Banco Santander S A : 2016 financial report

2016

Financial report

January - December

We want to help people and

businesses prosper

Helping people and businesses prosper

84% 15.2 (+10%)

of employees are proud to million loyal customers work at Banco Santander

Employees Customers

78%	20.9 (+26%)
of employees perceive	million digital customers
Banco Santander as
Simple, Personal and Fair
Our aim is to be the best retail
and commercial bank that earns
the lasting loyalty of our people,
customers, shareholders and
communities.

+35,000

scholarships granted

Communities

10.55%

Shareholders capitalratio

CET1 fully loaded

1,183 5.2%

agreements withdividend

universities and academicyield*

institutions

(*) 2016 total dividend / 2016 average share price

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KEY CONSOLIDATED DATA

Balance sheet (€ million)	Dec'16	Sep'16	%	Dec'16	Dec'15	%	Dec'14
Total assets	1,339,125	1,329,538	0.7	1,339,125	1,340,260	(0.1)	1,266,296
Net customer loans	790,470	773,290	2.2	790,470	790,848	(0.0)	734,711
Customer deposits	691,112	667,439	3.5	691,112	683,142	1.2	647,706
Managed and marketed customer funds	1,102,488	1,075,162	2.5	1,102,488	1,075,563	2.5	1,023,189
Total equity	102,699	101,122	1.6	102,699	98,753	4.0	89,714
Total managed and marketed funds	1,521,633	1,508,587	0.9	1,521,633	1,506,520	1.0	1,428,083
Income statement (€ million)	4Q'16	3Q'16	%	2016	2015	%	2014
Net interest income	8,096	7,798	3.8	31,089	32,189	(3.4)	29,548
Gross income	11,113	11,080	0.3	43,853	45,272	(3.1)	42,612
Net operating income	5,660	5,831	(2.9)	22,766	23,702	(3.9)	22,574
Underlying profit before taxes	2,663	2,940	(9.4)	11,288	10,939	3.2	9,720
Underlying attributable profit to the Group	1,646	1,695	(2.9)	6,621	6,566	0.8	5,816
Attributable profit to the Group	1,598	1,695	(5.7)	6,204	5,966	4.0	5,816

Variations w/o exchange rate: Quarterly: NII: +2.8%; Gross income: -0.7%; Net operating income: -4.1%; Underlying attributable profit: -3.5%; Attributable profit: -6.4%

Year-on-year: NII: +2.3%; Gross income: +2.5%; Net operating income: +1.6%; Underlying attributable profit: +10.5%; Attributable profit: +15.1%

EPS, profitability and efficiency (%)	4Q'16	3Q'16	%	2016	2015	%	2014
EPS (euro)	0.10	0.11	(6.8)	0.41	0.40	1.0	0.48
RoE	7.26	7.66	6.99	6.57	7.05
Underlying RoTE*	10.78	11.36	11.08	10.99	10.95
RoTE	10.70	11.36	10.38	9.99	10.95
RoA	0.58	0.61	0.56	0.54	0.58
Underlying RoRWA*	1.33	1.40	1.36	1.30	1.27
RoRWA	1.32	1.40	1.29	1.20	1.27
Efficiency ratio (with amortisations)	49.1	47.4	48.1	47.6	47.0
Solvency and NPL ratios (%)	Dec'16	Sep'16	%	Dec'16	Dec'15	%	Dec'14
CET1 fully-loaded	10.55	10.47	10.55	10.05	9.65
CET1 phase-in	12.53	12.44	12.53	12.55	12.23
NPL ratio	3.93	4.15	3.93	4.36	5.19
Coverage ratio	73.8	72.7	73.8	73.1	67.2

Market capitalisation and shares	Dec'16	Sep'16	%	Dec'16	Dec'15	%	Dec'14
Shares (millions)	14,582	14,434	1.0	14,582	14,434	1.0	12,584
Share price (euros)	4.959	3.947	25.6	4.959	4.558	8.8	6.996
Market capitalisation (€ million)	72,314	56,973	26.9	72,314	65,792	9.9	88,041
Tangible book value (euro)	4.22	4.18	4.22	4.07	4.01
Price / Tangible book value (X)	1.17	0.94	1.17	1.12	1.75
P/E ratio (X)	12.18	9.78	12.18	11.30	14.59
Other data	Dec'16	Sep'16	%	Dec'16	Dec'15	%	Dec'14
Number of shareholders	3,928,950	3,920,700	0.2	3,928,950	3,573,277	10.0	3,240,395

Number of employees	188,492	189,675	(0.6)	188,492	193,863	(2.8)	185,405
Number of branches	12,235	12,391	(1.3)	12,235	13,030	(6.1)	12,951

(*).- Excluding non-recurring net capital gains and provisions

Note: RoE, RoTE and CET1 2014, pro-forma taking into account the January 2015 capital increase

Note:The financial information in this report has not been audited, but it was approved by the Board of Directors at its meeting on January, 24 2017, following a favourable report fromthe Audit Committee on January, 18 2017. The Audit Committee verified that the information for 2016 was based on the same principles and practices as those used to draw up the annual financial statements.

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Income statement‌

€ million

Variation		Variation
4Q'16	3Q'16	% % w/o FX		2016	2015	% % w/o FX
Net interest income	8,096	7,798	3.8	2.8	31,089	32,189	(3.4)	2.3
Net fee income	2,637	2,597	1.6	0.8	10,180	10,033	1.5	8.1
Gains (losses) on financial transactions	412	440	(6.3)	(7.7)	1,723	2,386	(27.8)	(24.0)
Other operating income	(32)	245	-	-	862	665	29.7	26.1
Dividends	124	37	239.3	240.5	413	455	(9.1)	(7.7)
Income from equity-accounted method	130	119	9.0	8.8	444	375	18.3	26.0
Other operating income/expenses	(286)	90	-	-	5	(165)	-	-
Gross income	11,113	11,080	0.3	(0.7)	43,853	45,272	(3.1)	2.5
Operating expenses	(5,453)	(5,250)	3.9	3.1	(21,088)	(21,571)	(2.2)	3.5
General administrative expenses	(4,828)	(4,692)	2.9	2.1	(18,723)	(19,152)	(2.2)	3.7
Personnel	(2,876)	(2,726)	5.5	4.7	(10,997)	(11,107)	(1.0)	4.5
Other general administrative expenses	(1,952)	(1,966)	(0.7)	(1.5)	(7,727)	(8,045)	(4.0)	2.6
Depreciation and amortisation	(626)	(558)	12.2	11.6	(2,364)	(2,419)	(2.3)	2.2
Net operating income	5,660	5,831	(2.9)	(4.1)	22,766	23,702	(3.9)	1.6
Net loan-loss provisions	(2,406)	(2,499)	(3.7)	(5.8)	(9,518)	(10,108)	(5.8)	(2.1)
Impairment losses on other assets	(159)	(16)	896.8	939.5	(247)	(462)	(46.5)	(45.6)
Other income	(432)	(376)	15.1	16.3	(1,712)	(2,192)	(21.9)	(19.0)
Underlying profit before taxes	2,663	2,940	(9.4)	(10.2)	11,288	10,939	3.2	11.7
Tax on profit	(712)	(904)	(21.2)	(22.0)	(3,396)	(3,120)	8.9	16.4
Underlying profit from continuing operations	1,951	2,036	(4.2)	(4.9)	7,892	7,819	0.9	9.8
Net profit from discontinued operations	0	(0)	-	-	0	-	-	-
Underlying consolidated profit	1,951	2,036	(4.2)	(4.9)	7,893	7,819	0.9	9.8
Minority interests	305	341	(10.6)	(11.9)	1,272	1,253	1.5	6.2
Underlying attributable profit to the Group	1,646	1,695	(2.9)	(3.5)	6,621	6,566	0.8	10.5
Net capital gains and provisions	(49)*	-	-	-	(417)	(600)	(30.5)	(30.5)
Attributable profit to the Group	1,598	1,695	(5.7)	(6.4)	6,204	5,966	4.0	15.1
Underlying EPS (euros)	0.11	0.11	(3.8)	0.44	0.45	(2.1)
Underlying diluted EPS (euros)	0.11	0.11	(3.6)	0.43	0.44	(2.3)
EPS (euros)	0.10	0.11	(6.8)	0.41	0.40	1.0
Diluted EPS (euros)	0.10	0.11	(6.5)	0.41	0.40	0.9
Pro memoria:
Average total assets	1,340,897	1,338,607	0.2	1,337,661	1,345,657	(0.6)
Average stockholders' equity	90,054	88,565	1.7	88,744	90,798	(2.3)

(*).-PPI UK (-€137 million), restatement Santander Consumer USA (-€32 million) and the SRF contribution (€120 million), recorded in 2Q16, was reallocated to other operating income/expenses.

Non-recurring results net of tax

€ million

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