PR Newswire | Feb 3, 2021 05:47PM EST

Million

02/03 16:46 CST

Banco Santander Mxico Reports Fourth Quarter 2020 Net Income of Ps.5,480 Million- Despite a small year-over-year contraction in the loan book, the bank maintained a solid performance in mortgage and auto loans, while consumer and commercial loans remained weak- Individual demand deposits increased 23.6% YoY, supported by the loyalty and customer acquisition strategy- Maintaining ample levels of liquidity and capital- Profitability in 4Q20 remained resilient, but full-year impacted by reduced net income, precautionary provisions taken and excess capital MEXICO CITY, Feb. 3, 2021

MEXICO CITY, Feb. 3, 2021 /PRNewswire/ -- Banco Santander Mxico, S.A., Institucin de Banca Mltiple, Grupo Financiero Santander Mxico(NYSE: BSMX; BMV: BSMX), ("Banco Santander Mxico" or "the Bank"), today announced financial results for the three-month and twelve-month periods ending December 31st, 2020.

Banco Santander Mxico reported net income of Ps.5,480 million in 4Q20, representing increases of 11.5% YoY and 8.9% QoQ. On a cumulative basis, net income for 12M20 reached Ps.20,154 million, representing a 5.5% YoY decrease.

HIGHLIGHTS

Results(Million 4Q20 3Q20 4Q19 %QoQ %YoY 12M20 12M19 %YoYpesos)

Net interest 16,272 16,089 16,727 1.1 (2.7) 65,188 66,353 (1.8)income

Fee andcommission, 4,709 4,690 4,325 0.4 8.9 18,694 18,028 3.7net

Core revenues 20,981 20,779 21,052 1.0 (0.3) 83,882 84,381 (0.6)

Provisions for 3,152 4,596 4,862 (31.4) (35.2) 21,263 18,112 17.4loan losses

Administrativeand 11,102 10,429 10,344 6.5 7.3 40,915 38,865 5.3promotionalexpenses

Net income 5,480 5,030 4,916 8.9 11.5 20,154 21,332 (5.5)

Net income per 0.81 0.74 0.73 8.9 11.4 2.97 3.14 (5.4)share^1

Balance SheetData (Million Dec-20 Sep-20 Dec-19 %QoQ %YoY Dec-20 Dec-19 %YoYpesos)

Total assets 1,856,213 1,858,684 1,411,994 (0.1) 31.5 1,856,213 1,411,994 31.5

Total loans 702,769 735,330 713,680 (4.4) (1.5) 702,769 713,680 (1.5)

Deposits 764,444 772,984 692,537 (1.1) 10.4 764,444 692,537 10.4

Shareholders? 158,871 151,475 138,695 4.9 14.5 158,871 138,695 14.5equity

Key Ratios (%) 4Q20 3Q20 4Q19 bps QoQ bps YoY 12M20 12M19 bps YoY

Net interest 4.50 4.50 5.39 0 (89) 4.71 5.61 (90)margin

Net loans to 88.62 91.78 99.95 (316) (1,133) 88.62 99.95 (1,133)deposits ratio

ROAE 14.73 13.87 14.88 86 (15) 13.55 16.14 (259)

ROAA 1.34 1.23 1.41 11 (7) 1.23 1.53 (30)

Efficiency 52.06 48.14 47.21 392 485 46.06 45.37 69ratio

Capital ratio 19.01 17.16 16.37 185 264 19.01 16.37 264

NPLs ratio 3.08 2.09 2.28 99 80 3.08 2.28 80

Cost of Risk 2.89 3.13 2.60 (24) 29 2.89 2.60 29

Coverage ratio 116.87 167.94 132.02 - - 116.87 132.02 -

Operating Data Dec-20 Sep-20 Dec-19 %QoQ %YoY Dec-20 Dec-19 %YoY

Branches 1,013 1,050 1,209 (3.5) (16.2)^2 1,013 1,209 (16.2)^2

Branches and 1,350 1,407 1,402 (4.1) (3.7) 1,350 1,402 (3.7)offices^3

ATMs 9,448 9,365 9,015 0.9 4.8 9,448 9,015 4.8

Customers 18,707,976 18,796,611 18,134,468 (0.5) 3.2 18,707,976 18,134,468 3.2

Employees 21,422 20,922 19,975 2.4 7.2 21,422 19,975 7.2

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

2) Reflects the internal reclassification as of 2Q20 and the closing of certain branches.

3) Includes cash desks (espacios select, box select and corner select) and SMEs business centers. Excluding brokerage house offices.

Hctor Grisi, Banco Santander Mxico's Executive President and CEO, commented: "This quarter we concluded an extraordinarily challenging year, delivering solid and robust results in a still very weak and complex operating environment. Despite the small contraction of our loan book, we maintained strong performance levels in mortgages and auto loans, registering historically-high origination levels, while other consumer and commercial loans continued contracting in line with market trends and weak demand conditions. On the other hand, deposits remained resilient, particularly individual demand deposits, which increased over 20%, due in part to our successful loyalty and customer acquisition strategies. Corporate demand deposits also registered double-digit growth, as companies continued favoring liquidity over investments. As well, a prudent balance sheet approach enabled us to maintain ample levels of liquidity and capital, providing meaningful capacity for additional investments in our business and communities.

In terms of asset quality, we are pleased to report that 75% of the loan portfolio under the payment holiday program, which supports retail and SME customers, remains current. Only 9% are late in their payments, and we have restructured the other 16% of these loans; these levels are better than we initially forecasted and in line with the system. At the same time, we will continue executing the recoveries and restructurings plan that has enabled us to act swiftly and preemptively to effectively respond to adverse developments, while helping customers overcome temporary financial difficulties. Due to the better-than-expected performance in our asset quality, we are confident that the nearly Ps.4 billion of anticipated provisions that were built into second quarter 2020 should be sufficient to address any further deterioration in the portfolio associated with the holiday program.

Our focus on effectively managing risk in the current environment hasn't displaced our strategic priorities, which remain centered on building a stronger bank for the future. We continue shifting the business mix toward a higher share of retail loans and lower-cost deposits, while advancing our core plan to grow our base of loyal customers even more. Further digitalization of our operations also remains a priority as we continue investing in technology. Part of our digitalization strategy is collaborating with fintechs and other tech companies to produce tools and functionalities within our digital offering that are increasing customer engagement and driving higher transaction level and digital sales. During the most recent quarter, almost half of our total sales were completed through digital channels, compared to one-third only a year ago. Further, digital transactions accounted for 34% of total transactions, compared to 20% the previous year.

Even though visibility is better than in recent quarters, we expect the speed of an economic recovery will be largely dependent on the pace of the vaccination program. Because this variable remains uncertain, we anticipate anemic loan demand during most of the year, although likely accelerating during the second half as the vaccination program's progress starts improving consumer and business confidence. Nevertheless, the consistent execution of our strategy, in addition to our bank's strong liquidity and capital position, mean we remain well positioned to continue effectively weathering a still harsh economic environment as well as to capitalize on growth opportunities that will invariably arise as the pandemic subsides and eventually ends."

4Q20 Earnings Call Dial-In Information

Date: Thursday, February, 4^th, 2020

Time: 10:00 a.m. (MCT); 11:00 p.m. (US ET)

Dial-in Numbers: 1-877-407-4018 US & Canada 1-201-689-8471 International & Mexico

Access Code: Please ask for Santander M?xico Earnings Call

Webcast: http://public.viavid.com/index.php?id=143157

Replay: Starting: Thursday, February 4^th, 2021 at 2:00 p.m. (US ET)

Ending: Thursday, February 11^th, 2021 at 11:59 p.m. (US ET)

ET Dial-in number: 1-844-512-2921 US & Canada; 1-412-317-6671 International & Mexico Access Code: 13715461

ABOUT BANCO SANTANDER MXICO (NYSE: BSMX; BMV: BSMX)

Banco Santander Mxico, S.A., Institucin de Banca Mltiple, Grupo Financiero Santander Mxico (Banco Santander Mxico), 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 Mxico 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 December 31st, 2020, Banco Santander Mxico had total assets of Ps.1,856 billion under Mexican Banking GAAP and more than 18.7 million customers. Headquartered in Mexico City, the Company operates 1,350 branches and offices nationwide and has a total of 21,422 employees.

INVESTOR RELATIONS CONTACTHctor Chvez Lopez - Managing Director - IRO+ 52 (55) 5269-1925hchavez@santander.com.mx

Investor Relations Teaminvestor@santander.com.mx

www.santander.com.mx

LEGAL DISCLAIMERBanco Santander Mxico 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 Mxico); 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 (Comisin 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.

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SOURCE Banco Santander Mxico, S.A.