||
Consumer | 3,171 | 3,010 | 3,090 | 5.3 | 2.6 | ||
Mortgages | 1,210 | 147 | 159 | 723.6 | 661.2 | ||
Total | 5,165 | 4,862 | 4,318 | 6.2 | 19.6 |
Cost of Risk (%) | ||||||
Variation (bps) | ||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | ||
Commercial | 1.10 | 1.20 | 1.19 | (10) | (9) | |
Consumer | 10.55 | 10.57 | 10.62 | (2) | (7) | |
Mortgages | 1.23 | 0.53 | 0.95 | 70 | 28 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
17 |
Total | 2.65 | 2.60 | 2.69 | 5 | (4) |
Non-performing loans at March 2020 increased Ps.1,891 million YoY, or 12.7%, to Ps.16,767 million, and Ps.486 million, or 3.0% on a sequential basis. The NPL ratio for March 2020 stood at 2.16%, and remained flat from the 2.15% reported in March 2019. Sequentially, the NPL ratio decreased 12 basis points from 2.28% in December 2019.
The YoY increase in non-performing loans was due to an increase of 25.3%, or Ps.1,358 million, in mortgage loans, together with a 5.6%, or Ps.305 million, increase in commercial loans and a 5.6%, or Ps.228 million, in consumer loans (including credit cards). The increase in mortgage loans was due to a lower base in March 2019, owing to the sale of a Ps.1 billion non-performing loan portfolio.
NPLs for the mortgage loan portfolio increased 59 basis points YoY and 20 basis points sequentially. Consumer loan NPLs (including credit cards) increased 8 basis point YoY and decreased 8 basis points QoQ. At the same time, commercial loan NPLs decreased 11 basis point YoY and 12 basis points sequentially.
The breakdown of the non-performing loan portfolio is as follows: mortgage loans 40.1%, commercial loans 34.1% and consumer loans (including credit cards) 25.8%.
Non-Performing loan ratio (%) | ||||||
Variation (bps) | ||||||
Mar-20 | Dec-19 | Mar-19 | QoQ | YoY | ||
Commercial | 1.13 | 1.25 | 1.24 | (12) | (11) | |
Individuals | ||||||
Consumer | 3.73 | 3.81 | 3.65 | (8) | 8 | |
Credit Card | 4.14 | 4.14 | 4.08 | 0 | 6 | |
Other consumer | 3.31 | 3.46 | 3.22 | (15) | 9 | |
Mortgages | 4.33 | 4.13 | 3.74 | 20 | 59 | |
Total | 2.16 | 2.28 | 2.15 | (12) | 1 |
The aforementioned variations in non-performing loans led to an NPL ratio of 2.16% in March 2020, increasing 1 basis points from 2.15% in March 2019 and a decrease of 12 basis point compared to the 2.28% reported in December 2019. The current NPL ratio reflects Banco Santander México’s strong focus on prudent risk management and continuous focus of loan portfolio origination.
Finally, the coverage ratio for March 2020 stood at 135.17%, a decrease from 140.06% in March 2019 and an increase from 132.02% in December 2019.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
18 |
Commission and fee income, net
Commission and fee income, net | |||||||||||
Million pesos | % Variation | % Variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Commission and fee income | |||||||||||
Debit and credit card | 2,276 | 2,520 | 2,262 | (9.7) | 0.6 | 2,276 | 2,262 | 0.6 | |||
Account management | 389 | 379 | 333 | 2.6 | 16.8 | 389 | 333 | 16.8 | |||
Collection services | 855 | 715 | 729 | 19.6 | 17.3 | 855 | 729 | 17.3 | |||
Investment funds | 394 | 404 | 370 | (2.5) | 6.5 | 394 | 370 | 6.5 | |||
Insurance | 1,231 | 1,277 | 1,160 | (3.6) | 6.1 | 1,231 | 1,160 | 6.1 | |||
Purchase-sale of securities and money market transactions | 249 | 218 | 189 | 14.2 | 31.7 | 249 | 189 | 31.7 | |||
Checks trading | 53 | 57 | 63 | (7.0) | (15.9) | 53 | 63 | (15.9) | |||
Foreign trade | 399 | 298 | 318 | 33.9 | 25.5 | 399 | 318 | 25.5 | |||
Financial advisory services | 436 | 154 | 356 | 183.1 | 22.5 | 436 | 356 | 22.5 | |||
Other | 226 | 228 | 236 | (0.9) | (4.2) | 226 | 236 | (4.2) | |||
Total | 6,508 | 6,250 | 6,016 | 4.1 | 8.2 | 6,508 | 6,016 | 8.2 | |||
Commission and fee expense | |||||||||||
Debit and credit card | (995) | (1,055) | (922) | (5.7) | 7.9 | (995) | (922) | 7.9 | |||
Investment funds | 0 | 0 | 0 | 0.0 | 0.0 | 0 | 0 | 0.0 | |||
Insurance | (32) | (35) | (23) | (8.6) | 39.1 | (32) | (23) | 39.1 | |||
Purchase-sale of securities and money market transactions | (39) | (32) | (28) | 21.9 | 39.3 | (39) | (28) | 39.3 | |||
Checks trading | (11) | (8) | (8) | 37.5 | 37.5 | (11) | (8) | 37.5 | |||
Financial advisory services | (1) | (33) | (11) | (97.0) | (90.9) | (1) | (11) | (90.9) | |||
Bank Correspondents | (208) | (208) | (189) | 0.0 | 10.1 | (208) | (189) | 10.1 | |||
Other | (525) | (554) | (409) | (5.2) | 28.4 | (525) | (409) | 28.4 | |||
Total | (1,811) | (1,925) | (1,590) | (5.9) | 13.9 | (1,811) | (1,590) | 13.9 | |||
Commission and fee income, net | |||||||||||
Debit and credit card | 1,281 | 1,465 | 1,340 | (12.6) | (4.4) | 1,281 | 1,340 | (4.4) | |||
Account management | 389 | 379 | 333 | 2.6 | 16.8 | 389 | 333 | 16.8 | |||
Collection services | 855 | 715 | 729 | 19.6 | 17.3 | 855 | 729 | 17.3 | |||
Investment funds | 394 | 404 | 370 | (2.5) | 6.5 | 394 | 370 | 6.5 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
19 |
Insurance | 1,199 | 1,242 | 1,137 | (3.5) | 5.5 | 1,199 | 1,137 | 5.5 | |||
Purchase-sale of securities and money market transactions | 210 | 186 | 161 | 12.9 | 30.4 | 210 | 161 | 30.4 | |||
Checks trading | 42 | 49 | 55 | (14.3) | (23.6) | 42 | 55 | (23.6) | |||
Foreign trade | 399 | 298 | 318 | 33.9 | 25.5 | 399 | 318 | 25.5 | |||
Financial advisory services | 435 | 121 | 345 | 259.5 | 26.1 | 435 | 345 | 26.1 | |||
Bank Correspondents | (208) | (208) | (189) | 0.0 | 10.1 | (208) | (189) | 10.1 | |||
Other | (299) | (326) | (173) | (8.3) | 72.8 | (299) | (173) | 72.8 | |||
Total | 4,697 | 4,325 | 4,426 | 8.6 | 6.1 | 4,697 | 4,426 | 6.1 |
In 1Q20, net commission and fee income totaled Ps.4,697 million, increasing 6.1% YoY, or Ps.271 million, and 8.6%, or Ps.372 million, QoQ. On a yearly basis, commission and fee income increased 8.2%, or Ps.492 million, while commission and fee expense increased 13.9%, or Ps.221 million.
The main contributors to net commissions and fees were credit and debit card fees, which accounted for 27.3% of the total, followed by insurance fees and collection services fees, which accounted for 25.5% and 18.2% of total commissions and fees, respectively.
Net commisions and fees | ||||
Breakdown (%) | ||||
1Q20 | 4Q19 | 1Q19 | ||
Credit cards | 27.3 | 33.9 | 30.3 | |
Insurance | 25.5 | 28.7 | 25.7 | |
Collection services | 18.2 | 16.5 | 16.5 | |
Financial advisory services | 9.3 | 2.8 | 7.8 | |
Investment funds | 8.4 | 9.3 | 8.4 | |
Foreign trade | 8.5 | 6.9 | 7.2 | |
Account management | 8.3 | 8.8 | 7.5 | |
Purchase-sale of securities and money market transactions | 4.5 | 4.3 | 3.6 | |
Checks trading | 0.9 | 1.1 | 1.2 | |
Bank correspondents | (4.5) | (4.8) | (4.3) | |
Other | (6.4) | (7.5) | (3.9) | |
Total | 100.0 | 100.0 | 100.0 |
Net commissions and fees rose 6.1% YoY in 1Q20, mostly as a result of the following increases:
i) | 17.3%, or Ps.126 million, in collection and payments, and an increase of 16.8%, or Ps.56 million, in account management, mainly a result of Banco Santander México’s continued focus on being an integral part of its clients’ liquidity management efforts, which led to increase transactional activity ; |
ii) | 26.1%, or Ps.90 million, in financial advisory services, due to higher transactions in the market; |
iii) | 25.5%, or Ps.81 million, in foreign trade; |
iv) | 5.5%, or Ps.62 million, in insurance fees, driven by strong cross-selling opportunities among the Bank’s mortgage and payroll customers, along with the performance of the Bank’s digital car insurance platform; and |
v) | 30.4%, or Ps.49 million, in purchase-sale of securities and money market transactions. |
These positive contributions to net commissions and fees were partly offset by the following decreases:
i) | 72.8%, or 126 million, in other commissions and fees paid; and |
ii) | 4.4%, or Ps.59 million, in debit and credit card fees, affected by lower usage levels and the negative effect of the peso’s depreciation which affects U.S. dollar denominated fees paid; |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
20 |
Net gain (loss) on financial assets and liabilities
Net gain (loss) on financial assets and liabilities | |||||||||||
Million pesos | % variation | % variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Valuation | |||||||||||
Foreign exchange | (3,472) | 433 | 23 | (901.8) | (15,195.7) | (3,472) | 23 | (15,195.7) | |||
Derivatives | 2,140 | (128) | 2,545 | 1,771.9 | (15.9) | 2,140 | 2,545 | (15.9) | |||
Equity securities | (921) | (86) | 80 | 970.9 | (1,251.3) | (921) | 80 | (1,251.3) | |||
Debt instruments | 554 | (1,473) | (47) | 137.6 | 1,278.7 | 554 | (47) | 1,278.7 | |||
Valuation result | (1,699) | (1,254) | 2,601 | 35.5 | (165.3) | (1,699) | 2,601 | (165.3) | |||
Purchase / sale of securities | |||||||||||
Foreign exchange | 1,444 | 389 | 198 | 271.2 | 629.3 | 1,444 | 198 | 629.3 | |||
Derivatives | 495 | 2,177 | (3,003) | (77.3) | 116.5 | 495 | (3,003) | 116.5 | |||
Equity securities | 199 | 162 | 47 | 22.8 | 323.4 | 199 | 47 | 323.4 | |||
Debt instruments | 444 | (13) | 489 | 3,515.4 | (9.2) | 444 | 489 | (9.2) | |||
Purchase -sale result | 2,582 | 2,715 | (2,269) | (4.9) | 213.8 | 2,582 | (2,269) | 213.8 | |||
Total | 883 | 1,461 | 332 | (39.6) | 166.0 | 883 | 332 | 166.0 |
In 1Q20, Banco Santander México reported a Ps.883 million net gain from financial assets and liabilities, which compares with a gain of Ps.332 million in 1Q19 and a gain of Ps.1,461 million in 4Q19.
The Ps.883 million net gain from financial assets and liabilities in the quarter is mostly a result of:
i) | A Ps.2,582 million purchase-sale gain related to gains of Ps.1,444 million, Ps.495 million, Ps.444 million and Ps.199 million in foreign exchange, derivative instruments, debt instruments and equity securities, respectively; and |
ii) | A Ps.1,699 million valuation loss, which resulted from losses of Ps.3,472 million and Ps.921 million in foreign exchange and equity securities, respectively. These losses were partly offset by gains of Ps.2,140 million and Ps.554 million in derivatives and debt instruments, respectively. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
21 |
Other operating expense
Other operating income | |||||||||||
Million pesos | % variation | % variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Cancellation of liabilities and reserves | 80 | 260 | 89 | (69.2) | (10.1) | 80 | 89 | (10.1) | |||
Interest on personnel loans | 73 | 74 | 73 | (1.4) | 0.0 | 73 | 73 | 0.0 | |||
Allowance for losses on foreclosed assets | (5) | (16) | (40) | (68.8) | (87.5) | (5) | (40) | (87.5) | |||
Profit from sale of foreclosed assets | 275 | 20 | 31 | 1,275.0 | 787.1 | 275 | 31 | 787.1 | |||
Technical advisory and technology services | 21 | 25 | 20 | (16.0) | 5.0 | 21 | 20 | 5.0 | |||
Portfolio recovery legal expenses and costs | (122) | (352) | (253) | (65.3) | (51.8) | (122) | (253) | (51.8) | |||
Premiums paid on guarantees for SMEs loans | (298) | (308) | (183) | (3.2) | 62.8 | (298) | (183) | 62.8 | |||
Write-offs and bankruptcies | (220) | (472) | (310) | (53.4) | (29.0) | (220) | (310) | (29.0) | |||
Provision for legal and tax contingencies | (91) | (93) | (68) | (2.2) | 33.8 | (91) | (68) | 33.8 | |||
Others | 75 | 261 | 90 | (71.3) | (16.7) | 75 | 90 | (16.7) | |||
Total | (212) | (601) | (551) | (64.7) | (61.5) | (212) | (551) | (61.5) |
Other operating expenses in 1Q20 totaled Ps.212 million, down from Ps.551 million in 1Q19 and Ps.601 million in 4Q19.
The 61.5%, or Ps.339 million, YoY decrease, in other operating expenses in 1Q20 was mainly driven by higher profit from sale of foreclosed assets of Ps.244 million, lower expenses related to portfolio recoveries of Ps.131 million and lower write-offs of Ps.90 million. These positive effects, were partly offset by higher premiums paid on guarantees for SMEs loan portfolio of Ps.115 million.
Administrative and promotional expenses
Administrative and promotional expenses consist of personnel costs, such as payroll and benefits, promotion and advertising expenses, and other general expenses. Personnel expenses consist mainly of salaries, social security contributions, bonuses and a long-term incentive plan for the Bank’s executives. Other general expenses are mainly related to technology and systems, administrative services - mainly outsourced in the areas of information technology - taxes and duties, professional fees, contributions to IPAB, rental of properties
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
22 |
and hardware, advertising and communication, surveillance and cash courier services, and expenses related to maintenance, conservation and repair, among others.
Administrative and promotional expenses | |||||||||||
Million pesos | % variation | % variation | |||||||||
1Q20 | 4Q19 | 1Q19 | QoQ | YoY | 3M20 | 3M19 | 20/19 | ||||
Salaries and employee benefits | 3,922 | 3,843 | 3,865 | 2.1 | 1.5 | 3,922 | 3,865 | 1.5 | |||
Credit card operation | 49 | 84 | 78 | (41.7) | (37.2) | 49 | 78 | (37.2) | |||
Professional fees | 166 | 326 | 89 | (49.1) | 86.5 | 166 | 89 | 86.5 | |||
Leasehold | 644 | 652 | 597 | (1.2) | 7.9 | 644 | 597 | 7.9 | |||
Promotional and advertising expenses | 190 | 219 | 251 | (13.2) | (24.3) | 190 | 251 | (24.3) | |||
Taxes and duties | 699 | 483 | 484 | 44.7 | 44.4 | 699 | 484 | 44.4 | |||
Technology services (IT) | 998 | 1,174 | 939 | (15.0) | 6.3 | 998 | 939 | 6.3 | |||
Depreciation and amortization | 1,015 | 1,125 | 878 | (9.8) | 15.6 | 1,015 | 878 | 15.6 | |||
Contributions to IPAB | 834 | 841 | 812 | (0.8) | 2.7 | 834 | 812 | 2.7 | |||
Cash protection | 360 | 349 | 323 | 3.2 | 11.5 | 360 | 323 | 11.5 | |||
Others | 908 | 1,248 | 940 | (27.2) | (3.4) | 908 | 940 | (3.4) | |||
Total | 9,785 | 10,344 | 9,256 | (5.4) | 5.7 | 9,785 | 9,256 | 5.7 |
Banco Santander México’s administrative and promotional expenses are broken down as follows:
Administrative and promotional expenses | |||
Breakdown (%) | |||
1Q20 | 4Q19 | 1Q19 | |
Personnel | 40.1 | 37.2 | 41.8 |
Depreciation and amortization | 10.4 | 10.9 | 9.5 |
Technology services (IT) | 10.2 | 11.3 | 10.1 |
Others | 9.3 | 12.0 | 10.2 |
IPAB | 8.5 | 8.1 | 8.8 |
Taxes and duties | 7.1 | 4.7 | 5.2 |
Leasehold | 6.6 | 6.3 | 6.4 |
Cash protection | 3.7 | 3.4 | 3.5 |
Promotional and advertising expenses | 1.9 | 2.1 | 2.7 |
Professional fees | 1.7 | 3.2 | 1.0 |
Credit card operation | 0.5 | 0.8 | 0.8 |
Total | 100.0 | 100.0 | 100.00 |
Administrative and promotional expenses in 1Q20 totaled Ps.9,785 million, compared to Ps.9,256 million in 1Q19 and Ps.10,344 million in 4Q19, increasing 5.7% YoY and decreasing 5.4% QoQ, reflecting the amortization of strategic investments to enhance the Bank’s operating infrastructure and drive digitalization.
The 5.7%, or Ps.529 million, YoY increase in administrative and promotional expenses was mainly due to the following increases:
i) | 44.4%, or Ps.215 million, in taxes and duties; |
ii) | 15.6%, or Ps.137 million, in depreciation and amortization; |
iii) | 86.5%, or Ps.77 million, in professional fees; |
iv) | 6.3%, or Ps.59 million, in technology services; |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
23 |
v) | 1.5%, or Ps.57 million, in salaries and employee benefits; and |
vi) | 7.9%, or Ps.47 million, in rents. |
These increases were partly offset by the following decrease:
i) | 24.3%, or Ps.61 million, in promotional and advertising expenses. |
The efficiency ratio for the quarter decreased 86 basis points YoY and 326 basis points QoQ to 43.95%.
The recurrence ratio for 1Q20 was 53.56%, up from 52.83% in 1Q19 and higher than the 46.91% reported in 4Q19.
Profit before taxes
Profit before taxes in 1Q20 was Ps.7,318 million, reflecting increases of 3.3%, or Ps.236 million, YoY and 9.1%, or Ps.612 million, QoQ.
Income taxes
In 1Q20, Banco Santander México reported a tax expense of Ps.1,904 million compared to Ps.1,791 million in 1Q19 and Ps.1,790 million in 4Q19. The effective tax rate for the quarter was 26.02%, compared to 25.29% reported in 1Q19 and 26.69% in 4Q19.
Capitalization and liquidity
Capitalization | ||||||
Million pesos | Mar-20 | Dec-19 | Mar-19 | |||
CET1 | 90,288 | 90,816 | 90,260 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
24 |
Tier 1 | 102,020 | 100,236 | 99,934 | |||
Tier 2 | 30,487 | 24,847 | 25,145 | |||
Total Capital | 132,507 | 125,083 | 125,080 | |||
Risk-weighted assets | ||||||
Credit risk | 540,382 | 536,527 | 520,762 | |||
Credit, market and operational risk | 816,477 | 764,093 | 740,269 | |||
Credit risk ratios: | ||||||
CET1 (%) | 16.71 | 16.93 | 17.33 | |||
Tier 1 (%) | 18.88 | 18.68 | 19.19 | |||
Tier 2 (%) | 5.64 | 4.63 | 4.83 | |||
Capitalization ratio (%) | 24.52 | 23.31 | 24.02 | |||
Total capital ratios: | ||||||
CET1 (%) | 11.06 | 11.89 | 12.19 | |||
Tier 1 (%) | 12.50 | 13.12 | 13.50 | |||
Tier 2 (%) | 3.73 | 3.25 | 3.40 | |||
Capitalization ratio (%) | 16.23 | 16.37 | 16.90 |
Banco Santander México’s capital ratio at March 2020 was 16.23%, compared to 16.90% and 16.37% at March 2019 and December 2019, respectively. The 16.23% capital ratio was comprised of 11.06% of fundamental capital (CET1), 1.44% of additional capital (AT1), and 3.73% of complementary capital (Tier 2). The sequential decrease in capital ratio is driven by an increase in risk weighted assets associated with higher market risks due to the depreciation of the Mexican pesos.
As of February 2020, Banco Santander México was classified in Category 1, in accordance with Article 134 Bis of the Mexican Banking Law, and the Bank remains in this category per the preliminary results dated March 31, 2020, which is the most recent available analysis.
Liquidity coverage ratio (LCR)
Pursuant to the regulatory requirements of Banxico and the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or “CNBV”), the average Liquidity Coverage Ratio (LCR or CCL by its Spanish acronym) for 1Q20 was 124.99%, which compares to 166.29% in 1Q19 and 159.37% in 4Q19. (Please refer to note 24 of this report).
Leverage ratio
In accordance with CNBV regulatory requirements, effective June 14, 2016, the leverage ratio was 6.53% for March 2020, 7.02% for December 2019, 7.64% for September 2019, 7.67% for June 2019, and 7.92% for March 2019.
This ratio is defined by regulators and is calculated by dividing core capital (according to Article 2 Bis 6 (CUB)) by adjusted assets (according to Article 1, II (CUB)).
RELEVANT EVENTS, TRANSACTIONS AND ACTIVITIES
Relevant Events
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
25 |
Annual General Ordinary and Special Shareholders’ Meetings
On April 28, 2020 Banco Santander México held its Annual General Ordinary and Special Shareholders’ Meetings, and approved among other items:
§ | The integration of the Board of Directors as indicated below: |
Series “F” Independent Directors | ||
Laura Renne Diez Barroso Azcárraga | Director | |
Cesar Augusto Montemayor Zambrano | Director | |
Bárbara Garza Lagüera Gonda | Director | |
Juan Ignacio Gallardo Thurlow | Alternate Director | |
Guillermo Jorge Quiroz Abed | Alternate Director | |
Eduardo Carredano Fernandéz | Alternate Director | |
Series “F” Non-Independent Directors | ||
Héctor Blas Grisi Checa | Director | |
Magdalena Sofía Salarich Fernández de Valderrama | Director | |
Francisco Javier García-Carranza Benjumea | Director | |
Ángel Rivera Congosto | Alternate Director | |
Didier Mena Campos | Alternate Director | |
Rodrigo Brand de Lara | Alternate Director | |
Series “B” Independent Directors | ||
Antonio Purón Mier y Terán | Director | |
Fernando Benjamín Ruíz Sahagún | Director | |
Alberto Torrado Martínez | Director | |
María de Lourdes Melgar Palacios | Director | |
Jesús Federico Reyes Heroles González Garza | Alternate Director | |
Rogelio Zambrano Lozano | Alternate Director | |
Guillermo Francisco Vogel Hinojosa | Alternate Director | |
Joaquín Vargas Guajardo | Alternate Director |
§ | The Shareholders' Meeting determined that, taking into account the effects of the COVID-19 pandemic for the Bank, the Shareholders’ Meeting took the decision to abstain, for the time being, from approving the payment of a dividend out of the profits of the 2019 financial year and the previous years, for as long as there is a lack of visibility into the impact of the COVID-19 pandemic on the results and financial situation of the Bank. It was agreed to revisit this matter again in October of this year, taking into consideration the situation prevailing on such date. |
Action taken on the Bank’s credit ratings
On April 23, 2020 Banco Santander México informed the actions taken on its credit ratings by the rating agencies Fitch Ratings and Moody’s. (Please refer to “Credit Ratings” section of this report).
Issuance of Senior Notes
On April 14, 2020 Banco Santander México informed the issuance of U.S.$1.75 billion aggregate principal amount of its 5.375% senior notes due 2025. The Notes were offered in the United States of America through a private placement to qualified institutional buyers, in accordance with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act "), and outside the United States of America, in accordance with Regulation S under the Securities Act.
Business Update
On April 13, 2020 Banco Santander México provided an update on the initiatives it has implemented in response to the COVID-19 pandemic and with respect to current Government support programs. The Bank also announced selected preliminary first quarter results and withdrew its 2020 full year guidance given the uncertainty and lack of visibility resulting from the unprecedented COVID-19 pandemic and related disruption to Mexican, regional and global economic activity.
Implemented measures to protect the health of clients and employees, while maintaining its operations and supporting clients
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
26 |
On March 31, 2020 Banco Santander México informed that it has implemented measures to protect the health of its clients and employees, maintaining its operations and supporting its clients, while allowing it to continue its operations during the health emergency. As a result of such measures, some of the Bank’s activities could be affected, as well as its results and financial indicators.
Acquisition of merchant payment solutions company, Elavon Mexico
On March 31, 2020 Banco Santander México informed that it has completed the acquisition of 49% of the shares representing the capital stock of its Mexican partner in the merchant payment solutions business, Elavon Mexico Holding Company, S.A. de C.V. (“Elavon Mexico”), while Santander Merchant Platform Solutions, S.L. (“SMPS”), a subsidiary of our parent company, Banco Santander, S.A., completed the acquisition of the remaining 51%, in line with the announcement made on February 21st of this year. The acquisition of 100% of Elavon Mexico was completed for a total of Ps.1,600 million (approximately $85 million dollars).
The above mentioned was in line with the announcement made on February 21st of this year, regarding the matter that the Bank had reached an agreement to acquire Elavon Mexico which has operated the merchant acquiring business of Banco Santander México through an alliance agreement since January 2010.
Intention to nominate Laura Diez Barroso Azcárraga as director and chairman of the Board of Directors
On January 30, 2020 Banco Santander México informed that its Board of Directors, in a meeting held on that date, among other resolutions, expressed its intention to nominate, the renowned businesswoman Laura Diez Barroso Azcárraga as director and chairman of the Board of Directors to succeed Mr. Marcos Martínez Gavica, whose appointment as chairman of the Board of Directors will expire in April of this year.
Organizational changes within its Corporate and Investment Banking segment
On January 30, 2020 Banco Santander México informed that Octaviano Couttolenc Mestre was appointed as Deputy General Director of Corporate and Investment Banking, reporting to Héctor Grisi Checa.
Relevant Transactions
Interprotección financing
Banco Santander México participated along with five other banks as a Structuring Agent in the syndicated loan forInterprotección, an insurance and surety agent, for an amount of Ps.1,300 million with a term of seven-years. Banco Santander México's contributed a total amount of U.S.$425 million.
Iberdrolafinancing
Banco Santander México participated as Co-Arranger in a financing forIberdrola Company, through Simple Credit a total amount of U.S.$25 billion with a term of five-years. Banco Santander México participation was for a total amount of U.S.$500 million.
AWARDS AND RECOGNITIONS
Santander Private Banking Mexico, named "Best Private Bank" according to Euromoney magazine
On February 11, 2020 Santander Private Banking Mexico was recognized for third consecutive year as "Best Private Bank on Mexico" by the prestigious Euromoney magazine. This was the result of a vote among more than 2,000 financial and banking sector entities.
Euromoney magazine, founded in 1969, is recognized worldwide as a leader in international banking and financial news. The Euromoney Awards for Excellence are the benchmark for the financial sector. The awards are decided by Euromoney’s editors based on objective data such as profitability, growth and efficiency, combined with subjective criteria.
Socially Responsible Company Distinction for the 16th consecutive year
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
27 |
On Februry 21, 2020 Banco Santander México was recognized as a Socially Responsible Company (SRC) by the Mexican Center for Philanthropy (Cemefi), and the Alliance for Corporate Social Responsibility (AliaRSE) for the 16th consecutive year. In addition, for the first time, Tuiio, the Bank's financial inclusion program, also received the SRC recognition.
RESPONSIBLE BANKING
Trust “Por los Niños de México”
For the year 2020, a total of 76 projects for health, education and nutrition areas were approved by Banco Santander México, through its “Por los Niños de México” trust. This represents an investment of Ps.11.6 million which will benefit approximately 36,000 children.
For more information about Banco Santander México as a Responsible Bank:
https://servicios.santander.com.mx/comprometidos/
CREDIT RATINGS
Following the downgrade of Mexico's sovereign rating and given the deterioration in the operating environment, the rating agencies Fitch Ratings and Moody’ss reviewed the ratings of Mexican banks, including Banco Santander México. The review for the Bank was as follows:
On April 22, 2020, Moody’s downgraded to Baa1, from A3 our long-term global local and foreign currency deposit and debt ratings. Moody's also affirmed the Aaa.mx/MX-1 long- and short-term Mexican National Scale. The rating outlook remains Negative.
On April 21, 2020, Fitch Ratings downgraded the Bank's Viability Rating (VR) to ‘bbb-’ from ‘bbb’. The Bank's Issuer Default Ratings (IDR) of 'BBB +' were not included in this review as their outlook was recently revised to Negative from Stable, driven by a similar action on our ultimate parent (Banco Santander, S.A.) IDRs, as our IDRs are currently driven by its support.
Banco Santander México | Fitch Ratings | Moody’s | |
Global scale | |||
Foreign currency | |||
Long term | BBB+ | Baa1 | |
Short term | F2 | P-2 | |
Local currency | |||
Long term | BBB+ | Baa1 | |
Short Term | F2 | P-2 | |
National scale | |||
Long term | AAA(mex) | Aaa.mx | |
Short Term | F1+(mex) | Mx-1 | |
Rating viability (VR) | bbb- | N/A | |
Support | 2 | N/A | |
Counterparty risk Assessments (CR) | |||
Long Term | N/A | A3 (cr) | |
Short Term | N/A | P-2 (cr) | |
Standalone BCA | N/A | baa2 | |
Standalone Adjusted BCA | N/A | baa1 | |
Outlook | Negative | Negative | |
International Issuances | |||
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
28 |
Tier 2 Subordinated Capital Notes due 2028 | BBB- | Baa3 (hyb) | |
Long Term Senior Unsecured Global Notes due 2025 | BBB+ | Baa1 | |
Long Term Senior Unsecured Global Notes due 2022 | BBB+ | Baa1 | |
Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (AT1) | |||
Global Scale | |||
Foreign currency | |||
Long term | BB | Ba1 (hyb) | |
Local currency | |||
Long term | N/A | Ba1(hyb) | |
National scale | |||
Long term | N/A | A1.mx (hyb) |
Santander Consumo | Fitch Ratings | ||
National Scale | |||
Long term | AAA (mex) | ||
Short Term | F1+ (mex) | ||
Outlook | Stable | ||
Santander Vivienda | HR | ||
National Scale | |||
Long term | HR AAA | ||
Short Term | HR +1 | ||
Outlook | Stable |
Notes:
§ BCA = Baseline Credit Assessment
§ SR = Support Rating
§ VR = Viability Rating
§ SCP = Standalone Credit Profile
§ CR= Counterparty Risk Assessments
N/A = Not applicable
1Q20 EARNINGS CALL DIAL-IN INFORMATION
Date: Thursday, April, 30st, 2020
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
29 |
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: | http://public.viavid.com/index.php?id=139099 |
Replay: | Starting: Thursday, April 30st, 2020 at 1:00 p.m. (US ET) |
Ending: Thursday, May 7th, 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: 13701875 |
ANALYST COVERAGE
Bank of America Merrill Lynch, Barclays, BBVA, Bradesco, Brasil Plural, Banco BTG Pactual, Bx+, Citi, Credit Suisse, GBM, HSBC, Invex, Itaú, JP Morgan, Morgan Stanley, Nau Securities, Signum Research, Scotiabank, UBS and Intercam.
Santander México is covered by the above investment banks and research firms. Please note that any opinions, estimates or forecasts regarding the performance of Santander México issued by the research analysts of these firms reflect their own views, and therefore do not represent the opinions, estimates or forecasts of Santander México or its management. Although Santander México may refer to or distribute such statements, this does not imply that Santander México agrees with or endorses any information, conclusions or recommendations included therein.
DEFINITION OF RATIOS
ROAE:Annualized net income divided by average equity
Efficiency:Annualized administrative and promotional expenses divided by annualized gross operating income (before administrative and promotional expenses and allowances).
Recurrency:Annualized net fees divided by annualized administrative and promotional expenses (net of amortizations and depreciations).
NIM:Financial margin divided by daily average interest earnings assets.
Cost of risk:Annualized provisions for loan losses divided by average loan portfolio
Note: |
Annualized figures consider
· | Quarterly ratio = 1Q20x4 |
· | Average figures are calculated using 4Q19 and 1Q20 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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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 March 31, 2020, Banco Santander México had total assets of Ps.1,802 billion under Mexican Banking GAAP and more than 18.3 million customers. Headquartered in Mexico City, the Company operates 1,406 branches and offices nationwide and has a total of 19,638 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.
HÉCTOR B. GRISI CHECA | DIDIER MENA CAMPOS | |
Executive President and Chief Executive Officer | Chief Financial Officer | |
EMILIO DE EUSEBIO SAIZ | JUAN CARLOS GARCÍA CONTRERAS | JUAN RAMÓN JIMÉNEZ LORENZO |
Deputy General Director Financial Accounting and Control | Executive Director of Intervention | Chief Audit Executive |
The financial information presented in this report has been obtained from the non-audited financial statements prepared in accordance with accounting principles and regulations prescribed by the CNBV applicable to Credit Institution which are subject to the supervision of the CNBV on accounting procedures, published in the Federal Official Gazette on January 31st, 2011. The exchange rate used to convert foreign currency transactions US$ to Mexican pesos is Ps.23.4847.
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
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
31 |
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.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
32 |
CONSOLIDATED FINANCIAL STATEMENTS
Banco Santander México
§ | Consolidated balance sheet |
§ | Consolidated statement income |
§ | Consolidated statement of changes in stockholders’ equity |
§ | Consolidated statement of cash flows |
The information contained in this report and the financial statements of the Bank subsidiaries may be consulted on the Internet website: www.santander.com.mx or through the following direct access:
http://www.santander.com.mx/ir/english/financial/quarterly.html
There is also information on Santander México on the CNBV website:https://www.gob.mx/cnbv
Consolidated balance sheet | |||||||
Million pesos | |||||||
2020 | 2019 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
33 |
Mar | Dec | Sep | Jun | Mar | |||
Assets | |||||||
Funds available | 113,427 | 85,628 | 66,997 | 73,192 | 73,680 | ||
Margin accounts | 4,929 | 5,152 | 5,319 | 3,826 | 3,521 | ||
Investment in securities | 368,394 | 360,682 | 365,999 | 282,178 | 241,293 | ||
Trading securities | 116,232 | 115,455 | 146,864 | 94,763 | 77,513 | ||
Securities available for sale | 241,000 | 234,136 | 208,074 | 176,435 | 152,878 | ||
Securities held to maturity | 11,162 | 11,091 | 11,061 | 10,980 | 10,902 | ||
Debtors under sale and repurchase agreements | 66,147 | 4,154 | 14,747 | 67,889 | 63,768 | ||
Derivatives | 346,921 | 160,129 | 182,761 | 147,088 | 135,612 | ||
Trading purposes | 334,082 | 151,892 | 174,093 | 139,902 | 128,162 | ||
Hedging purposes | 12,839 | 8,237 | 8,668 | 7,186 | 7,450 | ||
Valuation adjustment for hedged financial assets | 264 | 234 | 253 | 152 | 77 | ||
Performing loan portfolio | |||||||
Commercial loans | 498,956 | 439,076 | 426,180 | 434,438 | 430,571 | ||
Commercial or business activity | 405,260 | 351,911 | 351,698 | 360,269 | 351,907 | ||
Financial entities loans | 17,103 | 16,713 | 13,713 | 12,430 | 15,911 | ||
Government entities loans | 76,593 | 70,452 | 60,769 | 61,739 | 62,753 | ||
Consumer loans | 111,592 | 112,663 | 112,099 | 110,226 | 107,959 | ||
Mortgage loans | 148,494 | 145,660 | 142,766 | 140,034 | 137,820 | ||
Medium and residential | 135,594 | 132,491 | 128,996 | 126,003 | 123,041 | ||
Social interest | 29 | 32 | 37 | 42 | 49 | ||
Credits acquired from INFONAVIT or FOVISSSTE | 12,871 | 13,137 | 13,733 | 13,989 | 14,730 | ||
Total performing loan portfolio | 759,042 | 697,399 | 681,045 | 684,698 | 676,350 | ||
Non-performing loan portfolio | |||||||
Commercial loans | 5,728 | 5,553 | 5,783 | 5,545 | 5,423 | ||
Commercial or business activity | 5,728 | 5,553 | 5,783 | 5,545 | 5,423 | ||
Consumer loans | 4,319 | 4,459 | 4,531 | 4,469 | 4,091 | ||
Mortgage loans | 6,720 | 6,269 | 5,967 | 5,617 | 5,362 | ||
Medium and residential | 5,095 | 4,751 | 4,431 | 4,094 | 3,978 | ||
Social interest | 3 | 4 | 5 | 5 | 5 | ||
Credits acquired from INFONAVIT or FOVISSSTE | 1,622 | 1,514 | 1,531 | 1,518 | 1,379 | ||
Total non-performing portfolio | 16,767 | 16,281 | 16,281 | 15,631 | 14,876 | ||
Total loan portfolio | 775,809 | 713,680 | 697,326 | 700,329 | 691,226 | ||
Allowance for loan losses | (22,664) | (21,494) | (21,299) | (21,345) | (20,836) | ||
Loan portfolio (net) | 753,145 | 692,186 | 676,027 | 678,984 | 670,390 | ||
Acrrued income receivable from securitization transactions | 154 | 157 | 80 | 84 | 113 | ||
Other receivables (net) | 106,093 | 64,076 | 110,974 | 77,945 | 79,046 | ||
Foreclosed assets (net) | 155 | 227 | 231 | 232 | 241 | ||
Property, furniture and fixtures (net) | 10,343 | 10,545 | 9,715 | 9,054 | 8,841 | ||
Long-term investment in shares | 359 | 90 | 90 | 90 | 90 | ||
Deferred taxes and deferred profit sharing (net) | 21,849 | 19,154 | 18,702 | 18,901 | 18,986 | ||
Deferred charges, advance payments and intangibles | 9,991 | 9,541 | 8,808 | 8,536 | 8,601 | ||
Other | 39 | 39 | 38 | 36 | 35 | ||
Total assets | 1,802,210 | 1,411,994 | 1,460,741 | 1,368,187 | 1,304,294 |
Consolidated balance sheet | |||||||
Million pesos | |||||||
2020 | 2019 | ||||||
Mar | Dec | Sep | Jun | Mar | |||
Liabilities | |||||||
Deposits | 861,518 | 745,882 | 738,723 | 776,006 | 750,154 | ||
Demand deposits | 529,554 | 443,189 | 437,202 | 458,126 | 462,441 | ||
Time deposits – general public | 216,206 | 186,484 | 190,925 | 207,018 | 193,528 | ||
Time deposits – money market | 63,040 | 61,132 | 53,820 | 54,543 | 45,175 | ||
Credit instruments issued | 51,178 | 53,345 | 55,133 | 54,718 | 47,510 | ||
Global Account uptake without movements | 1,540 | 1,732 | 1,643 | 1,601 | 1,500 | ||
Bank and other loans | 40,595 | 45,279 | 51,640 | 68,089 | 57,574 | ||
Demand loans | 275 | 5,922 | 9,546 | 22,305 | 6,792 | ||
Short-term loans | 16,973 | 15,713 | 15,239 | 17,816 | 22,440 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
34 |
Long-term loans | 23,347 | 23,644 | 26,855 | 27,968 | 28,342 | ||
Creditors under sale and repurchase agreements | 234,582 | 192,835 | 162,216 | 84,668 | 65,455 | ||
Securities Lending | 0 | 0 | 0 | 1 | 0 | ||
Collateral sold or pledged as guarantee | 10,209 | 8,923 | 30,611 | 21,211 | 24,006 | ||
Repurchase | 2,392 | 644 | 9 | 118 | 912 | ||
Securities loans | 7,817 | 8,279 | 30,602 | 21,093 | 23,094 | ||
Derivatives | 361,310 | 152,422 | 176,569 | 144,866 | 134,917 | ||
Trading purposes | 336,580 | 144,914 | 168,014 | 136,778 | 127,854 | ||
Hedging purposes | 24,730 | 7,508 | 8,555 | 8,088 | 7,063 | ||
Valuation adjustment of financial liabilities hedging | 3 | 5 | 14 | (12) | (19) | ||
Other payables | 110,432 | 93,398 | 125,472 | 104,255 | 104,521 | ||
Income taxes payable | 0 | 224 | 111 | 22 | 29 | ||
Employee profit sharing payable | 424 | 345 | 273 | 184 | 395 | ||
Creditors from settlement of transactions | 44,548 | 36,356 | 65,724 | 41,499 | 41,122 | ||
Payable for margin accounts | 627 | 407 | 1 | 532 | 69 | ||
Payable for cash collateral received | 23,230 | 16,759 | 16,208 | 22,924 | 28,378 | ||
Sundry creditors and other payables | 41,603 | 39,307 | 43,155 | 39,094 | 34,528 | ||
Subordinated credit notes | 42,218 | 34,267 | 35,464 | 34,886 | 34,819 | ||
Deferred revenues and other advances | 302 | 288 | 332 | 388 | 501 | ||
Total liabilities | 1,661,169 | 1,273,299 | 1,321,041 | 1,234,358 | 1,171,928 | ||
Paid-in capital | 34,917 | 34,908 | 34,859 | 34,961 | 34,908 | ||
Capital stock | 29,799 | 29,799 | 29,799 | 29,799 | 29,799 | ||
Share premium | 5,118 | 5,109 | 5,060 | 5,162 | 5,109 | ||
Other capital | 106,124 | 103,787 | 104,841 | 98,868 | 97,458 | ||
Capital reserves | 23,845 | 23,845 | 23,845 | 23,845 | 22,315 | ||
Retained earnings | 78,802 | 57,617 | 63,217 | 63,365 | 69,885 | ||
Result from valuation of available for sale securities, net | (467) | 2,177 | 1,311 | 667 | (145) | ||
Result from valuation of cash flow hedge instruments, net | (527) | (249) | (261) | (221) | (155) | ||
Cumulative effect of conversion | 9 | 9 | 9 | 9 | 9 | ||
Adjustment employees pension fund | (995) | (986) | 261 | 272 | 226 | ||
Net income | 5,414 | 21,332 | 16,416 | 10,899 | 5,291 | ||
Non-controlling interest | 43 | 42 | 43 | 32 | 32 | ||
Total stockholders´equity | 141,041 | 138,695 | 139,700 | 133,829 | 132,366 | ||
Total liabilities and stockholders´ equity | 1,802,210 | 1,411,994 | 1,460,741 | 1,368,187 | 1,304,294 |
Consolidated balance sheet | |||||||
Million pesos | |||||||
2020 | 2019 | ||||||
Mar | Dec | Sep | Jun | Mar | |||
Memorandum accounts | |||||||
Contingent assets and liabilities | 60 | 58 | 50 | 46 | 46 | ||
Credit commitments | 239,348 | 216,574 | 232,458 | 214,277 | 231,994 | ||
Assets in trust or under mandate | 182,285 | 185,620 | 187,586 | 179,341 | 177,672 | ||
Trusts | 181,595 | 184,868 | 186,678 | 177,240 | 175,516 | ||
Mandates | 690 | 752 | 908 | 2,101 | 2,156 | ||
Assets in custody or under administration | 1,683,347 | 1,597,771 | 2,147,758 | 2,058,218 | 2,124,474 | ||
Collateral received | 112,071 | 95,259 | 97,706 | 141,731 | 208,248 | ||
Collateral received and sold or pledged as guarantee | 35,501 | 77,824 | 46,861 | 49,536 | 118,896 | ||
Investment banking transactions for third parties (net) | 172,343 | 176,736 | 170,777 | 111,475 | 66,018 | ||
Uncollected interest earned on past due loan portfolio | 879 | 818 | 854 | 859 | 803 | ||
Other record accounts | 1,891,589 | 1,698,449 | 1,730,053 | 1,686,189 | 1,696,042 | ||
4,317,423 | 4,049,109 | 4,614,103 | 4,441,672 | 4,624,193 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
35 |
These consolidated financial statements were approved by the Board of Directors and signed on its behalf by
HÉCTOR B. GRISI CHECA | DIDIER MENA CAMPOS | |
Executive President and Chief Executive Officer | Chief Financial Officer | |
EMILIO DE EUSEBIO SAIZ | JUAN CARLOS GARCÍA CONTRERAS | JUAN RAMÓN JIMÉNEZ LORENZO |
Deputy General Director Financial Accounting and Control | Executive Director of Intervention | Chief Audit Executive |
The accompanying notes are part of these consolidated financial statements
www.santander.com.mx
Consolidated statement of income | |||||||
Million pesos | |||||||
2020 | 2019 | ||||||
1Q | 12M | 4Q | 3Q | 2Q | 1Q | ||
Interest income | 30,847 | 123,338 | 31,544 | 30,465 | 30,556 | 30,773 | |
Interest expense | (13,951) | (56,985) | (14,817) | (13,876) | (13,968) | (14,324) | |
Net interest income | 16,896 | 66,353 | 16,727 | 16,589 | 16,588 | 16,449 | |
Provisions for loan losses | (5,165) | (18,112) | (4,862) | (4,478) | (4,454) | (4,318) | |
Net interest income after provisions for loan losses | 11,731 | 48,241 | 11,865 | 12,111 | 12,134 | 12,131 | |
Commission and fee income | 6,508 | 25,256 | 6,250 | 6,504 | 6,486 | 6,016 | |
Commission and fee expense | (1,811) | (7,228) | (1,925) | (1,924) | (1,789) | (1,590) | |
Net gain (loss) on financial assets and liabilities | 883 | 3,458 | 1,461 | 1,101 | 564 | 332 | |
Other operating income | (212) | (2,174) | (601) | (582) | (440) | (551) | |
Administrative and promotional expenses | (9,785) | (38,865) | (10,344) | (9,783) | (9,482) | (9,256) | |
Operating income | 7,314 | 28,688 | 6,706 | 7,427 | 7,473 | 7,082 | |
Equity in results of associated companies | 4 | 0 | 0 | 0 | 0 | 0 | |
Operating income before income taxes | 7,318 | 28,688 | 6,706 | 7,427 | 7,473 | 7,082 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
36 |
Current income taxes | (3,044) | (7,099) | (2,108) | (1,958) | (1,782) | (1,251) | |
Deferred income taxes (net) | 1,140 | (257) | 318 | 48 | (83) | (540) | |
Net income | 5,414 | 21,332 | 4,916 | 5,517 | 5,608 | 5,291 |
These consolidated financial statements were approved by the Board of Directors and signed on its behalf by
HÉCTOR B. GRISI CHECA | DIDIER MENA CAMPOS | |
Executive President and Chief Executive Officer | Chief Financial Officer | |
EMILIO DE EUSEBIO SAIZ | JUAN CARLOS GARCÍA CONTRERAS | JUAN RAMÓN JIMÉNEZ LORENZO |
Deputy General Director Financial Accounting and Control | Executive Director of Intervention | Chief Audit Executive |
The accompanying notes are part of these consolidated financial statements
www.santander.com.mx
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
37 |
Consolidated statement of changes in stockholders’ equity | |||||||||||||||
From January 1st to March 31st, 2020 | |||||||||||||||
Million pesos | |||||||||||||||
Paid-in capital | Other capital | ||||||||||||||
CONCEPT | Capital stock | Additional paid-in capital | Capital reserves | Retained earnings | Result from valuation of securities available for sale, net | Result from the valuation of cash flow hedge instruments | Cumulative effect from conversion | Measurement defined benefit employees | Net income | Non-controlling interest | Total stockholders' equity | ||||
BALANCE AS OF DECEMBER 31st, 2019 | 29,799 | 5,109 | 23,845 | 57,617 | 2,177 | (249) | 9 | (986) | 21,332 | 42 | 138,695 | ||||
MOVEMENTS INHERENT TO THE SHAREHOLDERS' DECISIONS | |||||||||||||||
Transfer of prior year's net income | 21,332 | (21,332) | 0 | ||||||||||||
TOTAL | 0 | 0 | 0 | 21,332 | 0 | 0 | 0 | 0 | (21,332) | 0 | 0 | ||||
MOVEMENTS INHERENT TO THE RECOGNITION OF THE COMPREHENSIVE INCOME | |||||||||||||||
Result from valuation of available for sale securities, net | (2,644) | (2,644) | |||||||||||||
Result from valuation of cash flow hedge instruments, net | (278) | (278) | |||||||||||||
Recognition of share-based payments | 57 | 57 | |||||||||||||
Shares held by treasury | (48) | (48) | |||||||||||||
Interest on Subordinated debentures Perpetual Non-Preferred Contingent Convertible | (147) | (147) | |||||||||||||
Employee defined benefit measures | (9) | (9) | |||||||||||||
Net income | 5,414 | 5,414 | |||||||||||||
Non-controlling interest | 1 | 1 | |||||||||||||
TOTAL | 0 | 9 | 0 | (147) | (2,644) | (278) | 0 | (9) | 5,414 | 1 | 2,346 | ||||
BALANCE AS OF MARCH 31st, 2020 | 29,799 | 5,118 | 23,845 | 78,802 | (467) | (527) | 9 | (995) | 5,414 | 43 | 141,041 | ||||
These consolidated financial statements were approved by the Board of Directors and signed on its behalf by
HÉCTOR B. GRISI CHECA | DIDIER MENA CAMPOS | |
Executive President and Chief Executive Officer | Chief Financial Officer | |
EMILIO DE EUSEBIO SAIZ | JUAN CARLOS GARCÍA CONTRERAS | JUAN RAMÓN JIMÉNEZ LORENZO |
Deputy General Director Financial Accounting and Control | Executive Director of Intervention | Chief Audit Executive |
The accompanying notes are part of these consolidated financial statements
www.santander.com.mx
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
38 |
Consolidated statement of cash flows | ||
From January 1st to March 31st, 2020 | ||
Million pesos | ||
OPERATING ACTIVITIES | ||
Net income | 5,414 | |
Adjustment for line items that do not require cash flows | ||
Result from valuation associated with operating activities | (7,395) | |
Equity in income of associated companies | (4) | |
Depreciation of property, furniture and fixtures | 405 | |
Amortizations of intangible assets | 610 | |
Recognition of share-based payments | 57 | |
Current and deferred income taxes | 1,904 | |
Deferred employee profit sharing | (1) | |
Provisions | 113 | |
Amortizations of debt issuance expenses | 4 | (4,307) |
1,107 | ||
OPERATING ACTIVITIES | ||
Margin accounts | 224 | |
Investment in securities | 655 | |
Debtors under sale and repurchase agreements | (61,993) | |
Derivatives-asset | (185,278) | |
Loan portfolio-net | (59,545) | |
Accrued income receivable from securitization transactions | 3 | |
Foreclosed assets | 73 | |
Other operating assets | (44,104) | |
Deposits | 113,129 | |
Bank and other loans | (4,683) | |
Creditors under sale and repurchase agreements | 41,747 | |
Collateral sold or pledged as guarantee | 1,285 | |
Derivatives-liability | 195,181 | |
Other operating liabilities | 16,694 | |
Payments of income taxes | (1,060) | |
Net cash provided by (used in) operating activities | 12,328 | |
INVESTING ACTIVITIES | ||
Proceeds from disposal of property, furniture and fixtures | 1 | |
Payments for acquisition of property, furniture and fixtures | (203) | |
Payments for acquisition of intangible assets | (318) | |
Payments for acquisition of mortgage business | (784) | |
Net cash provided by (used in) investing activities | (1,304) | |
FINANCING ACTIVITIES | ||
Payments associated with subordinated capital notes | (147) | |
Payments from associated for purchase of treasury shares | (48) | |
Net cash used in financing activities | (195) | |
Net Increase in cash and cash equivalents | 11,936 | |
Adjustment to cash flows for changes in exchange rate | 15,863 | |
Funds available at the beginning of the year | 85,628 | |
Funds available at the end of the year | 113,427 | |
These consolidated financial statements were approved by the Board of Directors and signed on its behalf by:
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
39 |
HÉCTOR B. GRISI CHECA | DIDIER MENA CAMPOS | |
Executive President and Chief Executive Officer | Chief Financial Officer | |
EMILIO DE EUSEBIO SAIZ | JUAN CARLOS GARCÍA CONTRERAS | JUAN RAMÓN JIMÉNEZ LORENZO |
Deputy General Director Financial Accounting and Control | Executive Director of Intervention | Chief Audit Executive |
The accompanying notes are part of these consolidated financial statements
www.santander.com.mx
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
40 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
§ | Special accounting criteria |
§ | Significant accounting policies |
§ | Earnings per share |
§ | Consolidated balance sheet and consolidated income statement by segment |
§ | Annex 1. Loan portfolio rating |
§ | Annex 2. Financial ratios according to CNBV |
§ | Notes to consolidated financial statements |
The information contained in this report and the financial statements of the Bank subsidiaries may be consulted on the Internet website: www.santander.com.mx or through the following direct access:
http://www.santander.com.mx/ir/english/financial/quarterly.html
There is also information on Santander México on the CNBV website:https://www.gob.mx/cnbv
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
41 |
Special accounting criteria
On March 25, 2020, the Mexican National Banking and Securities Commission (“CNBV” by its Spanish acronym or “the Commission”), together with the Ministry of Finance and Public Credit (“SHCP” by its Spanish acronym) issued a Temporary Special Accounting Criteria regarding consumer loans (revolving and non-revolving), of housing with mortgage guarantee and commercial, in order to guarantee the stability of the Financial System in Mexico.
These Temporary Special Accounting Criteria include the partial or total deferral of principal and / or interest payments for up to 4 months, with the possibility of extending it to an additional 2 months, with respect to the entire amount required including accessories. Balances may be frozen without interest charge.
The foregoing will be applicable as long as the loan is classified as current loan portfolio as of February 28, 2020 and the benefits are implemented no later than 120 days after the aforementioned date.
In follow-up to the foregoing, Banco Santander México implemented, beginning of April 1, 2020, various programs in accordance with the Temporary Special Accounting Criteria in order to support clients that have had a negative effect on their economy derived from the pandemic of the covid19.
Among the main benefits are the following:
§ | Credit card |
- | The support consists of not demanding payment for 4 months including capital and interest, this will be reflected in the debtor's account statement since the minimum payment will come in zeros during this period. Once the support is requested, it will take effect 24 business hours after the request; |
- | Itis necessary that the credit card is in a current situation as of February 28, 2020 and that it has not been issued (formalized) after February 29, 2020; |
- | Applying for and obtaining support will not affect the customer's loan history; and |
- | Can make payments at any time to the card. |
§ | Consumer loans |
- | Loan payments will be suspended for a period of 4 months. The original term of the loan will be extended for an additional 4 months, maintaining the composition of the payment according to the contracted scheme; |
- | It is necessary that the loan is in a current situation as of February 28, 2020 and that it has been disposed of before that date; and |
- | Payments can be made during the suspension period. |
§ | Automotive loan |
- | The program consists of not requiring the required payment of the loan for the following 4 months, the original term of the loan will be extended keeping the contracted fees; |
- | It is necessary that the loan is valid and contracted as of February 28, 2020, as well as not having been in default in the last 3 months; |
- | This benefit will be reflected from the following installment once it is confirmed that the debtor is eligible for support; and |
- | Payments can be made at any time. |
§ | Mortgage |
- | The program consists of suspending the payment of the loan for 4 months; |
- | This benefit will be reflected from the following installment once it is confirmed that the debtor is eligible for support; and |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
42 |
- | There will be no impact on the loan history and there will be no collection activities. |
§ | SME loans: |
- | Simple loan: Postpone the payment of credits for up to 4 months, both interest and principal, this means that it is not necessary to make a monthly payment in this period without having any impact on the credit bureau, which will allow you to use this liquidity in solving immediate needs. The loan commitment will be expanded in the same monthly payments for which payment is postponed and the installments will be transferred to this new term; |
- | Agile loan: Postpone the payment of loans for up to 4 months, both interest and capital, this means that it is not necessary to make a minimum payment without having any impact on the credit bureau, without capitalization of interest, which will allow you to use this liquidity in solving immediate needs; |
- | It is necessary to be up-to-date with loan payments when requesting support and the loan must have been granted before March 1, 2020; |
- | As long as the client is in the support program, his record in Credit Bureau will not be affected; and |
- | The loan conditions are maintained, the only thing that will change is the term that will increase up to 4 months. |
Significant accounting policies
Changes in Accounting Criteria issued by the CNBV
Entry into force of the new accounting pronouncements:
On December 27, 2017, a Resolution was published in the Official Gazette of the Federation (DOF by its Spanish acronym) that modifies to the Accounting Criteria issued by the Commission, in order to incorporate certain Mexican Financial Reporting Standards (MFRS) issued by the Mexican Financial Reporting Standards Board (CINIF by its acronym in Spanish) to the applicable standards for the preparation of the accounts of credit institutions.
Subsequently, on November 15, 2018, an amending Resolution was published to the Resolution mentioned in the previous paragraph in order to extend the term of its application to January 1, 2020 so that credit institutions were able to adjust their credit systems. Accounting information. On November 4, 2019, the Commission announced, through the DOF, the decision to extend the entry into force of that Resolution to January 1, 2021.
Finally, on March 13, 2020, the Commission published a Resolution that modifies the Accounting Criteria applicable to Credit Institutions, the update was made to be consistent with Mexican Financial Reporting Standards and International Financial Reporting Standards, will allow having transparent and comparable financial information with other countries. The entry into force of this Resolution was on January 1, 2021. On April 8, 2020, the Commission decided to postpone until January 1, 2022 its entry into force due to the contingency SARS CoV-2 (COVID -19).
The Bank is analyzing the effects that these modifications will have on its financial information.
Special accounting criteria issued by the CNBV derived from the contingency by the SARS CoV-2 (COVID-19):
On March 25, 2020, the Mexican National Banking and Securities Commission (“CNBV” by its Spanish acronym or “the Commission”), together with the Ministry of Finance and Public Credit (“SHCP” by its Spanish acronym) issued a Temporary Special Accounting Criteria regarding consumer loans (revolving and non-revolving), of housing with mortgage guarantee and commercial, in order to guarantee the stability of the Financial System in Mexico.
These Temporary Special Accounting Criteria include the partial or total deferral of principal and / or interest payments for up to 4 months, with the possibility of extending it to an additional 2 months, with respect to the entire amount required including accessories. Balances may be frozen without interest charge.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
43 |
The foregoing will be applicable as long as the loan is classified as current loan portfolio as of February 28, 2020 and the benefits are implemented no later than 120 days after the aforementioned date, as follows:
§ | Those loans with a single payment of principal at maturity and periodic payments of interest, as well as loans with a single payment of principal and interest at maturity, that are renewed or restructured will not be considered as past due loans. For this purpose, it is required that the new expiration term, which in its case be granted to the borrower, be no more than six months from the date on which it has expired. |
§ | Loans with periodic payments of principal and interest, which are subject to restructuring or renewal, may be considered as valid at the time said act is carried out, without the applicable requirements of Accounting Criterion B-6 "Loan portfolio” applicable to the case of merit. The foregoing, subject, among other things, to the fact that the new expiration period, which in its case is granted to the borrower, is not more than six months from the date on which it has expired. |
§ | Loans that from the start are stipulated as revolving, which are restructured or renewed within 120 calendar days following February 28, 2020, will not be considered as past due loans in terms of the aforementioned Accounting Criteria B -6 "Loan portfolio". The aforementioned benefit may not exceed six months from the date on which they have expired. |
In relation to the aforementioned loans, these will not be considered as restructured nor should they be reported as past due loans before the Credit Information Societies.
In the event that the restructuring or renewals include withdrawals, cancellations, bonuse2s, or discounts on the loan balance that result in lower payments for borrowers, as a mechanism to strengthen the latter's liquidity, Credit Institutions may defer the constitution of allowance for loan losses, related to the granting of withdrawals, waivers, bonuses and discounts to its clients.
Those modifications to the original conditions of the loan, in which the risk profiles of the borrower are adjusted, and do not imply a total or partial deferral of principal and / or interest and that do not imply restructuring that show compliance with payment for the total amount due of principal and interests, will not be considered as restructuring, as long as:
§ | These are loans registered as current portfolio as of February 28, 2020. |
§ | The contractual modifications are made within the 120 calendar days following February 28, 2020. |
§ | It is established in said modifications that they will only be applicable for a period that cannot exceed 6 months, with Credit Institutions being obliged to maintain the risk profiles originally established for each loan, in accordance with their policies and procedures. |
In applying the Temporary Special Accounting Criteria, Credit Institutions must adhere to the following conditions:
§ | Not to make contractual modifications that explicitly or implicitly consider the capitalization of interests, nor the collection of any type of commission derived from the restructuring. |
§ | Previously authorized or agreed loan commitments should not be restricted, decreased or canceled. |
§ | Do not request additional guarantees or their substitution in the case of restructuring. |
For the purpose of applying the regulatory facilities described above, Credit Institutions must submit to the Commission, the general conditions of the support programs granted to borrowers, as well as a detailed report on loans, where the conditions are disaggregated original loans and benefits granted with the Temporary Special Accounting Criteria, within ten business days following the end of each month, beginning in March 2020 with the process of documentation of the benefits granted.
The Temporary Special Accounting Criteria are not applicable for those loans that are located under the "Permanent Support Program for Areas Affected by Natural Disasters" of FIRA ("Fideicomisos Instituidos en Relación con la Agricultura "), or for those loans that are already part of some other benefit program.
Additionally, Credit Institutions must disclose in notes to their annual financial statements for the years 2020 and 2021, the effects derived from the application of the Temporary Special Accounting Criteria, as well as in any public release of annual financial information for the years 2020 and 2021, and in the information from the
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
44 |
first to the fourth quarter of 2020 as well as that corresponding to the first quarter of 2021 as required by the CNBV.
In follow-up to the foregoing, Banco Santander México implemented, beginning of April 1, 2020, various programs in accordance with the Temporary Special Accounting Criteria in order to support clients that have had a negative effect on their economy derived from the pandemic of the covid19, therefore, as of March 31, 2020, there is no effect due to their application, between the amounts recorded and presented in the balance sheet and in the statement of results.
Changes in the MFRS
Improvements to MFRS 2020
Starting January 1, 2020, the Bank prospectively adopted the following Improvements to the MFRS, which were issued by the CINIF. These Improvements to the MFRS did not have a significant impact on the financial information presented by the Bank.
MFRS B-1,Accounting Changes and Error Corrections
MFRS B-1 establishes the retrospective application in the recognition of accounting changes, error corrections and reclassifications. However, the CINIF considered it convenient to introduce the concept of partial retrospective application, in order to give practical sense to the recognition of certain accounting changes derived from modifications to the MFRS or the incorporation of new MFRS. The CINIF will evaluate in each case, when it is possible to apply this practical solution and it will be established in each MFRS.
MFRS B-8,Consolidated or combined financial statements
Presentation of the goodwill of subsidiaries in unconsolidated financial statements
MFRS B-8 establishes the possibility for a controlling entity to present unconsolidated financial statements. In the financial statements, the interests in subsidiaries must be presented as permanent investments valued based on the equity method, for which the provisions of MFRS C-7,Investments in associates, joint ventures and permanent investments must be observed; however, MFRS B-8 does not clearly mention how the goodwill of the subsidiaries should be presented.
MFRS B-8 is amended to promptly mention the form of presentation of goodwill associated with a subsidiary
MFRS B-11,Disposal of long-lived assets and discontinued operations
The CINIF amended MFRS B-11 to clarify that a disposal asset is not the same as an asset held for sale; that is, disposal assets include assets: held for sale, to distribute to shareholders, for abandonment and for donation.
Disposal assets classified as non-current in accordance withMFRS B-6, Statement of Financial Position, must be classified as current assets when they meet the criteria to be classified as held for sale in accordance with this MFRS. The assets of an entity that would normally be considered non-current, but that entity since its acquisition has exclusively destined them to be sold, should not be classified as current unless they meet the criteria to be classified as held for disposal in accordance with this MFRS.
MFRS C-2,Investment in financial instruments
MFRS C-2 establishes that an entity may, upon initial recognition of a financial instrument, irrevocably designate it as valued at its fair value with effect on net profit or loss. However, the wording of the MFRS was not clear, so it was modified to make it more precise.
MFRS C-3,Accounts receivable
MFRS C-3 establishes that an entity must recognize an foreclosed asset received in exchange for an account receivable, at the lower of the gross book value of the account receivable and the net realization value of the
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foreclosed asset. However, in Appendix A of this MFRS it is mentioned that it should be the net book value of the account receivable, so this appendix was adjusted.
MFRS C-16,Impairment of financial instruments receivable
It is considered necessary to make a modification to specify what interest rate will be used in the event of renegotiation of a Financial instruments to collect principal and interest (FICPI). The rate to be used will be the original effective interest rate, which should only be modified due to the effect of the renegotiation costs to be amortized.
MFRS C-19,Financial instruments payable
MFRS C-19 mentions that when a financial instrument has a variable interest rate, the effective interest rate must be periodically recalculated during the life of the instrument; In the application of said criterion, it has been detected that the effects of the recalculation of the effective rate normally do not have effects of relative importance in the amortization of the transaction costs and finally in the book value of the Financial Instruments Payable (FIP), therefore, MFRS C-19 is modified to not require recalculation of the effective interest rate against a variable interest rate that does not produce effects of relative importance.
MFRS C-20,Financial instruments to collect principal and interest
MFRS C-19 and MFRS C-20 mentions that when a financial instrument has a variable interest rate, the effective interest rate must be periodically recalculated for the rest of the instrument's life, in accordance with the change made by the CINIF to the MFRS C-19, the MFRS C-20 is also modified.
MFRS D-2,Costs associated with contracts with customers
In the convergence section with IFRS, within the Introduction section of MFRS D-2, it was mentioned that this MFRS was totally convergent with said international standards; however, a difference was detected, so the CINIF modified MFRS D-2 to mention it.
MFRS D-3,Employee benefits
It establishes the bases to recognize the uncertain tax treatments in the Employees' Statutory Profit Sharing (PTU by its Spanish acronym) both caused and deferred, as well as the disclosure requirements in this regard. The PTU, when determined on the same on the same law and basically on the same basis with which the income tax is determined, could also be based on uncertain tax determinations, established in MFRS D-4Income Tax as regards to uncertain tax treatments.
MFRS D-4,Income tax
It establishes the bases to recognize the uncertain tax treatments in the income taxes, both caused and deferred, as well as the disclosure requirements in this regard. It also includes rules for the recognition of income taxes generated by a distribution of dividends.
MFRS D-5,Leases
Mainly it incorporates the possibility of using a risk-free rate to discount future lease payments and thus recognize the lease liability of a lessee and restricts the use of the practical solution to prevent important and identifiable non-lease components from include in the measurement of assets for right of use and liabilities for leases.
Earnings Release | 1Q.2020 | ||
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Earnings per ordinary share and earnings per diluted share | |||||||||||||
Million pesos, except shares and earnings per share | |||||||||||||
March 2020 | March 2019 | March 2018 | |||||||||||
Shares | Earnings | Shares | Earnings | Shares | Earnings | ||||||||
Earnings | -weighted- | per share | Earnings | -weighted- | per share | Earnings | -weighted- | per share | |||||
Earnings per share | 5,414 | 6,777,197,774 | 0.80 | 5,291 | 6,772,748,542 | 0.78 | 4,727 | 6,777,337,202 | 0.70 | ||||
Treasury stock | 9,796,583 | 14,245,815 | 9,657,155 | ||||||||||
Diluted earnings per share | 5,414 | 6,786,994,357 | 0.80 | 5,291 | 6,786,994,357 | 0.78 | 4,727 | 6,786,994,357 | 0.70 | ||||
Plus loss / less (profit): | |||||||||||||
Discontinued operations | |||||||||||||
Continued fully diluted earnings per share | 5,414 | 6,786,994,357 | 0.80 | 5,291 | 6,786,994,357 | 0.78 | 4,727 | 6,786,994,357 | 0.70 | ||||
Balance outstanding shares as of March 31th, 2020 | 6,776,550,903 | ||||||||||||
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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Consolidated Balance Sheet by Segment | |||||||
Million pesos | |||||||
As of march 31, 2020 | As of march 31, 2019 | ||||||
Retail Banking | Corporate & Investment Banking | Corporate Activities | Retail Banking | Corporate & Investment Banking | Corporate Activities | ||
Assets | |||||||
Funds available | 45,668 | 54,191 | 13,568 | 47,919 | 12,225 | 13,536 | |
Margin accounts | 0 | 4,929 | 0 | 0 | 3,521 | 0 | |
Investment in securities | 0 | 108,019 | 260,375 | 0 | 75,328 | 165,965 | |
Debtors under sale and repurchase agreements | 0 | 66,147 | 0 | 0 | 63,768 | 0 | |
Derivatives | 0 | 334,082 | 12,839 | 0 | 128,162 | 7,450 | |
Valuation adjustment for hedged financial assets | 0 | 0 | 264 | 0 | 0 | 77 | |
Total loan portafolio | 618,265 | 157,544 | 0 | 566,262 | 124,964 | 0 | |
Allowance for loan losses | (20,450) | (2,214) | 0 | (18,513) | (2,323) | 0 | |
Loan portafolio (net) | 597,815 | 155,330 | 0 | 547,749 | 122,641 | 0 | |
Accrued income receivable from securitization transactions | 0 | 0 | 154 | 0 | 0 | 113 | |
Other receivables (net) | 207 | 87,723 | 18,163 | 217 | 63,561 | 15,268 | |
Foreclosed assets (net) | 155 | 0 | 0 | 241 | 0 | 0 | |
Property, furniture and fixtures (net) | 8,739 | 1,473 | 131 | 7,470 | 1,259 | 112 | |
Long-term investment in shares | 0 | 0 | 359 | 0 | 0 | 90 | |
Deferred taxes and deferred profit sharing (net) | 0 | 0 | 21,849 | 0 | 0 | 18,986 | |
Other assets | 2,594 | 1,511 | 5,925 | 1,660 | 1,301 | 5,675 | |
Total assets | 655,178 | 813,405 | 333,627 | 605,256 | 471,766 | 227,272 | |
Liabilities | |||||||
Deposits | 610,799 | 129,802 | 69,739 | 549,478 | 100,598 | 52,568 | |
Credit instruments issued | 0 | 3,679 | 47,499 | 0 | 8,165 | 39,345 | |
Bank and other loans | 11,768 | 1,793 | 27,034 | 22,145 | 1,076 | 34,353 | |
Creditors under sale and repurchase agreements | 7,785 | 226,797 | 0 | 7,909 | 57,546 | 0 | |
Securities lending | 0 | 0 | 0 | 0 | 0 | 0 | |
Collateral sold or pledged as guarantee | 0 | 10,209 | 0 | 0 | 24,006 | 0 | |
Derivatives | 0 | 336,580 | 24,730 | 0 | 127,854 | 7,063 | |
Valuation adjustment of financial liabilities hedging | 0 | 0 | 3 | 0 | 0 | (19) | |
Other payables | 28,034 | 79,052 | 3,346 | 30,674 | 69,544 | 4,303 | |
Subordinated credit notes | 0 | 0 | 42,218 | 0 | 0 | 34,819 | |
Deferred revenues and other advances | 302 | 0 | 0 | 501 | 0 | 0 | |
Total liabilities | 658,688 | 787,912 | 214,569 | 610,707 | 388,789 | 172,432 | |
Total stockholders' equity | 54,566 | 29,423 | 57,052 | 58,018 | 23,916 | 50,432 | |
Total liabilities and stockholders' equity | 713,254 | 817,335 | 271,621 | 668,725 | 412,705 | 222,864 |
Income Statement by Segment | |||||||
Million pesos |
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Banco Santander México | ||
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3M20 | 3M19 | ||||||
Retail Banking | Corporate & Investment Banking | Corporate Activities | Retail Banking | Corporate & Investment Banking | Corporate Activities | ||
Net interest income | 15,018 | 1,498 | 380 | 14,077 | 2,185 | 187 | |
Provisions for loan losses | (5,662) | 497 | 0 | (4,392) | 74 | 0 | |
Net interest income after provisions for loan losses | 9,356 | 1,995 | 380 | 9,685 | 2,259 | 187 | |
Commission and fee income (net) | 4,188 | 514 | (5) | 4,022 | 400 | 4 | |
Net gain (loss) on financial assets and liabilities | 354 | 629 | (100) | 322 | (16) | 26 | |
Other operating income | (272) | 38 | 22 | (521) | 0 | (30) | |
Administrative and promotional expenses | (8,491) | (1,135) | (159) | (8,118) | (1,098) | (40) | |
Operating income | 5,135 | 2,041 | 138 | 5,390 | 1,545 | 147 |
Segment information has been prepared according to the classifications used in Santander México at secondary level, based in the type of developed business:
Retail banking
The Retail Banking segment encompasses the entire commercial banking and asset management business. Our Retail Banking segment’s activities include products and services for individuals, private banking clients, SMEs, middle-market corporations and government institutions.
Corporate & Investment Banking
The Corporate & Investment Banking segment reflects the returns on the corporate banking business, including managed treasury departments and the equities business. Our Corporate & Investment Banking segment provides comprehensive products and services relating to finance, guarantees, mergers and acquisitions, equity and fixed income, structured finance, international trade finance, cash management services, collection services and e-banking, including structured loans, syndicated loans, acquisition financing and financing of investment plans, among others.
Corporate activities
The Corporate Activities segment is comprised of all operational and administrative activities that are not assigned to a specific segment or product mentioned above. The Corporate Activities segment includes the financial management division, which manages structural financial risks arising from our commercial activities, mainly liquidity risk and interest rate risk, provides short- and long-term funding for our lending activities and calculates and controls transfer prices for loans and deposits in local and foreign currencies. The financial management division also oversees the use of our resources in compliance with internal and regulatory limits regarding liquidity and regulatory capital requirements.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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Annex 1. Loan portfolio rating | |||||
As of March 31st, 2020 | |||||
Million pesos | |||||
Loan Portfolio | Allowance for loan losses | ||||
Category | Commercial | Consumer | Mortgages | Total | |
Risk "A" | 753,508 | 1,683 | 2,379 | 305 | 4,367 |
Risk "A-1" | 690,659 | 1,291 | 1,052 | 269 | 2,612 |
Risk "A-2" | 62,849 | 392 | 1,327 | 36 | 1,755 |
Risk "B" | 72,636 | 382 | 2,243 | 169 | 2,794 |
Risk "B-1" | 34,512 | 79 | 1,144 | 35 | 1,258 |
Risk "B-2" | 23,520 | 71 | 668 | 95 | 834 |
Risk "B-3" | 14,604 | 232 | 431 | 39 | 702 |
Risk "C" | 25,436 | 299 | 1,744 | 511 | 2,554 |
Risk "C-1" | 14,245 | 144 | 715 | 180 | 1,039 |
Risk "C-2" | 11,191 | 155 | 1,029 | 331 | 1,515 |
Risk "D" | 11,805 | 707 | 2,268 | 814 | 3,789 |
Risk "E" | 10,613 | 3,890 | 3,101 | 541 | 7,532 |
Total rated portfolio | 873,998 | 6,961 | 11,735 | 2,340 | 21,036 |
Provisions created | 21,036 | ||||
Complementary provisions | 1,628 | ||||
Total | 22,664 |
Notes: | ||
1. | The figures used for rating and creation of allowance for loan losses, correspond to the ones as of the last day of the month of the balance sheet as of March 31th, 2020. | |
2. | Loan portfolio is rated according to the methodology issued by the CNBV in chapter V of Title II of the General Rules Applicable to Credit Institutions, can be rated by internal methodology approved by the CNBV.
We use the methodology established by the CNBV, which have been incorporated or modified according to the following schedule:
As of September 2011, the Bank apply the rules for rating the states and municipalities loan portfolio.
As of June 2013, the Bank apply the new rules for rating the commercial loan portfolio.
As of October 2016, the Bank updated the rules for rating the revolving consumer loan portfolio.
As of September 2017, the Bank updated the rules for rating the non-revolving consumer and mortgage loan portfolios.
As of November 2018, the Bank began to report the allowance for loans losses with their IRB methodology for middle-market and mortgages broker’s loans.
As of February 2020, the Bank concluded the parallel exercise and began to report the allowance for loan losses with their internal ratings based (IRB) model for Corporate and Invesment Banking and Financial Institutions segments.
As of February 2020, the Bank informs to the CNBV, the constitution of Ps.900 million additional provisions for the organic mortgage portfolio due to the coming-up implementation of their internal rating base (IRB) model for that portfolio.
Credit Institutions use risk ratings: A-1; A-2; B-1; B-2; B-3; C-1; C-2; D and E, to classify allowance for impairment losses according to the portfolio segment and percentage of the provisions representing the outstanding balance of the loan, established in Section Fifth of “De la constitución de reservas y su clasificación por grado de riesgo”, contained in chapter 5 of Title II of such regulation.
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Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
50 |
Annex 2. Financial ratios according to CNBV | |||||||
Percentages | 1Q20 | 4Q19 | 1Q19 | 3M20 | 3M19 | ||
Past Due Loans Ratio | 2.16 | 2.28 | 2.15 | 2.16 | 2.15 | ||
Past Due Loans Coverage | 135.17 | 132.02 | 140.06 | 135.17 | 140.06 | ||
Operative Efficiency | 2.44 | 2.88 | 2.76 | 2.44 | 2.76 | ||
ROE | 15.48 | 14.13 | 16.40 | 15.48 | 16.40 | ||
ROA | 1.35 | 1.37 | 1.58 | 1.35 | 1.58 | ||
Capitalization Ratio | |||||||
Credit Risk | 24.52 | 23.31 | 24.02 | 24.52 | 24.02 | ||
Credit, Market and operations risk | 16.23 | 16.37 | 16.90 | 16.23 | 16.90 | ||
Liquidity | 86.07 | 93.63 | 61.84 | 86.07 | 61.84 | ||
NIM (Net Interest Margin) | 3.25 | 3.65 | 4.14 | 3.25 | 4.14 |
Note: ratios are prepared according to the general rules applicable to financial information of credit institutions, issued by the CNBV, according to Annex 34.
NPL ratio = Balance of past due loans portfolio as of the end of the quarter / Balance of loans portfolio as of the end of the quarter.
Coverage ratio= Balance of provision for loan losses as of the end of the quarter / Balance of past due loans portfolio as of the end of the quarter.
Efficiency ratio = Administration and promotion expenses of the quarter, annualized / Total Average Assets.
ROAE = Annualized quarterly net earnings/ Average stockholders’ equity.
ROAA = Annualized quarterly net earnings /Total average assets.
Breakdown of capitalization ratio: (1)=Net Capital/ Assets subject to credit risk. (2)=Net Capital / Assets subject to credit, market and operation risk.
Liquidity = Current Assets/ Current Liabilities.
Where: Current Assets = Availabilities + securities for trade + securities available for sale.
Current liabilities= Demand deposits + bank loans and loans from other entities, payable on demand, + short term bank loans and loans from other entities.
NIM = Quarterly Net Interest Margin, adjusted by annualized credit risks / Average interest-earning assets.
Where: Average interest-earning assets = availabilities, investments in securities, transactions with securities and derivatives and loan portfolio.
Notes:
Average = ((Balance of the corresponding quarter + balance of the previous quarter) / 2).
Annualized figures = (Flow of the corresponding quarter * 4).
Notes to financial statements as of March 31st 2020 | |
Million pesos, except for number of shares |
1. Investment in securities |
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Banco Santander México | ||
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Financial instruments are constituted as follows: | |
Book Value | |
Trading securities: | |
Bank securities | 15,966 |
Government securities | 91,950 |
Shares | 8,316 |
116,232 | |
Securities available for sale: | |
Government securities | 239,167 |
Private securities | 1,274 |
Shares | 559 |
241,000 | |
Securities held until maturity: | |
Government securities | 7,795 |
Government securities (special cetes) | 3,367 |
11,162 | |
Total | 368,394 |
2. Sale and repurchase agreements | ||
The sale and repurchase agreements transactions are constituted as follows: | ||
Net balance | ||
Debit balances | ||
Bank securities | 2,699 | |
Government securities | 63,448 | |
Total | 66,147 | |
Credit balances | ||
Bank securities | 9,780 | |
Government securities | 224,549 | |
Private securities | 253 | |
Total | 234,582 | |
(168,435) | ||
3. Investment in securities different to government securities | |||
The table below lists the investments in debt securities of a same issuer (other than government), with positions equal or greater than 5% of of the Institution’s net capital. | |||
Issuer / Series | Maturity date | % Rate | Book Value |
BANOB 17X | 31-aug-20 | 7.19 | 448 |
BANOB 19 | 08-jun-22 | 7.17 | 179 |
FBANOBRA 19313 | 16-dec-22 | 7.17 | 502 |
FBANOBRA 20022 | 19-jan-23 | 7.15 | 602 |
IBANOBRA 20143 | 08-apr-20 | 6.49 | 2,543 |
IBANOBRA 20163 | 22-apr-20 | 6.52 | 3,005 |
IBANOBRA 20243 | 17-jun-20 | 6.37 | 3,067 |
Total | 10,346 | ||
Total Capital as of March 2020 | 132,507 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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5 % of Total Capital | 6,625 |
4. Derivatives | |||||
The nominal value of the different derivative financial instruments agreements for trading and hedging purposes, as of March 31st, 2020, are as follows: | |||||
Trading | |||||
Swaps | |||||
Interest rate | 7,886,589 | ||||
Cross currency | 973,230 | ||||
Equity | 775 | ||||
Futures | Buy | Sell | |||
Foreign currency | 10,497 | 0 | |||
Index | 3 | 7,945 | |||
Forward contracts | |||||
Foreign currency | 461,916 | 24,755 | |||
Equity | 500 | 311 | |||
Options | Long | Short | |||
Interest rate | 103,335 | 117,637 | |||
Foreign currency | 104,078 | 110,910 | |||
Indexes | 2,180 | 1,257 | |||
Equity | 84 | 17 | |||
Total trading derivatives | 9,543,187 | 262,832 | |||
Hedging | |||||
Cash flow | |||||
Interest rate swaps | 31,311 | ||||
Cross currency swaps | 23,173 | ||||
Foreign Exchange Forwards | 49,990 | ||||
Fair value | |||||
Interest rate swaps | 7,233 | ||||
Cross currency swaps | 38,615 | ||||
Total hedging derivatives | 150,322 | ||||
Total derivative financial instruments | 9,693,509 | 262,832 | |||
5. Performing loan portfolio | ||||||||||||
The loan portfolio, by type of loan and currency, as of March 31st, 2020, is constituted as follows: | ||||||||||||
Amount | ||||||||||||
Pesos | USA Dlls | UDIS | Euros | GBP | Total | |||||||
Commercial or business activity | 313,823 | 85,389 | 0 | 5,069 | 979 | 405,260 | ||||||
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Banco Santander México | ||
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Financial entities | 15,256 | 1,847 | 0 | 0 | 0 | 17,103 |
Government entities | 68,749 | 6,484 | 1,360 | 0 | 0 | 76,593 |
Commercial loans | 397,828 | 93,720 | 1,360 | 5,069 | 979 | 498,956 |
Consumer loans | 111,592 | 0 | 0 | 0 | 0 | 111,592 |
Media and residential | 132,810 | 587 | 2,197 | 0 | 0 | 135,594 |
Of social interest | 29 | 0 | 0 | 0 | 0 | 29 |
Credits acquired from INFONAVIT or FOVISSSTE | 12,871 | 0 | 0 | 0 | 0 | 12,871 |
Mortgage loans | 145,710 | 587 | 2,197 | 0 | 0 | 148,494 |
Total performing loan portfolio | 655,130 | 94,307 | 3,557 | 5,069 | 979 | 759,042 |
6. Non-performing loan portfolio | |||||
Amount | |||||
Pesos | USA Dlls | UDIS | Total | ||
Commercial or business activity | 3,569 | 2,159 | 0 | 5,728 | |
Financial entities | 0 | 0 | 0 | 0 | |
Commercial loans | 3,569 | 2,159 | 0 | 5,728 | |
Consumer loans | 4,319 | 0 | 0 | 4,319 | |
Media and residential | 4,674 | 137 | 284 | 5,095 | |
Of social interest | 3 | 0 | 0 | 3 | |
Credits acquired from INFONAVIT or FOVISSSTE | 1,622 | 0 | 0 | 1,622 | |
Mortgage loans | 6,299 | 137 | 284 | 6,720 | |
Total non-performing loan portfolio | 14,187 | 2,296 | 284 | 16,767 | |
The analysis of movements in non-performing loans from December 31st, 2019 to March 31th, 2020, is as follows: |
Balance as of December 31st, 2019 | 16,281 | ||
Plus: Transfer from performing loan portfolio to non-performing loan portfolio | 8,135 | ||
Collections | |||
Cash | (714) | ||
Transfer to performing loan portfolio | (1,638) | ||
Proceeds from foreclosure proceedings | (10) | ||
Write-offs | (5,286) | ||
Adjustment for exchange rate | 0 | ||
Balance as of March 31th, 2020 | 16,767 | ||
7. Allowance for loan losses | |||||||
The movement in the allowance for loan losses, from January 1st to March 31st, 2020, is as follows: | |||||||
Balance as of January 1st, 2020 | 21,495 | ||||||
Allowance for loan losses | 5,771 | ||||||
Write-offs | (5,275) | ||||||
Foreign exchange result | 673 | ||||||
Balance as of March 31st, 2020 | 22,664 | ||||||
The table below presents a summary of write-offs by type of product as of March 31st, 2020: | |||||||
Product | Charge-offs | Debit Relieves | Total | % |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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First quarter | |||||||
Commercial loans | 1,150 | 91 | 1,241 | 23.5 | |||
Mortgage loans | 211 | 14 | 225 | 4.3 | |||
Credit card loans | 1,958 | 47 | 2,005 | 38.0 | |||
Consumer loans | 1,768 | 36 | 1,804 | 34.2 | |||
Total | 5,087 | 188 | 5,275 | 100.0 | |||
Accumulated 2020 | |||||||
Commercial loans | 1,150 | 91 | 1,241 | 23.5 | |||
Mortgage loans | 211 | 14 | 225 | 4.3 | |||
Credit card loans | 1,958 | 47 | 2,005 | 38.0 | |||
Consumer loans | 1,768 | 36 | 1,804 | 34.2 | |||
Total | 5,087 | 188 | 5,275 | 100.0 | |||
8. Problematic loans |
Loans portfolio was graded according to the general provisions issued by the National Banking and Securities Commission.
The management considers that problematic loans are the ones graded as “D” and “E”, due to their low possibility for the collection of the full amount of principal.
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9. Programs of benefits to bank debtors with the support of the Federal Government |
Breakdown of special CETES , of which Ps.3,305 millon correspond to the early extinction of debtor support programs: |
Amount | |||||||
Government Securities | |||||||
Special CETES for housing loan debtor support programs | 3,533 | ||||||
Total securities held to maturity (no reserve) | 3,533 | ||||||
Minus- | |||||||
Reserve for Special CETES | (166) | ||||||
Total securities held to maturity , net | 3,367 | ||||||
The remaining balance and expiration date Special Cetes that were not repurchased by the Federal Government and therefore the Financial Group holds in its balance sheet at March 31st, 2020, is as follows: | |||||||
Issue | Trust | Securities Number | Due date | Price (MXN) | Amount | ||
B4-220707 | 422-9 | 12,762,386 | 07-jul-22 | 124.04 | 1,583 | ||
B4-270701 | 423-2 | 15,292,752 | 01-jul-27 | 124.04 | 1,897 | ||
B4-220804 | 431-2 | 440,294 | 04-aug-22 | 113.57 | 50 | ||
BC-220804 | 431-2 | 71,442 | 04-aug-22 | 38.44 | 3 | ||
3,533 | |||||||
10. Average interest rates paid on deposits | |||||
The average interest rates paid on deposits during March 2020, is as follow: | |||||
Pesos | USD | ||||
Average balance | 363,309 | 52,683 | |||
Interest | 2,416 | 6 | |||
Rate | 2.63% | 0.05% | |||
11. Bank and other loans | |||||
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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As of March 31st, 2020, banks and other loans are constituted as follows: | |||||
Amount | Average Rate (%) | Maturity | |||
Liabilities | |||||
Loans in pesos | |||||
Local bank loans | 5,048 | 7.29 | To 8 years | ||
Public fiduciary funds | 13,530 | 7.33 | From 1 day to 10 years | ||
Development banking institutions | 18,370 | 7.41 | From 1 day to 20 years | ||
Total | 36,948 | ||||
Loans in foreign currency | |||||
Foreign bank loans | 1,210 | 1.95 | From 2 days to 1 year | ||
Public fiduciary funds | 2,272 | 2.18 | From 1 day to 5 years | ||
Development banking institutions | 11 | 6.47 | From 1 to 3 months | ||
Total | 3,493 | ||||
Total loans | 40,441 | ||||
Accrued interests | 154 | ||||
Total bank and other loans | 40,595 | ||||
12. Current and deferred taxes | ||
Current taxes are composed as follows at March 31st, 2020 | ||
Income taxes | 2,683 | |
Deferred taxes | (1,249) | (1) |
Total Bank | 1,434 | |
Current and-deferred taxes from other subsidiaries | 470 | |
Total consolidated Bank | 1,904 | |
(1) Deferred taxes are composed as follows: | ||
Global provision | (32) | |
Fixed assets and deferred charges | 22 | |
Net effect from financial instruments | (1,975) | |
Accrued liabilities | 334 | |
Others | 402 | |
Total Bank | (1,249) | (1) |
Allowance for loan losses of subsidiaries, net | 21 | |
Others, subsidiaries | 88 | |
Total deferred tax, consolidated Bank | (1,140) | |
As of March 31st, 2020, deferred assets and deferred liabilities are registered at 100% | ||
Remainder of global provisions and allowances for loan losses | 9,500 | |
Other | 12,349 | |
Total deferred income tax (net) | 21,849 | |
Deferred taxes registered in balance sheet accounts | 21,849 | |
Deferred taxes registered in memorandum accounts | 0 | |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
56 |
13. Employee profit sharing | |
As of March 31st, 2020, the deferred Employee profit sharing “EPS” is compromised as follows: | |
Asset per deferred EPS: | |
Allowance for loan losses deducting outstanding | 1,572 |
Fixed assets and deferred charges | 727 |
Accrued liabilities | 490 |
Capital losses carryforward | 837 |
Commissions and interests early collected | (268) |
Foreclosed assets | 53 |
Labor obligations | 301 |
Derivative financial transactions of exchange rate | 9 |
Deferred EPS asset: | 3,721 |
Deferred EPS liability: | |
Net effect from financial instruments | 574 |
Advance payments | (124) |
Others | (78) |
Deferred EPS liability | 372 |
Less – Reserve | 0 |
Deferred EPS asset (net) | 4,093 |
14. Capitalization Ratio |
Table I.1
Form of disclosure of the capital integration without considering the phase in in the application of regulatory adjustments
Reference | Capital Description | Capital |
Level 1 (CET 1) Ordinary capital: Instruments and reserves | ||
1 | Ordinary shares that qualify for level 1 Common Capital plus corresponding premium | 34,985 |
2 | Earnings from previous fiscal years | 78,466 |
3 | Other elements of other comprehensive income (and other reserves) | 27,227 |
4 | Capital subject to gradual elimination of level 1 ordinary capital (only applicable for companies that are not lined to shares) | |
5 | Ordinary shares issued by subsidiaries held by third parties (amount allowed in level 1 ordinary capital) | |
6 | Level 1 ordinary capital before adjustments to regulation | 140,678 |
Level 1 Ordinary capital: adjustments to regulation |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
57 |
7 | Adjustments due to prudential valuation | |
8 | Goodwill (net of its corresponding deferred profit taxes debited) | 2,254 |
9 | Other intangibles other than rights to mortgage rights (net of its corresponding deferred profit taxes debited) | 6,683 |
10 | Deferred taxes to profit credited relying on future income excluding those that derive from temporary differences (net of deferred profit taxes debited) | 0 |
11 | Results of valuation of cash flow hedging instruments | 0 |
12 | Reserves to be constituted | 0 |
13 | Benefits surplus of securitization transactions | 0 |
14 | Losses and gains caused for the changes in credit rating of liabilities assessed at a reasonable value | 0 |
15 | Pension plan for defined benefits | 0 |
16 | Investments in proprietary shares | 32 |
17 | Reciprocal investments in ordinary capital | 0 |
18 | Investments in capital of banks, financial institutions and insurance companies out of the reach of the regulation consolidation, net of short eligible positions, wherein the institution does not hold more than 10% of the issued capital (amount that exceeds the 10% threshold) | 805 |
19 | Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital (amount that exceeds the 10% threshold) | 0 |
20 | Rights for mortgage services (amount exceeding the 10% threshold) | 0 |
21 | Deferred taxes assets resulting from temporary differences (amount exceeding the 10% threshold, net of deferred taxes debited) | 6,560 |
22 | Amount exceeding the 15% threshold. | |
23 | of which: significant investments wherein the institution holds more than 10% of ordinary shares of financial institutions | |
24 | of which: rights for mortgage services | |
25 | of which: Taxes to profit Deferred credited deriving from temporary differences | |
26 | National regulation adjustments | 33,312 |
A | of which: Other elements of other comprehensive income (and other reserves) | 0 |
B | of which: investments in subordinated debt | 0 |
C | of which: profit or increase in the value of assets from the purchase of securitization positions (Originating Institutions) | 0 |
D | of which: investments in multilateral entities | 0 |
E | of which: investments in related corporations | 31,539 |
F | of which: investments in risk capital | 0 |
G | of which: Stakes on investments funds | 0 |
H | of which: Funding for the purchase of proprietary shares | 0 |
I | of which: Transactions in breach of provisions | 0 |
J | of which: Deferred charges and installments | 963 |
K | of which: Positions in First Losses Schemes | 0 |
L | of which: Worker's Deferred Profit Sharing | 0 |
M | of which: Relevant Related Persons | 0 |
N | of which: Pension plan for defined benefits | 0 |
O | of witch: Adjustment for capital acknowledgment | 0 |
P | of which: investments in Clearing Houses | 810 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
58 |
27 | Regulation adjustments that apply to level 1 common stock due to level 1 capital shortage and level 2 capital to cover deductions | 0 |
28 | Total regulation adjustments to level 1 Common Capital | 50,390 |
29 | Level 1 Common Capital (CET1) | 90,288 |
Level 1 additional capital: instruments | ||
30 | Instruments directly issued that qualify as level 1 additional capital, plus premium | 11,731 |
31 | of which: Qualify as capital under the applicable accounting criteria | 11,731 |
32 | of which: Qualify as liability under the applicable accounting criteria | |
33 | Capital instruments directly issued subject to gradual elimination of level 1 additional capital | 0 |
34 | Instruments issued of level 1 additional capital and level 1 Common Capital instruments that are not included in line 5 issued by subsidiaries held by third parties (amount allowed at additional level 1) | 0 |
35 | of which: instruments issued by subsidiaries subject to gradual elimination | |
36 | Level 1 additional capital before regulation adjustments | 11,731 |
Level 1 additional capital: regulation adjustments | ||
37 | Investments in held instruments of level 1 additional capital | |
38 | Investments in reciprocal shares in level 1 additional capital instruments. | |
39 | Investments in capital of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, net of short eligible positions, wherein the institution holds more than 10% of the issued capital | |
40 | Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital | |
41 | National regulation adjustments | 0 |
42 | Regulation adjustments that apply to level 1 common stock due to level 1 capital shortage and level 2 capital to cover deductions | |
43 | Total regulation adjustments to level 1 additional Common Capital | 0 |
44 | Level 1 additional capital (AT1) | 11,731 |
45 | Level 1 capital (T1 = CET1 + AT1) | 102,020 |
Level 2 capital: instruments and reserves | ||
46 | Instruments directly issued that qualify as level 2 capital, plus premium | 30,487 |
47 | Capital instruments directly issued subject to gradual elimination of level 2 capital. | |
48 | Level 2 capital instruments and level 1 Common Capital instruments and level 1 additional capital that has not been included in lines 5 or 34, which have been issued by subsidiaries held by third parties (amount allowed in level 2 completer capital) | 0 |
49 | of which: instruments issued by subsidiaries subject to gradual elimination | 0 |
50 | Reserves | 0 |
51 | Level 2 capital before regulation adjustments | 30,487 |
Level 2 capital : regulation adjustments | ||
52 | Investments in own instruments of level 2 capital | |
53 | Reciprocal investments in level 2 capital instruments | |
54 | Investments in capital of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, net of short eligible positions, wherein the institution does not hold more than 10% of the issued capital (amount exceeding the 10% threshold) |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
59 |
55 | Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital | |
56 | National regulation adjustments | 0 |
57 | Total regulation adjustments to level 2 capital | 0 |
58 | Level 2 capital (T2) | 30,487 |
59 | Total stock (TC = T1 + T2) | 132,507 |
60 | Total Risk Weighted Assets | 816,477 |
Capital reasons and buffers | ||
61 | Level 1 Common Capital (as percentage of assets weighted by total risks) | 11.06% |
62 | Level 1 Stock (as percentage of assets weighted by total risks) | 12.50% |
63 | Total capital (as percentage of assets weighted by total risks) | 16.23% |
64 | Institutional specific buffer (must at least consist of: the level 1 Common Capital requirement plus the capital maintenance buffer, plus the countercyclical buffer, plus D-SIB buffer; expressed as percentage of the total risk weighted assets) | 14.76% |
65 | of which: Buffer of capital preservation | 2.50% |
66 | of which: Buffer of specific bank countercyclical | |
67 | of which: Buffer of systematically important local banks (D-SIB) | 1.20% |
68 | Level 1 Common Capital available for hedging the buffers (as percentage of total risk weighted assets) | 4.06% |
National minimums (if other than those of Basel 3) | ||
69 | National minimum reason of CET1 (if different than the minimum established by Basilea 3) | |
70 | National minimum reason of T1 (if different than the minimum established by Basel 3) | |
71 | National minimum reason of TC (if different than the minimum established by Basel 3) | |
Amounts under the deduction thresholds (before weighting by risk) | ||
72 | Non-significant investment in the capital of other financial institutions | |
73 | Significant investment in the capital of other financial institutions | |
74 | Rights for mortgage services (net of Deferred profit taxes debited) | |
75 | Deferred profit taxes credited derived from temporary differences (net of Deferred profit taxes debited) | 9,846 |
Applicable limits to the inclusion of reserves in level 2 capital | ||
76 | Eligible reserves to be included in level 2 capital with respect to expositions subject to standardized methodology (prior application of limit) | |
77 | Limit in the inclusion of level 2 capital provisions under standardized methodology | |
78 | Eligible reserves for its inclusion on level 2 capital regarding exposure subject to credit risks (before the limit application). | |
79 | Limit in the inclusion of reserves in level 2 capital under internal rating methodology | |
Capital instruments subject to gradual elimination (applicable only between January 1, 2018 and January 1, 2022) | ||
80 | Current limit of CET1 instruments subject to gradual elimination | |
81 | Amount excluded from CET1 due to limit (excess over the limit after amortization and maturity periods) | |
82 | Current limit of AT1 instruments subject to gradual elimination | |
83 | Amount excluded from AT1 due to limit (excess over the limit after amortization and maturity periods) | |
84 | Current limit of T2 instruments subject to gradual elimination | |
85 | Amount excluded from T2 due to limit (excess over the limit after amortization and maturity periods) |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
60 |
I.2
Notes to Table I.1 “Form of disclosure of the capital integration without considering the phase in in the application of regulatory adjustments”
Reference | Description |
1 | Elements of capital contributed pursuant to fraction I item a) numbers 1) and 2) of Article 2 Bis 6 hereof |
2 | Results from previous fiscal years and their corresponding updates. |
3 | Capital reserves, net result, result per assessment of titles available for sale, accrued effect per conversion, result per assessment of cash flow, result from non-monetary assets holding, and the measuring balance from defined benefits to the employees considering on each concept its updates. |
4 | Does not apply. The capital stock of credit institutions in Mexico is represented by representative certificates or shares. This concept only applies for entities where such capital is represented by representative certificates or shares. |
5 | Does not apply for the capitalization scope in Mexico which is on a non-consolidated basis. This concept will only apply for entities with a consolidated scope. |
6 | Sum of concepts 1 through 5. |
7 | Does not apply. In Mexico the use of internal models for calculating capital requirements per market risk is not allowed. |
8 | Goodwill, net of owed differed profit taxes pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof. |
9 | Intangibles, other than commercial credit, and if applicable to mortgage service rights, net of owed deferred profit taxes, pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof. |
10* | Credited deferred profit taxes from losses and fiscal credits pursuant to the provisions of fraction I item p) of Article 2 Bis 6 hereof. |
This is a more conservative approach than the one established by the Basel Committee on Banking Supervision in its document "Basel III: Global legal framework for the reinforcement of banks and banking systems" published on June 2011, given that it does not allow to set off with owed differed profit taxes. | |
11 | Result from assessment of cash flow hedging instruments corresponding to hedged entries that are not assessed at reasonable value. |
12* | Reserves pending constitution pursuant to the provisions of fraction I item k) of Article 2 Bis 6 hereof. |
This is a more conservative approach than the one established by the Basel Committee on Banking Supervision in its document "Basel III: Global legal framework for the reinforcement of banks and banking systems" published on June 2011, given that deducts from level 1 common stock the preventive reserves pending constitution, according to the provisions of Chapter V of the Second Title hereof, as well as those constituted charged to accounting accounts that are part of the result entries or shareholders' equity and not only the positive difference between the Aggregate Expected Losses minus the Aggregate Admissible Reserves, in the event the Institutions use methods based in internal qualifications in the determination of their capital requirements. | |
13 | Benefits surplus of securitization transactions pursuant to the provisions of fraction I item c) of Article 2 Bis 6 hereof. |
14 | Does not apply |
15 | Investments made by the benefit pension fund defined corresponding to resources to which the Institution does not have unrestrictive or unlimited access. These investments are considered as net of the plan's liabilities and owed differed taxes to profit that correspond that have not been applied in any other regulatory adjustment. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
61 |
16* | The amount of investment in any own action the institution acquires : in accordance with the provisions of the Act in accordance with the provisions of section I subsection d) of Article 2 Bis 6 of these provisions ; through rates predicted valuesof section I subsection e ) of Section 2 Bis 6 of these provisions and through investment in funds established in section I point i) of article 2 bis 6. |
This treatment is more conservative than the one established by the Committee on Banking Basel Supervision in its document " Basel III : A global regulatory framework for more resilient banks and banking systems " published in June 2011 because the deduction for this concept is made of common equity tier 1 capital , regardless of the level of capital which has been invested | |
17* | Investments, in capital of corporations, other than financial entities referred to by item f) of Article 2 Bis 6 hereof, that are in turn, directly or indirectly, shareholders of the institution itself, of the fund |
This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made in the level 1 common stock, irrespective of the capital level where it has been invested, and in addition because any type of entity is considered, not only financial entities. | |
18* | Investments in shares, where the Institution owns up to 10% of the capital stock of the financial entities referred to by Articles 89 of the Law and 31 of the Law Regulating Financial Groups pursuant to the provisions of fraction I item f) of Article 2 Bis 6 hereof, including those investments made through investment funds referred to by fraction I item i) of Article 2 Bis 6. The previous investments exclude those made in the capital of development and promotion multilateral organizations of an international nature that have a credit Qualification assigned by any of the issuer's Qualifying Institutions, equal or greater than long term Risk Degree 2. |
This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made in level 1 common stock, irrespective of the capital level in which it is invested, and additionally because it is deducted from the aggregate amount registered of the investments. | |
19* | Investments in shares, where the Institution owns up to 10% of the capital stock of the financial entities referred to by Articles 89 of the Law and 31 of the Law Regulating Financial Groups pursuant to the provisions of fraction I fraction f) of Article 2 Bis 6 hereof, including those investments made through investment funds referred to by fraction I item i) of Article 2 Bis 6. The previous investments exclude those made in development and promotion multilateral organizations of an international nature that have a credit Qualification assigned by any of the issuer's Qualifying institutions, equal or greater than long term Risk Degree 2. |
This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made from level 1 common stock, irrespective of the level of capital where it has been investment, and additionally because the aggregate amount registered of investments is deducted. | |
20* | Mortgage service s rights shall be deducted from the aggregate amount registered in the event these rights exist. |
This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the aggregate amount registered of rights is deducted. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
62 |
21 | Deferred taxes assets resulting from temporary differences minus the corresponding owed differed profit taxes not considered to set-off other adjustments, exceeding 10% of the difference between the reference 6 and the sum of references 7 through 20. |
22 | Does not apply. Concepts were deducted from the aggregate capital. See notes of references 19, 20 and 21. |
23 | Does not apply. Concepts were deducted from the aggregate capital. See note of references 19. |
24 | Does not apply. Concepts were deducted from the aggregate capital. See note of reference 20. |
25 | Does not apply. Concepts were deducted from the aggregate capital. See note of reference 21. |
26 | National adjustments considered as the sum of the following concepts. |
A. | The sum of the accrued effect for conversion and result for ownership of non-monetary assets considering the amount of each of these concepts with a sign different than the one considered to include them in reference 3, namely, if positive in this concept shall be entered as negatives and vice versa. |
B. | Investments in subordinated debt instruments, pursuant to the provisions of fraction I item b) of Article 2 Bis 6 hereof. |
C. | The amount resulting if on account of the purchase of securitization positions, the originating Institutions register a profit or increase in the value of their assets with respect to the assets previously registered in its balance, pursuant to the provisions of fraction I item c) of Article 2 Bis 6 hereof. |
D. | Investments in capital of development or promotion multilateral organizations of an international nature pursuant to the provisions of fraction I item f) of Article 2 Bis 6 hereof, that have a credit Qualification assigned by any of the issuer's Qualifying Institutions, equal or better to long term Risk Degree 2. |
E. | Investments in shares or corporations related to the Institution under the terms of Articles 73, 73 Bis and 73 Bis 1 of the Law, including the amount corresponding to investments in investment funds and investments indices pursuant to the provisions of fraction I item g) of Article 2 Bis 6 hereof. |
F. | Investments made by development banking institutions in risk capital, pursuant to the provisions of fraction I item h) of Article 2 Bis 6 hereof. |
G. | Investments in shares, other than fix capital, in listed investment funds wherein the Institutions holds more than 15 per cent of shareholder's equity of the aforementioned investment funds, pursuant to fraction I item i) of Article 2 Bis 6, that have not been considered in the preceding references. |
H. | Any type of contribution which resources are destined to the purchase of shares in the financial group's holding company, of the other financial entities that comprise the group to which the Institution belongs or of the financial affiliates of the latter pursuant to the provisions of fraction I item l) of Article 2 Bis 6 hereof. |
I. | Transactions that infringe the provisions, pursuant to the provisions of fraction I item m) of Article 2 Bis 6 hereof. |
J. | Differed charges and early payments, net of owed differed profit taxes, pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof. |
K. | Positions pertaining to the First Losses Scheme where the risk is preserved or credit protection is provided up to a certain limit of a position pursuant to fraction I item o) of Article 2 Bis 6. |
L. | Worker's participation in credited differed profits pursuant to fraction I item p) of Article 2 Bis 6 hereof. |
M. | The added amount of Transactions Subject to Credit Risk owed by Relevant Related Persons pursuant to fraction I item r) of Article 2 Bis 6 hereof. |
N. | The difference between the investments made by the benefit pension funds defined pursuant to Article 2 Bis 8 minus reference 15. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
63 |
O. | Adjustment for the acknowledgment of Net Capital . The amount shown corresponds to the amount registered in box C1 of the form included in section II hereof. |
P. | The investments or contributions, directly or indirectly, in the corporation's capital or in the trust estate or other type of similar figures that have the purpose to set off and liquidate Transactions executed in the stock market, except for such corporation's or trust's share in the former pursuant to item f) fraction I of Article 2 Bis 6. |
27 | Does not apply. There are no regulatory adjustments for additional level 1 capital nor for ancillary capital. All regulatory adjustments are made from the level 1 common stock. |
28 | Sum of lines 7 through 22, plus lines 26 and 27. |
29 | Line 6 minus line 28. |
30 | The amount corresponding to titles representing the capital stock (including its share sale premium) that had not been considered in Fundamental Capital and Capital Instruments, that meet the conditions established in fraction II of Article 2 Bis 6 hereof. |
31 | Amount of line 30 qualified as capital under the applicable accounting standards. |
32 | Does not apply. Instruments directly issued that qualify as additional level 1 capital, plus its premium are registered for accounting purposes as capital. |
33 | Subordinated obligations computed as Non-Fundamental Capital, pursuant to the provisions of Article Third Transitory of Resolution 50th that amends the general provisions applicable to Credit Institutions, (Resolution 50th) |
34 | Does not apply. See note to reference 5. |
35 | Does not apply. See note to reference 5. |
36 | Sum of lines 30, 33 and 34. |
37* | Does not apply. Deduction is made in aggregate level 1 common capital. |
38* | Does not apply. Deduction is made in aggregate level 1 common capital. |
39* | Does not apply. Deduction is made in aggregate level 1 common capital. |
40* | Does not apply. Deduction is made in aggregate level 1 common capital. |
41 | National adjustments considered: |
Adjustment for the acknowledgment of Net Capital. The amount shown corresponds to the amount registered in box C2 of the form included in section II hereof. | |
42 | Does not apply. There are no regulatory adjustments for ancillary capital. All regulatory adjustments are made from the level 1 common stock. |
43 | Sum of lines 37 through 42. |
44 | Line 36, minus line 43. |
45 | Line 29, plus line 44. |
46 | The amount corresponding to titles representing the capital stock (including its share sale premium) that had not been considered in Capital Fundamental nor in Non-Fundamental Capital and Capital Instruments, that comply with Exhibit 1-S hereof pursuant to the provisions of Article 2 Bis 7 hereof. |
47 | Subordinated obligations computed as ancillary capital, pursuant to the provisions of Article Third Transitory, of Resolution 50th |
48 | Does not apply. See note to reference 5. |
49 | Does not apply. See note to reference 5. |
50 | Preventive estimations for credit risk up to a sum of 1.25% of the assets weighed by credit risk corresponding to the Transactions that use the Standard Method to calculate the capital requirement per credit risk; and the positive difference of the Aggregate Admissible Reserves minus the Aggregate Expected Losses, up to an amount that does not exceed of 0.6 per cent of the assets weighed by credit risk, corresponding to the Transactions wherein the method based in internal qualifications to calculate the capital requirements by credit risk is used, pursuant to fraction III of Article 2 Bis 7. |
51 | Sun of lines 46 through 48, plus line 50. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
64 |
52* | Does not apply. The deduction is made in aggregate of level 1 common stock. |
53* | Does not apply. The deduction is made in aggregate of level 1 common stock. |
54* | Does not apply. The deduction is made in aggregate of level 1 common stock. |
55* | Does not apply. The deduction is made in aggregate of level 1 common stock. |
56 | National adjustments considered: |
Adjustment for the acknowledgment of Net Capital. The amount shown corresponds to the amount registered in box C4 of the form included in section II hereof. | |
57 | Sum of lines 52 through 56. |
58 | Line 51, minus line 57. |
59 | Line 45, plus line 58. |
60 | Total Risk Weighted Assets. |
61 | Line 29 divided by line 60 (expressed as percentages) |
62 | Line 45, divided by line 60 (expressed as percentages) |
63 | Line 59 divided by line 60 (expressed as percentages) |
64 | To report the percentages amount expressed on lines 61, 65, 66 and 67. |
65 | Report 2.5% |
66 | Percentage corresponding to the Countercyclical Capital buffer referred to on section c), subsection III, article 2 Bis 5 |
67 | The SCCS amount on line 64 (expressed as a percentage of the total risk weighted assets) which is related to the banking institutions’ capital buffer for systemic character, in accordance with section b), subsection III, article 2 Bis 5. |
68 | Line 61 minus 7% |
69 | Does not apply. The minimum is the same as established by the Basel Committee on Banking Supervision in its document "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published in June 2011. |
70 | Does not apply. The minimum is the same as established by the Basel Committee on Banking Supervision in its document "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published in June 2011. |
71 | Does not apply. The minimum is the same as established by the Basel Committee on Banking Supervision in its document "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published in June 2011. |
72 | Does not apply. The concept was deducted from the aggregate capital. See note of reference 18. |
73 | Does not apply. The concept was deducted from the aggregate capital. See note of reference 19. |
74 | Does not apply. The concept was deducted from the aggregate capital. See note of reference 20. |
75 | The amount, that does not exceed 10% of the difference between reference 6 and the sum of references 7 through 20, of the credited differed taxes assets resulting from temporary differences minus those corresponding to owed profit taxes not considered to set off other adjustments. |
76 | Preventive estimations for credit risk corresponding to the Transactions that use the Standard Method to calculate the capital requirement per credit risk. |
77 | 1.25% of weighed assets per credit risk, corresponding to Transactions wherein the Standard Method to calculate the capital requirement by credit risk. |
78 | Positive difference of the Aggregate Admissible Reserves minus the Aggregate Expected Losses corresponding to Transactions wherein the method based in internal qualifications to calculate the capital requirement by credit risk is used. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
65 |
79 | 0.6 per cent of the weighted assets by credit risk, corresponding to Transactions wherein the method based in internal qualifications to calculate the capital requirement by credit risk is used. |
80 | Does not apply. There are no instruments subject to transience that compute in level 1 common stock |
81 | Does not apply. There are no instruments subject to transience that compute in level 1 common stock |
82 | Balance of instruments computed as capital in the basic portion by December 31, 2012 for the corresponding balance limit therein. |
83 | Balance of instruments computed as capital in the basic portion by December 31, 2012 minus line 33. |
84 | Balance of instruments computed as capital in the complementary portion by December 31, 2012 for the corresponding balance limit therein. |
85 | Balance of instruments computed as capital in the basic portion by December 31, 2012 minus line 47. |
Note: * The aforementioned approach is more conservative than the one established by the Basel Committee on Banking Supervision in its document "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published in June 2011.
Table II.1
Balance sheet figures
Reference of the balance sheet items | Balance sheet items | Amount shown in the balance sheet |
Assets | 1,782,474 | |
BG1 | Funds Available | 113,374 |
BG2 | Margin accounts | 3,082 |
BG3 | Investment in securities | 368,351 |
BG4 | Debtors under sale and repurchase agreements | 64,298 |
BG5 | Securities loans) | 0 |
BG6 | Derivatives | 346,921 |
BG7 | Valuation adjustment for hedged financial assets | 264 |
BG8 | Total loan portfolio | 708,882 |
BG9 | Benefits to be received in securitization transactions | 0 |
BG10 | Other receivables (net) | 105,802 |
BG11 | Foreclosed assets (net | 96 |
BG12 | Property, furniture and fixtures (net) | 9,698 |
BG13 | Long-term investment in shares | 35,522 |
BG14 | Non current assets held for sale | 0 |
BG15 | Deferred income taxes (net) | 16,406 |
BG16 | Other assets (net) | 9,777 |
Liabilities | 1,641,787 | |
BG17 | Deposits | 862,175 |
BG18 | Bank and other loans | 23,529 |
BG19 | Creditors under sale and repurchase agreements | 234,641 |
BG20 | Securities loans | 0 |
BG21 | Collateral sold or pledged as guarantee | 10,209 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
66 |
BG22 | Derivatives | 361,310 |
BG23 | Valuation adjustment for hedged financial liabilities | 3.441286 |
BG24 | Creditors from settlement of transactions | 0 |
BG25 | Other payables, deferred revenues and other advances | 107,352 |
BG26 | Subordinated debentures outstanding | 42,218 |
BG27 | Deferred income taxes (net) | 0 |
BG28 | Deferred revenues and other advances | 349 |
Shareholders' Equity | 140,687 | |
BG29 | Paid-in capital | 34,985 |
BG30 | Other capital | 105,702 |
Memorandum accounts | 3,714,817 | |
BG31 | Guarantees granted | 0 |
BG32 | Contingent assets and liabilities | 59 |
BG33 | Credit commitments | 143,498 |
BG34 | Assets in trust or mandate | 180,640 |
BG35 | Federal Government financial agent | |
BG36 | Assets in custody or under administration | 1,683,117 |
BG37 | Collateral received by the entity | 110,222 |
BG38 | Collateral received and sold or pledged as guarantee | 35,501 |
BG39 | Investment bank operations on behalf of third parties | 0 |
BG40 | Uncollected interest earned on past due loan portfolio | 510 |
BG41 | Other accounts | 1,561,269 |
Table II.2
Regulatory concepts considered in the calculation of Net Capital components
Identifier | Regulatory concepts considered for the calculation of Net Capital components | Reference of the format for the disclosure of capital integration of section I hereof | Amount pursuant to the notes of the table Regulatory concepts considered for the calculation of Net Capital components | Reference(s) of balance sheet item and amount related with the regulatory concept considered for the calculation of Net Capital derived from the aforementioned reference |
Asset | ||||
1 | Goodwill | 8 | 2,254 | BG16= 9,777 Minus: deferred charges and advance payments 963; intangibles 6,683; advance payments that are computed as risk assets 821; other assets are computed as risk assets 944 |
2 | Intangible assets | 9 | 6,683 | BG16= 9,777 Minus: deferred charges and advance payments 963; intangibles 2,254; advance payments that are computed as risk assets 856; other assets that are computed as risk assets 979 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
67 |
3 | Deferred income tax from tax losses carryforward and tax credits | 10 | 0 | |
4 | Benefits to be received in securitization transactions | 13 | 0 | |
5 | Defined benefit pension plan assets with no restriction and unlimited access | 15 | 0 | |
6 | Investment in own-equity securities | 16 | 32 | BG3= 368,351 Minus: Reciprocal investments in common capital of financial entities 805; Investments in securities computed as risk assets 367,514 |
7 | Reciprocal investments in common capital | 17 | 0 | |
8 | Direct investments in the capital of financial entities wherein the institution does not hold more than 10% of the issued capital stock | 18 | 0 | |
9 | Indirect investment in capital of financial entities wherein the institution does not hold more than 10% of the issued capital stock | 18 | 805 | BG3= 368,351 Minus: Investment in own-equity securities 32; Investments in securities computed as risk assets 367,514 |
10 | Direct investments in the capital of financial entities wherein the institution holds more than 10% of the issued capital stock | 19 | 0 | |
11 | Indirect investment in capital of financial entities wherein the institution holds more than 10% of the issued capital stock | 19 | 0 | |
12 | Deferred income tax from temporary differences | 21 | 6,560 | BG15= 16,406 Minus: Amount computed as risk asset 9,846 |
13 | Reserves recognized as complementary capital | 50 | 0 | BG8= Total loan portfolio 708,882 |
14 | Investments in subordinated debt | 26 - B | 0 | |
15 | Investments in multilateral entities | 26 - D | 0 | BG13= 35,522 Minus: Investments in subsidiaries 31,539; Investments in clearing houses 810; Investments in associated companies 379; Other investments that are computed as risk assets 2,794 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
68 |
16 | Investments in associated companies | 26 - E | 31,539 | BG13= 35,522 Minus: Investments in clearing houses 810; Investments in associated companies 379; Other investments that are computed as risk assets 2,794 |
17 | Investments in risk capital | 26 - F | 0 | |
18 | Investments in investment corporations | 26 - G | 0 | |
19 | Financing for repurchase of own shares | 26 - H | 0 | |
20 | Deferred charges and advance payments | 26 - J | 575 | BG16= 8,665 Minus: intangible assets 7,949; others assets that are computed as risk assets 247; other assets are computed as risk assets 592 |
21 | Deferred employee profit sharing (net) | 26 - L | 0 | |
22 | Defined benefit pension plan assets | 26 - N | 0 | |
23 | Investments in clearing houses | 26 - P | 810 | BG13= 35,522 Minus: Investments in subsidiaries 31,539; Investments in associated companies 379; other investments that are computed as risk assets 2,794 |
Liabilities | ||||
24 | Deferred income tax related to goodwill | 8 | 0 | |
25 | Deferred income tax related to other intangible assets | 9 | 0 | |
26 | Provision for defined benefit pension plan with no restrictiion and unlimited access | 15 | 0 | |
27 | Deferred income tax related to defined benefit pension plan | 15 | 0 | |
28 | Deferred income tax related to other items | 21 | 0 | |
29 | Subordinated liabilities that meets with Exhibit 1-R | 31 | 0 | |
30 | Subordinated liabilities subject to transitoriness that compute as basic capital 2 | 33 | 0 | |
31 | Subordinated liabilities that meets with Exhibit 1-S | 46 | 0 | |
32 | Subordinated obligations subject to transitoriness that compute as complementary capital | 47 | 0 | |
33 | Deferred income tax related to deferred charges and advance payments | 26 - J | 0 | |
Shareholders' Equity | ||||
34 | Paid-in capital that meets with Exhibit 1-Q | 1 | 34,985 | BG29 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
69 |
35 | Retained earnings | 2 | 78,466 | BG30= 105,702 Minus: other items of earned capital 27,227, cumulative effect of conversion 9 |
36 | Result from valuation of cash flow hedge instruments | 3 | 0 | |
37 | Other items of earned capital | 3 | 27,227 | BG30= 105,702 Minus: Retained earnings 78,466,cumulative effect of conversion 9 |
38 | Paid-in capital that meets with Exhibit 1-R | 31 | 11,731 | BG26= 42,218 More: Subordinated debt instruments non-convertible 30,487 |
39 | Paid-in capital that meets with Exhibit 1-S | 46 | 30,487 | BG26= 42,218 More: Subordinated debt instruments convertible 11,731 |
40 | Result from valuation of cash flow hedge instruments | 03, 11 | 0 | |
41 | Cumulative effect from conversion | 3, 26 - A | 0 | |
42 | Result from ownership of non-monetary assets | 3, 26 - A | 0 | |
Accounts in order | ||||
43 | Positions in First Losses Schemes | 26 - K | 0 | |
Regulatory concepts not considered in the balance sheet | ||||
44 | Reserves pending constitution | 12 | 0 | |
45 | Profit or increase of the value of assets from the purchase of securitization positions (Originating Institutions) | 26 - C | 0 | |
46 | Transactions that breach the provisions | 26 - I | 0 | |
47 | Transactions with Relevant Related Persons | 26 - M | 0 | |
48 | Repealed | 0 |
Table II.3
Notes to table III.2 "Regulatory concepts considered for the calculation of Net Capital components"
Identifier | Description |
1 | Commercial credit. |
2 | Intangibles, without including commercial credit. |
3 | Credited differed profit taxes originating from fiscal losses and credits. |
4 | Benefits regarding the remnant of securitization transactions. |
5 | Investments of pension plan for defined benefits without unrestrictive and unlimited access. |
6 | Any share that the Institution acquires pursuant to the provisions of the Law, that have not been subtracted; considering those amounts acquired through investments in securities indexes and the amount corresponding to investments in investment funds other than those provided by reference 18. |
7 | Investments in shares in corporations other than financial entities referred to by item f) of fraction I of Article 2 Bis 6 hereof, that are in turn, directly or indirectly shareholders of the Institution itself, of the financial group's holding company, of the remaining financial entities that comprise the group to which the Institution belongs or financial affiliates of the latter, considering those investments corresponding to investment funds other than those provided by reference 18. |
8 | Direct investments in financial entities capital referred to by Article 89 of the Law and 12 and 8 of the Law Regulating Financial Groups, where the Institution owns more than 10% of the capital thereof. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
70 |
9 | Direct investments in financial entities capital referred to by Article 89 of the Law and 12 and 8 of the Law Regulating Financial Groups, where the Institution owns more than 10% of the capital thereof. |
10 | Direct investments in financial entities capital referred to by Article 89 of the Law and 12 and 8 of the Law Regulating Financial Groups, where the Institution owns more than 10% of the capital thereof. |
11 | Indirect investments in financial entities capital referred to by Article 89 of the Law and 12 and 8 of the Law Regulating Financial Groups, where the Institution owns more than 10% of the capital thereof. |
12 | Credited differed profit taxes originating from temporary differences. |
13 | Preventive estimates for credit risk up to a sum of 1.25% of the weighted assets by credit risk, corresponding to Transactions wherein the Standard Method is used to calculate the capital requirement by credit risk; and the positive difference of the Aggregate Admissible Reserves minus the Aggregate the Expected Losses, up to an amount that does not exceed of 0.6 per cent of the weighted assets by credit risk, corresponding to Transactions where the method based in internal qualifications is used to calculate the capital requirement by credit risk. |
14 | Investments in subordinated debt instruments, pursuant to the provisions of fraction I item b) of Article 2 Bis 6 hereof. |
15 | Investments in development or promotion multilateral organizations of an international nature pursuant to the provisions of fraction I item f) of Article 2 Bis 6 hereof that have a credit Qualification assigned by any of the issuer's Qualifying Institutions, equal or greater than long term Risk Degree 2. |
16 | Investments in shares of corporations related with the Institution under the terms of Articles 73, 73 Bis and 73 Bis 1 of the Law, including the amount corresponding to investments in investment corporations and investments in indices pursuant to the provisions of fraction I item g) of Article 2 Bis 6 hereof. |
17 | Investments made in development banking institutions in risk capital, pursuant to the provisions of fraction I item h) of Article 2 Bis 6 hereof. |
18 | Investments in shares, other than fix capital, of listed investment corporations, wherein the Institution holds more than 15 per cent of shareholders' equity of the aforementioned investment corporation, pursuant to fraction I item i) of Article 2 Bis 6, that have not been considered in the previous references. |
19 | Any type of contributions which resources are destined to the purchase of shares of the financial group's holding company, of the other financial entities that comprise the group to which the Institution belongs or the latter's financial affiliates, pursuant to the provisions of fraction I item l) of Article 2 Bis 6 hereof. |
20 | Differed charges and early payments. |
21 | Workers' share in credited differed profits pursuant to fraction I item p) of Article 2 Bis 6 hereof. |
22 | Investments of the pension plan for benefits defined that have to be deducted according with Article 2 Bis 8 hereof. |
23 | Investments or contributions, directly or indirectly, in the corporation's capital or in trust estate or other type of similar figures that have the purpose of setting off and liquidating Transactions executed in the stock market, unless the share in such corporations or trusts in the former pursuant to item f) fraction I of Article 2 Bis 6. |
24 | Owed differed taxes to profit originating from temporary differences related to commercial credit. |
25 | Owed differed taxes to profit originated from temporary differences related to other intangibles (other than commercial credit). |
26 | Liabilities of the pension plan for benefits defined related to investments of the pension plan for defined benefits. |
27 | Owed differed taxes originated from temporary differences related to the pension plan for defined benefits. |
28 | Owed differed profit taxes originated from temporary differences other than those of references 24, 25, 27 and 33 |
29 | Amount of subordinated obligations that meet with Exhibit 1-R hereof. |
30 | Amount of subordinated obligations subject to transience that are computed as Non-Fundamental Capital. |
31 | Amount of subordinated obligations that meet with Exhibit 1-S hereof. |
32 | Amount of subordinated obligations subject to transience that compute as ancillary capital. |
33 | Owed differed profit taxes originated from temporary differences related to differed charges and early payments. |
34 | Amount of capital contributed that meets the provisions of Exhibit 1-Q hereof. |
35 | Result of the previous fiscal years. |
36 | Result for the assessment of cash flow hedging instruments from covered entries assessed at reasonable value. |
37 | Net result and result for the assessment of titles available for sale. |
38 | Amount of capital contributed that meets the provisions of Exhibit 1-R hereof. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
71 |
39 | Amount of capital contributed that meets the provisions of Exhibit 1-S hereof. |
40 | Result for the assessment of cash flow hedging instruments from covered entries assessed at capitalized cost. |
41 | Accrued effect by conversion. |
42 | Result for ownership of non-monetary assets. |
43 | Positions related with the First Losses Scheme wherein risk is preserved or credit protection provided until certain limit of a position pursuant to fraction I item o) of Article 2 Bis 6. |
44 | Reserves pending constitution pursuant to the provisions of fraction I item k) of Article 2 Bis 6 hereof. |
45 | The amount resulting if on account of the purchase of securitization positions, the originating Institutions register a profit or an increase in the value of their assets with respect to assets previously registered in its balance, pursuant to the provisions of fraction I item c) of Article 2 Bis 6 hereof. |
46 | Transactions that infringe the provisions, pursuant to the provisions of fraction I item m) of Article 2 Bis 6 hereof. |
47 | The aggregate amount of Transactions Subject to Credit Risk owed by Relevant Related Persons pursuant to fraction I item r) of Article 2 Bis 6 hereof. |
Table III.1
Positions exposed to market risks per risk factor
Concept | Amount of equivalent positions | Capital Requirement |
Transactions in national currency with nominal rate | 100,698 | 8,056 |
Transactions with debt instruments in national currency with surtax and reviewable rate | 2,076 | 166 |
Transactions in national currency with real rate or denominated in UDIs | 9,623 | 770 |
Transactions in national currency with yield rate referred to the increase of the General Minimum Wage | 9,228 | 738 |
Positions in UDIs or with yield referred to INPC | 19 | 2 |
Positions in national currency with yield rate referred to the increase of the General Minimum Wage | 413 | 33 |
Transactions in foreign currency with nominal rate | 59,393 | 4,751 |
Positions in foreign currency or with yield indexed to the exchange rate | 16,713 | 1,337 |
Positions in shares or with yield indexed to the price of one share or set of shares | 16,726 | 1,338 |
Positions in commodities | 0 | 0 |
Impact Capital requirement for Gamma and Vega | 1 | 0 |
Table III.2
Assets weighted subject to credit risk by risk group
Concept | Risk weighted assets | Capital Requirement |
Group I-A (weighted at 0%) | 0 | 0 |
Group I-A (weighted at 10%) | 0 | 0 |
Group I-A (weighted at 20%) | 0 | 0 |
Group I-B (weighted at 2%) | 656 | 52 |
Group I-B (weighted at 4.0%) | 0 | 0 |
Group II (weighted at 0%) | 0 | 0 |
Group II (weighted at 20%) | 5,589 | 447 |
Group II (weighted at 50%) | 0 | 0 |
Group II (weighted at 100%) | 31,996 | 2,560 |
Group II (weighted at 120%) | 0 | 0 |
Group II (weighted at 150%) | 0 | 0 |
Group III (weighted at 2.5%) | 0 | 0 |
Group III (weighted at 10%) | 0 | 0 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
72 |
Group III (weighted at 11.5%) | 0 | 0 |
Group III (weighted at 20%) | 37,265 | 2,981 |
Group III (weighted at 23%) | 605 | 48 |
Group III (weighted at 25%) | 0 | 0 |
Group III (weighted at 28.75%) | 0 | 0 |
Group III (weighted at 50%) | 4 | 0 |
Group III (weighted at 57.5%) | 0 | 0 |
Group III (weighted at 60%) | 0 | 0 |
Group III (weighted at 75%) | 0 | 0 |
Group III (weighted at 100%) | 24,253 | 1,940 |
Group III (weighted at 115%) | 0 | 0 |
Group III (weighted at 120%) | 0 | 0 |
Group III (weighted at 138%) | 0 | 0 |
Group III (weighted at 150%) | 0 | 0 |
Group III (weighted at 172.5%) | 0 | 0 |
Group IV (weighted at 0%) | 0 | 0 |
Group IV (weighted at 20%) | 9,903 | 792 |
Group V (weighted at 10%) | 0 | 0 |
Group V (weighted at 20%) | 6,324 | 506 |
Group V (weighted at 50%) | 0 | 0 |
Group V (weighted at 115%) | 0 | 0 |
Group V (weighted at 150%) | 0 | 0 |
Group VI (weighted at 20%) | 0 | 0 |
Group VI (weighted at 50%) | 31,731 | 2,538 |
Group VI (weighted at 75%) | 12,447 | 996 |
Group VI (weighted at 100%) | 42,177 | 3,374 |
Group VI (weighted at 120%) | 0 | 0 |
Group VI (weighted at 150%) | 0 | 0 |
Group VI (weighted at 172.5%) | 0 | 0 |
Group VII-A (weighted at 10%) | 0 | 0 |
Group VII-A (weighted at 11.5%) | 0 | 0 |
Group VII-A (weighted at 20%) | 10,749 | 860 |
Group VII-A (weighted at 23%) | 0 | 0 |
Group VII-A (weighted at 50%) | 4,103 | 328 |
Group VII-A (weighted at 57.5%) | 0 | 0 |
Group VII-A (weighted at 100%) | 130,204 | 10,416 |
Group VII-A (weighted at 115%) | 0 | 0 |
Group VII-A (weighted at 120%) | 0 | 0 |
Group VII-A (weighted at 138%) | 0 | 0 |
Group VII-A (weighted at 150%) | 3 | 0 |
Group VII-A (weighted at 172.5%) | 0 | 0 |
Group VII-B (weighted at 0%) | 0 | 0 |
Group VII-B (weighted at 20%) | 0 | 0 |
Group VII-B (weighted at 23%) | 0 | 0 |
Group VII-B weighted at 50%) | 1,297 | 104 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
73 |
Group VII-B weighted at 57.5%) | 8,758 | 701 |
Group VII-B (weighted at 100%) | 46,346 | 3,708 |
Group VII-B (weighted at 115%) | 0 | 0 |
Group VII-B (weighted at 120%) | 0 | 0 |
Group VII-B (weighted at 138%) | 0 | 0 |
Group VII-B (weighted at 150%) | 0 | 0 |
Group VII-B (weighted at 172.5%) | 0 | 0 |
Group VIII (weighted at 115%) | 1,993 | 159 |
Group VIII (weighted at 150%) | 4,158 | 333 |
Group IX (weighted at 100%) | 67,785 | 5,423 |
Group IX (weighted at 115%) | 0 | 0 |
Group IX (weighted at 150%) | 0 | 0 |
Group X (weighted at 1250%) | 1,244 | 100 |
Other Assets (weighted at 0%) | 0 | 0 |
Other Assets (weighted at 100%) | 23,059 | 1,845 |
Credit Valuation Adjustment on Derivative Operations | 33,044 | 2,644 |
Re-securitization with Risk Degree 1 (weighted at 20%) | 1,136 | 91 |
Re-securitization with Risk Degree 2 (weighted at 50%) | 0 | 0 |
Re-securitization with Risk Degree 3 (weighted at 100%) | 0 | 0 |
Re-securitization with Risk Degree 4 (weighted at 350%) | 0 | 0 |
Re-securitization with Risk Degree 4, o 5 or Not qualified (weighted at 1250%) | 3,553 | 284 |
ReRe-securitization with Risk Degree 1 (weighted at 40%) | 0 | 0 |
ReRe-securitization with Risk Degree 1 (weighted at 100%) | 0 | 0 |
ReRe-securitization with Risk Degree 1 (weighted at 225%) | 0 | 0 |
ReRe-securitization with Risk Degree 1 (weighted at 650%) | 0 | 0 |
ReRe-securitization with Risk Degree 4, 5 or Not qualified (weighted at 1250%) | 0 | 0 |
Table III.3
Operational Risk weighted Assets
Method | Risk weighted Assets | Capital Requirement |
STANDARD ALTERNATIVE METHOD | 61,206 | 4,896 |
Average of requirement by market and credit risk of the last 36 months | Average of annual positive net income of the last 36 months | |
0 | 59,055 |
Table IV.1
Main characteristics of titles that are part of the Net Capital
Reference | Characteristic | Options |
1 | Issuer | Banco Santander (Mexico), S. A. |
2 | ISIN, CUSIP or Bloomberg Identifier | MX41BS060013 |
3 | Legal frame | Securities Market Law |
Regulation treatment | ||
4 | Level of capital with transitory | N.A |
5 | Level of capital without transitory | Fundamental Capital |
6 | Instrument level | Credit Institution without consolidating |
7 | Instrument type | Series F Shares |
8 | Amount acknowledge of regulatory capital | Ps.15,210,402,155.77 |
9 | Instrument's par value | Ps.3.78 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
74 |
9A | Instrument's currency | Mexican Pesos |
10 | Accounting qualification | Capital |
11 | Date of issuance | N.A |
12 | Instrument´s term | Perpetual |
13 | Date of expiration | Without expiration |
14 | Early payment clause | No |
15 | First date of early payment | N.A |
15A | Regulatory or fiscal events | No |
15B | Liquidation price of the early payment clause | N.A |
16 | Subsequent early payment dates | N.A |
Yields / Dividends | ||
17 | Type of yield/dividend | Variable |
18 | Interest rate/dividend | Variable |
19 | Cancellation of dividends clause | No |
20 | Payment discretion | Mandatory |
21 | Interest increase clause | No |
22 | Yields/Dividends | Not Accruable |
23 | Convertibility of the instrument | N.A |
24 | Convertibility conditions | N.A |
25 | Degree of convertibility | N.A |
26 | Conversion rate | N.A |
27 | Instrument convertibility rate | N.A |
28 | Type of convertibility financial instrument | N.A |
29 | Instrument issuer | N.A |
30 | Write-down clause | No |
31 | Conditions for write-down | N.A |
32 | Degree of write-down | N.A |
33 | Temporality of write-down | N.A |
34 | Mechanism for temporary write down | N.A |
35 | Subordination position in the event of liquidation | Creditors in general |
36 | Breach characteristics | No |
37 | Description of breach characteristics | N.A |
Table IV.1.2
Main characteristics of titles that are part of the Net Capital
Reference | Characteristic | Options |
1 | Issuer | Banco Santander (Mexico), S. A. |
2 | ISIN, CUSIP or Bloomberg Identifier | MX41BS060005 |
3 | Legal frame | Securities Market Law |
Regulation treatment | ||
4 | Level of capital with transitory | N.A |
5 | Level of capital without transitory | Fundamental Capital |
6 | Instrument level | Credit Institution without consolidating |
7 | Instrument type | Series B Shares |
8 | Amount acknowledge of regulatory capital | Ps.14,588,587,852.93 |
9 | Instrument's par value | Ps.3.78 |
9A | Instrument's currency | Mexican Pesos |
10 | Accounting qualification | Capital |
11 | Date of issuance | N.A |
12 | Instrument´s term | Perpetual |
13 | Date of expiration | Without expiration |
14 | Early payment clause | No |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
75 |
15 | First date of early payment | N.A |
15A | Regulatory or fiscal events | No |
15B | Liquidation price of the early payment clause | N.A |
16 | Subsequent early payment dates | N.A |
Yields / Dividends | ||
17 | Type of yield/dividend | Variable |
18 | Interest rate/dividend | Variable |
19 | Cancellation of dividends clause | No |
20 | Payment discretion | Mandatory |
21 | Interest increase clause | No |
22 | Yields/Dividends | Not Accruable |
23 | Convertibility of the instrument | N.A |
24 | Convertibility conditions | N.A |
25 | Degree of convertibility | N.A |
26 | Conversion rate | N.A |
27 | Instrument convertibility rate | N.A |
28 | Type of convertibility financial instrument | N.A |
29 | Instrument issuer | N.A |
30 | Write-down clause | No |
31 | Conditions for write-down | N.A |
32 | Degree of write-down | N.A |
33 | Temporality of write-down | N.A |
34 | Mechanism for temporary write down | N.A |
35 | Subordination position in the event of liquidation | Creditors in general |
36 | Breach characteristics | No |
37 | Description of breach characteristics | N.A |
Table IV.1.3
Main characteristics of titles that are part of the Net Capital
Reference | Item | Characteristics |
1 | Issuer | Banco Santander México, S. A., Institución de Banca Múltiple, Grupo Financiero Santander México. |
2 | ISIN, CUSIP or Bloomberg Identifier | ISIN | CUSIP | |
144A | US05969BAC72 | 05969BAC7 | ||
Reg S | USP1507SAG23 | P1507SAG2 |
3 | Governing Law | The Indenture and the Notes will be governed by, and construed in accordance with, the law of the State of New York. All additional dispositions related to the determination of Suspension Periods, a Trigger Event (leading to a Writedown), Interest Payment cancellation, Optional Redemption or, the ranking and subordination of the Notes, will be governed by, and construed in accordance with, Mexican Law, as established in the Indenture and the Notes. |
Regulatory Treatment | ||
4 | Capital category the Note qualifies as, based on Article 3, Transitory, Resolution 50th | N.A. |
5 | Capital category the Note qualifies as, based on | “Tier 2” or Supplementary Capital (Capital Complementario). |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
76 |
Annexes 1-Q, 1-R and 1-S | ||
6 | Instrument seniority within the Group | Subordinated Debt issued by our Credit Institution. |
7 | Type of Instrument | Tier 2 Subordinated Preferred Capital Notes. |
8 | Amount acknowledged as regulatory capital | $25,145,225,839.39 |
9 | Instrument's Face Value | $30,530,100,000.00 (USD $1,300,000,000.00) |
9A | Currency | USD. |
10 | Accounting Classification | Subordinated Debt. |
11 | Issuance Date | October 1, 2018. |
12 | Type of Expiration | Expiration Date. |
13 | Expiration Date | October 1, 2028. |
14 | Optional Redemption | Subject to certain conditions, the Issuer may redeem the Notes at par plus accrued and unpaid interest due on, or with respect to, the Capital Notes, plus Additional Amounts, if any, (i) in whole or in part, only on the Optional Redemption Date or (ii) in whole, but not in part, at any date by means of the existence a Withholding Tax Redemption event or a Special Redemption event. |
15 | Optional Redemption Date | October 1, 2023. |
15A | Does the early redemption clause contemplates Regulatory or Fiscal Events? | Yes.
Withholding Tax Redemption: The Issuer may redeem the Capital Notes at par plus accrued and unpaid interest due on, or with respect to the Capital Notes, plus Additional Amounts, if any, in whole but not in part, prior to the Maturity Date as a result of certain changes in tax law affecting the Notes and resulting in a higher withholding tax applicable to interest payments under the Notes, subject to the satisfaction of certain conditions.
Special Event Redemption: The Issuer may redeem the Notes at par plus accrued and unpaid interest due on, or with respect to, the Capital Notes, plus Additional Amounts, if any, in whole but not in part, upon the occurrence of a Special Event (which event happens upon the occurrence of certain changes in capital treatment or tax deductibility of payments under the Notes and the satisfaction of certain conditions).
|
15B | Liquidation price for an early redemption | Upon an early redemption, the Notes would be repaid at par plus accrued and unpaid interest due on, or with respect to, the Notes, plus Additional Amounts, if any. |
16 | Subsequent early redemption dates | None, except for early redemptions caused by a Withholding Tax Redemption event or a Special Redemption event, which can be made at any date before Maturity Date. |
Yields / Dividends | ||
17 | Type of Interest Rate | Fixed Rate with only one reset date at the Optional Redemption Date. |
18 | Interest Rate | 5.95%. |
19 | Dividend Stopper Clause: | Subject to certain exceptions, the Issuer will not be allowed to make certain distributions during a Suspension Period, including (i) dividends or distributions on capital stock, (ii) make any payment of the Issuer’s debt securities that rankpari passu with or junior in right of payment and in liquidation to the Notes; or (iii) make any guaranty payments with respect to any guaranty of the debt securities of its subsidiaries if such guaranty rankspari passu with or junior in right of payment and in liquidation to the Notes. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
77 |
20 | Are Interest Payments discretionary? | Interest Payments are Mandatory. |
21 | Interest increase / Step-Up clause | No. |
22 | Are coupon payments cumulative? | Cumulative.
The Issuer will have the right to and will defer, but not cancel (except pursuant to a Write-Down), payment of interest and principal due on the Notes, if the CNBV institutes certain corrective measures against the Issuer if the Issuer is classified as Class III (or equivalent classification under any successor provisions) or below under the Mexican Capitalization Requirements. Payments of interest due on the Notes will be cumulative. Subject to the occurrence of one or more Write-Downs, a Suspension Period shall terminate and the payment of interest due on the Notes and payment of principal thereof will resume when the related Mexican Regulatory Event has terminated.
|
23 | Convertibility of the instrument | N.A. |
24 | Convertibility conditions | N.A. |
25 | Degree of convertibility | N.A. |
26 | Conversion rate | N.A. |
27 | Type of Conversion | N.A. |
28 | Type of shares into which the title is converted | N.A. |
29 | Issuer of such capital instrument | N.A. |
30 | Write-Down Mechanism | Yes. |
31 | Write-Down Trigger Events | A “Trigger Event” will be deemed to have occurred if (i) the CNBV publishes a determination, in its official publication of capitalization levels for Mexican banks, that Banco Santander Mexico’s Fundamental Capital Ratio, as calculated pursuant to the applicable Mexican Capitalization Requirements, is equal to or below 4.5%, or (ii) both (A) the CNBV notifies the Issuer that it has made a determination, pursuant to Article 29 Bis of the Mexican Banking Law, that a cause for revocation of Banco Santander Mexico’s license has occurred resulting from (x) the Issuer’s non-compliance with corrective measures imposed by the CNBV pursuant to the Mexican Banking Law, or (y) the Issuer’s non-compliance with the capitalization requirements set forth in the Mexican Capitalization Requirements and (B) the Issuer has not cured such cause for revocation, by (a) complying with such corrective measures, or (b)(1) submitting a capital restoration plan to, and receiving approval of such plan by, the CNBV, (2) transferring at least seventy five percent (75%) of its shares to an irrevocable
trust and (3) not being classified in Class III, IV, or V, or (c) remedying any capital deficiency, , in each case, on or before the third (in the case of (A)(z)) or seventh (in the case of (A)(x) or (y)) business day in Mexico, as applicable, following the date on which the CNBV notifies the Issuer of such determination..
|
32 | Write-Down Amount | “Write-Down Amount” means an (i) amount that would be sufficient, together with any concurrent pro rata write down of any other loss-absorbing instruments issued by us and then outstanding, to return Banco Santander Mexico’s Fundamental Capital to the levels required under Section IX, b), 2 of Annex 1-S of the General Rules Applicable to Mexican Banks, or (ii) if any Write-Down of the Current Principal Amount, together with any concurrent pro rata write down of any other loss-absorbing instruments issued by us and then outstanding, would be insufficient to return Banco Santander Mexico’s Fundamental Capital to the levels required under Section IX, b), 2 of Annex 1-S of the General Rules Applicable to Mexican Banks, the amount necessary to reduce the Current Principal Amount of each outstanding Capital Note to zero. |
33 | Write-Up Mechanism | N.A., Write-Down, if applied, will be permanent. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
78 |
34 | Mechanism for temporary Write-Down | N.A. |
35 | Ranking of the Capital Notes in a liquidation event | The Notes constitute subordinated preferred indebtedness, and will rank (i) subordinate and junior in right of payment and in liquidation to all of the Issuer’s present and future senior indebtedness, (ii)pari passu without preference among themselves and with all of the Issuer’s present and future unsecured subordinated preferred indebtedness and (iii) senior only to all of the Issuer’s present and future subordinated non-preferred indebtedness and all classes of the Issuer’s equity or capital stock.. |
36 | Does any characteristic of the Notes breach conditions set forth in Annex 1-R, 1-S or 1-Q of the Mexican Banking Law | No. |
37 | Specify which characteristics of the Notes breach conditions set forth in Annex 1-R, 1-S or 1-Q of the Mexican Banking Law | N.A. |
Table IV.1.4
Main characteristics of titles that are part of the Net Capital
Reference | Characteristic | Options |
1 | Issuer | Banco Santander México, S. A., Institución de Banca Múltiple, Grupo Financiero Santander México. |
2 | ISIN, CUSIP or Bloomberg Identifier | ISIN: US40053CAA36 CUSIP: 40053C AA3 BMV Ticker: BSMX 17 |
3 | Governing Law | The Capital Notes and the Indenture are governed by, and construed in accordance with the laws of New York, except that the ranking and subordination provisions, provisions related to mandatory cancellation of interest, provisions relating to conversion, provisions relating to a withholding tax redemption or a special redemption and the waiver of the right to set-off by the holders of the Capital Notes and by the Trustee acting on behalf of the holders with respect to the Capital Notes will be governed by and construed in accordance with the laws of Mexico. |
Regulatory Treatment | ||
4 | Level of capital with transitory | N.A. |
5 | Level of capital without transitory | Tier 1 Capital (Capital Básico No Fundamental). |
6 | Instrument level within the Group | Subordinated Debt issued from our Credit Institution. |
7 | Type of Instrument | Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes. |
8 | Amount acknowledged as regulatory capital | $9,018,160,682.00 |
9 | Instrument's Face Value | $11,742,350,000.00 (USD $500,000,000.00) |
9A | Currency | USD. |
10 | Accounting Classification | Principal is accounted as debt, coupon payments are accounted as capital. |
11 | Issuance Date | December 23, 2016. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
79 |
12 | Type of Expiration | Perpetuity. |
13 | Expiration Date | N.A. |
14 | Optional Redemption | Subject to certain conditions, the Issuer may redeem the Capital Notes at par plus accrued and unpaid interest due on, or with respect to, the Capital Notes, plus Additional Amounts, if any, (i) in whole or in part, only on the Optional Redemption Dates or (ii) in whole at any date by means of the existence a Withholding Tax Event or a Special Event.
|
15 | First Optional Redemption Date | January 20, 2022. |
15A | Does the early redemption clause contemplates Regulatory or Fiscal Events? | Yes.
Withholding Tax Redemption: The Issuer may redeem the Capital Notes at par plus accrued and unpaid interest due on, or with respect to the Capital Notes, plus Additional Amounts, if any, in whole but not in part, prior to the Maturity Date as a result of certain changes in tax law affecting the, and resulting in a higher, withholding tax applicable to interest payments under the Capital Notes, subject to the satisfaction of certain conditions.
Special Event Redemption: The Issuer may redeem the Capital Notes at par plus accrued and unpaid interest due on, or with respect to, the Capital Notes, plus Additional Amounts, if any, in whole but not in part, upon the occurrence of a Special Event (which event happens upon the occurrence of certain changes in capital treatment or tax deductibility of payments under the Capital Notes and the satisfaction of certain conditions).
|
15B | Liquidation price for an early redemption | Upon an early redemption, Capital Notes would be repaid at par plus accrued and unpaid interest due on, or with respect to, the Capital Notes, plus Additional Amounts, if any, |
16 | Subsequent early redemption dates | Every Interest Payment Date after the First Optional Redemption Date.
Early redemptions caused by a Withholding Event or a Special Event, which can be made at any date.
|
Yields / Dividends | ||
17 | Type of Interest Rate | Fixed with reset dates on the First Redemption Date and every fifth anniversary thereafter. |
18 | Interest Rate | 8.50%. |
19 | Dividend Stopper Clause | Unless the most recent payable accrued interests and any Additional Interest on the Capital Notes have been paid, the Issuer shall not: (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock; or (ii) make any payment of premium, if any, or interest on or
repay, repurchase or redeem any of its Subordinated Non-Preferred Indebtedness.
|
20 | Are Interest Payments discretionary | Completely Discretionary.
(a) Interest is payable solely at the Issuer’s discretion, and no amount of interest shall become due and payable in respect of the relevant interest period to the extent that it has been canceled by the Issuer (in whole or in part) at its sole discretion and/or has been canceled as a result of the occurrence and continuation of an Interest Cancellation Event; and (b) a cancellation of interest (in whole or in part) shall not constitute a default.
|
21 | Interest increase / Step-Up clause | No. |
22 | Are Coupon Payments Cumulative? | No. |
23 | Convertibility of the instrument | Yes. |
24 | Conversion Trigger Events | A Conversion Trigger Event shall occur:
(i) the Business Day in Mexico following the publication of a determination by the CNBV, in its official publication of capitalization levels for Mexican banks, that Banco Santander México’s Fundamental Capital Ratio, as calculated pursuant to the applicable Mexican Capitalization Requirements, is equal to or below 5.125%; |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
80 |
(ii) if both (A) the CNBV notifies Banco Santander México that it has made a determination, pursuant to Article 29 Bis of the Mexican Banking Law, that a cause for revocation of Banco Santander México’s license has occurred resulting from (x) Banco Santander México’s assets being insufficient to satisfy its liabilities, (y) Banco Santander México’s non-compliance with corrective measures imposed by the CNBV pursuant to the Mexican Banking Law, or (z) Banco Santander México’s non-compliance with the capitalization requirements set forth in the Mexican Capitalization Requirements and (B) Banco Santander México has not cured such
cause for revocation, by (x) complying with such corrective measures, or (y)(1) submitting a capital restoration plan to, and receiving approval of such plan by, the CNBV, (2) not being classified in Class III, IV or V, and (3) transferring at least 75% of its shares to an irrevocable trust, or (z) remedying any capital deficiency, in each case, on or before the third or seventh calendar day in Mexico, as applicable, following the date on which the CNBV notifies Banco Santander México of such determination;
(iii) if the Banking Stability Committee, which is a committee formed by the CNBV, the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público), Banco de México and the IPAB, determines pursuant to Article 29 Bis 6 of the Mexican Banking Law that, under Article 148, Section II, paragraphs (a)
and (b) of the Mexican Banking Law, financial assistance is required by Banco Santander México to avoid revocation of its license because Banco Santander México’s assets are insufficient to satisfy Banco Santander México’s liabilities, or Banco Santander México’s failure to comply with corrective measures, to comply with capitalization requirements, or to satisfy certain liabilities when due, as a means to maintain the solvency of the Mexican financial system or to avoid risks affecting the Mexican payments system and such determination is either made public or notified to Banco Santander México (for the avoidance of doubt, pursuant to Annex 1-R of the general rules applicable to Mexican banks, a Conversion Trigger Event shall occur if financial assistance or other loans shall be granted to the Bank pursuant to Article 148, Section II, paragraphs (a) and (b) of the Mexican Banking Law) | ||
25 | Conversion Amount | “Conversion Amount” means: (i) a conversion of the then Current Principal Amount of Capital Notes in an amount that would be sufficient, and together with any concurrent pro rata write-down or conversion of any other Subordinated Non-Preferred Indebtedness issued by Banco Santander México and then outstanding, to return Banco Santander México’s Fundamental Capital Ratio to the then-applicable Fundamental Capital Ratio required by the CNBV in accordance with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor regulation; or, if no such amount, together with any such concurrent pro rata write-down or conversion, would be sufficient to so restore Banco Santander México’s Fundamental Capital Ratio to the aforementioned amount, then (ii) conversion of the then Current Principal Amount of Notes in the amount necessary to reduce the principal amount of each outstanding Note to zero. |
26 | Conversion Price | The conversion price shall be, if the Ordinary Shares are:
(i) then admitted to trading on the Mexican Stock Exchange, the higher of: (x) the volume weighted average of the Ordinary Shares closing price on the Mexican Stock Exchange for the thirty (30) consecutive Business Days immediately preceding the Conversion Date, with each closing price for the thirty (30) consecutive Business Days being converted from Mexican pesos into U.S. dollars at the then-prevailing exchange rate; or (y) floor price of Ps.20.30 converted into U.S. dollars at the then-prevailing exchange rate;
(ii) not then admitted to trading on the Mexican Stock Exchange, the floor price of Ps.20.30 converted into U.S. dollars at the then-prevailing exchange rate.
The conversion price shall be subject to certain anti-dilution adjustments. |
27 | Type of Conversion | Mandatory. |
28 | Type of shares into which the title is converted | Banco Santander México’s Series F shares (common shares). |
29 | Issuer of such capital instrument | Banco Santander México, S. A., Institución de Banca Múltiple, Grupo Financiero Santander México. |
30 | Write-Down Mechanism | N.A. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
81 |
31 | Write-Down Trigger Events | N.A. |
32 | Write-Down Amount | N.A. |
33 | Write-Up Mechanism | N.A. |
34 | Mechanism for temporary Write-Down | N.A. |
35 | Ranking of the Capital Notes in a liquidation event | The Capital Notes will represent the Issuer’s general, unsecured and subordinated obligations. The Capital Notes constitute Subordinated Non-Preferred Indebtedness and will rank (i) subordinate and junior in right of payment and in liquidation to all of the Issuer’s present and future Senior Indebtedness and Subordinated Preferred Indebtedness, (ii)pari passu without preference among themselves and with all of the Issuer’s present and future other unsecured Subordinated Non-Preferred Indebtedness and (iii) senior only to all classes of the Issuer’s capital stock. |
36 | Does any characteristic of the Capital Notes breach conditions set forth in Annex 1-R, 1-S or 1-Q of the Mexican Banking Law | No. |
37 | Specify which characteristics of the Capital Notes breach conditions set forth in Annex 1-R, 1-S or 1-Q of the Mexican Banking Law | N.A. |
The information relating to Annex 1-O Capitalization Ratio Santander Consumo, Santander Hipotecario and Santander Inclusión Financiera is available on the website
www.santander.com.mx/ir
Leverage ratio
Table I.1 | ||
Integration of the main sources of leverage | ||
Reference | Item | Mar-20 |
1 | On-balance sheet items (excluding derivatives and SFTs, but including collateral) | 1,371,256 |
2 | (Asset amounts deducted in determining Basel III Tier 1 capital) | (50,390) |
3 | Total on-balance sheet exposures (excluding derivatives and SFTs) (sum of lines 1 and 2) | 1,320,866 |
Derivative exposures | ||
4 | Replacement cost associated with all derivatives transactions (ie net of eligible cash variation margin) | 39,049 |
5 | Add-on amounts for PFE associated with all derivatives transactions | 48,947 |
6 | Gross-up for derivatives collateral provided where deducted from the balance sheet assets pursuant to the operative accounting framework | 0 |
7 | (Deductions of receivables assets for cash variation margin provided in derivatives transactions) | 0 |
8 | (Exempted CCP leg of client-cleared trade exposures) | 0 |
9 | Adjusted effective notional amount of written credit derivatives | 0 |
10 | (Adjusted effective notional offsets and add-on deductions for written credit derivatives) | 0 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
82 |
11 | Total derivative exposures (sum of lines 4 to 10) | 87,997 |
Securities financing transaction exposures | ||
12 | Gross SFT assets (with no recognition of netting), after adjusting for sale accounting transactions | 97,350 |
13 | (Netted amounts of cash payables and cash receivables of gross SFT assets) | (33,053) |
14 | CCR exposure for SFT assets | 3,417 |
15 | Agent transaction exposures | 0 |
16 | Total securities financing transaction exposures (sum of lines 12 to 15) | 67,714 |
Other off-balance sheet exposures | ||
17 | Off-balance sheet exposure at gross notional amount | 143,498 |
18 | (Adjustments for conversion to credit equivalent amounts) | (58,802) |
19 | Off-balance sheet items (sum of lines 17 and 18) | 84,696 |
Capital and total exposures | ||
20 | Tier 1 capital | 102,020 |
21 | Total exposures (sum of lines 3, 11, 16 and 19) | 1,561,273 |
Leverage ratio | ||
22 | Basel III leverage ratio | 6.53% |
Table II.1 | ||
Comparison total assets and assets adjusted | ||
Reference | Item | Mar-20 |
1 | Total consolidated assets as per published financial statements | 1,782,474 |
2 | Adjustment for investments in banking, financial, insurance or commercial entities that are consolidated for accounting purposes but outside the scope of regulatory consolidation | 0 |
3 | Adjustment for fiduciary assets recognised on the balance sheet pursuant to the operative accounting framework but excluded from the leverage ratio exposure measure | (50,390) |
4 | Adjustments for derivative financial instruments | (258,925) |
5 | Adjustment for securities financing transactions | 3,417 |
6 | Adjustment for off-balance sheet items | 84,696 |
7 | Other adjustments | 0 |
Leverage ratio exposure | 1,561,273 |
Table III.1
| ||
Conciliation of total assets and exposure in the balance | ||
Reference | Item | Mar-20 |
1 | Total consolidated assets as per published financial statements | 1,782,474 |
2 | operative derivative financial instruments | (346,921) |
3 | operative securities financing transactions | (64,298) |
4 | Trust assets recognized in the balance sheet under the accounting framework, but excluded from the exposure measure of the leverage ratio | 0 |
On-balance exposure | 1,371,256 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
83 |
Table IV.1 | |||
Variation of the elements | |||
Dec-19 | Mar-20 | ||
Concept/Quarter | T-1 | T | Variation (%) |
Basic Capital | 100,236 | 102,020 | 2 |
Adjusted assets | 1,428,739 | 1,561,273 | 9 |
Leverage ratio | 7.02% | 6.53% |
The information relating to Annex 1-O Leverage Ratio is available on the website
www.santander.com.mx/ir
15. Risk Diversification |
Pursuant to the general rules for risk diversification in the performance of borrowing and lending transactions applicable to credit institutions, published in the Federal official Gazette on April 30, 2003, the following information with respect to credit risk transactions as of Mar 31st, 2020, is provided:
- As of Mar 31, 2020 the Bank did not grant financing to debtors or groups of individuals representing single common risk greater than than amount of core capital Bank.
- Loans granted to the three major debtors or groups of persons representing a common risk for a total amount of Ps.43,776 million representing the 43.67% of the basic capital of the Bank.
|
16. Internal and external Sources of Liquidity
Financial sources of liquidity in domestic and foreign currency come from the different savings products that Banco Santander México offers to its clients; mainly demand and time deposits.
An additional internal source of liquidity is the collection of fees, interests and principal amounts of the loans that the Bank grants to its clients.
With respect to external sources of liquidity, the Bank has access to the domestic and foreign capital markets through the issuance of debt or equity instruments. Santander México also obtains funding from other institutions including the Mexican Central Bank, development banks, commercial banks, and other institutions.
Banco Santander México may also obtain liquidity via sale and repurchase agreements (short-term repos) over securities it holds in its investment portfolio. Additionally, the Bank could obtain liquidity through the sale of assets.
17. Dividends Policy
Banco Santander México performs the payment of dividends pursuant to the applicable legal, administrative, fiscal and accounting rules, based in the results obtained by Banco Santander México. The payment of dividends is discussed in the Ordinary General Stockholders’ Meeting, which is the body that orders and approves the payment of dividends to the stockholders.
18. Treasury Policies
The activities of Banco Santander México’s treasury are performed pursuant to the following:
a) | In compliance with the provisions issued by the different authorities of the financial system for bank institutions, such as guidelines for lending and borrowing transactions, accounting rules, liquidity ratios, regulatory matching, capacity of the payment systems, etc. |
b) | Internal limits for market, liquidity and credit risks that are reviewed and approved by appropriate committees, i.e., there are limits established and independent for treasury activities for the management of the assets and liabilities of the bank with respect to the market and liquidity risk derived from such management, as well as the limits regarding counterparty risk derived from the daily transactions. The treasury is responsible for their activities within the limits allowed to manage their risk. |
c) | Compliance with the guidelines stipulated by national and international standard agreements regarding transactions performed in markets. |
d) | Sound market practices. |
e) | Strategies proposed in the banks internal committees. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
84 |
f) | Compliance with the operation procedures of the institution. |
19. Shareholding | ||
Subsidiaries | % of interest | |
Santander Consumo, S.A. de C.V., SOFOM, E.R. | 99.99 | |
Santander Vivienda, S.A. de C.V., SOFOM, E.R. | 99.99 | |
Santander Inclusion Financiera, S.A. de C.V., SOFOM, E.R. | 99.99 | |
Centro de Capacitación Santander, A.C. | 99.99 | |
Banco Santander, S.A. F-100740 | 99.99 | |
Fideicomiso GFSSLPT Banco Santander, S.A. | 89.14 | |
Santander Servicios Corporativos, S.A. de C.V. | 99.99 | |
Santander Servicios Especializados, S.A. de C.V. | 99.99 | |
Santander Tecnología México, S.A. de C.V. | 99.99 |
20. Internal Control
The activities of Banco Santander Mexico are governed by the current legislations of the local regulator and for a series of guidelines established by his holding company, Banco Santander, whose headquarters are located in Madrid.
For the compliance of the regulations in force, Santander México has developed and implemented an Internal Control Model (ICM) which includes the participation of the Board of Directors, the statutory advisor, the Audit Committee, the Internal Audit Department, the General Direction, the Executive Direction of Non-Financial Risks (Internal Control), Financial Control Department and the Regulatory Control Department.
The ICM is based in the identification and documentation of the main risks and the annual assessment of the controls that are created to mitigate such risks. ICM guarantees, among other aspects, design and execution of controls, establishment and updating of measures and controls that promote the compliance with the internal and external regulations, such as the Committee of Sponsoring Organizations of the Tradeway Commission (COSO) guidelines and the proper operation of the financial data processing systems.
The internal control system includes:
The implementation of an organizational structure has allowed the development and growth of the bank. Such structure is constituted as follows:
CEO and General Direction
The following functions report to the President and CEO:
§ | Deputy General of intervention and Management Control |
§ | Deputy General Direction of Technology and Operations |
§ | Executive Direction of Human Resourcecs |
§ | Deputy General Direction of Corporate Resources and Recoveries |
§ | Deputy General Direction of Legal Affairs and Compliance |
§ | Chief Financial Officer |
§ | Vice-president of Commercial Banking: |
- | Deputy General Direction Network Commercial |
- | Deputy General Direction of Specialized Businesses |
- | Deputy General Direction of Strategy of Business |
- | Executive Direction of Commercial Planning |
- | Deputy General Directorate Transformation and Digital Banking |
- | Executive Direction of Strategy Clients |
- | Deputy General Direction of Digital Factory |
§ | Deputy General Direction of Corporate & Investment Bankig |
§ | Deputy General Direction of Enterprises and Institutions |
§ | Deputy General Direction of Risk |
§ | Deputy General Direction of Public Affairs and Strategy |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
85 |
§ | Executive Direction of Audit |
The roles and responsibilities of each direction have been stipulated in order to optimize the performance of the activities of Santander México.
The Organization area, via manuals, circulars and bulletins, governs the activities of the bank; likewise, the Regulatory Control Department has established a general Code of Conduct that every employee of Santander México has to follow.
The structure of Santander México includes the constitution of a Board of Directors, which establishes the objectives, the policies and general procedures of Santander México, the appointment of directors and the constitution of committees that are to supervise the development of the activities of Santander México.
The committees that supervise the development of the entities that constitute Banco Santander México, created and reported to the Board of Directors, are:
§ | Audit Committee |
§ | Corporate Practices, Nominating and Compensation Committee |
§ | Risk Management Committee |
§ | Remuneration Committee |
§ | Communication and Control Committee |
The registration, control and storage of the daily activities of Santander México are carried out by systems mainly designed and focused on the banking and brokerage activity. The common platform for such purposes is known as ALTAIR and it is applied by all the entities in Latin America that are part of Banco Santander (España).
Loans portfolio and transactions of commercial banking of the bank are controlled and registered at ALTAIR. Treasury activities are controlled and registered in computer platforms and the operations are centralized for its accounting registration in ALTAIR. Such platforms comply with the parameters stipulated by the CNBV with respect to reliability and accuracy.
Santander México is regulated by the CNBV, and therefore, the financial statements are prepared according to the accounting practices stipulated by such Commission via the issue of accounting circulars, general official letters and particular official letters regarding the accounting registration of transactions. For such purposes, the accounting system of Santander México has been structured with an accounts catalog stipulated by the Commission, and all the reports come from such system and comply with the applicable provisions.
Within Santander México, there is an independent area of Internal Audit, whose mission is to oversee the compliance, efficacy and efficiency of the internal control systems of the Bank, as well as the reliability and quality of the accounting information.
To achieve so, Internal Audit verifies that the risks inherent to the activity of Santander México are properly covered and the policies stipulated by the Direction, the applicable internal and external regulations and the procedures are observed.
The results of the activities of Internal Audit are reported on regular basis to the General Direction, the Audit Committee and the Board of Directors. Among other issues, the results of the audits performed to the different business units of the companies that constitute Santander México and the follow up of the recommendations provided to the different areas and/ or entities are informed.
Internal Audit has a quality system oriented to the client satisfaction focus on continuous process improvement, which has been subject to a successful Quality Assurance Review (QAR) during 2014.
In summary, Internal Control of Santander México includes the continuous development, implementation and updating of an internal control model where all the areas of the bank have an active role.
During the quarter, there have been no changes to the internal controls and internal audit guidelines.
21. Transactions with related parties | |
Receivable | |
Funds available | 3,740 |
Debtors under sale and repurchase agreements | 1,673 |
Derivatives (asset) | 118,855 |
Performing loan portfolio | 11,751 |
Other receivables, (net) | 20,464 |
Payable | |
Time deposits | 6,649 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
86 |
Demand deposits | 3,851 |
Credit instruments issued | 1,049 |
Creditors under sale and repurchase agreements | 5,586 |
Derivatives (liability) | 114,225 |
Other payables | 4,123 |
Creditors from settlement of transactions | 5,641 |
Subordinated debentures | 33,257 |
Revenues | |
Interest | 69 |
Premium on sale and repurchase agreements | 17 |
Others | 50 |
Net Commissions | 1,462 |
Net gain (loss) on financial assets and liabilities | (9,256) |
Expenses | |
Interest | 502 |
Administrative expenses | 257 |
Technical assistance | 635 |
22. Interests on loan portfolio |
As of March 31st, 2020, the consolidated income statement includes, in the item "Interest income", Ps.22,033 million that correspond to interests from the loan portfolio of Banco Santander México, S.A., Santander Consumo, S.A. de C.V. SOFOM E.R. and Santander Vivienda, S.A. de C.V. SOFOM E.R. |
23. Integral Risk Management (unaudited) |
Risk management is considered by Banco Santander as a competitive element of strategic nature with the purpose of maximizing the value for the stockholder. This management is defined, from a conceptual and organizational sense, as a comprehensive management of the different risks (market risk, liquidity risk, credit risk, counterparty risk, operative risk, legal risk and technological risk) assumed by Banco Santander for the development of its activities. The management of the risk inherent to transactions is essential for understanding and determining the behavior of the financial condition of Banco Santander and the creation of long-term value.
In order to comply with the provisions regarding the Comprehensive Risk management applicable to credit institutions, issued by the National Banking and Exchange Commission, the Board of Directors agreed to create the Comprehensive Risk Management Committee of Banco Santander, to work pursuant to the rules set by such regulations. This Committee gathers every month and verifies that the transactions are according to the objectives, policies and procedures approved by the Board of Directors for the Comprehensive Risk Management.
The Comprehensive Risk management Committee delegates in the Comprehensive Risk Management Unit the responsibility for the implementation of procedures for the measure, administration and control of risks according to the applicable policies; such Unit has the faculty to authorize amounts greater than the stipulated limits and in such cases, the Board of Directors shall be informed on such deviations.
Market Risk
The Market Risk Management department of the Comprehensive Risk management Unit is responsible for recommending the policies on market risk management of Banco Santander, and to establish the parameters for risk measuring, and to provide reports, analysis and assessments to the senior management, to the Comprehensive Risk management Committee and to the Board of Directors.
The market risk management is to identify measure, monitor and control risks arising from fluctuations in interest rates, exchange rates, prices and other market risk factors in currency, money, capital and derivative markets that are exposed the positions that belong to Banco Santander.
The market risk measurement quantifies the potential variation in the value of the positions as a consequence of changes in the market risk factors.
Depending on the nature of the activities of each business unit, debt and capital instruments are registered as securities for trade, securities available for sale and or securities held to maturity. The main characteristic that identifies securities available for sale is their permanent nature and they are managed as a structural part of the balance sheet. Banco Santander has established provisions that all securities available for sale must fulfill, as well as adequate controls for the compliance of such provisions.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
87 |
Whenever significant risks are identified, they are measured and limits are allocated in order to assure an adequate control. Global measurement of risk is carried out via a combination of the methodology applied to Portfolios for Trade and to the management of Assets and Liabilities.
Trading Books
In order to measure the risk in a global approach, the methodology of Value at Risk (“VaR”) is used. VaR is defined as the statistical estimate of the potential loss of value of a given position, during certain period and at certain confidence level. VaR provides a universal measure of the level of exposure of the different risk portfolios; it allows the comparison of the risk level assumed in different securities and markets and expresses the level of each portfolio through a unique figure in economic units.
VaR is calculated via historical simulation, with a 521 working-days window (520 percentage changes) and a one-day horizon. The calculation is performed from a series of simulated gains and losses with 1% percentile at constant pesos and with pesos decreasing on an exponential basis, with a decrease factor that is reviewed on annual basis, the most conservative measure is the one to be reported. A confidence level of 99% is assumed.
Note that the historical simulation model is limiting to assume that the recent past represent the near future.
The Value at Risk as of the end of first quarter of 2020 (unaudited) amounted to:
Bank | ||
VaR (Thousands of pesos) | % | |
Trading Desks | 338,725.01 | 0.26% |
Market Making | 86,253.04 | 0.07% |
Proprietary Trading | 50,953.92 | 0.04% |
Risk factor | ||
Interest rate | 99,708.02 | 0.08% |
Foreign exchange | 238,842.85 | 0.18% |
Equity | 1,695.87 | 0.00% |
* % of VaR with respect to Net Capital |
The Value at Risk for the average the first quarter of 2020 (unaudited) amounted to:
Bank | ||
VaR (Thousands of pesos) | % | |
Trading Desks | 182,842.56 | 0.14% |
Market Making | 45,593.08 | 0.03% |
Proprietary Trading | 23,736.21 | 0.02% |
Risk factor | ||
Interest rate | 66,584.73 | 0.05% |
Foreign exchange | 118,652.07 | 0.09% |
Equity | 2,518.69 | 0.00% |
* % of VaR with respect to Net Capital |
Likewise, monthly simulations of gains or losses of portfolios are carried out by revaluating such portfolios under different scenarios (Stress Test). Such estimates are generated using two different methods:
§ | Applying to risk factors the percentage changes observed in certain periods including relevant market turbulences. |
§ | Applying to risk factors changes that depend on the volatility of each risk factor. |
On a monthly basis “back testing” is carried out to compare daily gains and losses that would have been observed is the same positions had been maintained, taking into account only the change in value at risk in order to be able to fine tune the models. Even though these reports are prepared on a monthly basis, they include daily tests.
Assets and Liabilities Management
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
88 |
Commercial banking activities of Banco Santander generate important balance sheet amounts. The Assets and Liabilities Committee (“ALCO”) is responsible for determining the guidelines for the management of financial margin risk, net worth value and liquidity that must be followed by the different commercial portfolios. Pursuant to this approach, the General Direction of Finances has the responsibility to execute the strategies defined by the Assets and Liabilities Committee in order to modify the risk profile of the commercial portfolio by following the corresponding policies. Compliance with information requirements for interest rate, Exchange rate and liquidity risks is fundamental.
As part of the financial management of Banco Santander, sensitivity to Net Interest Income (“NIM”) and Market Value of Equity (“MVE”) of the different balance sheet items is analyzed in comparison to variations in interest rates. This sensitivity is derived from the difference between maturity dates of assets and liabilities and the dates interest rates are modified. The analysis is performed from the classification of each item sensitive to interest rate throughout time, according to their repayment, maturity or contractual modification of the applicable interest rate.
Sensitivity NIM | Sensitivity MVE | ||||||||
Bank | Jan-20 | Feb-20 | Mar-20 | Average | Jan-20 | Feb-20 | Mar-20 | Average | |
Balance MXN GAP | 15% | 18% | 24% | 19% | 39% | 43% | 72% | 52% | |
Scenario | +100 bp | +100 bp | +100 bp | N/A | +100 bp | +100 bp | +100 bp | N/A | |
Balance USD GAP | 40% | 40% | 17% | 32% | 75% | 75% | 35% | 62% | |
Scenario | (100) bp | (100) bp | (100) bp | N/A | (100) bp | (100) bp | (75) bp | N/A |
Using simulation techniques, the predictable change of the net interest income and the market value of equity are measured in different interest rate scenarios, and their sensitivity under extreme movement of such scenarios, as of the end of the first quarter of 2020:
Sensitivity NIM | Sensitivity MVE | ||||||||
Bank | Scenario | Total | Derivatives | Non Derivatives | Scenario | Total | Derivatives | Non Derivatives | |
Balance MXN GAP | +100 bp | (358) | (941) | (1,298) | +100 bp | (3,078) | 1,845 | (4,923) | |
Balance USD GAP | (100) bp | (242) | 72 | (315) | (75) bp | (823) | (1,599) | 776 |
The Assets and Liabilities Committee adopts investment and hedging strategies in order to maintain such sensitivities within the target range.
Limits
Limits are used to control global risk of the financial group derived from each portfolio and books. The structure of limits is used to control exposures and to establish the total risk authorized to business units. These limits are established for VaR, Loss alert, maximum loss, equivalent volume of interest rate, delta equivalent in equity, open foreign currency positions, sensitivity of net interest income and sensitivity of market value of equity.
Liquidity Risk
Liquidity risk is related to the ability of Banco Santander to finance acquired commitments at reasonable market prices, as well as to fulfill business plans with stable financing sources. Risk factors may be external (liquidity crisis) and internal due to excessive concentration of maturities.
Banco Santander carries out a coordinated management of maturities of assets and liabilities, and oversees the maximum timing difference profiles. This monitoring is based in the analysis of maturities of assets and liabilities, both contractual and managerial. Banco Santander realizes a control for the maintenance of a sufficient quantity of liquid assets to guarantee a horizon of survival during a minimum of days facing a scene of stress of liquidity without resorting to additional financing sources. The risk of Liquidity is limited in terms of a minimal period of days established for local, foreign and consolidated currencies. It is necessary to indicate that in the current quarter incidents have not been had in the metrics.
Million pesos | Total | 1D | 1W | 1M | 3M | 6M | 9M | 1Y | 5Y | >5Y | |
Structural GAP | 186,928 | (166,353) | (79,419) | (38,968) | 52,649 | 51,841 | 43,039 | 41,856 | 363,563 | (81,281) | |
Non Derivative | 175,240 | (166,353) | (79,489) | (39,223) | 52,607 | 51,688 | 42,955 | 40,252 | 353,844 | (81,041) | |
Derivatives | 11,687 | 0 | 70 | 255 | 42 | 153 | 84 | 1,604 | 9,719 | (240) |
Credit Risk
Management of credit risk of Grupo Financiero Santander is developed differently for the different segments of clients along the three phases of the credit process: acceptance, follow-up and recovery.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
89 |
From a global perspective, management of credit risk in Grupo Financiero Santander is responsible for the identification, measurement, integration and assessment of the aggregated risk and the profitability according to such risk; with the purpose of oversee the levels of risk concentration and to adapt them to the limits and objectives previously established.
Risks receiving an individual treatment (risks with companies, Grupo Financiero Santander and financial entities) are identified and taken apart from those other risk that are managed in standardized manner (consumer and mortgages credits to individuals, loans to businesses and small enterprises)
Risks managed on individual basis are subject to a solvency or rating system with a related probability of failure that allows the measuring of the risk for each client and for each transaction from the beginning. The assessment of the client, after analyzing other relevant risk factors in different areas, is adjusted according to the special characteristics of the transaction (guarantee, term, etc,).
Standardized risks require, due to their special characteristics (great number of transactions for relatively low amounts), a different management that allows an efficient process and effective use of resources, so automated decision tools are used (expert and credit scoring systems).
Management of loans to companies is complemented, during the follow-up phase, with the so called “system of special monitoring” that determines the policy to be followed in the management of the risks with companies or groups rated within such category. Different situations of levels of monitoring are identified and generate different actions. A special monitoring grade is given in the case of alert signals, systematic reviews, or specific initiatives promoted by the Risks Department or Internal Audit.
Recovery Units constitute a critical element in the management of irregular risk, in order to minimize the final loss for Grupo Financiero Santander. These units are responsible for a specialized management of the risk from the moment they are classified as irregular risk loans (defaulting payment).
Grupo Financiero Santander has carried out a policy for the selective growth of risk and a strict treatment of late payments and the creation of the corresponding provisions, based in the prudent criteria defined by the Group.
Probability of Default and Expected Losses
Pursuant to the provisions on Comprehensive Risk Management included in the general regulations applicable to credit institutions, as part of the credit risk management, credit institutions must determine the probability of default.
The system allows the calculation of the probability for the different loans portfolios.
a. | The probability of failure is for “No Retail” portfolios. It is determined via the fine tune of the ratings of clients in a given moment, based in the Monthly Default Rates observed during a period of five years. Such Default Rates are adjusted to an economic cycle of ten years. For “Retail” portfolios, the standard default probabilities set by the Basilea Convention are used. |
b. | Once the probability of default is determined, the parameters of “severity of Loss” (“LGD”) and “Exposure at Default” (“EAD”) stipulated in Basilea, are taken into consideration. |
Once the abovementioned factors are obtained, the Expected Loss (“PE”) is calculated as follows:
Expected Loss = Probability of Default x Severity of Loss x Exposure at Default
i.e.:PE = PD * LGD * EAD
Counterparty Risk
Whitin the credit risk, there is a concept that, due to its specific characteristics, it requires a special management: the Counterparty Credit Risk.
Counterparty Credit Risk (CCR) is defined as the risk that may arise from total or partial breach of the financial obligations contracted with the entity. It is a bilateral credit risk, as it may affect both parties of the transaction, and it is uncertain, since it is conditioned by the behaviour of markets, which are volatile.
The financial securities that generates this exposure are the financial derivatives, repurchase agreements (REPOs) and security lending. The management and control of this type of credit risk is carried out by a specific team with an organizational structure independent from the business teams.
For the control of the counterparty credit lines, the Equivalent Credit Risk (REC) is used. The REC is the metric that represents the peak exposure or the highest potential future exposure value at a specific time interval and it can be obtained in the following ways:
· | Gross REC: it measures the exposure without considering netting and collateral agreements. It´s obtained at a transaction level and at other levels of aggregation. |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
90 |
· | Net REC: it measures the exposure considering netting and collateral agreements and personal or financial guarantees. It´s calculated at a netting agreement level and at other levels of aggregation. |
In addition to the Counterparty Risk, there is the issuing risk, which is generated by the acquisition and / or direct disposal of public and private instruments of authorized securities and the Settlement Risk, also known for Herstatt risk for FX trading, is the risk that is generated in the exchange of securities when one of the parties fails to deliver the securities/currency/cash, committed by contract, having received the amount from the other party.
The control of Counterparty Risk is performed in a daily basis using theInteractive Risk Integrated System (IRIS), which allows to know the credit line availability for all the counterparties, for any of the instruments already mentioned and term.
For the process of control for this risk, Financial Risk Division oversees on a daily basis the compliance with the limits on counterparty credit risks by product, term and other conditions stipulated in the authorization for financial markets. Likewise, it is the responsible for communicating on a daily bases, the limits, consumptions and any incurred deviation or excess.
On a monthly basis, a report is presented to the Risk Management Committee, with respect to the limits to Counterparty Credit Risks, Issuer Risks and current consumptions. In addition, on a monthly basis, a report is presented to the Global Banking Credit Committee and Retail Credit Committee with respect to incurred excesses and transactions with non-authorized customers. Also, in a monthly basis, is presented to the Risk Management Committee the present value of the expected loss for the actual portfolio of derivatives and repos in a base scenario and two other stressed scenarios (LGD and PD).
Currently, Banco Santander has lines of counterparty credit risk with the following segments: Mexican Sovereign Risk and Domestic Development Banking, Foreign Financial Institutions, Mexican Financial Institutions, Corporations, Companies Banking-SGC, Institutional Banking, Large Enterprises Unit and Project Finance.
Equivalent Net Credit Risk of the lines of Counterparty Credit Risk and Issuer Risk of Banco Santander for the first quarter of 2020:
Equivalent Net Credit Risk | ||||
Millions of U.S. Dollars | ||||
Segment | Jan-20 | Feb-20 | Mar-20 | Average |
Sovereign Risk, Development Banking and Financial Institutions | 752.99 | 777.99 | 1,347.41 | 959.46 |
Corporates | 461.67 | 462.99 | 488.40 | 471.02 |
Project Finance | 468.41 | 471.65 | 438.54 | 459.53 |
Companies | 245.71 | 251.72 | 310.79 | 269.41 |
Equivalent Net Credit Risk of the lines of Issuer Risk of Banco Santander for the first quarter of 2020:
Equivalent Net Credit Risk | ||||
Millions of U.S. Dollars | ||||
Segment | Jan-20 | Feb-20 | Mar-20 | Average |
Sovereign Risk, Development Banking and Financial Institutions | 17,415.21 | 18,547.66 | 14,770.17 | 16,911.01 |
Corporates | 69.47 | 66.72 | 53.33 | 63.17 |
Project Finance | 0.00 | 0.00 | 0.00 | 0.00 |
Companies | 0.00 | 0.00 | 0.01 | 0.00 |
The equivalent credit risk lines maximum gross counterparty risk of Banco Santander as of the end of the first quarter of 2020, which corresponds to derivative transactions, is distributed depending on the type of derivative:
Gross REC distribution | |
Type of Derivative | End of 1Q20 |
Interest Rate Derivatives | 31.26% |
Exchange Rate Derivatives | 68.61% |
Bonds Derivatives | 0.00% |
Equity Derivatives | 0.13% |
Total | 100% |
The Expected Loss of Banco Santander at the end of the quarter of 2020, and the quarterly average of the expected loss of the lines of Counterparty risk of Banco Santander are:
Expected Loss |
Millions of U.S.Dollars |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
91 |
Segment | Jan-20 | Feb-20 | Mar-20 | Average |
Sovereign Risk, Development Banking and Financial Institutions | 2.83 | 3.51 | 4.65 | 3.66 |
Corporates | 6.25 | 8.30 | 24.79 | 13.11 |
Project Finance | 3.45 | 4.85 | 9.99 | 6.10 |
Companies | 2.07 | 3.10 | 7.63 | 4.27 |
The segments of Mexican Financial Institutions and Foreign Financial Institutions are very active counterparties with whom Banco Santander has current positions of financial instruments with Counterparty Credit Risk. It is important to mention that Equivalent Credit Risk is mitigated by netting agreements (ISDA-CMOF) and, in some cases, by collateral agreements (CSA-CGAR) or revaluation agreements with counterparties.
Respect to total collateral received for derivatives transactions as of the end of the first quarter of 2020:
Warranty | ||
Millions of U.S.Dollars | ||
Collateral | Average | |
Cash | 973.68 | 73.72% |
Debt issued by the Mexican Government | 184.95 | 14.00% |
Debt issued by Sovereigns other than the Mexico | 162.16 | 12.28% |
In respect to collateral management in derivatives transactions, counterparty’s positions are valuated according to the frequency established at each collateral agreement. In addition, all credit risk parameters, established at each collateral agreement are considered to obtain the amount of collateral to be delivered or to be received from the counterparty. These amounts, margin calls, will be requested from the counterparty which has the right to receive the collateral, according to the frequency established at the collateral agreement. The counterparty which receives the margin call, has the right to analyze the valuation and it could result on discrepancies to solve. There are two types of margins for derivatives:
· | Variation Margin: it refers to collateral delivered by a counterparty to another counterparty in order to meet its obligations under one or more transactions between the parties, as a result of a change in the value of such obligations since the last time those collaterals were delivered. |
· | Initial Margin: it refers to the collateral received by a counterparty to cover its current and future exposure in the interval between the last receipt of margin and the settlement of positions or the coverage of market risk after a default by the other counterparty. |
The control of wrong-way risk is also performed by the counterparty credit risk team. This risk occurs when the "exposure to a counterparty is adversely correlated with the credit quality of that counterparty", in short it arises when default risk and credit exposure increase together. In Banco Santander (Mexico) the deals with wrong-way risk receive a special treatment, they are not included in the netting set and must have an independent CSA, so the exposure is limited.
Legal Risk
Legal Risk is defined as the potential loss due to the failure to comply with the applicable legal and administrative regulations, the issue of administrative and judicial resolutions against Banco Santander and the application of fines, with respect to the transactions carried out by Banco Santander.
Pursuant to the provisions regarding the Comprehensive Risk Management, the following activities are performed: a) Establishment of policies and procedures for analyzing the legal validity and the proper execution of the legal acts. b) estimates of the amount of potential losses derived from judicial or administrative orders against Banco Santander and the possible application of fines c) Analysis of the legal acts governed by a legal system different to the Mexican laws, d) communication to directors and employees on the legal and administrative regulations applicable to transactions and e) the performance, at least on annual basis, of internal legal audits.
Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
The main objective is to avoid or reduce the impact of Operational Risk, through the identification, monitoring and control of the factors that trigger the events of potential loss. Therefore, it also requires to establish policies and procedures to operate under the risk exposure that the Bank is willing to accept.
The sound management of risk involves mainly the heads of each Business Unit on the management tools and results; as well as a continuous training to the staff. The pillars on which the operational risks are managed are:
a) Strategic planning and budget: Required activities to define the operational risk profile for Banco Santander México; this includes:
- | Risk appetite, defined as the level of risk that the Bank is willing to accept |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
92 |
- | Loss annual budget; ensuring the overview of real losses according to the budget and the deviations, challenging the controls and extenuation measures. |
b) Identify, measure and evaluation of the Operational risk; identify risks and the factors that trigger them in the Bank, and estimate the qualitative or/and quantitative impact.
c) Monitoring; The Overview and monitoring of operational risk goal for periodic analysis of available information of risk (type and level) during the normal development of the activities.
d) Extenuation (Mitigation); once the Operational Risk has been assessed, it is required to establish actions to avoid the risk or to mitigate the impact for risk that materialize, develop a cost-benefit study and indicators should be implemented to help us evaluate the effectiveness of these actions.
e) Reporting; the Operational Risk profile and performance of the Operational Risk environment is presented on a regular basis in Bank Committees.
Banco Santander México had an average monthly loss of Ps.28 million for operational risk in general to the first quarter of 2020.
Since December 2016, Banco Santander México applies the Alternate Standard Approach (ASA) for operational risk capital requirements.
Technological Risk
Technological risk is defined as the potential loss due to damages, discontinuation, alterations or failures derived from the use or dependence on hardware, software, systems, applications, networks and any other data channel distribution for the provision of banking services to the clients of Banco Santander.
Banco Santander México has adopted a corporate model for the management of technological risk (which includes cyber risks), integrated into the service and support processes of the technological areas, to identify, evaluate, monitor, control, mitigate and report the technological risks to which the operation is exposed. This model allows the establishment of control measures to reduce the probability of risks materializing or, minimize the impact of those risks.
Processes and levels of authorization
Pursuant to internal regulations, all the products and services traded by Banco Santander are approved by the “Comité de Comercialización” and by the “Comité Corporaivo de Comercialización”. Those products or services that are modified or extended with respect to their original approval must be approved by the “Comité de Comercialización” and, depending of their relevance, the “Comité Corporaivo de Comercialización” must approve them too.
All areas taking part in the operation of the product or service, depending on the nature of such product or service, as well as the areas responsible for their accounting registration, legal formalization, fiscal treatment, risk assessment, etc. are present in the Committee. All approvals shall be unanimous as there are no authorizations approved by majority of votes. In addition to the Committee’s approval, there are products that require authorizations from local authorities, and therefore, the Committee’s approvals are subject to the authorizations issued by the competent authorities in each case.
Finally, all the approvals shall be authorized by the Comprehensive Risk Management Committee.
Independent Reviews
Banco Santander is subject to the monitoring and supervision of the National Bank and Exchange Commission, the Central Bank of Mexico and the Bank of Spain, and such monitoring and supervision is exercised via follow-up processes, inspection visits, information requests, delivery of documents and reports.
Likewise, periodic reviews are performed by Internal and External Auditors.
General description of the valuation techniques
Derivative financial securities are valued at reasonable value, according to the accounting rules established in the Circular Letter for Credit Institutions issued by the National Banking and Exchange Commission, in Principle B-5 “Derivative Financial Instruments and hedging Transactions” and the provisions in Principle A-2 “Application of specific rules”, and the provisions in the specific rule included in Bulletin C-10 of the Financial Information Rules.
A. | Methodology of Valuation |
1) | Trading purposes |
a) | Organized Markets |
Valuation is made at the corresponding closing market price. Prices are provided by the supplier of prices.
b) | Over-the-Counter Markets |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
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i) | Derivative financial instruments with optionality. |
In the majority of the cases, a general form of the Black & Scholes model is used. Such model assumes that the underlying product follows a lognormal distribution. For exotic products or when payment depends on the trajectory of any market variable, MonteCarlo simulations are used. In this case, it is assumed that logarithms of the different variables follow a multi-varied normal distribution.
ii) | Derivative financial instruments with no optionality. |
The valuation technique is to obtain the present value of the estimated future flows.
In all cases, Banco Santander carries out the valuation of its positions and registers the corresponding value. In some cases, a different calculation agent is designated, and such calculation agent may be the counterparty or a quarter party.
2) | Hedging purposes |
In the performance of its commercial banking activities, Banco Santander has tried to cover the evolution of the financial margin of structured portfolios that are exposed to adverse movements in interest rates. The ALCO, the body responsible for the management of long-term assets and liabilities, has constituted the portfolio via which the Banco Santander achieves such hedge.
An accounting hedge is defined as a transaction that complies with the following conditions:
a. | A hedge relationship is designated and documented from the beginning in an individual file, where its objective and strategy is established. |
b. | The hedge is effective for the compensation of variations in the reasonable value or in the cash flows attributed to such risk, according to the risk management documented at the beginning. |
The Management of Banco Santander performs derivative transactions for hedging purposes with swaps.
Derivatives for hedging purposes are valued at market value, and the effect is recognized depending on the type of accounting hedge, pursuant to the following:
a. | In the case of fair value hedges, they are valued at market value for the risk covered, the primary position and the hedging derivative instrument, and the net effect is registered in the statement of income of the corresponding period. |
b. | In the case of cash flow hedges, the hedging derivative instrument is valued at market value. The effective portion of the hedge is registered in the comprehensive income account, within the stockholders’ equity, and the ineffective portion is registered in the statement of income. |
Banco Santander ceases the recording of hedges at the maturity date of the derivative, or when such derivative is sold, cancelled or exercised; when the derivative does not reach a high efficiency in compensating the changes in the reasonable value or the cash flows of the covered item, or when Banco Santander decides to cancel the hedge.
It shall be fully evidenced that the hedge fulfills the objective for which derivatives were contracted for. This effectiveness requirement assumes that the hedge must comply with a maximum range of deviation with respect to the initial objective of 80% to 125%.
In order to demonstrate the efficacy of hedges, two tests are to be carried out:
a) | Forward-looking Test: it is demonstrated that, in the future, the hedge will be within the aforementioned range of deviation. |
b) | Retrospective Test: This test reviews if, in the past, from its initial date to now, the hedge has been maintained within the allowed range of deviation. |
In the cases of Fair Value Hedges and the Cash Flow Hedges, they are retrospective and forward-looking efficient and within the allowed maximum range of deviation.
B. | Reference Variables |
The most relevant reference variables are:
Exchange Rates
Interest Rates
Equity
Baskets of equities and stock indexes.
C. | Frequency of valuation |
Derivative financial instruments for trading and hedging purposes are valued on a daily basis.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
94 |
Management of internal and external sources of liquidity that may be used for the compliance of requirements related to derivative financial instruments.
Resources are obtained via the National and International Treasury departments.
Changes in exposure to identified risks, contingencies and events, known or expected, in derivative financial instruments.
At the end of the first quarter of 2020, Banco Santander has no situation or contingency such as changes in the value of the underlying asset or the reference variables, that may cause the use of the derivative financial instruments to be different to their original intended use, a significant change in their scheme or the total or partial loss of the hedge, requiring the Issuer to assume new obligations, commitments or variations in its cash flow or affecting its liquidity (day trade calls), nor contingencies or events known or expected by the Management that may affect future reports.
Summary of Derivative Financial Instruments | ||||||
Million Pesos as of March 31th, 2020 | ||||||
Derivatives | Underlying Asset | Purposes trading or hedging | Notional | Fair Value | ||
Current Quarter | Previous Quarter | |||||
Forwards | Foreign Currency | Trading | 486,670 | (4,068) | 1,422 | |
Forwards | Equity | Trading | 810 | 7 | (3) | |
Futures | Foreign Currency | Trading | 10,497 | 0 | 0 | |
Futures | Market Index | Trading | 7,948 | 0 | 0 | |
Options | Equity | Trading | 330 | (214) | (71) | |
Options | Foreign Currency | Trading | 214,988 | 1,023 | (512) | |
Options | Market Index | Trading | 3,207 | 82 | 75 | |
Options | Interest Rate | Trading | 220,972 | 154 | 130 | |
Swaps | Cross Currency | Trading | 973,230 | (7,140) | 446 | |
Swaps | Interest Rate | Trading | 7,839,542 | 7,305 | 4,588 | |
Swaps | Equity | Trading | 775 | 353 | 4 | |
Forwards | Foreign Currency | Hedging | 49,990 | 1,794 | 3,597 | |
Swaps | Cross Currency | Hedging | 61,788 | (13,497) | (3,402) | |
Swaps | Interest Rate | Hedging | 85,591 | (188) | (81) |
Santander México, at the execution of transactions of OTC derivative financial instruments, has Collateral formalized agreements with many of its counterparties, which function as market value guarantee of the derivative transactions, and it is determined based on the exposure of the net position on risk with each opposing party. The managed Collateral consists mainly in cash deposits, whereat there is not a deterioration situation.
During the first quarter of 2020, there have been no derivatives which underlying assets are investments in proprietary shares or stock certificates that represent them.
During the first quarter of 2020, the number or expired derivative financial instruments and closed positions was as follows (unaudited):
Description | Maturities | Closed Positions | |
CAPS AND FLOORS | 615 | 29 | |
EQUITY FORWARD | 6 | 0 | |
OTC EQ | 198 | 24 | |
OTC FX | 1945 | 568 | |
SWAPTIONS | 3 | 1 | |
FX FORWARD | 2534 | 169 | |
IRS | 585 | 81 | |
CCS | 52 | 2 |
The amount of day trade calls performed during the quarter was the necessary for covering contributions to organized markets and the requirements in collateral agreements.
During the first quarter of 2020, there were no defaults by counterparties.
Sensitivity Analysis
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
95 |
Identification of Risks
Sensitivity measures of market risk associated with securities and derivative financial instruments are those that measure the change (sensitivity) of the market value of the financial instrument concerned, when changes in each of the risk factors associated with same occur.
The sensitivity of the value of a financial instrument when changes in market factors occur and is determined by the full instrument revaluation.
The sensitivities are detailed below according to each risk factor and associated historical consumption of the trading book.
The management strategy of the organization is integrated with security positions and derivatives. The latter are used largely to mitigate the market risk of the second. In view of the above, the sensitivities or exposures as described below are both types of instruments considered as a whole.
1. Sensitivity to risk factor “Equity (“Delta EQ”)”
The EQ Delta shows the change in the portfolio's value in relation to changes in the prices of equities.
The EQ Delta calculated for the case of derivative financial instruments considered the relative change of 1% in the prices of the underlying assets in equities, in the case of equities, this considers the relative variation of 1% of market price title.
2. Sensitivity to risk factor “Foreign Exchange”, (“Delta FX”)
The FX Delta shows the change in the portfolio's value in relation to changes in asset prices exchange rate.
The FX Delta calculated for the case of derivative financial instruments considered the relative change of 1% in the prices of the underlying assets of the exchange rate, In the case of currency positions, this considers the relative variation of 1%of the corresponding exchange rate.
3. Sensitivity to risk factor “Volatility” (“Vega”)
Vega sensitivity is the measure resulting from changes in the volatility of the underlying asset (the reference asset). Vega risk is the risk that a change in the volatility of the underlying asset value, that results in a change in the market value of the derivative.
The calculation of Vega sensitivity, considers the absolute change of 1% in the volatility of the underlying asset value.
4. Sensitivity to risk factors “Interest Rate” (“Rho”)
This sensitivity quantifies the change in value of financial instruments for the trading portfolio in the face of a parallel increase in the interest rate curves of a basis point.
The table below presents the sensitivities described above corresponding to the position of the trading portfolio,as of the end of the first quarter of 2020:
Sensitivity Analysis | ||||||
Million pesos | ||||||
Total Rate Sensitivity | ||||||
Pesos | Other Currencies | |||||
Sens. a 1 Bp | (0.18) | 8.28 | ||||
Vega Risk factor | ||||||
EQ | FX | IR | ||||
Total | (0.04) | (7.36) | (0.59) | |||
Delta Risk Factor (EQ and FX) | ||||||
EQ | FX | |||||
Total | (0.29) | 1.62 |
It is considered that the above sensitivity table reflects prudent management of the trading portfolio of Banco Santander with respect to risk factors.
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
96 |
Stress Test for Derivative Financial Instruments
The following are various stress test scenarios considering various scenarios calculated for the trading portfolio of Banco Santander.
· | Probable scenario |
This scenario was defined based in the movements derived from a standard deviation, with respect to risk factors that have an influence over the valuation of financial instruments. Specifically:
o | Risk factors of Interest Rate (“IR”), volatility (“Vol”) and rate of Exchange (“FX”) were incremented in a standard deviation. |
o | Risk factors with respect to stock market (“EQ”) were decreased in a standard deviation. |
· | Possible scenario |
Under this scenario, as requested in the official letter, risk factors were modified in 25%. Specifically:
o | Risk factors: IR, Vol and FX were multiplied by 1.25 that means, they were incremented in 25%. |
o | Risk factor EQ was multiplied by 0.75 that means, it was decreased in 25%. |
· | Remote scenario |
Under this scenario, as requested in the official letter, risk factors were modified in 50%. Specifically:
o | Risk factors IR, Vol and FX are multiplied by 1.50, that is, they were incremented in 50%. |
o | Risk factor EQ was multiplied by 0.5, that is, it was decreased a 50%. |
Effect in the Income Statement
The following table shows the possible income (loss) for the trading portfolio of Banco Santander, in millions of Mexican pesos for each stress scenario,as of the end of the first quarter of 2020:
Summary of Stress Test | |
Million pesos | |
Risk Profile | Stress all factors |
Probable scenario | (29) |
Remote scenario | (160) |
Possible scenario | (141) |
24. Disclosure of the Liquidity Coverage Ratio
On December 31st, 2014, the Commission and the Central Bank of Mexico published in the Federal Official Gazette, the General Provisions on Liquidity Requirements for multiple banking institutions, which establish liquidity requirements that
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credit institutions must comply at all times in accordance with the guidelines established by the Committee on Regulation of Bank Liquidity at its meeting held on October 17th, 2014.
These regulations came into effect on January 1st, 2015.
During the first quarter of 2020, the weighted average CCL for the Bank is 124.99%, complying with the Bank´s desired Risk Profile and well above the regulatory minimum established in the regulations.
Million pesos | Amount unweighted (average) | Weighted amount (average) | |||
Liquidity Assets | |||||
1 | Total high-quality liquid assets | Not applicable | 167,664 | ||
Cash Outflows | |||||
2 | Unsecured retail financing | 246,952 | 14,768 | ||
3 | Stable funding | 198,544 | 9,927 | ||
4 | Less stable funding | 48,408 | 4,841 | ||
5 | Unsecured wholesale funding | 379,877 | 150,833 | ||
6 | Operational deposits | 195,252 | 44,489 | ||
7 | Non-operational deposits | 162,085 | 83,805 | ||
8 | Unsecured debt | 22,539 | 22,539 | ||
9 | Secured wholesale funding | Not applicable | 543 | ||
10 | Additional requirements: | 205,183 | 44,274 | ||
11 | Outflows related to derivatives exposures and other collateral requirements | 55,212 | 34,547 | ||
12 | Outflows related to loss of funding on debt products | 0 | 0 | ||
13 | Credit and liquidity facilities | 149,971 | 9,727 | ||
14 | Other contractual funding obligations | 82,997 | 480 | ||
15 | Other contingent funding obligations | 9,947 | 9,947 | ||
16 | Total Cash Out | Not applicable | 220,845 | ||
Cash Inflows | |||||
17 | Cash inflows secured transactions | 86,708 | 1,562 | ||
18 | Cash inflows from operations unsecured | 100,002 | 70,059 | ||
19 | Other cash inflows | 14,097 | 14,097 | ||
20 | Total Cash Inflows | 200,807 | 85,718 | ||
Total adjusted value | |||||
21 | Total of Eligible Liquid Assets | Not applicable | 167,664 | ||
22 | Total Net Cash Out | Not applicable | 135,128 | ||
23 | Liquidity Coverage Ratio | Not applicable | 124.99% | ||
The presented numbers are subject to review and therefore they might suffer changes.
Notes related to the Liquidity Coverage Ratio
a) | Natural days contemplated in the quarterly report. |
· | 91 days. |
b) | Main causes of the results of the Liquidity Coverage Ratio and the evolution of its main components; |
· | During the quarter, there was a decrease in CCL attribute to a reduction in the commercial gap due to a seasonal issue (driven by lower deposits at the beginning of the year). |
c) | Changes of major components within the quarter report. |
· | During the quarter, there was a decrease in CCL attribute to a reduction in the commercial gap due to a seasonal issue (driven by lower deposits at the beginning of the year). |
d) | Evolution of the composition of the Eligible and Computable Liquid Assets. |
· | The Bank has a significant proportion of liquid assets comprised by government debt, deposits in Bank of Mexico and cash. |
e) | Concentration of funding sources. |
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· | The main sources of funding are diversified by its own nature as: (i) demand deposits; (ii) term deposits, which include retail deposits and the money market (promissory notes with interest payable at maturity), and (iii) repurchase agreements. |
· | In addition, the Bank has registered programs for local market´s debt issuances and has experience issuing in international markets. |
f) | Exposures in financial derivative instruments and possible margin calls. |
· | Performed analyses don’t show any significant vulnerabilities coming from financial derivative instruments. |
g) | Currency mismatch. |
· | Performed analyses don’t show any significant vulnerability in Currency mismatch. |
h) | Description of the level of centralization of liquidity management and interaction between the units of the group. |
· | Banco Santander Mexico is autonomous in terms of liquidity and capital; it develops its financial plans, liquidity forecast, and analyzes funding requirements for all its subsidiaries. The Bank is responsible for its own "ratings", its issuance program and any other activities to keep its ability to access capital markets. The issuance activity is performed without having the guarantee of the parent company. |
· | The liquidity management of all Bank subsidiaries is centralized. |
i) | Cash flows and Inflows, if any, that are not captured in this framework, but the institution considers relevant to the liquidity profile. |
· | The Liquidity Coverage Ratio considers only the inflows and outflows up to 30 days, however the flows that are not contained in the metric are well managed and controlled by the Group. |
Additional notes for the previous quarter
I.Quantitative information:
a) | The concentration limits for different groups of guarantees received and major sources of financing. |
· | The Bank has no concentration limits under guarantees received by market operations, as they are mainly composed of government securities and cash. |
b) | Exposure to liquidity risk and funding needs of the institution, taking into account the legal, regulatory and operational constraints on liquidity transfers. |
· | Liquidity risk is associated with our capacity to finance the commitments we undertake at reasonable prices, as well as maintaining our ability to carry out our business plans using stable financing sources. Factors that influence liquidity risk may be external, such as a liquidity crisis, or internal, such as an excessive concentration of maturities. |
· | The measures used to control liquidity risk in balance sheet management are the liquidity gap, liquidity ratios, stress scenarios and liquidity horizons. |
· | The liquidity horizons metric has been defined to ensure that the Group has sufficient liquid assets to comply with its requirements during a certain period of time, given different stress scenarios. The Group set a 90-day survival horizon for local currency and consolidated balance and a 30-day survival horizon for foreign currency. During the 4Q19, the balance remained above the established limits, and therefore we maintained a sufficient liquidity buffer. |
31/12/2019 | Term | Amount | |
Million pesos | |||
Consolidated | 90 days | 138,755 | |
Local Currency | 90 days | 63,335 | |
Foreign Currency | 30 days | 80,418 |
c) | Balance sheet maturity liquidity gap including off balance sheet accounts. |
· | The table below shows the liquidity gap of our assets and liabilities using maturity dates as of December 31, 2019. The reported amounts include cash flows from interest on fixed and variable rate instruments. The interest on variable rate instruments is determined using the forward interest rates for each period presented. |
Million pesos | Total | 0-1 months | 1-3 months | 3-6 months | 6-12 months | 1-3 years | 3-5 years | >5 years | Not Sensitive |
Money Market | 79,151 | 33,546 | 0 | 0 | 0 | 29 | 0 | 0 | 45,575 |
Loans | 923,390 | 63,743 | 91,160 | 73,504 | 122,407 | 280,957 | 121,497 | 171,017 | (895) |
Trade Finance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Intragroup | 2,391 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,391 |
Securities | 417,021 | 31,965 | 1,856 | 1,861 | 10,709 | 81,502 | 63,620 | 98,939 | 126,570 |
Permanent | 16,901 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 16,901 |
Other Balance Sheet Assets | 2,464,626 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,464,626 |
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Total Balance Sheet Assets | 3,903,479 | 129,254 | 93,016 | 75,365 | 133,116 | 362,489 | 185,117 | 269,956 | 2,655,168 |
Money Market | (206,367) | (100,790) | (591) | 0 | 0 | 0 | 0 | 0 | (104,986) |
Deposits | (709,438) | (238,812) | (33,549) | (26,289) | (26,585) | (62,061) | (42,162) | (279,979) | 0 |
Trade Finance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Intragroup | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Long-Term Funding | (213,656) | (8,851) | (18,714) | (23,558) | (34,569) | (66,566) | (29,414) | (9,339) | (22,644) |
Equity | (138,381) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (138,381) |
Other Balance Sheet Liabilities | (2,458,641) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (2,458,641) |
Total Balance Sheet Liabilities | (3,726,482) | (348,453) | (52,855) | (49,847) | (61,155) | (128,627) | (71,576) | (289,318) | (2,724,652) |
Total Balance Sheet Gap | 176,997 | (219,199) | 40,161 | 25,518 | 71,961 | 233,862 | 113,541 | (19,362) | (69,484) |
Total Off-Balance Sheet Gap | 20,905\ | (15,134) | 398 | 730 | 1,125 | 10,566 | 5,253 | 6,175 | 11,791 |
Total Structural Gap | (229,025) | 40,432 | 25,564 | 70,970 | 243,525 | 118,794 | (13,187) | (59,171) | |
Accumulated Gap | (477,783) | (188,593) | (163,029) | (223,695) | 151,466 | 270,260 | 257,072 | 197,901 |
II.Qualitative information:
a) | The way in which liquidity risk is managed within the institution, considering the risk tolerance, the structure and responsibilities for managing liquidity risk, internal liquidity reports, the liquidity risk strategy, policies and practices across business lines and with the board of directors. |
· Our general policy regarding liquidity management seeks to ensure that even under adverse conditions, we have enough liquidity to fulfill client needs, maturing liabilities and working capital requirements. The Bank ´s liquidity management is based on analyses of asset and liability maturities, using contractual and management models.
· The Financial Management Area is responsible for executing the strategies and policies established by ALCO in order to modify the risk profile of the Bank, within the limits established by the CAIR who reports to the Board.
b) | Financing strategy, including diversification policies, and whether the funding strategy is centralized or decentralized. |
· Annually the Financial Plan for the Bank is prepared considering: the projected business growth, the debt maturity profile, risk appetite, expected market conditions, the implementation of diversification policies and regulatory metrics and the analysis of the liquidity buffer. The Financial Plan is the guide used to issue debt or contract term liabilities and aims to maintain adequate liquidity profile.
· The funding strategy of all subsidiaries is centralized.
c) | Mitigation techniques of liquidity risk used by the institution. |
· The risk mitigation techniques in the Group have a proactive nature. The Financial Plan in addition to the projection exercises and stress test scenarios allows us to anticipate risks and implement measures to ensure that the liquidity profile is adequate.
d) | Explanation of how the stress tests are used. |
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· The Liquidity Stress Test is a Risk Management tool designed to warn the governing committees and areas responsible for making decisions in this area about the potential adverse effects of the liquidity risk the Institution is exposed to.
· The results of these stress tests aim to identify the impacts prospectively in order to improve planning processes, and help align and calibrate Risk Appetite, Exposure Limits and Levels of Liquidity Risk tolerance.
e) | Description of contingent financing plans. |
· The plan includes the following elements: type and business model as the starting point. Early Warning Indicators to identify in a timely manner the increase in liquidity risk and the elements that define the crisis scenarios used. Additionally we measure the liquidity shortages that stress scenarios could produce and the available actions considered by the plan to restore liquidity conditions. Actions are prioritized in order to preserve the value of the entity and the stability of the markets. A key aspect of the Plan is the governance process, stating the areas responsible for the different stages involved: activation, execution, communication and maintenance of the Plan.
On April 8th the Banking Liquidity Regulatory Committee held a meeting and approved some exceptions to the established Liquidity Requirements (CCL). Those exceptions are listed below:
· | Liquid assets that were eligible as liquid assets as of February 28th, 2020 may continue to be considered as such, even if they would otherwise no longer be eligible as a result of the volatility in financial markets in recent weeks. |
· | The liquidity reserves calculation for potential margin calls and valuation changes of portfolios of derivatives (LBA) may exclude data for March 2020. |
· | Temporary exceptions are granted to some corrective measures indicated in the Liquidity Requirements, like not considering an institution to not comply with the CCL if it is classified in scenarios III, IV or V of the Liquidity Requirements. The aforementioned exceptions will be in place for six months starting on February 28th, 2020, and could be extended by another six months if Banxico and the CNBV were to consider that conditions so require. |
By applying some of the exceptions mentioned, the CCL would go from 123.91% to 124.99%, according to the format reported above.
25. Underlying Assets |
General data and stock market information
Each of the Series of this issue may be related, individually or jointly, pursuant to the provisions of the fourth paragraph of article 66 of the Mexican Exchange Law, to any of the following securities for which, during the last three years and up to date, no material suspensions have occurred in their trading.
The Issuer shall publish on a monthly basis at the Internet sitewww.santander.com.mx/conocealbanco/títulosopcionales the information regarding the behavior of the Underlying Assets of the Series in effect.
Indexes
Index | Ticker Symbol |
S&P 500 | SPX |
Eurostoxx 50 | SX5E |
i) | S&P 500 Index (SPX) |
Standard and Poor’s 500 Index is an index weighted by capitalization and it is constituted by 500 stocks. This Index is designed to measure the performance of the USA economy via the changes in the market value added of 500 stocks representing the main industrial sectors
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Formula:
The formula used for determining the value of SPX measures the daily change of the capitalization value of a sample of securities. This formula assesses the market trends and eases its reproduction in portfolios, mutual funds and securities portfolios aiming to obtain the average yield offered by the market.
It: Index in time t
Pit: Price of issuer i in time t
Qit: Stocks of issuer i in time t
Fi: Factor of Adjustment due to input and output of securities in the sample, rights declared by issuers, repurchase of stocks and new issues, and disincorporations.
i= 1, 2, 3….n
Weighting:Weighting is determined according to the capitalization value.
Selection Criteria:
· | Companies in USA. |
· | Capitalization value greater than 5 billion dollars. |
· | financial viability |
· | Bursatility |
Operating companies
Size of sample:
S&P 500 Index includes the 500 most important companies within the most important industries in the economy of the United States of America. The table below shows the ticker symbols of the securities that constitute the sample:
Ticker | Name | Ticker | Name | Ticker | Name |
LYB UN Equity | LyondellBasell Industries NV | MU UW Equity | Micron Technology Inc | DVA UN Equity | DaVita Inc |
AXP UN Equity | American Express Co | MSI UN Equity | Motorola Solutions Inc | HIG UN Equity | Hartford Financial Services Group Inc/Th |
VZ UN Equity | Verizon Communications Inc | CBOE UF Equity | Cboe Global Markets Inc | IRM UN Equity | Iron Mountain Inc |
AVGO UW Equity | Broadcom Inc | MYL UW Equity | Mylan NV | EL UN Equity | Estee Lauder Cos Inc/The |
BA UN Equity | Boeing Co/The | LH UN Equity | Laboratory Corp of America Holdings | CDNS UW Equity | Cadence Design Systems Inc |
CAT UN Equity | Caterpillar Inc | NEM UN Equity | Newmont Goldcorp Corp | UHS UN Equity | Universal Health Services Inc |
JPM UN Equity | JPMorgan Chase & Co | NKE UN Equity | NIKE Inc | ETFC UW Equity | E*TRADE Financial Corp |
CVX UN Equity | Chevron Corp | NI UN Equity | NiSource Inc | SWKS UW Equity | Skyworks Solutions Inc |
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KO UN Equity | Coca-Cola Co/The | NBL UN Equity | Noble Energy Inc | NOV UN Equity | National Oilwell Varco Inc |
ABBV UN Equity | AbbVie Inc | NSC UN Equity | Norfolk Southern Corp | DGX UN Equity | Quest Diagnostics Inc |
DIS UN Equity | Walt Disney Co/The | PFG UW Equity | Principal Financial Group Inc | ATVI UW Equity | Activision Blizzard Inc |
FLT UN Equity | FleetCor Technologies Inc | ES UN Equity | Eversource Energy | ROK UN Equity | Rockwell Automation Inc |
EXR UN Equity | Extra Space Storage Inc | NOC UN Equity | Northrop Grumman Corp | KHC UW Equity | Kraft Heinz Co/The |
XOM UN Equity | Exxon Mobil Corp | WFC UN Equity | Wells Fargo & Co | AMT UN Equity | American Tower Corp |
PSX UN Equity | Phillips 66 | NUE UN Equity | Nucor Corp | HFC UN Equity | HollyFrontier Corp |
GE UN Equity | General Electric Co | PVH UN Equity | PVH Corp | REGN UW Equity | Regeneron Pharmaceuticals Inc |
HPQ UN Equity | HP Inc | OXY UN Equity | Occidental Petroleum Corp | AMZN UW Equity | Amazon.com Inc |
HD UN Equity | Home Depot Inc/The | OMC UN Equity | Omnicom Group Inc | JKHY UW Equity | Jack Henry & Associates Inc |
IBM UN Equity | International Business Machines Corp | OKE UN Equity | ONEOK Inc | RL UN Equity | Ralph Lauren Corp |
CXO UN Equity | Concho Resources Inc | RJF UN Equity | Raymond James Financial Inc | BXP UN Equity | Boston Properties Inc |
JNJ UN Equity | Johnson & Johnson | PH UN Equity | Parker-Hannifin Corp | APH UN Equity | Amphenol Corp |
MCD UN Equity | McDonald's Corp | ROL UN Equity | Rollins Inc | ARNC UN Equity | Arconic Inc |
MRK UN Equity | Merck & Co Inc | PPL UN Equity | PPL Corp | PXD UN Equity | Pioneer Natural Resources Co |
MMM UN Equity | 3M Co | EXC UN Equity | Exelon Corp | VLO UN Equity | Valero Energy Corp |
AWK UN Equity | American Water Works Co Inc | COP UN Equity | ConocoPhillips | SNPS UW Equity | Synopsys Inc |
BAC UN Equity | Bank of America Corp | PHM UN Equity | PulteGroup Inc | WU UN Equity | Western Union Co/The |
BHGE UN Equity | Baker Hughes a GE Co | PNW UN Equity | Pinnacle West Capital Corp | CHRW UW Equity | CH Robinson Worldwide Inc |
PFE UN Equity | Pfizer Inc | PNC UN Equity | PNC Financial Services Group Inc/The | ACN UN Equity | Accenture PLC |
PG UN Equity | Procter & Gamble Co/The | PPG UN Equity | PPG Industries Inc | TDG UN Equity | TransDigm Group Inc |
T UN Equity | AT&T Inc | PGR UN Equity | Progressive Corp/The | YUM UN Equity | Yum! Brands Inc |
TRV UN Equity | Travelers Cos Inc/The | PEG UN Equity | Public Service Enterprise Group Inc | PLD UN Equity | Prologis Inc |
UTX UN Equity | United Technologies Corp | RTN UN Equity | Raytheon Co | FE UN Equity | FirstEnergy Corp |
ADI UW Equity | Analog Devices Inc | RHI UN Equity | Robert Half International Inc | VRSN UW Equity | VeriSign Inc |
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WMT UN Equity | Walmart Inc | EIX UN Equity | Edison International | PWR UN Equity | Quanta Services Inc |
CSCO UW Equity | Cisco Systems Inc | SLB UN Equity | Schlumberger Ltd | HSIC UW Equity | Henry Schein Inc |
INTC UW Equity | Intel Corp | SCHW UN Equity | Charles Schwab Corp/The | AEE UN Equity | Ameren Corp |
GM UN Equity | General Motors Co | SHW UN Equity | Sherwin-Williams Co/The | ANSS UW Equity | ANSYS Inc |
MSFT UW Equity | Microsoft Corp | SJM UN Equity | JM Smucker Co/The | NVDA UW Equity | NVIDIA Corp |
DG UN Equity | Dollar General Corp | SNA UN Equity | Snap-on Inc | SEE UN Equity | Sealed Air Corp |
CI UN Equity | Cigna Corp | AME UN Equity | AMETEK Inc | CTSH UW Equity | Cognizant Technology Solutions Corp |
KMI UN Equity | Kinder Morgan Inc/DE | SO UN Equity | Southern Co/The | SIVB UW Equity | SVB Financial Group |
C UN Equity | Citigroup Inc | BBT UN Equity | BB&T Corp | ISRG UW Equity | Intuitive Surgical Inc |
AIG UN Equity | American International Group Inc | LUV UN Equity | Southwest Airlines Co | AMG UN Equity | Affiliated Managers Group Inc |
HON UN Equity | Honeywell International Inc | SWK UN Equity | Stanley Black & Decker Inc | TTWO UW Equity | Take-Two Interactive Software Inc |
MO UN Equity | Altria Group Inc | PSA UN Equity | Public Storage | RSG UN Equity | Republic Services Inc |
HCA UN Equity | HCA Healthcare Inc | ANET UN Equity | Arista Networks Inc | EBAY UW Equity | eBay Inc |
UAA UN Equity | Under Armour Inc | STI UN Equity | SunTrust Banks Inc | GS UN Equity | Goldman Sachs Group Inc/The |
IP UN Equity | International Paper Co | SYY UN Equity | Sysco Corp | SRE UN Equity | Sempra Energy |
HPE UN Equity | Hewlett Packard Enterprise Co | CTVA UN Equity | Corteva Inc | SBAC UW Equity | SBA Communications Corp |
ABT UN Equity | Abbott Laboratories | TXN UW Equity | Texas Instruments Inc | MCO UN Equity | Moody's Corp |
AFL UN Equity | Aflac Inc | TXT UN Equity | Textron Inc | BKNG UW Equity | Booking Holdings Inc |
APD UN Equity | Air Products & Chemicals Inc | TMO UN Equity | Thermo Fisher Scientific Inc | FFIV UW Equity | F5 Networks Inc |
RCL UN Equity | Royal Caribbean Cruises Ltd | TIF UN Equity | Tiffany & Co | AKAM UW Equity | Akamai Technologies Inc |
AEP UN Equity | American Electric Power Co Inc | TJX UN Equity | TJX Cos Inc/The | MKTX UW Equity | MarketAxess Holdings Inc |
HES UN Equity | Hess Corp | TMK UN Equity | Torchmark Corp | DVN UN Equity | Devon Energy Corp |
APC UN Equity | Anadarko Petroleum Corp | TSS UN Equity | Total System Services Inc | GOOGL UW Equity | Alphabet Inc |
AON UN Equity | Aon PLC | JCI UN Equity | Johnson Controls International plc | TFX UN Equity | Teleflex Inc |
APA UN Equity | Apache Corp | ULTA UW Equity | Ulta Beauty Inc | RHT UN Equity | Red Hat Inc |
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ADM UN Equity | Archer-Daniels-Midland Co | UNP UN Equity | Union Pacific Corp | NFLX UW Equity | Netflix Inc |
ADP UW Equity | Automatic Data Processing Inc | KEYS UN Equity | Keysight Technologies Inc | ALLE UN Equity | Allegion PLC |
VRSK UW Equity | Verisk Analytics Inc | UNH UN Equity | UnitedHealth Group Inc | A UN Equity | Agilent Technologies Inc |
AZO UN Equity | AutoZone Inc | UNM UN Equity | Unum Group | ANTM UN Equity | Anthem Inc |
AVY UN Equity | Avery Dennison Corp | MRO UN Equity | Marathon Oil Corp | CME UW Equity | CME Group Inc |
MSCI UN Equity | MSCI Inc | VAR UN Equity | Varian Medical Systems Inc | JNPR UN Equity | Juniper Networks Inc |
BLL UN Equity | Ball Corp | VTR UN Equity | Ventas Inc | BLK UN Equity | BlackRock Inc |
BK UN Equity | Bank of New York Mellon Corp/The | VFC UN Equity | VF Corp | DTE UN Equity | DTE Energy Co |
BAX UN Equity | Baxter International Inc | VNO UN Equity | Vornado Realty Trust | NDAQ UW Equity | Nasdaq Inc |
BDX UN Equity | Becton Dickinson and Co | VMC UN Equity | Vulcan Materials Co | CE UN Equity | Celanese Corp |
BRK/B UN Equity | Berkshire Hathaway Inc | WY UN Equity | Weyerhaeuser Co | PM UN Equity | Philip Morris International Inc |
BBY UN Equity | Best Buy Co Inc | WHR UN Equity | Whirlpool Corp | CRM UN Equity | salesforce.com Inc |
HRB UN Equity | H&R Block Inc | WMB UN Equity | Williams Cos Inc/The | HII UN Equity | Huntington Ingalls Industries Inc |
BSX UN Equity | Boston Scientific Corp | WEC UN Equity | WEC Energy Group Inc | MET UN Equity | MetLife Inc |
BMY UN Equity | Bristol-Myers Squibb Co | XRX UN Equity | Xerox Corp | UA UN Equity | Under Armour Inc |
FBHS UN Equity | Fortune Brands Home & Security Inc | ADBE UW Equity | Adobe Inc | TPR UN Equity | Tapestry Inc |
BF/B UN Equity | Brown-Forman Corp | AES UN Equity | AES Corp/VA | CSX UW Equity | CSX Corp |
COG UN Equity | Cabot Oil & Gas Corp | AMGN UW Equity | Amgen Inc | EW UN Equity | Edwards Lifesciences Corp |
CPB UN Equity | Campbell Soup Co | AAPL UW Equity | Apple Inc | AMP UN Equity | Ameriprise Financial Inc |
KSU UN Equity | Kansas City Southern | ADSK UW Equity | Autodesk Inc | FTI UN Equity | TechnipFMC PLC |
HLT UN Equity | Hilton Worldwide Holdings Inc | CTAS UW Equity | Cintas Corp | ZBH UN Equity | Zimmer Biomet Holdings Inc |
CCL UN Equity | Carnival Corp | CMCSA UW Equity | Comcast Corp | CBRE UN Equity | CBRE Group Inc |
QRVO UW Equity | Qorvo Inc | TAP UN Equity | Molson Coors Brewing Co | MA UN Equity | Mastercard Inc |
CTL UN Equity | CenturyLink Inc | KLAC UW Equity | KLA-Tencor Corp | KMX UN Equity | CarMax Inc |
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UDR UN Equity | UDR Inc | MAR UW Equity | Marriott International Inc/MD | ICE UN Equity | Intercontinental Exchange Inc |
CLX UN Equity | Clorox Co/The | MKC UN Equity | McCormick & Co Inc/MD | FIS UN Equity | Fidelity National Information Services I |
CMS UN Equity | CMS Energy Corp | JWN UN Equity | Nordstrom Inc | CMG UN Equity | Chipotle Mexican Grill Inc |
NWL UW Equity | Newell Brands Inc | PCAR UW Equity | PACCAR Inc | WYNN UW Equity | Wynn Resorts Ltd |
CL UN Equity | Colgate-Palmolive Co | COST UW Equity | Costco Wholesale Corp | AIZ UN Equity | Assurant Inc |
CMA UN Equity | Comerica Inc | FRC UN Equity | First Republic Bank/CA | NRG UN Equity | NRG Energy Inc |
IPGP UW Equity | IPG Photonics Corp | SYK UN Equity | Stryker Corp | RF UN Equity | Regions Financial Corp |
CAG UN Equity | Conagra Brands Inc | TSN UN Equity | Tyson Foods Inc | MNST UW Equity | Monster Beverage Corp |
ED UN Equity | Consolidated Edison Inc | LW UN Equity | Lamb Weston Holdings Inc | MOS UN Equity | Mosaic Co/The |
SLG UN Equity | SL Green Realty Corp | AMAT UW Equity | Applied Materials Inc | EXPE UW Equity | Expedia Group Inc |
GLW UN Equity | Corning Inc | AAL UW Equity | American Airlines Group Inc | EVRG UN Equity | Evergy Inc |
CMI UN Equity | Cummins Inc | CAH UN Equity | Cardinal Health Inc | DISCA UW Equity | Discovery Inc |
DHR UN Equity | Danaher Corp | CELG UW Equity | Celgene Corp | CF UN Equity | CF Industries Holdings Inc |
TGT UN Equity | Target Corp | CERN UW Equity | Cerner Corp | VIAB UW Equity | Viacom Inc |
DE UN Equity | Deere & Co | CINF UW Equity | Cincinnati Financial Corp | GOOG UW Equity | Alphabet Inc |
D UN Equity | Dominion Energy Inc | DHI UN Equity | DR Horton Inc | COO UN Equity | Cooper Cos Inc/The |
DOV UN Equity | Dover Corp | FLS UN Equity | Flowserve Corp | TEL UN Equity | TE Connectivity Ltd |
LNT UW Equity | Alliant Energy Corp | EA UW Equity | Electronic Arts Inc | DFS UN Equity | Discover Financial Services |
DUK UN Equity | Duke Energy Corp | EXPD UW Equity | Expeditors International of Washington I | TRIP UW Equity | TripAdvisor Inc |
REG UW Equity | Regency Centers Corp | FAST UW Equity | Fastenal Co | V UN Equity | Visa Inc |
ETN UN Equity | Eaton Corp PLC | MTB UN Equity | M&T Bank Corp | MAA UN Equity | Mid-America Apartment Communities Inc |
ECL UN Equity | Ecolab Inc | XEL UW Equity | Xcel Energy Inc | XYL UN Equity | Xylem Inc/NY |
PKI UN Equity | PerkinElmer Inc | FISV UW Equity | Fiserv Inc | MPC UN Equity | Marathon Petroleum Corp |
EMR UN Equity | Emerson Electric Co | FITB UW Equity | Fifth Third Bancorp | TSCO UW Equity | Tractor Supply Co |
EOG UN Equity | EOG Resources Inc | GILD UW Equity | Gilead Sciences Inc | AMD UW Equity | Advanced Micro Devices Inc |
ETR UN Equity | Entergy Corp | HAS UW Equity | Hasbro Inc | RMD UN Equity | ResMed Inc |
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EFX UN Equity | Equifax Inc | HBAN UW Equity | Huntington Bancshares Inc/OH | MTD UN Equity | Mettler-Toledo International Inc |
IQV UN Equity | IQVIA Holdings Inc | WELL UN Equity | Welltower Inc | CPRT UW Equity | Copart Inc |
IT UN Equity | Gartner Inc | BIIB UW Equity | Biogen Inc | ALB UN Equity | Albemarle Corp |
FDX UN Equity | FedEx Corp | NTRS UW Equity | Northern Trust Corp | FTNT UW Equity | Fortinet Inc |
M UN Equity | Macy's Inc | PKG UN Equity | Packaging Corp of America | ESS UN Equity | Essex Property Trust Inc |
FMC UN Equity | FMC Corp | PAYX UW Equity | Paychex Inc | O UN Equity | Realty Income Corp |
F UN Equity | Ford Motor Co | PBCT UW Equity | People's United Financial Inc | STX UW Equity | Seagate Technology PLC |
NEE UN Equity | NextEra Energy Inc | QCOM UW Equity | QUALCOMM Inc | WRK UN Equity | Westrock Co |
BEN UN Equity | Franklin Resources Inc | ROP UN Equity | Roper Technologies Inc | INFO UW Equity | IHS Markit Ltd |
FCX UN Equity | Freeport-McMoRan Inc | ROST UW Equity | Ross Stores Inc | WAB UN Equity | Wabtec Corp |
GPS UN Equity | Gap Inc/The | IDXX UW Equity | IDEXX Laboratories Inc | WDC UW Equity | Western Digital Corp |
GD UN Equity | General Dynamics Corp | SBUX UW Equity | Starbucks Corp | PEP UW Equity | PepsiCo Inc |
GIS UN Equity | General Mills Inc | KEY UN Equity | KeyCorp | FANG UW Equity | Diamondback Energy Inc |
GPC UN Equity | Genuine Parts Co | FOXA UW Equity | Fox Corp | NKTR UW Equity | Nektar Therapeutics |
ATO UN Equity | Atmos Energy Corp | FOX UW Equity | Fox Corp | MXIM UW Equity | Maxim Integrated Products Inc |
GWW UN Equity | WW Grainger Inc | STT UN Equity | State Street Corp | CHD UN Equity | Church & Dwight Co Inc |
HAL UN Equity | Halliburton Co | NCLH UN Equity | Norwegian Cruise Line Holdings Ltd | DRE UN Equity | Duke Realty Corp |
HOG UN Equity | Harley-Davidson Inc | USB UN Equity | US Bancorp | FRT UN Equity | Federal Realty Investment Trust |
LHX UN Equity | L3Harris Technologies Inc | AOS UN Equity | AO Smith Corp | MGM UN Equity | MGM Resorts International |
HCP UN Equity | HCP Inc | SYMC UW Equity | Symantec Corp | JBHT UW Equity | JB Hunt Transport Services Inc |
HP UN Equity | Helmerich & Payne Inc | TROW UW Equity | T Rowe Price Group Inc | LRCX UW Equity | Lam Research Corp |
FTV UN Equity | Fortive Corp | WM UN Equity | Waste Management Inc | MHK UN Equity | Mohawk Industries Inc |
HSY UN Equity | Hershey Co/The | CBS UN Equity | CBS Corp | PNR UN Equity | Pentair PLC |
SYF UN Equity | Synchrony Financial | AGN UN Equity | Allergan PLC | VRTX UW Equity | Vertex Pharmaceuticals Inc |
HRL UN Equity | Hormel Foods Corp | STZ UN Equity | Constellation Brands Inc | AMCR UN Equity | Amcor PLC |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
107 |
AJG UN Equity | Arthur J Gallagher & Co | XLNX UW Equity | Xilinx Inc | FB UW Equity | Facebook Inc |
MDLZ UW Equity | Mondelez International Inc | XRAY UW Equity | DENTSPLY SIRONA Inc | URI UN Equity | United Rentals Inc |
CNP UN Equity | CenterPoint Energy Inc | ZION UW Equity | Zions Bancorp NA | ABMD UW Equity | ABIOMED Inc |
HUM UN Equity | Humana Inc | ALK UN Equity | Alaska Air Group Inc | ARE UN Equity | Alexandria Real Estate Equities Inc |
WLTW UW Equity | Willis Towers Watson PLC | IVZ UN Equity | Invesco Ltd | DAL UN Equity | Delta Air Lines Inc |
ITW UN Equity | Illinois Tool Works Inc | LIN UN Equity | Linde PLC | UAL UW Equity | United Airlines Holdings Inc |
IR UN Equity | Ingersoll-Rand PLC | INTU UW Equity | Intuit Inc | NWS UW Equity | News Corp |
FL UN Equity | Foot Locker Inc | MS UN Equity | Morgan Stanley | CNC UN Equity | Centene Corp |
IPG UN Equity | Interpublic Group of Cos Inc/The | MCHP UW Equity | Microchip Technology Inc | MAC UN Equity | Macerich Co/The |
IFF UN Equity | International Flavors & Fragrances Inc | CB UN Equity | Chubb Ltd | MLM UN Equity | Martin Marietta Materials Inc |
JEC UN Equity | Jacobs Engineering Group Inc | HOLX UW Equity | Hologic Inc | PYPL UW Equity | PayPal Holdings Inc |
HBI UN Equity | Hanesbrands Inc | CFG UN Equity | Citizens Financial Group Inc | COTY UN Equity | Coty Inc |
K UN Equity | Kellogg Co | ORLY UW Equity | O'Reilly Automotive Inc | DISH UW Equity | DISH Network Corp |
BR UN Equity | Broadridge Financial Solutions Inc | ALL UN Equity | Allstate Corp/The | DOW UN Equity | Dow Inc |
PRGO UN Equity | Perrigo Co PLC | FLIR UW Equity | FLIR Systems Inc | ALXN UW Equity | Alexion Pharmaceuticals Inc |
KMB UN Equity | Kimberly-Clark Corp | EQR UN Equity | Equity Residential | RE UN Equity | Everest Re Group Ltd |
KIM UN Equity | Kimco Realty Corp | BWA UN Equity | BorgWarner Inc | WCG UN Equity | WellCare Health Plans Inc |
KSS UN Equity | Kohl's Corp | INCY UW Equity | Incyte Corp | NWSA UW Equity | News Corp |
ORCL UN Equity | Oracle Corp | SPG UN Equity | Simon Property Group Inc | GPN UN Equity | Global Payments Inc |
KR UN Equity | Kroger Co/The | EMN UN Equity | Eastman Chemical Co | CCI UN Equity | Crown Castle International Corp |
LEG UN Equity | Leggett & Platt Inc | TWTR UN Equity | Twitter Inc | APTV UN Equity | Aptiv PLC |
LEN UN Equity | Lennar Corp | AVB UN Equity | AvalonBay Communities Inc | AAP UN Equity | Advance Auto Parts Inc |
JEF UN Equity | Jefferies Financial Group Inc | PRU UN Equity | Prudential Financial Inc | CPRI UN Equity | Capri Holdings Ltd |
LLY UN Equity | Eli Lilly & Co | UPS UN Equity | United Parcel Service Inc | ALGN UW Equity | Align Technology Inc |
LB UN Equity | L Brands Inc | AIV UN Equity | Apartment Investment & Management Co | ILMN UW Equity | Illumina Inc |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
108 |
CHTR UW Equity | Charter Communications Inc | WBA UW Equity | Walgreens Boots Alliance Inc | ADS UN Equity | Alliance Data Systems Corp |
LNC UN Equity | Lincoln National Corp | MCK UN Equity | McKesson Corp | LKQ UW Equity | LKQ Corp |
L UN Equity | Loews Corp | LMT UN Equity | Lockheed Martin Corp | NLSN UN Equity | Nielsen Holdings PLC |
LOW UN Equity | Lowe's Cos Inc | ABC UN Equity | AmerisourceBergen Corp | GRMN UW Equity | Garmin Ltd |
HST UN Equity | Host Hotels & Resorts Inc | COF UN Equity | Capital One Financial Corp | XEC UN Equity | Cimarex Energy Co |
MMC UN Equity | Marsh & McLennan Cos Inc | WAT UN Equity | Waters Corp | ZTS UN Equity | Zoetis Inc |
MAS UN Equity | Masco Corp | DLTR UW Equity | Dollar Tree Inc | EQIX UW Equity | Equinix Inc |
SPGI UN Equity | S&P Global Inc | DRI UN Equity | Darden Restaurants Inc | DLR UN Equity | Digital Realty Trust Inc |
MDT UN Equity | Medtronic PLC | NTAP UW Equity | NetApp Inc | DISCK UW Equity | Discovery Inc |
CVS UN Equity | CVS Health Corp | CTXS UW Equity | Citrix Systems Inc | ||
DD UN Equity | DuPont de Nemours Inc | DXC UN Equity | DXC Technology Co |
Frequency of Review of the sample:
Changes to sample are performed discretionally; there is no established periodicity.
For more information regarding this index, its background, main characteristics and selection criteria, please consult
www.indices.standardandpoors.com
Historical Evolution:
Comparison base: March 31, 2015
Period | Minimum Price | Maximum Price | Average Securities |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
109 |
2015 | 1,867.61 | 2,130.82 | 639,419,475.58 |
2016 | 1,829.08 | 2,271.72 | 673,318,153.53 |
2017 | 2,238.83 | 2,690.16 | 567,284,554.67 |
2018 | 2,351.10 | 2,930.75 | 647,233,053.89 |
2019 | 2,447.89 | 3,240.02 | 572,985,179.79 |
1° Sem. 2018 | 2,581.00 | 2,872.87 | 646,249,029.04 |
2° Sem. 2018 | 2,351.10 | 2,930.75 | 648,201,034.85 |
1° Sem. 2019 | 2,447.89 | 2,954.18 | 613,818,722.34 |
2° Sem. 2019 | 2,840.60 | 3,240.02 | 532,817,401.52 |
October 2019 | 2,887.61 | 3,046.77 | 494,202,548.06 |
November 2019 | 3,066.91 | 3,153.63 | 499,142,354.27 |
December 2019 | 3,093.20 | 3,240.02 | 576,952,712.77 |
January 2020 | 3,225.52 | 3,329.62 | 562,227,678.94 |
February 2020 | 2,954.22 | 3,386.15 | 693,823,560.31 |
March 2020 | 2,237.40 | 3,130.12 | 1,220,907,805.42 |
Historical Volatility:
Source of Information on Historic Evolution and Volatility:www.bloomberg.com.mx
Historical:www.bloomberg.com.mx
Quantitative examples that illustrate possible gains or losses
SPX004R DV006
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
110 |
Payment Rights (MXN) | ||||
Market Price | Observed Price | Scenario 1 (TCF = 100%*TCI) | Scenario 2 (TCF = 70%*TCI) | Scenario 3 (TCF = 130%*TCI) |
1,936.99 | 70 | 130.00 | 121.00 | 139.00 |
1,992.33 | 72 | 128.00 | 119.60 | 136.40 |
2,047.68 | 74 | 126.00 | 118.20 | 133.80 |
2,103.02 | 76 | 124.00 | 116.80 | 131.20 |
2,158.36 | 78 | 122.00 | 115.40 | 128.60 |
2,213.70 | 80 | 120.00 | 114.00 | 126.00 |
2,269.05 | 82 | 118.00 | 112.60 | 123.40 |
2,324.39 | 84 | 116.00 | 111.20 | 120.80 |
2,379.73 | 86 | 114.00 | 109.80 | 118.20 |
2,435.07 | 88 | 112.00 | 108.40 | 115.60 |
2,490.42 | 90 | 110.00 | 107.00 | 113.00 |
2,545.76 | 92 | 108.00 | 105.60 | 110.40 |
2,601.10 | 94 | 106.00 | 104.20 | 107.80 |
2,656.44 | 96 | 104.00 | 102.80 | 105.20 |
2,711.79 | 98 | 102.00 | 101.40 | 102.60 |
2,767.13 | 100 | 109.84 | 106.89 | 112.79 |
2,822.47 | 102 | 109.84 | 106.89 | 112.79 |
2,877.82 | 104 | 109.84 | 106.89 | 112.79 |
2,933.16 | 106 | 109.84 | 106.89 | 112.79 |
2,988.50 | 108 | 109.84 | 106.89 | 112.79 |
3,043.84 | 110 | 109.84 | 106.89 | 112.79 |
3,099.19 | 112 | 109.84 | 106.89 | 112.79 |
3,154.53 | 114 | 109.84 | 106.89 | 112.79 |
3,209.87 | 116 | 109.84 | 106.89 | 112.79 |
3,265.21 | 118 | 109.84 | 106.89 | 112.79 |
3,320.56 | 120 | 109.84 | 106.89 | 112.79 |
3,375.90 | 122 | 109.84 | 106.89 | 112.79 |
3,431.24 | 124 | 109.84 | 106.89 | 112.79 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
111 |
3,486.58 | 126 | 109.84 | 106.89 | 112.79 |
3,541.93 | 128 | 109.84 | 106.89 | 112.79 |
ii) | Eurostoxx 50 |
Eurostoxx 50 is a stock index of the European zone designed by Stoxx Ltd, an index supplier of Deutsche Böese and SIX Group. Its goal is to provide a “blue chip” representation of the leaders of the European zone.
Methodology
The index universe is defined as all the components of the 19 Euro Stoxx indexes of the supersector. The components stocks are ranked regarding the shares outstanding. The more floating shares are added to the selection list until the coverage is closed, but without not exceeding 60% of the free floatation from the Total Euro Stoxx Market Index (TMI). If the following ordered stocks have a coverage of nearly 60% in absolute terms, then they will be added to the selected list.
Any remaining stock that is an actual component of the index is added to the selection list.
The listed stocks are ordered from the highest to the lowest. The actions in the list are ordered from highest to lowest shares. In exceptional cases, the Oversight Committee may add or remove stocks to the list.
Selection of the shares:
• The 40 stocks with more outstanding shares in the selection list are chosen as components.
• Any remaining component of the Euro Stoxx 50 index place between 41 and 60 is added as index component
• If the number of components is still less than 50 , then the actions with the highest number of shares outstanding are added to make 50 shares.
Frequency of Review
The index composition is reviewed annually in September. The components are monitored monthly.
Weighting
The index is weighted by market capitalization of free float. The weight of each component is capped to 10% of the free float market. Free float weights are reviewed quarterly.
Here the list of valuesin the sample:
Ticker | Name | Ticker | Name |
OR FP Equity | L'Oreal SA | ISP IM Equity | Intesa Sanpaolo SpA |
DG FP Equity | Vinci SA | ENI IM Equity | Eni SpA |
BBVA SQ Equity | Banco Bilbao Vizcaya Argentaria SA | ENGI FP Equity | Engie SA |
SAN SQ Equity | Banco Santander SA | ORA FP Equity | Orange SA |
ASML NA Equity | ASML Holding NV | ABI BB Equity | Anheuser-Busch InBev SA/NV |
URW NA Equity | Unibail-Rodamco-Westfield | SAN FP Equity | Sanofi |
PHIA NA Equity | Koninklijke Philips NV | GLE FP Equity | Societe Generale SA |
TEF SQ Equity | Telefonica SA | ENEL IM Equity | Enel SpA |
FP FP Equity | TOTAL SA | NOKIA FH Equity | Nokia OYJ |
AI FP Equity | Air Liquide SA | SU FP Equity | Schneider Electric SE |
CS FP Equity | AXA SA | ALV GY Equity | Allianz SE |
BNP FP Equity | BNP Paribas SA | AIR FP Equity | Airbus SE |
BN FP Equity | Danone SA | BAYN GY Equity | Bayer AG |
VIV FP Equity | Vivendi SA | BMW GY Equity | Bayerische Motoren Werke AG |
EL FP Equity | EssilorLuxottica SA | CRH ID Equity | CRH PLC |
MC FP Equity | LVMH Moet Hennessy Louis Vuitton SE | BAS GY Equity | BASF SE |
KER FP Equity | Kering SA | SIE GY Equity | Siemens AG |
AMS SQ Equity | Amadeus IT Group SA | VOW3 GY Equity | Volkswagen AG |
SAF FP Equity | Safran SA | MUV2 GY Equity | Munich Re |
AD NA Equity | Koninklijke Ahold Delhaize NV | FRE GY Equity | Fresenius SE & Co KGaA |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
112 |
UNA NA Equity | Unilever NV | SAP GY Equity | SAP SE |
IBE SQ Equity | Iberdrola SA | ADS GY Equity | adidas AG |
INGA NA Equity | ING Groep NV | DTE GY Equity | Deutsche Telekom AG |
LIN GY Equity | Linde PLC | DPW GY Equity | Deutsche Post AG |
ITX SQ Equity | Industria de Diseño Textil SA | DAI GY Equity | Daimler AG |
For more information on this index regarding its background, main characteristics and the criteria for the selection of issuers, please visitwww.stoxx.com
Historical Evolution:
Comparison base: March 31, 2015
Period | Minimum Price | Maximum Price | Average (securities) |
2015 | 3,019.34 | 3,828.78 | 628,465,059.22 |
2016 | 2,680.35 | 3,290.52 | 670,496,806.23 |
2017 | 3,230.68 | 3,697.40 | 480,238,812.63 |
2018 | 2,937.36 | 3,672.29 | 495,509,098.11 |
2019 | 2,954.66 | 3,782.27 | 450,435,611.05 |
1° Sem. 2018 | 3,278.72 | 3,672.29 | 525,141,755.13 |
2° Sem. 2018 | 2,937.36 | 3,527.18 | 466,359,582.24 |
1° Sem. 2019 | 2,954.66 | 3,514.62 | 473,592,625.64 |
2° Sem. 2019 | 3,282.78 | 3,782.27 | 427,656,156.48 |
October 2019 | 3,413.31 | 3,625.69 | 485,468,230.84 |
November 2019 | 3,623.74 | 3,712.85 | 410,637,596.13 |
December 2019 | 3,610.99 | 3,782.27 | 434,627,950.87 |
January 2020 | 3,640.91 | 3,808.26 | 349,100,554.35 |
February 2020 | 3,329.49 | 3,865.18 | 541,799,087.07 |
March 2020 | 2,385.82 | 3,420.56 | 1,045,078,385.71 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
113 |
Historical Volatility:
Quantitative examples that ilustrate possible gains or losses
SXE009R DC058
Market Price | Observed Price | Payment Rights |
2,379.44 | 70 | 100.00 |
2,447.42 | 72 | 100.00 |
2,515.41 | 74 | 100.00 |
2,583.39 | 76 | 100.00 |
2,651.38 | 78 | 100.00 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
114 |
2,719.36 | 80 | 100.00 |
2,787.34 | 82 | 100.00 |
2,855.33 | 84 | 100.00 |
2,923.31 | 86 | 100.00 |
2,991.30 | 88 | 100.00 |
3,059.28 | 90 | 100.00 |
3,127.26 | 92 | 100.00 |
3,195.25 | 94 | 100.00 |
3,263.23 | 96 | 100.00 |
3,331.22 | 98 | 100.00 |
3,399.20 | 100 | 100.00 |
3,467.18 | 102 | 106.22 |
3,535.17 | 104 | 112.44 |
3,603.15 | 106 | 118.66 |
3,671.14 | 108 | 124.88 |
3,739.12 | 110 | 131.10 |
3,807.10 | 112 | 137.32 |
3,875.09 | 114 | 143.54 |
3,943.07 | 116 | 146.65 |
4,011.06 | 118 | 146.65 |
4,079.04 | 120 | 146.65 |
4,147.02 | 122 | 146.65 |
4,215.01 | 124 | 146.65 |
4,282.99 | 126 | 146.65 |
4,350.98 | 128 | 146.65 |
SXE108R DC063
Observed Price | Market Price | Payment Rights |
1.00 | 38.3654 | 90 |
6.00 | 230.1924 | 90 |
11.00 | 422.0194 | 90 |
16.00 | 613.8464 | 90 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
115 |
21.00 | 805.6734 | 90 |
26.00 | 997.5004 | 90 |
31.00 | 1189.3274 | 90 |
36.00 | 1381.1544 | 90 |
41.00 | 1572.9814 | 90 |
46.00 | 1764.8084 | 90 |
51.00 | 1956.6354 | 90 |
56.00 | 2148.4624 | 90 |
61.00 | 2340.2894 | 90 |
66.00 | 2532.1164 | 90 |
71.00 | 2723.9434 | 90 |
76.00 | 2915.7704 | 90 |
81.00 | 3107.5974 | 90 |
86.00 | 3299.4244 | 90 |
91.00 | 3491.2514 | 91 |
96.00 | 3683.0784 | 96 |
101.00 | 3874.9054 | 125 |
106.00 | 4066.7324 | 125 |
111.00 | 4258.5594 | 125 |
116.00 | 4450.3864 | 125 |
121.00 | 4642.2134 | 125 |
126.00 | 4834.0404 | 126 |
131.00 | 5025.8674 | 131 |
136.00 | 5217.6944 | 136 |
141.00 | 5409.5214 | 141 |
146.00 | 5601.3484 | 146 |
151.00 | 5793.1754 | 151 |
156.00 | 5985.0024 | 156 |
161.00 | 6176.8294 | 161 |
166.00 | 6368.6564 | 166 |
171.00 | 6560.4834 | 171 |
176.00 | 6752.3104 | 176 |
181.00 | 6944.1374 | 181 |
186.00 | 7135.9644 | 186 |
191.00 | 7327.7914 | 191 |
196.00 | 7519.6184 | 196 |
201.00 | 7711.4454 | 201 |
206.00 | 7903.2724 | 206 |
211.00 | 8095.0994 | 211 |
216.00 | 8286.9264 | 216 |
221.00 | 8478.7534 | 221 |
226.00 | 8670.5804 | 226 |
231.00 | 8862.4074 | 231 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
116 |
Stocks
For more information regarding stocks, investors may consult the following Internet sites:
www.bmv.com.mx
www.bloomberg.com
Bloomberg page does not constitute a part of the prospectus and consequently, the Commission did not review it.
Some Issuers have a Market Maker. The effect of the performance of the market maker is reflected as an increase in the levels of operation and an improvement in the bid-offer spread of the prices of the stocks of the corresponding Issuer.
Stock | Ticker |
Facebook, Inc. | FB* |
I. | Facebook Inc. (FB*) |
Stock Market where it is quoted:
Nasdaq
Description:
Facebook, Inc. operates a social networking website. The Company website allows people to communicate with their family, friends, and coworkers. Facebook develops technologies that facilitate the sharing of information, photographs, website links, and videos. Facebook users have the ability to share and restrict information based on their own specific criteria.
Historical Evolution:
Comparison base: March 31, 2015
Period | Minimum Price | Maximum Price | Average (securities) |
2015 | 77.46 | 109.01 | 27,069,253.47 |
2016 | 94.16 | 133.28 | 25,385,708.73 |
2017 | 115.05 | 183.03 | 16,674,596.54 |
2018 | 124.06 | 217.50 | 27,262,166.58 |
2019 | 131.09 | 208.10 | 16,094,515.08 |
1° Sem. 2018 | 152.22 | 202.00 | 27,985,086.01 |
2° Sem. 2018 | 124.06 | 217.50 | 26,551,033.88 |
1° Sem. 2019 | 131.09 | 195.47 | 18,274,490.02 |
2° Sem. 2019 | 174.60 | 208.10 | 13,950,083.22 |
October 2019 | 174.60 | 191.65 | 13,902,934.87 |
November 2019 | 189.61 | 202.00 | 12,908,549.83 |
December 2019 | 194.11 | 208.10 | 13,859,161.35 |
January 2020 | 201.91 | 223.23 | 15,330,400.19 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
117 |
February 2020 | 189.75 | 217.80 | 17,167,069.10 |
March 2020 | 146.01 | 196.44 | 29,553,856.48 |
Historical Volatility:
Material Suspensions:
No material suspensions have occurred in the trading of this stock during the last three years.
FBK102L DC053
ket Price | Observed Price | Observation Dates 1 to 3 | Exercise Dates 1 to 3 | Exercise Date 4 |
- | 0 | $ - | $ - | $ 70.00 |
8.50 | 5 | $ - | $ - | $ 70.00 |
17.00 | 10 | $ - | $ - | $ 70.00 |
25.50 | 15 | $ - | $ - | $ 70.00 |
34.00 | 20 | $ - | $ - | $ 70.00 |
42.50 | 25 | $ - | $ - | $ 70.00 |
51.00 | 30 | $ - | $ - | $ 70.00 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
118 |
59.50 | 35 | $ - | $ - | $ 70.00 |
68.00 | 40 | $ - | $ - | $ 70.00 |
76.50 | 45 | $ - | $ - | $ 70.00 |
85.00 | 50 | $ - | $ - | $ 70.00 |
93.50 | 55 | $ - | $ - | $ 70.00 |
102.00 | 60 | $ - | $ - | $ 70.00 |
110.50 | 65 | $ - | $ - | $ 75.00 |
119.00 | 70 | $ - | $ - | $ 80.00 |
127.50 | 75 | $ - | $ - | $ 85.00 |
136.00 | 80 | $ - | $ - | $ 90.00 |
144.50 | 85 | $ - | $ - | $ 95.00 |
153.00 | 90 | $ 3.00 | $ - | $ 103.00 |
161.50 | 95 | $ 3.00 | $ - | $ 103.00 |
170.00 | 100 | $ - | $ 103.00 | $ 103.00 |
178.50 | 105 | $ - | $ 103.00 | $ 103.00 |
187.00 | 110 | $ - | $ 103.00 | $ 103.00 |
195.50 | 115 | $ - | $ 103.00 | $ 103.00 |
204.00 | 120 | $ - | $ 103.00 | $ 103.00 |
212.50 | 125 | $ - | $ 103.00 | $ 103.00 |
221.00 | 130 | $ - | $ 103.00 | $ 103.00 |
229.50 | 135 | $ - | $ 103.00 | $ 103.00 |
238.00 | 140 | $ - | $ 103.00 | $ 103.00 |
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
119 |
Hedged Position as of March 31st, 2020 | ||||||||||
Hedged Position | ||||||||||
EMISORAS: FBK102L DC053, SXE108R DC063, SXE009R DC058, SPX004R DV006. | ||||||||||
Asset Type | Issuer / Serie | Number of Shares | Market Price | Beta Coef. | Period in Months used for Beta | Delta Coefic. (For Options and Warrants) | Delta (Shares) | Delta (Securities) | ||
HEDGE | FBK102L DC053 | 835,000 | 0.00 | 1.0000 | 12 | 1.000000 | 835,000.00 | (8,804.1009) | ||
HEDGE | SXE108R DC063 | 808,500 | 0.00 | 1.0000 | 12 | 1.000000 | 808,500.00 | 46.4162 | ||
HEDGE | SXE009R DC058 | 464,000 | 0.00 | 1.0000 | 12 | 1.000000 | 464,000.00 | 73.4747 | ||
HEDGE | MINI-SP FUT | 3 | 2,569.75 | 1.0000 | 12 | 1.000000 | 3.00 | 150.0000 | ||
OBLIGATION | FBK102L DC053 | 835,000 | 86.50 | 1.0000 | 12 | 0.010544 | 8,804.10 | 8,804.1009 | ||
OBLIGATION | SXE108R DC063 | 808,500 | 84.48 | 1.0000 | 12 | 0.000057 | 46.42 | (46.4162) | ||
OBLIGATION | SXE009R DC058 | 464,000 | 98.93 | 1.0000 | 12 | 0.000158 | 73.4747 | (73.4747) | ||
OBLIGATION | SPX004R DV006 | 190,000 | 107.26 | 1.0000 | 12 | 0.000943 | 179.2523 | (179.2523) | ||
Delta as Issuers | ||||||||||
Issuer / Serie | Asset Type | Total | ||||||||
MINI-SP FUT | HEDGE | 150.000000 | ||||||||
SPX004R DV006 | OBLIGATION | (179.252340) | ||||||||
SXE009R DC058 | HEDGE | 73.474670 | ||||||||
OBLIGATION | (73.474670) | |||||||||
FBK102L DC053 | HEDGE | (8,804.100860) | ||||||||
OBLIGATION | 8,804.100860 | |||||||||
SXE108R DC063 | HEDGE | 46.416190 | ||||||||
MINI-SP FUT | OBLIGATION | (46.416190) | ||||||||
Total | (29.252340) | |||||||||
Issuer | Delta (Shares) | Original Beta | Standard Error | Delta (Shares) | Delta Hedge in Securities | Delta Obligations in Securities | ||||
FBK102L DC053 | 0.0000 | 1.0000 | 0.000000 | 0.0000 | (8,804.1009) | 8,804.1009 | ||||
SXE108R DC063 | 0.0000 | 1.0000 | 0.000000 | 0.0000 | 46.4162 | (46.4162) | ||||
SXE009R DC058 | 0.0000 | 1.0000 | 0.000000 | 0.0000 | 73.4747 | (73.4747) | ||||
SPX004R DV006 | (29.2523) | 1.0000 | 0.000000 | (29.2523) | 150.0000 | (179.2523) | ||||
Earnings Release | 1Q.2020 | ||
Banco Santander México | ||
120 |
Item 2
1Q.20 Earnings Presentation Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México.
Safe Harbor Statement 2 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 formation 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 nominal Mexican pesos, unless otherwise indicated . Historical figures are not adjusted by inflation .
Solid Quarter, Strong Capital and Liquidity, Healthy Asset Quality, Well Positioned to Face COVID - 19 Impact 3 Source: Company filings under CNBV GAAP. 1Q20 Highlights Loan book up 12.2% YoY and deposits up 15.3% boosted by corporates, middle - market and government customers Stable asset quality Strong capital and liquidity position, supported with recent issuance of U.S.$1.75 billion of senior notes due 2025 Launching measures to mitigate COVID - 19 impact Operational resiliency and actions to ensure the health of our employees Support programs for individuals and SMEs Community support actions focused on awareness and funding campaigns
4 Employees Customers Initiatives Implemented to Mitigate the COVID - 19 Pandemic – Employees and Customers ▪ Operational readiness for servicing customers through all digital channels and contact centers ▪ Debtor Relief Program for Individuals and SMEs ▪ Participation in Federal Program to Support Small Businesses ▪ Zero Interest Payments in Credit Cards for 3 months for purchases at on - line supermarkets and 5 to 10 months on purchases at pharmacies, laboratories and hospitals ▪ Bank’s health insurance products offer coverage for the COVID - 19 pandemic ▪ Established work - from - home protocols for business continuity ▪ Critical personnel works remotely or split into teams working on alternative schedules or at alternate work sites ▪ Branch employees are split into teams ▪ Additional IT resources channeled into remote operating tools and cybersecurity ▪ Special support line for confidential counseling Employees Branch , … Ho … Branch employees working from… Working … Critical , 10%
5 15% 46% 8% 31% SMEs Customers Strong Response to Support Program Aimed at individuals and SMEs, with current loans as of Feb 28 , 2020 . Registration ends on April 30 th . Includes credit cards, payroll and consumer loans, auto, mortgages and SME loans . Benefits : Grace period for up to 4 + 2 months Customers will not enter the credit bureau NPLs nor provisions will be affected during grace period Nearly 406 , 000 customers have registered into the program Debt relief program Portfolio under support program The portfolio under support program represents 16% of the total loan book accounting for Ps.122Bn of credit amount of product’s loan book 36% 5 2 % 31% Personal, Payroll & Auto Mortgages Credit Cards 17% Note: Data as of April 28 th 2020.
▪ Debtors support program for individuals and SMEs will not have an impact during the grace period neither on loan loss provisions nor NPLs ▪ Flexibility for using the capital conservation buffer of 2.5% without triggering any regulatory corrective measures ▪ Banks allowed to fall below 100% of their Liquidity Coverage Ratio (LCR) without consequences; volatility impact excluded from LCR ▪ Recommendation to abstain from paying dividends and repurchasing shares to enhance financial position ▪ Santander will participate in Federal Program to Support small businesses ▪ 10 actions to provide liquidity announced by Banxico 6 Government & Regulators Initiatives Implemented to Mitigate the COVID - 19 Pandemic – Government • Weight of fiscal stimulus ranges between 0% and 7% of GDP COVID - 19 support measures with fiscal impact 34.0 33.6 18.8 14.6 11.1 10.1 9.3 7.1 6.0 2.9 2.4 1.1 (as % of GDP) Includes loans, equity injections, government guarantees as well as spending and revenue measures. Source : IMF as of April 8 th . Figures based on public announcements; final figures and deficit impact will depend on effective implementation. Including Guarantee and Liquidity programs plus fiscal packages.
▪ Launch of campaigns to encourage people to stay at home and an appreciation campaign aimed at health professionals #YoMeQuedoEnCasa #HéroesConBata ▪ Santander launched a support website as a resource guide to help people and companies overcome the COVID - 19 crisis ▪ + Ps.55 million from Santander Universidades program channeled to support digital learning platforms at universities and scholarships for students ▪ ▪ Launch of a fund to collect resources from employees to aid those in need and the Bank will double the amount collected 7 Community Initiatives Implemented to Mitigate the COVID - 19 Pandemic – Communities Esto lo superamos juntos
8 Business Volumes Boosted by Corporate and Government Loans and Deposit Attraction Efforts Business volumes grew significantly in March, as corporates tapped their committed lines of credit Mortgages and payroll loans continue showing robust growth, while credit cards start to soften and SMEs continue decelerating The recent depreciation of the Mexican peso contributed to relevant nominal increase in the loan portfolio Deposits grew significantly in March, mainly driven by our efforts to compensate for loan growth Individual demand deposits grew a solid 12 % YoY reflecting our continuing strategy of loyal customer acquisition 775 691 713 55 - 2 7 3 - 1 1T19 Total Loans Middle Mkt. & Corp. Gov&FinEnt Consumer 1Q19 Total loans 4Q19 Total loans 1Q20 Total loans Middle Mkt. & Corp SMEs Gov. & FinEnt Mortgage Consum. Loan portfolio grows in most business lines (Ps. Bn, ending balance) Deposit growth (Ps. Bn, ending balance) 810 702 692 - 2 120 1T19 Total D 4Q19 Total D Individuals Corporates 1Q20 Total Loans 1Q19 Total Deposits 4Q19 Total Deposits 1Q20 Total Deposits Individuals Corp. 12.2% 15.3%
9 Solid 1Q20 Results with Non - Material Impact from COVID - 19 Pandemic % Variation 1Q20 QoQ YoY Net interest income 16,896 1.0 2.7 Provisions for loan losses (5,165) 6.2 19.6 Net interest income after provisions for loan losses 11,731 (1.1) (3.3) Commission and fee income (net) 4,697 8.6 6.1 Net gain (loss) on financial assets and liabilities 883 (39.6) 166.0 Other operating income (212) (64.7) (61.5) Administrative and promotional expenses (9,785) (5.4) 5.7 Operating income 7,314 9.1 3.3 Equity in results of associated companies 4 — — Operating income before income taxes 7,318 9.1 3.3 Income taxes (net) (1,904) 6.4 6.3 Net income 5,414 10.1 2.3 NII impacted by lower interest rates and low margin segments growth Asset quality remains healthy while LLR were affected by internal model adoption Net fees driven by robust cash management, investment banking and insurance fees offset by lower credit card usage Expenses and efficiency reflect amortization of strategic investments, in line with original guidance Net Income impacted by lower interest rates, higher non - recurrent provisions, and higher tax rate 1Q20 QoQ Var YoY Var Efficiency ratio 2 43.95% - 326 bps - 86 bps ROAE 3 15.48% +60 bps - 92 bps Source: Company filings under CNBV GAAP. Notes: 1) Quarterly ratio = Annualized quarterly opex as percentage of annualized quarterly income before opex - net of allowances (1Q20*4). 2) Quarterly ratio = Annualized quarterly net income as a percentage of average equity (4Q19;1Q20).
Diversified Business with Prudent Origination Healthy Asset Quality and Diversified Business with Prudent Origination Main focus in defensive products (i.e. payroll lending and mortgages) Defensive SME portfolio (68% of loan portfolio is guaranteed by NAFIN) Prudent loan origination practices 9.2% of the loan portfolio is exposed to most vulnerable sectors due to Covid - 19 pandemic: oil & gas, transportation, hotels and restaurants and automotive industries Cost of risk 1 Commercial loan portfolio breakdown by Industry 3 Commerce , 21% Professional and Technical Services , 17% Construction , 16% Oil & Gas , 7% Communication , 5% Transport , 5% Agriculture , 5% Food, Beverages and Tobacco , 4% Lodging and Restaurants , 3% Other , 17% 1Q19 4Q19 1Q20 Var YoY (bps) Var QoQ (bps) Consumer 3.65% 3.81% 3.73% 8 (8) Credit Card 4.08% 4.14% 4.14% 6 0 O . consumer 3.22% 3.46% 3.31% 9 (15) Mortgages 3.74% 4.13% 4.33% 59 20 Commercial 2 1.24% 1.25% 1.13% (11) (12) SMEs 2.16% 2.42% 2.61% 45 19 NPL ratio 2.15% 2.28% 2.16% 1 (12) NPL Ratio 1Q19 2Q19 3Q19 2.62% 4Q19 1Q20 2.69% 2.70% 2.60% 2.65% +5bps - 4 bps Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Year to date = Annualized loan loss reserves (LTM) as percentage of average loans (LTM). 2) Commercial loans include: Middle - Market, SMEs, corporates, financial institutions and government. 3) As of December 31, 2019. 10
1.2% 8.2% 2.5% Strong Capital Position and Liquidity Profile Debt Maturity (pro forma for recent issuance) CET1 11.1% 13.1 % Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) LCR = Liquidity Coverage Ratio. 2) Including short - term positions. 3) Including additional Tier 1 Capital Notes issued in December 2016. Liquidity Coverage Ratio (LCR 1 ) 100% 125% Regulatory Minimum 1Q20 25% above regulatory minimum Core Capital well in excess of regulatory minimums 1Q20 LCR of 125% in average and 136% by quarter end, well above 100% Banxico regulatory requirement On April 14, the bank issued U.S.$1.75 billion of 5.375% senior notes due 2025 that will further strengthen liquidity Diversified funding sources and manageable maturity profile +540bps Regulatory Minimum 1Q20 Capital conservation buffer (waived) 4.5% CET1 +290bps Systemic buffer Minimum CET1 Ratio 11 14,197 31,649 10,150 31,571 2020 2021 2028 2022 12,143 3 >2028 2026 31,093 2
Guidance 2020 Withdrawn Due to Lack of Visibility Total Loans Δ 5% - 7% Total Deposits Δ 2% - 4% Cost of Risk (Net of recoveries ) 2.7% - 2.9% Expenses Δ 5% - 7% Tax Rate 26% - 27% Net Income Δ 3% - 5% 12 Metrics 2020 Withdrawn Target
Questions and Answers
14 Annex 1 1Q20 Earnings Full Presentation
Solid Quarter, Strong Capital and Liquidity, Healthy Asset Quality, Non - Material Impact of COVID - 19 Pandemic Yet 15 Source: Company filings under CNBV GAAP. Notes: 1) Year to date = Annualized loan loss reserves (LTM) as percentage of average loans (LTM). 2) Quarterly ratio = Annualized quarterly opex as percentage of annualized quarterly income before opex - net of allowances (1Q20*4). 3) Quarterly ratio = Annualized quarterly net income as a percentage of average equity (4Q19;1Q20). Loan book up 12.2% YoY Growth boosted by corporates, middle - market and government loans Mortgages and payroll lending continue showing robust growth Deposit base up 15.3% YoY Individual demand deposits +11.7% YoY Individual term deposits +4.3% YoY Stable asset quality NPL ratio 2.16% +1 bps Cost of risk 1 2.65% - 4 bps Improvement in efficiency while maintaining strong profit levels Efficiency ratio 2 43.95% - 86 bps ROAE 3 15.48% - 92 bps 1Q20 YoY Var 1Q20 YoY Var Corporate demand deposits +15.6% YoY Corporate term deposits +23.7% YoY Strong capital and liquidity position supported with recent issuance of U.S.$1.75 billion of 5.375% senior notes due 2025 CET1 11.06% LCR 124.99% 1Q20
Continued Increase in Loyal, Digital and Mobile Customers 16 Notes: 1) Thousands of customers. 2) Monetary transactions of individuals. Figures may vary from those previously reported due to restatements. Loyal Customers 1 Digital Customers 1 Digital Transactions / Total Transactions 2 Mobile Customers 1 3Q19 1Q19 2,652 2Q19 4Q19 1Q20 2,844 2,980 3,168 3,300 +24.4% 1Q19 3Q19 2Q19 4Q19 1Q20 3,815 3,512 3,227 4,170 4,448 +37.8% 2Q19 3,425 2,784 1Q19 1Q20 3Q19 4Q19 3,094 4,215 3,803 +51.4% A loyal customer is 4x more profitable 92% Mar’19 19% 81% 8% 25.4% 16.5% Mar’20 Internet Mobile
Soft Uptick in System Loans and Deposits Growth 17 Source: CNBV Banks as of February 2020 in billion pesos. Notes: 1) Includes credit cards, payroll, personal and auto loans. Total Loans Total Deposits Consumer Loans 1 (YoY Growth) Demand Deposits (YoY Growth) 4.3% 1Q19 7.5% 10.1% 2Q19 5.8% 3Q19 4Q19 4.4% Feb’20 5,254 5,352 5,335 5,406 5,440 YoY Growth 5,104 4.5% 6.1% 5.2% 1Q19 2Q19 8.4% 3Q19 4Q19 4.6% Feb’20 5,223 5,160 5,310 5,302 YoY Growth 2Q19 3Q19 1Q19 4Q19 Feb’20 6.4% 6.4% 6.0% 5.2% 4.7% 1Q19 6.0% 2Q19 3Q19 1.2% 4Q19 Feb’20 3.9% 6.4% 7.2%
18 Santander Mexico Loan Growth Boosted by Commercial Portfolio Source: Company filings under CNBV GAAP, in million pesos. Total Loans Loan Portfolio Breakdown 700,329 1Q19 2Q19 3Q19 4Q19 1Q20 691,226 697,326 713,680 775,809 +8.7% +12.2% 1Q20 Var YoY Contribution to: Loans NII Loans High - margin s egments : Middle - market 214,054 16.5% 52.1% 66.7% SMEs 74,587 (4.7%) Credit cards 57,624 2.0% Consumer 58,287 4.9% 404,552 8.2% Low - margin segments : Corporates 122,347 28.2% 47.9% 33.3% Government & Financial Entities 93,696 19.1% Mortgages 155,214 8.4% 371,257 17.0% Middle - Market 28% Corporates 16% Gov&FinEnt 12% SMEs 10% Mortgages 20% Credit Cards 7% Consumer 7%
Hipoteca Plus Drives Organic Mortgage Growth while Payroll Loans Remain Robust; Credit Cards Impacted by COVID - 19 19 Source: Company filings under CNBV GAAP, in million pesos. Market position calculated with CNBV Banks as of February 2020. Notes: 1) Includes payroll, personal and auto loans. Individual Loans 271,125 255,232 1Q19 1Q20 +6.2% 2Q19 1Q19 3Q19 4Q19 1Q20 155,214 143,182 145,651 148,733 151,929 +2.2% +8.4% 3Q19 1Q19 2Q19 1Q20 4Q19 59,478 56,473 57,476 58,960 57,624 - 3.1% +2.0% 2Q19 1Q19 3Q19 1Q20 55,577 4Q19 57,219 57,670 57,644 58,287 +1.1% +4.9% Double digit organic growth – up +12.6% YoY # 3 top mortgage originator, with Hipoteca Plus accounting for 63% of new mortgages Usage and balances negatively impacted by Covid - 19; usage down 6% YoY 3 rd largest market player Sustained cross selling to payroll, mortgage and other existing clients Gaining market share in payroll loans, up 8.2% YoY Originated close to Ps.1.7 billion in auto loans over the LTM, bringing this portfolio to over Ps.2.6 billion Personal Payroll Mortgages Credit Cards Consumer 1
Strong Growth in Commercial Lending; Companies, Institutions and Governments Drawing on Credit Lines 20 Source: Company filings under CNBV GAAP, in million pesos. Commercial Loans 504,684 435,994 1Q19 1Q20 +15.8% SMEs Middle - Market Corporates Government & Fin. Ent . 1Q19 2Q19 74,587 3Q19 4Q19 78,075 1Q20 78,229 79,491 76,344 - 2.3% - 4.7% 4Q19 98,270 1Q19 2Q19 3Q19 1Q20 95,410 93,838 94,506 122,347 +29.5% +28.2% 3Q19 1Q19 4Q19 2Q19 1Q20 183,691 188,053 185,567 186,615 214,054 +14.7% +16.5% 4Q19 1Q19 3Q19 2Q19 1Q20 87,165 74,482 78,664 74,169 93,696 +7.5% +19.1%
Strong Deposit Growth by Corporates Favoring Liquidity and Deposit Attraction Strategies 21 Total Deposits 683,590 34% 66% 1Q20 36% 1Q19 2Q19 64% 36% 64% Term 3Q19 36% 64% 4Q19 810,340 34% 66% Demand 702,644 721,288 692,537 +17.0% +15.3% Demand Deposits 1Q20 1Q19 463,941 531,094 +14.5% +11.7% Individuals Corporate +15.6% Term Deposits 1 238,703 1Q19 1Q20 279,246 +17.0% Total retail deposits – up 8.9%. Commercial customers drawing on credit lines boosted commercial deposits as most funds remained in deposit accounts and we launched a deposit attraction campaign. Source: Company filings under CNBV GAAP, in millions pesos. Notes: 1) Includes money market. Individuals Corporate +4.3% +23.7%
Strengthening our Liquidity Profile and Capital Position 22 Net Loans to Deposits 1 Debt Maturity CET1 and Capitalization Diversified funding sources and manageable maturity profile LCR 2 of 124.99%, well above 100% Banxico regulatory requirement Tier 1 ratio decreased 100 bps to 12.50% Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Loans net of allowances divided by total deposits (Demand + Term). 2) LCR = Liquidity Coverage Ratio. / 3) Including short - term positions. 4) Including additional Tier 1 Capital Notes issued in December 2016. / 5) 1Q20 is preliminary. 94.13% 1Q20 1Q19 95.41% 92.94% 2Q19 4Q19 3Q19 98.89% 99.95% 14,197 31,649 10,150 31,571 2020 2028 2021 2022 2026 12,143 4 >2028 31,093 3 12.19 11.89 12.29 11.89 11.06 1Q20 5 16.37% 1Q19 2Q19 16.90% 3Q19 4Q19 16.50% Tier 2 AT1 CET1 16.89% 16.23%
Lower Interest Rates and Low Margin Segments Growth Explain Slowdown in NII and a Lower NIM 23 N et Interest Income and NIM 1 NII grew 2.7% YoY, principally due to: ▪ Strong interest income from: Investment in securities: +39.3% Credit cards: +9.6% Loan portfolio (ex - credit cards): +0.4% NIM declined 13 bps YoY to 5.45% in 1Q20 and increased 6 bps QoQ Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Quarterly ratio = Annualized net interest income as percentage of daily average interest earnings assets (1Q20). 16,449 5.58 5.45 2Q19 1Q19 5.39 5.76 5.74 4Q19 3Q19 1Q20 16,588 16,589 16,727 16,896 +1.0% +2.7%
Robust Cash Management, Investment Banking and Insurance Fees Offset Lower Credit Card Usage by COVID - 19 24 Net Commissions and Fees Source: Company filings under CNBV GAAP, in million pesos. Notes: * Includes fees from collections and payments, account management, checks, foreign trade and others. 1Q20 3Q19 4,697 1Q19 2Q19 4Q19 4,426 4,580 4,325 4,697 +8.6% +6.1% Credit cards 27% Insurance 26% Cash management* 25% Financial advisory services 9% Investment funds 8% Purchase - sale of securities and money market transactions 5% Var YoY 1Q19 4Q19 1Q20 $$ % Credit cards 1,340 1,465 1,281 (59) (4.4%) Cash management* 1,262 1,115 1,386 124 9.8% Insurance 1,137 1,242 1,199 62 5.5% Financial advisory services 345 121 435 90 26.1% Investment funds 370 404 394 24 6.5% Purchase - sale of securities and money market transactions 161 186 210 49 30.4% Bank correspondents (189) (208) (208) (19) 10.1% Net commisions and fees 4,426 4,325 4,697 271 6.1%
Gross Operating Income Supported by Robust Market Related Income and Fees 25 Gross Operating Income 1 Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Gross operating income does not include other income. 3Q19 22,513 1Q19 2Q19 4Q19 22,270 1Q20 22,476 21,207 21,849 - 0.2% +6.0% Net Interest Income 75.2% Net Commissions and Fees 20.9% Market related revenue 3.9% Var YoY 1Q19 4Q19 1Q20 Var $$ Var % Net Interest Income 16,449 16,727 16,896 447 2.7% Net Commissions and Fees 4,426 4,325 4,697 271 6.1% Market related revenue 332 1,461 883 551 166.0% Gross Operating Income * 21,207 22,513 22,476 1,269 6.0%
Key Risk Metrics Remain Healthy; Loan Loss Reserves Affected by Internal Model Adoption 26 Loan Loss Reserves (LLR) Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Year to date = Annualized loan loss reserves (LTM) as percentage of average loans (LTM). 2) Commercial loans include: Middle - Market, SMEs, corporates, financial institutions and government. 1Q19 4Q19 2Q19 3Q19 1Q20 4,318 4,454 4,478 4,862 5,165 +6.2% +19.6% C ost of Risk 1 2Q19 1Q19 3Q19 4Q19 1Q20 2.69% 2.70% 2.62% 2.60% 2.65% +5bps - 4 bps NPL Ratio 1Q19 4Q19 1Q20 Var YoY (bps) Var QoQ (bps) Consumer 3.65% 3.81% 3.73% 8 (8) Credit Card 4.08% 4.14% 4.14% 6 0 Other consumer 3.22% 3.46% 3.31% 9 (15) Mortgages 3.74% 4.13% 4.33% 59 20 Commercial 2 1.24% 1.25% 1.13% (11) (12) SMEs 2.16% 2.42% 2.61% 45 19 NPL ratio 2.15% 2.28% 2.16% 1 (12)
Expenses and Efficiency Reflect Amortization of Strategic Investments 27 Administrative & Promotional Expenses Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Quarterly ratio = Annualized opex as percentage of annualized income before opex - net of allowances (1Q20*4). Efficiency 1 4Q19 1Q19 1Q20 2Q19 3Q19 9,256 9,482 9,783 10,344 9,785 - 5.4% +5.7% 43.95% 2Q19 1Q19 3Q19 4Q19 1Q20 44.81% 45.11% 44.29% 47.21% - 326bps - 86 bps Expenses Breakdown & Performance Var YoY 1Q19 4Q19 1Q20 $$ % Personnel 3,865 3,843 3,922 57 1.5% Administrative expenses 3,701 4,535 4,014 313 8.5% Depreciation and amortization 878 1,125 1,015 137 15.6% IPAB 812 841 834 22 2.7% Administrative & prom expenses 9,256 10,344 9,785 529 5.7%
Net Income Up 2.3% YoY and 10.1% Sequentially, Impacted by Strategic Investments, Lower Interest Rates and Higher Taxes 28 Source: Company filings under CNBV GAAP, in million pesos. Notes: 1) Quarterly ratio = Annualized net income as percentage of average equity (4Q19,1Q20). Net Income ROAE 1 Effective Tax Rate Profit Before Taxes 1Q19 5,291 2Q19 3Q19 4Q19 1Q20 5,608 4,916 5,517 5,414 +10.1% +2.3% 1Q20 1Q19 2Q19 3Q19 4Q19 17.29% 16.40% 16.63% 14.88% 15.48% +60bps - 92bps 2Q19 1Q19 26.02% 3Q19 4Q19 25.72% 1Q20 25.29% 24.96% 26.69% - 67bps +73bps 2Q19 1Q19 3Q19 1Q20 4Q19 7,318 7,082 7,473 7,427 6,706 +9.1% +3.3%
29 Annexes
Consolidated Income Statement 30 Source: Company filings under CNBV GAAP, in million pesos. % Variation 1Q19 4Q19 1Q20 QoQ YoY Interest income 30,773 31,544 30,847 (2.2) 0.2 Interest expense (14,324) (14,817) (13,951) (5.8) (2.6) Net interest income 16,449 16,727 16,896 1.0 2.7 Provisions for loan losses (4,318) (4,862) (5,165) 6.2 19.6 Net interest income after provisions for loan losses 12,131 11,865 11,731 (1.1) (3.3) Commission and fee income 6,016 6,250 6,508 4.1 8.2 Commission and fee expense (1,590) (1,925) (1,811) (5.9) 13.9 Net gain (loss) on financial assets and liabilities 332 1,461 883 (39.6) 166.0 Other operating income (551) (601) (212) (64.7) (61.5) Administrative and promotional expenses (9,256) (10,344) (9,785) (5.4) 5.7 Operating income 7,082 6,706 7,314 9.1 3.3 Equity in results of associated companies 0 0 4 — — Operating income before income taxes 7,082 6,706 7,318 9.1 3.3 Current income taxes (1,251) (2,108) (3,044) 44.4 143.3 Deferred income taxes (net) (540) 318 1,140 258.5 (311.1) Net income 5,291 4,916 5,414 10.1 2.3
Consolidated Balance Sheet 31 Source: Company filings under CNBV GAAP, in million pesos. % Variation Mar - 19 Dic - 19 Mar - 20 QoQ YoY Funds available 73,680 85,628 113,427 32.5 53.9 Margin accounts 3,521 5,152 4,929 (4.3) 40.0 Investment in securities 241,293 360,682 368,394 2.1 52.7 Debtors under sale and repurchase agreements 63,768 4,154 66,147 1,492.4 3.7 Derivatives 135,612 160,129 346,921 116.7 155.8 Valuation adjustment for hedged financial assets 77 234 264 12.8 — Total loan portafolio 691,226 713,680 775,809 8.7 12.2 Allowance for loan losses (20,836) (21,494) (22,664) 5.4 8.8 Loan portafolio (net) 670,390 692,186 753,145 8.8 12.3 Accrued income receivable from securitization transactions 113 157 154 (1.9) 36.3 Other receivables (net) 79,046 64,076 106,093 65.6 34.2 Foreclosed assets (net) 241 227 155 (31.7) (35.7) Property, furniture and fixtures (net) 8,841 10,545 10,343 (1.9) 17.0 Long - term investment in shares 90 90 359 298.9 298.9 Deferred taxes and deferred profit sharing (net) 18,986 19,154 21,849 14.1 15.1 Deferred charges, advance payments and intangibles 8,601 9,541 9,991 4.7 16.2 Other 35 39 39 0.0 11.4 Total assets 1,304,294 1,411,994 1,802,210 27.6 38.2 Deposits 750,154 745,882 861,518 15.5 14.8 Bank and other loans 57,574 45,279 40,595 (10.3) (29.5) Creditors under sale and repurchase agreements 65,455 192,835 234,582 21.6 258.4 Collateral sold or pledged as guarantee 24,006 8,923 10,209 14.4 (57.5) Derivatives 134,917 152,422 361,310 137.0 167.8 Valuation adjustment of financial liabilities hedging (19) 5 3 (40.0) — Other payables 104,521 93,398 110,432 18.2 5.7 Subordinated credit notes 34,819 34,267 42,218 23.2 21.2 Deferred revenues and other advances 501 288 302 4.9 (39.7) Total liabilities 1,171,928 1,273,299 1,661,169 30.5 41.7 Total stockholders' equity 132,366 138,695 141,041 1.7 6.6
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