PR Newswire | Oct 28, 2021 06:03PM EDT

10/28 17:02 CDT

Banco Santander Mxico Reports Third Quarter 2021 Net Income of Ps.4,843 Million- Retail portfolio reflected YoY sustained performance, supported by market share gains in mortgages and auto loans, while credit cards and consumer loans remained weak. While loan volumes in commercial portfolio still faces a difficult comparison base and soft demand conditions.- Total deposits remained relatively stable sequentially. The high liquidity has allowed the Bank to focus on improving deposit mix by favoring demand deposits over term deposits.- Net income decreased 3.7% YoY in 3Q21, mainly due to lower fees and higher expenses, partially offset by solid growth in market related income and lower provisions for loan losses. MEXICO CITY, Oct. 28, 2021

MEXICO CITY, Oct. 28, 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 nine-month periods ending September 30th, 2021.

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

HIGHLIGHTS

Results (Million pesos) 3Q21 2Q21 3Q20 %QoQ %YoY 9M21 9M20 %YoY

Net interest income 15,684 15,770 16,089 (0.5) (2.5) 47,039 48,916 (3.8)

Fee and commission, net 4,447 4,873 4,690 (8.7) (5.2) 14,222 13,985 1.7

Core revenues 20,131 20,643 20,779 (2.5) (3.1) 61,261 62,901 (2.6)

Provisions for loan losses 4,385 5,068 4,596 (13.5) (4.6) 16,528 18,111 (8.7)

Administrative and promotional expenses 10,750 9,955 10,429 8.0 3.1 30,599 29,813 2.6

Net income 4,843 4,713 5,030 2.8 (3.7) 12,835 14,674 (12.5)

Net income per share^1 0.71 0.70 0.74 2.8 (3.7) 1.89 2.17 (12.5)

Balance Sheet Data (Million pesos) Sep-21 Jun-21 Sep-20 %QoQ %YoY Sep-21 Sep-20 %YoY

Total assets 1,669,138 1,634,384 1,858,684 2.1 (10.2) 1,669,138 1,858,684 (10.2)

Total loans 715,759 710,323 735,330 0.8 (2.7) 715,759 735,330 (2.7)

Deposits 766,336 766,663 772,984 (0.0) (0.9) 766,336 772,984 (0.9)

Shareholders? equity 165,020 159,941 151,475 3.2 8.9 165,020 151,475 8.9

Key Ratios (%) 3Q21 2Q21 3Q20 bps QoQ bps YoY 9M21 9M20 bps YoY

Net interest margin 4.64 4.52 4.50 12 14 4.53 4.78 (25)

Net loans to deposits ratio 90.27 89.50 91.78 77 (151) 90.27 91.78 (151)

ROAE 11.96 11.83 13.87 13 (191) 10.57 13.49 (292)

ROAA 1.10 1.08 1.23 2 (13) 0.97 1.20 (23)

Efficiency ratio 50.97 47.59 48.14 338 283 48.39 44.16 423

Capital ratio 21.46 18.91 17.16 255 430 21.46 17.16 430

NPLs ratio 2.85 2.87 2.09 (2) 76 2.85 2.09 76

Cost of Risk 2.75 2.75 3.13 0 (38) 2.75 3.13 (38)

Coverage ratio 117.56 118.39 167.94 (83) - 117.56 167.94 -

Operating Data Sep-21 Jun-21 Sep-20 %QoQ %YoY Sep-21 Sep-20 %YoY

Branches 1,039 1,039 1,050 0.0 (1.0) 1,039 1,050 (1.0)

Branches and offices^2 1,350 1,352 1,407 (0.1) (4.1) 1,350 1,407 (4.1)

ATMs 9,564 9,534 9,365 0.3 2.1 9,564 9,365 2.1

Customers 19,499,552 19,257,998 18,796,611 1.3 3.7 19,499,552 18,796,611 3.7

Employees 24,901 23,512 20,731 5.9 20.1 24,901 20,731 20.1

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

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

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

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

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

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

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

3Q21 Earnings Call Dial-In Information

Date: Friday, October, 29^th, 2021

Time: 09:00 a.m. (MCT); 10:00 a.m. (US ET)

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

Access Please ask for Santander M?xico Earnings CallCode:

Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1504898&tp_key= 77ba22d97c

Replay: Starting: Friday, October 29^th, 2021 at 1:00 p.m. (US ET)

Ending: Friday, November 5^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: 13724245

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 September 30th, 2021, Banco Santander Mxico had total assets of Ps.1,669 billion under Mexican Banking GAAP and more than 19.4 million customers. Headquartered in Mexico City, the Company operates 1,350 branches and offices nationwide and has a total of 24,901 employees.

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