Santander Consumer Bank AS - Investor Presentation 2017
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Santander
Consumer Bank AS
Investor Presentation 2017
1
Disclaimer
Important information
Santander Consumer Bank AS ("SCB") cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without
limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our
business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market,
macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments;
and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, could adversely affect our
business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
This document has been prepared by SCB for information purposes only and its contents are proprietary information and are strictly private and confidential. You agree that this document should not be reproduced (in
whole or in part), delivered or distributed to others or replicated without the prior written consent of SCB and is intended to be read by market professionals (eligible counterparties and professional clients) and should not
be disclosed to nor relied upon by retail clients and/or investors.
Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information
and views may change at any time without notice. SCB does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Likewise, this document contains certain tables and other statistical analyses (the "Statistical Information") which may have not been audited. Numerous assumptions have been used in preparing the Statistical Information,
which may or may not be reflected in this document or be suitable for the circumstances of any particular recipient. As such, no assurance can be given as to the Statistical Information's accuracy, appropriateness or
completeness in any particular context, or as to whether the Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Statistical
Information should not be construed as either projections or predictions or as legal, tax, financial, investment or accounting advice.
Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or
exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.
The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by SCB. Any
person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such
public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this
presentation available, SCB gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in SCB or in any other securities or investments whatsoever.
Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except
pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment
activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000. This document is not intended for distribution to, or use by, any person or entity in any jurisdiction or
country where such distribution or use would be contrary to law or regulation.
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles
of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
To the fullest extent permitted by law, SCB does not accept any liability whatsoever (including in negligence) for any direct or consequential loss arising from any use of or reliance on material contained in this document. In
addition neither SCB nor any of their affiliates makes any representation or warranty as to the fairness, accuracy, completeness, adequacy or comprehensiveness of the information contained in this document and
expressly waives any responsibility arising from any lack of accuracy, comprehensiveness and adequacy of the information contained in this document.
This document has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither
SCB nor any director, officer, employee or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard
copy version available to you on request from SCB.
This presentation is provided on the basis of your acceptance of the terms of this disclaimer.
2
Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
3
Financial Highlights Q1-2017
NOK 868,7 MM in Profit before tax
P&L 4,9% Net Interest Income ratio
18,7% Return on Equity
NOK ~144 Bn in Total Assets
Assets 3,1% increase in Net Loans
2,8% Return on Assets
Affirmed ratings of A-/A3 by Fitch/Moody’s
Funding
Self funding ratio increased from 70,4% to 75,4%
Consolidated Liquidity Coverage Ratio of 113%
Risk
NPL ratio lowered to 2,01%
14,6% CET1 ratio
Capital
Dividend of NOK 1,2 billion paid to parent
4
SCB Nordic at a glance
Strong performance in a AAA region, Q1-2017 figures
Nordic
Gross Outstanding Auto Loans¹: 100,3 Bn (76%)
Gross Outstanding Unsecured Loans²: 31,6 Bn (24%)
Profit Before Tax: 869 MM
Norway Finland
Auto Loans: 42,4 Bn Auto Loans: 19,2 Bn
Unsecured Loans: 10,9 Bn Unsecured Loans: 2,4 Bn
Profit Before Tax: 374 MM Profit Before Tax: 148 MM
Total
Outstanding 40%
share Total
16% Outstanding
Denmark share Sweden
Auto Loans: 21,0 Bn Auto Loans: 17,7 Bn
Unsecured Loans: 5,1 Bn Unsecured Loans: 13,2 Bn
Profit Before Tax: 192 MM 53 % Profit Before Tax: 155 MM
Total
Total 24% Outstanding
Outstanding 20% share
share
Source: Q1 2017 Report
All figures in Norwegian Kroner (NOK)
1) Gross Outstanding Auto Loans (“Auto Loans”): Total loans before individual and group-wise write-downs, Operational leasing and Stock Finance.
5 2) Gross Outstanding Unsecured Loans (“Unsecured Loans”): Direct Loans, Credit Cards and Sales Finance (“Durables”)
3) Return on Assets: PBT (annualized) / ANEA
Strong asset growth
Robust business development and growth across all Nordic countries
Gross outstanding loans by geography
140 000
3%
8%
120 000 16%
16% 15%
15%
100 000 39%
20% 20% 20%
20%
80 000 16%
23% 24% 24%
21% 24%
60 000
40 000
41% 41% 40%
40%
20 000
0
2012 2013 2014 2015 2016 Q1 2017
Finland Denmark Sweden Norway
Source: SCB annual reports (2012 – 2016) and Q1 2017 report
6 Figures in NOK million
Solid financial performance
Increased earnings from strong asset growth, lower funding costs and merger synergies
Profit before tax (NOK MM)
3 500
3076
3 000
2 500
2 000
1942
1 500 1393 1321
1136
1 000 869
712
500
0
2012 2013 2014 2015 2016 Q1 2016 Q1 2017
Full-year 2016 development
2016 full year PBT contribution from the GE-portfolio compared to only half year in 2015
Net loans increased by 7,5%
Reduced funding costs in 2016
Opex in 2015 was significantly higher than 2016 due to restructuring costs related to the merger with GE.
LLR & write off alignment after the merger in 2015
Source: SCB annual reports (2012 – 2016) and Q1 2017 report
7
SCB achieved its stand-alone rating in 2016
Ratings are equalized with those of its direct and ultimate parent
Moody’s Fitch S&P
Banco Santander Long Term: A3 Long Term: A- Long Term: A-
S.A. Short Term: P-2 Short Term: F2 Short Term: A-2
(Stable Outlook) (Stable Outlook) (Positive Outlook)
Santander Consumer Long Term: A3 Long Term: A- Long Term: BBB+
Finance S.A. Short Term: P-2 Short Term: F2 Short Term: A-2
(Stable Outlook) (Stable Outlook) (Positive Outlook)
Santander Consumer Long Term: A3 Long Term: A-
Bank AS Short Term: P-2 Short Term: F2 -
(Stable Outlook) (Stable Outlook)
SCB AS ratings
affirmed by
Fitch & Moody’s
for 2017
8
Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
9
Core strengths of SCB Nordic
Market leader in the Sound financial Good asset quality Part of the Santander
Nordics performance group
• #1 position in auto finance in • Strong profitability history - • Internally developed risk • Strong, globally diversified
Norway, Finland and PBT of NOK 869 million models owner
Denmark, and #4 in Sweden • Total Assets of NOK ~144 • Pro-active portfolio • Sharing of risk management,
• Pan-Nordic market leader in billion management systems and knowledge
the unsecured segment • Solid capitalization. CET11 of • Retail customer base
14.6% • Low and stable NPL-ratio at
2.01%2
Source: Q1 2017 Report
1) CET1 = Common Equity Tier 1
10 2) NPL-ratio = Non-performing loans / Gross outstanding loansThe Nordic
Core Auto
strengths of Finance market
SCB Nordic
SCB’s market share and main competitors
Market leading position provides
Norwegian market economy of scale Finnish market
8% 13 % 6%
9%
25 % 21 %
11 % 24 %
19 % 27 %
36 %
Santander Consumer Bank DNB Finans Santander Consumer Bank OP Financial Group
VW Møller Bilfinans Nordea Finans Nordea Finans Danske Finance
Sparebank 1 Gruppen Others (incl captives) Others (incl captives)
Danish market Swedish market
12 % 36% 14 % 34 %
Market shares
and position 27%
14 % 18 % 20 % Market shares 10 %
36% 18 %
24 %
and position
#1
#1
Santander Consumer Bank Jyske Finans Santander Consumer Bank Volvo Finans
Nordea Finans
Others (incl captives)
Nordania
53 % Volkswagen Finans
Others (incl captives)
DNB Finans
#4
Partnerships with
Market shares 10% Market shares
and position 20%
#1
and position
19 brands &
3.900+
dealers
Source Norway: Internal calculations based on data from Finansieringsselskapenes Forening as per Q1 2017
Source Finland: Internal calculations based on data from Finnish Transportation Safety Agency (Trafi) as per Q1 2017
11 Source Denmark: Internal calculations based on data from Finans og Leasing as per year-end 2016
Source Sweden: Internal calculations based on data from Finansbolagens Förening as per year-end 2016Segments and customer types
SCB Auto’s main business area is car financing for private customers
Stock
Finance
Other Private
Persons
5%
6%
40%
13%
Auto SME
77% 23%
New Cars
6%
Wholesale
49% Other 4%
Used Cars
Segmentation based on Gross outstanding loans figures for Q1 2017
“Other” segments refers to leisure financing
12
“Other” customer type primarily consists of municipalitiesUnsecured product offering and segments
The Unsecured portfolio is divided into three main products
1%
Sales
20% Finance
Credit
Cards
79%
Direct
Loans
Segmentation based on Gross outstanding loans figures for Q1 2017
13Digitalisation at the core of consumer strategy
The journey has started and will continue during 2017
Santander Commerce Universe
Digital NORDIC
Building a Digital foundation - Core system replacement Plastic to Wallets
Transformation PSDII
CONSUMER
Digital application and
BUSINESS
Journey signature processes
HOW WHO
“Banking is no longer somewhere you go,
but something you do” (Brett King)
WHAT
“Banking is essential, Banks are
not” (Bill Gates)
CRM – a foundation for a real time engine to convert big data to customer value
14Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
15Group Balance Sheet summary
Robust balance sheet driven by growth in net loans
NOK Billion Q1 2017 Q4 2016 Δ Q/Q % FY 2016 FY 2015 Δ 16/15 %
Claims on Banks 3,0 4,0 -1,0 -26 % 4,0 5,8 -1,8 -31 %
Net Loans 125,5 121,7 3,8 3% 121,7 113,6 8,1 7%
Cash, Comm Paper, Bonds, Central Bank 9,2 10,9 -1,7 -16 % 10,9 9,2 1,7 18 %
Other Assets 6,5 6,1 0,4 7% 6,1 7,3 -1,2 -16 %
Total Assets 144,1 142,7 1,4 1% 142,7 135,9 6,8 5%
Liabilities to Banks 29,9 35,0 -5,1 -15 % 35,0 33,6 1,4 4%
Liabilities to Customers 43,9 41,0 2,9 7% 41,0 37,4 3,6 10 %
Bonds and other long term loan raising 47,3 42,6 4,7 11 % 42,6 41,5 1,1 3%
Other Liabilities 3,1 3,6 -0,5 -15 % 3,6 4,4 -0,8 -18 %
Subordinated loan capital 3,6 3,6 0,0 0% 3,6 3,8 -0,2 -5 %
Equity 16,5 17,0 -0,5 -3 % 17,0 15,3 1,7 11 %
Total Liabilities & Equity 144,1 142,7 1,4 1% 142,7 135,9 6,8 5%
Full-year 2016 development
Overall Balance Sheet growth driven by growth in net loans
Claims on banks reduced due to lower reserves on securitization transactions
Increase in deposits consistent with funding strategy
Dividend payment of NOK 500 MM in December 2016
Bonds purchased as part of liquidity portfolio of NOK 14,2 bn YTD
Issued bonds of NOK 18,3 bn in 2016 bn YTD (NOK 7,9 bn in Q4)
Source: Q1 2017 and 2016 Annual Report
16Group Income Statement summary
P&L showing steady growth with increasing PBT after legal merger
NOK MM Q1 2017 Q1 2016 Δ Q/Q % FY 2016 FY 2015 Δ 16/15 %
Interest Income 1 895 1 912 -17 -1 % 7 657 6 444 1 213 19 %
Interest Expenses -345 -375 30 -8 % -1 405 -1 525 120 -8 %
Net Interest Income 1 550 1 537 13 1% 6 252 4 919 1 333 27 %
Net fees, Commissions and Other 135 113 22 19 % 375 290 85 29 %
Other product related income & cost -23 -4 -19 475 % 70 29 41 141 %
Gross Margin 1 662 1 647 15 1% 6 697 5 238 1 459 28 %
Personnel Expenses -282 -296 14 -5 % -1 161 -1 014 -147 14 %
Administration Expenses -377 -340 -37 11 % -1 303 -1 418 115 -8 %
Depreciation -26 -27 1 -4 % -109 -79 -30 38 %
Net Operating Income 978 984 -6 -1 % 4 124 2 727 1 397 51 %
Other Operating Expenses -1 0 -1 - -70 12 -82 -
Loan Losses -108 -272 164 -60 % -977 -797 -180 23 %
Profit Before Tax 869 712 157 22 % 3 076 1 942 1 134 58 %
Taxes -205 -182 -23 13 % -765 -435 -330 76 %
Profit After Tax 663 530 133 25 % 2 311 1 507 804 53 %
Q1 2017 development Full-year 2016 development
Increase in net loans is higher than increase in net interest Legal merger with Santander Consumer Bank AB occurred on 1
income due to increase in Auto part of the product mix portfolio. July 2015 and therefore the first six months of AB performance
Lower funding cost contributes to a higher net interest income. are not included in statutory figures
Significantly lower losses, mainly driven by lower reserves. Write- A financial tax on wages of 5% of gross salaries paid to correct for
off and recoveries relatively stable. lack of VAT on financial services was introduced in Norway on 1
Jan 2017
Source: Q1 2017 and 2016 Annual Report
17Solid financial KPI development
Strengthening ratios due to merger effects
Return On Assets1 Return on Equity2
3,0 % 20,0 %
2,6 % 17,5 %
17,2 %
2,5 % 16,2 % 16,3 %
2,1 % 15,0 %
2,0 % 13,7 %
2,0 %
12,9 %
1,8 %
12,5 %
1,7 %
1,5 % 10,0 %
7,5 %
1,0 %
5,0 %
0,5 %
2,5 %
0,0 % 0,0 %
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
ROA: Increase due to higher portion in unsecured ROE: Increase due to strong PAT growth in 2016
financing and merger one-offs in 2014 and 2015. and despite higher regulatory requirements.
Source: SCB annual reports (2012 – 2016)
1) Return on Assets: PBT / ANEA
18
2) Return on Equity: PAT / Average Core Capital (CET1)Solid financial KPI development
Increased profits and stricter cost control
Net Interest Income Ratio1 NII Ratio: Development largely due to higher portion of
7,0 % unsecured loans from merger.
6,0 %
5,3 %
5,0 % 4,6 % 4,6 % 4,4 % 4,7 % C/I Ratio: Decrease due to strong cost control, synergies from
4,0 % merger and higher margins.
3,0 %
2,0 % Loan Loss/ANEA: Development driven by stable risk
1,0 % performance and more conservative LLR adjustment in 2014.
0,0 %
2012 2013 2014 2015 2016
Cost / Income Ratio2 Loan Loss / ANEA3
60% 1,25%
50% 1,1 %
50% 1,00%
42% 44% 0,9 %
42% 40% 0,8 %
40% 0,8 % 0,7 %
0,75%
30%
0,50%
20%
10% 0,25%
0% 0,00%
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Source: SCB annual reports (2012 – 2016)
1) Net Interest Income Ratio: NII / ANEA
19 2) Cost / Income ratio: OPEX / Gross Margin
3) Loan Loss / ANEAFunding
Steadily increasing self funding, with focus on deposits and senior unsecured issuances
Self-funding pillars1 Funding composition
120
100 17% 22% 27%
Senior
Securitization Deposits
Unsecured 80
NOK billion
33%
35% 36%
• 8 current • NOK 7,25 billion • In Norway 60
outstanding outstanding in deposits are 20%
13%
40 12%
transactions the Norwegian guaranteed up to
across Nordics bond market NOK 2 MM 20 30% 30% 25%
• Represents a • SEK 5,26 billion • In EU countries 0
2011 2012 2013 2014 2015 2016 Q1 2017
low-cost and outstanding in the guarantee is
stable funding the Swedish up to EUR Parent funding Securitization Deposits Unsecured Bonds
source bond market 100,000
Self-funding ratio
• EUR 2,25 billion • NOK 44 billion in
outstanding from total deposits 100%
four Benchmark across Norway, 75,4 %
transactions Sweden and 80% 70,1 % 70,4 %
62,4 %
issued under the Denmark
60% 49,6 %
SCB AS EMTN
Programme
40%
28,2 %
21,9 %
20%
0%
2011 2012 2013 2014 2015 2016 Q1 2017
Source: Q1 2017 Report
20 1) Outstanding amounts/transactions as per Q1 2017Unsecured Senior Funding
2016 summary and Q1 2017 developments
NOK SEK EUR
New Issuances 3,651 million 1,451 million 1,000 million
2016
Maturities 1,104 million - 500 million
Repurchases 401 million 90 million -
Net new funding 3,250 million 1,210 million 1,000 million
Total outstanding¹ 5,821 million 4,860 million 1,750 million
Preferred Format Floating Rate Note Floating Rate Note Fixed Rate Note
Preferred Tenor 2 – 3 year 2 – 3 year 3 year
New Issuances 2,200 million 400 million 500 million
2017
Maturities - - -
Repurchases 800 million - -
Net new funding 1,400 million 400 million 500 million
Total outstanding² 7,251 million 5,260 million 2,250 million
Preferred Format Floating Rate Note Floating Rate Note Fixed Rate Note
Preferred Tenor 3 – 5 year 3 – 5 year 3 year
Source: Q1 2017 Report, 2016 Annual Report, Bloomberg
1) Outstanding amounts as per year-end 2016
21
2) Outstanding amounts as per Q1 2017Unsecured Funding
Maturity profile 2017 - 2022
Total Maturity (EUR MM) EUR MM
1500 1200
1000
1000
1400 800 750
600 500
1300 400
200
1200
0
2017 2018 2019 2020 2021 2022
1100
1000
1000 SEK MM
900 3000
2410
2500
800 2000
1450
1500
1000
700 1000
750 500 400
600 0
2017 2018 2019 2020 2021 2022
500
152
400
500 NOK MM
4000 3451
300
3000
105
200 376
42 2000 1600
253 1300
100 175 1000
900
142
98
0 0
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
NOK SEK EUR
Source: Q1 2017 Report, 2016 Annual Report, Bloomberg
22 FX: SEK/NOK 0,9618 EUR/NOK 9,1683 EUR/SEK 9,5322Nordic Deposits
Online distribution of high-yield deposit products
Nordic Deposit
Consolidated Total Balance: NOK 44 Bn
• Retail customer base
• Highly competitive market with many small players
Norway
Deposit Balance: NOK 19,8 Bn
• Demand products with floating interest
rate
% of
Consolidated 45%
Denmark balance
Deposit Balance: NOK 11,5 Bn Sweden
• Demand and Notification product with Deposit Balance: NOK 12,7 Bn
floating interest rate • Demand and Notification product with
• Termed Deposit with fixed interest rate
53 % floating interest rate
% of
% of
26% 29% Consolidated
Consolidated
balance
balance
Source: Q1 2017 Report
23Strict capital requirements in Norway
Ensuring strong capitalization of the bank
CET1-ratio requirements per Q1 2017 and expected requirements per Q4 2017
Q1 2017 Q4 2017
2.2% 2.2%
Pillar 2 CET1- Pillar 2 CET1-
requirement requirement
Countercyclical Countercyclical
buffer ~1.03% buffer ~1.3%1
~0.27%
~13.23% Systemic risk ~13.5% Systemic risk
Increase in CET1
buffer 3% buffer 3%
requirements due to
~11.03% ~11.03% increase in ~11.3% ~11.3%
Pillar 1 CET1- countercyclical buffer Pillar 1 CET1-
requirement Conservation requirement Conservation
buffer 2.5% buffer 2.5%
Minimum CET1 Minimum CET1
requirement requirement
4.5% 4.5%
• Strict requirements in Norway with the inclusion of additional buffer requirements and a high countercyclical buffer requirement
• Pillar 2 requirement for SCB was set to 2.2% by the Norwegian FSA, applicable from January 2017
• From Q4 2016, the countercyclical buffer requirement is calculated as a weighted average of the risk weighted assets in the
countries where the bank operates
• Per end 2017, the bank expect a CET1 ratio requirement of about 13.5%
• From July 2017, SCB will have to comply with a leverage ratio requirement of 5%
1) Pillar 1 CET1 requirement here incorporates the increase in countercyclical buffer from 1.5% to 2% in Norway in December 2017. Total countercyclical buffer requirement is set to
1.3% since the countercyclical buffer requirement is calculated as a weighted average of the risk weighted assets in the countries where the bank operates . The countercyclical
24 buffer for SCB will vary with the share of risk weighted assets in each country and according to the buffer requirement determined by the respective countrySCB has strengthened its capital ratios
With a CET1 ratio ~15%
Capital ratios evolution SCB Group1
25%
20% 19,14% 18,66%
17,77% 17,41% 18,08%
16,89%
15,26% 15,09% 14,63%
15% 13,71% 13,86% 14,12%
13,06%
10,90%
9,69%
10% 10,78% 11,43% 11,53% 11,41%
10,27%
5%
0%
2013 2014 2015 2016 Q1 2017
CET1 Tier 1 Tier 2 Leverage ratio
High capital ratios attained through solid earnings and IRB
• SCB capital ratios are comfortably above regulatory requirements
• Adoption of advanced IRB approach in December 2015 provided capital relief of about NOK 1.3 billion
• Combined with solid earnings in 2016, SCB paid dividends of NOK 1.7 billion¹ for 2016
• SCB aims to pay annual dividend subject to ensuring adequate capitalization of the bank
• With a leverage ratio of 11.4%, the bank is well positioned to meet the coming leverage ratio requirement
1) NOK 500 million payed in December 2016 and NOK 1.2 billion payed in February 2017. Therefore, December 2016 capital ratios
25 include the dividend payment of NOK 1.2 billion in February 2017.Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
26Risk Management
Clear governance and management structures
Clear governance & key Seeking synergies to be efficient Making sure to have the
decision bodies best team in Risk
General Assembly
Independent entities Financial
GREAT PEOPLE
Supervisory
(Shareholder) Supervisory Board
Committee of Representatives
Authority
+
Board of Directors
Control Committee
OPPORTUNITY
=
Directors
Audit Committee
Remuneration
Committee
Internal Audit
SCB AS
Internal Audit Director RESULTS
Risk Committee
Internal Audit
Administration
Grupo Santander
Chief Executive Audit
Officer
Securitization
Senior Management AML
Team (SMT) Basel II
Credit Risk
Credit Committee Legal
(1. Auto 2. Non-
Auto) Finance
IT
Asset & Liability
Committee
Independent Credit Risk
Capital Committee
Control Unit
Nordic Internal
Control Committee External Audit Deloitte
Sourcing Board
Compliance
Committee
AML Committee
Branches lead by
Local Management
Teams
Local Credit
Committee
27Sound underwriting processes
Information is fed into PANDE1 Key components in underwriting
• Credit reports from • Minimum acceptance
external agencies criteria including:
• Internal payment history • Min. age
• Pay-slips, tax • Down payment
Credit requirements (LTV)
information declarations, etc.
• AML/Fraud
Credit info Credit policy
Credit
policy PANDE Scorecards
• Internally developed • Includes:
scorecards since 2010 • Age
• Enables high degree of • Mileage
automatization • Brand
• Models integrated into
management
Vehicle
information
Scorecards Vehicle info
28 1) Pan Nordic Decision EngineCreditor friendly legal environment
Good legal environment for automatic underwriting and collection in the Nordics
Underwriting: Underwriting: Underwriting: Underwriting:
• Public access to • Access to debt register • Negative payment • Negative payment
income history and income register register
• Negative payment information
register (Upplysningscentralen)
Collection: Collection: Collection: Collection:
Collateral can be Collateral can be Collateral can be Collateral can be
repossessed outside repossessed outside of repossessed outside of repossessed outside
of court court court of court
Withholding of salary Withholding of salary For both secured and For auto loans, the
can be arranged can be arranged unsecured loans, the Bank can claim
Sales-lien on car will For auto loans, the Bank will have a claim proceeds from sale of
expire after 5y Bank can claim on the Borrower for the car
For both secured and proceeds from sale of any outstanding For unsecured loans,
unsecured loans, the the car and payment of amount up to 15-20y the Bank will have a
Bank will have a outstanding invoices lifetime claim on any
Denmark
Sweden
lifetime claim on the For unsecured loans, outstanding loan
Norway
Finland
Borrower for any the Bank will have a
outstanding loan lifetime claim on any
outstanding loan
29Tight risk controls result in stable performance
Risk ratio breakdown
NPL Ratio 2012 2013 2014 2015 2016 Q1 2017 NPL Ratio3
Denmark 0,70 % 0,71 % 0,61 % 0,97 % 1,21 % 1,30 % 2,05% 2,01% 2,01%
1,76%
1,61% 1,48%
Finland 1,38 % 1,04 % 0,89 % 0,72 % 0,71 % 0,71 %
Norway 2,47 % 2,47 % 2,36 % 3,41 % 3,36 % 3,35 %
Sweden 0,74 % 0,48 % 0,61 % 1,52 % 1,22 % 1,22 %
Nordic 1,76 % 1,61 % 1,48 % 2,05 % 2,01 % 2,01 %
2012 2013 2014 2015 2016 Q1 2017
NPL Ratio 2012 2013 2014 2015 2016 Q1 2017
Auto¹ 1,30 % 1,20 % 1,09 % 1,01 % 1,08 % 1,07 % Coverage Ratio4
Unsecured² 6,24 % 5,32 % 4,77 % 4,95 % 4,88 % 4,94 %
126,9 %
113,5 %
Nordic 1,76 % 1,61 % 1,48 % 2,05 % 2,01 % 2,01 % 97,7 %
106,8 %
98,6 % 99,3 %
Coverage Ratio 2012 2013 2014 2015 2016 Q1 2017
Auto¹ 69,2 % 75,5 % 89,4 % 95,4 % 90,4 % 86,9 %
Unsecured² 138,6 % 136,4 % 148,1 % 111,8 % 113,1 % 107,7 %
Nordic 97,7 % 98,6 % 126,9 % 106,8 % 113,5 % 99,3 % 2012 2013 2014 2015 2016 Q1 2017
1) Auto includes Stock Finance
2) Unsecured includes Direct Loans, Credit Cards and Sales Finance (“Durables”)
30 3) NPL ratio = Non-performing loans / Gross outstanding loans
4) Coverage Ratio = Loan Loss Reserves (Write Downs) / NPLTable of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
31Part of the Santander Group
A leading financial group worldwide
1.35 TN
EUR total
assets 128 MM
customers
6.204 BN
EUR PAT
2016
95 BN
EUR total
assets
1.238 BN
EUR PAT
2016
SCF: Management perimeter (Includes Santander Consumer UK)
32Fully owned by Santander Consumer Finance
Santander Consumer Bank AS is regulated by the Norwegian FSA
Banco Santander S.A.
SCF accounts for 14% of
Banco Santander’s NAP1
Santander Consumer
Finance S.A.
SCB Nordic accounts
for 22% of SCF’s NAP
Santander Consumer
Bank AS
Norway
Santander Consumer Santander Consumer Santander Consumer
Bank AS Bank AS Finance OY
(Branch, Sweden) (Branch, Denmark) (Subsidiary, Finland)
1) Percentage over Banco Santander 2016 Profit after tax, excluding Corporate Centre and Real Estate Activity in Spain.
33Our Culture
“At the heart of our culture we believe that wherever we operate, everything we do
should be Simple, Personal and Fair.”
Ana Botín
Group executive chairman
34Key takeaways for continued growth
• Defend our position as a Nordic market leader
• Continue to deliver strong financial results
• Maintain focus on risk to ensure good asset quality
• Continue leveraging strength of a global banking franchise
35Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
36Grupo Santander & Santander Consumer Finance
Subjects Banco Santander Santander Consumer Finance
Santander, a leading financial group
Key Figures Mar’17
Total assets (trill. €) 1.35
Attributable Profit 1Q’17 (mill. €) 1,867
Headcount 188,182
Customers (millions) 128
Shareholders (millions) 3.96
Branches (units) 12,1171Q'17 Financial Highlights
Chg. 1Q’17 / 1Q’16
(1) % change in constant euros
FL CET1: Common Equity Tier 1 Fully Loaded RoTE: Return on Tangible Equity EPS: Earnings Per Share TNAV: Tangible Net Asset Value1Q'17 Business Highlights
Chg. Mar’17 / Mar’16
Note: Loans excluding repos. Customer funds: deposits excluding repos + marketed mutual funds. % change in constant eurosDelivering on our commitments with a story of profitable growth (1) % change (constant euros), (2) Dividends charged to 2017 profit to be submitted to the AGM for approval EPS: Earnings Per Share DPS: Dividends Per Share FL CET1: Common Equity Tier 1 Fully Loaded
Subjects Banco Santander Santander Consumer Finance
Santander Consumer Finance
Santander Consumer Finance is the European leader
in the consumer finance industry …
… fully owned by Santander, one of the largest
financial groups in the world
Its core businesses are car finance and consumer
finance (durables financing, personal loans and
credit cards) …
… distributed mainly through point-of-sales, and
direct-to-consumer channels such as internet,
telemarketing platforms and branches.European leader in the consumer finance industry
Key Figures Mar’17
Loans (bill. €) 95
Deposits (bill. €) 36
Attributable Profit 1Q’17 (mill. €) 344
European countries 15
TOP 3 position1 (countries) 14
Customers (million) 20
PoS partnerts (thousand) >130
SCF: Management Control Perimeter (includes SCUK).
(1) By Market share in New Business car loans or durablesWith recurrent profits through the cycle
Net Attributable Profit
€ Million
All-time record profit result in 2016
In 1Q17, profit of €344 million (+19% y-o-y)
SCF: Management Control Perimeter (includes SCUK).A differential and proven business model
A
High diversification and European leadership
B
Advanced car financing platform and strong foothold in consumer finance
C
SCF’s
Efficiency leadership with proven integration capabilities
business model
D
Best-in-class risk and collections capabilities
E
Sound funding structureA
Well spread across Europe and well balanced
between car and consumer loans
Geographic diversification Product diversification
Outstanding: €95 bn Outstanding: €95 bn Auto
(Mar’17) Other (Mar’17) Car Stock Consumer
Other
Poland Finance
7% Other
Italy 4% 10%
5%
Auto
7% Germany Mortgages -New
UK 36% 8%
35%
8% % loans % loans
by country Cards 3%
by product
4%
10%
France Durables 13%
13% 15% 22%
Auto-Used
Spain Direct
Nordic Countries
Well spread across 15 European countries Car financing represents the biggest share
Important foothold in the largest economies of the portfolio: 67%
74% portfolio in AAA & AA countries Consumer lending (durables financing, cash
loans and credit cards): 21%
SCF: Management perimeter (i.e. including SCUK)B
Advanced car financing platform and strong foothold
in consumer finance
Advanced car financing platform Strong foothold in consumer finance
• Presence in all European markets • TOP retail chain agreements throughout
Europe
• TOP positions in its geographies,
including the 5 biggest European auto • >55,000 POS partners
markets: Germany, France, UK, Italy and
Spain, that accounts for 75% of Europe’s • 4.3MM consumer loans per year
car registrations
• TOP 3 in core geographies
• >75.000 POS (captive and non-captive)
• Digital direct business platforms
• The longest European captive
agreements base: more than 100
agreements with 15 manufacturers Consumer Finance: Durable financing, Personal loans and Credit Cards
SCF: Management perimeter (i.e. including SCUK)C
One of the best efficiency ratios in the industry, with
proven capabilities to make the most of integrations
2008
Cost to Income • UK • Austria 2014 …
Pan-European peers • Germany • Finland
• Norway
• Sweden
2009 • Denmark
• German
• Benelux
2015 …
2010
• France
• Poland
• Germany
• UK
• Italy
2011 • Spain
• Poland
• Germany • Portugal
• Belgium
• Austria
• Netherlands
2014 • Switzerland
• Spain
SCF: Management perimeter (i.e. including SCUK)
Peers: CREDIT AGRICOLE Consumer Credit, BNP Personal FinanceD Sound risk metrics
Risk Premium (%) NPL Ratio (%)
Coverage Ratio (%)
SCF: Management perimeter (i.e. including SCUK). Risk Premium: Ratio (%) of average VMG (last 12 months variation in delinquency balance minus Net Write Offs for the
period) to average portfolio (for a period of twelve months). (12-month VMG / 12-month Average Managed Loans) * 100.E Funding diversification
SCF’s funding structure
Mar’17
• Capacity to do issuances
in all countries
• Diversification of deposits
in many countries
• Improvement of access
cost to markets
• Increase of long term
financing versus short
term
SCF: Management perimeter (i.e. including SCUK)All in all, SCF is a significant contributor to Santander’s
results, representing 14% of the Group’s profit* in 1Q17
SCF
represents
14%
of
SAN profit (*)
in 1Q17
SCF geographies in Europe
• Austria • Italy • Nordics
• Benelux • Portugal • Poland
• France • Spain • UK
• Germany • Switzerland
SCF: Management perimeter (i.e. including SCUK). Excluding SCUK, SCF represents 13% of SAN profit*
(*) Percentage over SAN underlying profit in 1Q17, excluding Corporate Centre and Real Estate Activity in Spain.Table of contents
1. Highlights
2. Company Overview
a) Business
b) Financials
c) Risk
d) Santander Group
3. Appendix: Banco Santander & Santander Consumer Finance
4. Appendix: Contacts
54Contacts
• Anders Bruun-Olsen, Nordic CFO • Thomas Andrén-Johansen, Capital Markets Manager, Nordic
• Mobile: +47 95 76 83 28 • Mobile: +47 91 82 42 44
• E-mail: anders.bruun.olsen@santanderconsumer.no • E-mail: thomas.andren.johansen@santanderconsumer.no
• Priscilla Halverson, Capital Markets Director, Nordic • Morten Christopher Freberg Holme, Capital Markets Manager, Nordic
• Mobile: +47 92 06 58 75 • Mobile: +47 92 82 38 33
• E-mail: thomas.andren.johansen@santanderconsumer.no
• E-mail: priscilla.halverson@santanderconsumer.no
• Anders Fuglsang, Capital Markets Manager, Nordic • Joachim Joveng Rogne, Capital Markets Analyst, Nordic
• Mobile: :+47 48 23 86 32
• Mobile: +47 95 04 21 28
• E-mail: joachim.joveng.rogne@santanderconsumer.no
• E-mail: anders.fuglsang@santanderconsumer.no
• For more information:
• Santander Consumer Bank AS: www.santanderconsumer.no
• Santander Consumer Finance SA: www.santanderconsumer.com
• Banco Santander: www.santander.com
55Thank you!
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