Banco Santander Mexico SA Institucion de Banca Multiple Grupo Financiero Santand (BSMX) 2023 Q1 法說會逐字稿

Good day, everyone, and welcome to the Banco Santander Mexico's First Quarter 2023 Earnings Conference Call. (Operator Instructions) Today's call is being recorded. Following the speakers' prepared remarks, there will be a question-and-answer session.

大家好，歡迎參加墨西哥桑坦德銀行 2023 年第一季財報電話會議。 （操作員說明）今天的通話正在錄音。演講者準備好發言後，將進行問答環節。

I would now like to turn the conference over to Mr. Hector Chavez, Managing Director and Head of Investor Relations, who will make some opening remarks and introduce today's other speakers. Please go ahead.

我現在將會議交給董事總經理兼投資者關係主管 Hector Chavez 先生，他將致開幕詞並介紹今天的其他演講者。請繼續。

Thank you. Good day, and welcome to our first quarter 2023 earnings conference call. We appreciate everyone's participation today. By now, you should have access to our earnings press release and the presentation for today's call, both of which were distributed yesterday after the market closed and can be found in our Investor Relations website. Presenting on our call today will be Didier Mena, Vice President of Administration and Finance. As always, we also remind you that certain statements made during the course of this discussion may constitute forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, including Covid 19 pandemic that could cause actual results to materially differ, including factors that could be beyond the company's control. For an explanation of these risks, please refer to our filings with the SEC and the Mexican Stock Exchange.

謝謝。美好的一天，歡迎參加我們的 2023 年第一季財報電話會議。我們感謝大家今天的參與。到目前為止，您應該可以訪問我們的收益新聞稿和今天電話會議的演示文稿，這兩者都是在昨天市場收盤後發布的，可以在我們的投資者關係網站上找到。行政和財務副總裁迪迪埃·梅納 (Didier Mena) 出席今天的電話會議。像往常一樣，我們也提醒您，在本次討論過程中做出的某些陳述可能構成前瞻性陳述，這些陳述基於管理層當前的預期和信念，並受到許多風險和不確定性的影響，包括Covid 19 大流行可能會導致實際結果有重大差異，包括可能超出公司控制範圍的因素。有關這些風險的說明，請參閱我們向 SEC 和墨西哥證券交易所提交的文件。

Didier, please go ahead.

迪迪爾，請繼續。

Thank you, Hector. Good morning, everyone, and good afternoon to all of you participating from Europe. Before reviewing our first quarter results, I would like to inform you that the tender offer being executed by Santander Group had a very high level of participation. The Santander Group was able to repurchase 96% of the total shares that were still outstanding, thereby increasing Banco Santander's stake in Santander Mexico from 96.2% to 99.84%. Further, in the listing process is evolving this plan, we expect that the last tail trading of our ADRs, so the New York Stock Exchange would be on May 4, while the diluting from the Mexican Stock Exchange should occur in the subsequent weeks as we await authorization from the Mexican regulator. Moving on to our first quarter performance. I'm pleased to share with you that we started the year with very strong results, with net income of MXN 7.6 billion, growing slightly more than 49% year-over-year and demonstrating the earnings power of our strategy. Total loans grew more than 5% year-on-year, with strong performance across our entire loan book. In individual loans, we had a solid increase compared to last year, mainly due to double-digit growth in credit cards, payroll and other loans. In fact, February was our 10th consecutive month of down digit growth in payroll loans and credit cards. We also reached a market share of 16.2% in auto loans, keeping us firmly in third position in the auto segment. On the other hand, we started to see a gradual and expected slowdown in mortgages due to higher interest rates. With regard to deposits, we achieved solid growth of 14.6% compared to the first quarter of last year. That was mainly due to good performance of term deposits, which grew close to 52% year-on-year, thanks to our strategy focused on increasing retail deposits for new customers as well as higher interest rates that have practically doubled in this period. Our main opportunity continues to be increasing our market share in individual demand deposits, which stood at 9.8% in February, a 20 basis point decrease compared to last year. It is also worth noting that although we have increased the contribution of deposits from individuals to total deposits from 24% in 2016 to 40%, the contribution share of demand deposits to total deposits fell to 64% in the first quarter of this year from 73% in the first quarter of last year. This is due to strong growth in terms of profit. During the first quarter, asset quality remains at excellent levels despite the solid growth of our consumer loans. The NPL ratio stood at 1.96%, improving 83 basis points compared to the first quarter of last year, while our cost of risk improved 79 basis points to 1.62%. This results underscore our prudent risk management strategy that has been consistently executed by a risk team in co-ordination with all business units. In terms of profitability, our first quarter of this year performance reflects solid coating individuals, both in terms of credit and deposits as well as the excellent risk management that I just noted. Accordingly, we achieved a return on equity of nearly 18%, 560 basis points higher than a year ago. Thanks to our solid revenue growth and strict cost controls, we also managed to improve our efficiency ratio by 644 basis points year-on-year, which stood at 40.8% at the end of the first quarter. It's noteworthy that we accomplish still in a high inflation environment. Moreover, we continue to maintain a strong balance sheet as reflected in our solid capital ratio and liquidity position well above regulatory requirements for a systemic bank of our size. At the end of the first quarter, our total capital ratio was 22.1%, while our liquidity coverage ratio was 212%. before we open the call for the Q&A session, I would like to briefly summarize the quarter. The healthy growth we achieved in retail loans, coupled with a reduction in our cost of risk and the effective cost controls we have maintained, generated solid net income growth, building on various initiatives to consistently deliver strong results. We will continue executing our many growth initiatives and advancing our bank's transformation hand-in-hand with our strategy focused on further strengthening customer loyalty by increasing the digitalization of our products and operations. Innovation and market-leading digital advancements will enable us to continually enhance the value of our products and digital offerings. All in all, our goal of building a much stronger franchise and becoming the best bank in customer experience for all of our customers remains our top priority. This concludes our prepared remarks.

謝謝你，赫克托。大家早安，來自歐洲的所有與會者都下午好。在回顧我們第一季的業績之前，我想通知您，桑坦德集團正在執行的要約收購的參與度非常高。桑坦德銀行集團回購了96%的流通股，從而將桑坦德銀行在墨西哥桑坦德銀行的持股比例從96.2%增加到99.84%。此外，在上市過程中，我們正在製定這項計劃，我們預計美國存託憑證的最後一次尾部交易，因此紐約證券交易所將於5 月4 日進行，而墨西哥證券交易所的稀釋應在接下來的幾週內進行，因為我們等待墨西哥監管機構的授權。繼續我們第一季的業績。我很高興與您分享，我們在年初取得了非常強勁的業績，淨利潤為 76 億墨西哥比索，同比增長略高於 49%，這證明了我們戰略的盈利能力。貸款總額較去年同期成長超過 5%，整個貸款業務表現強勁。在個人貸款方面，我們與去年相比實現了穩健成長，主要得益於信用卡、薪資和其他貸款的兩位數成長。事實上，2 月是我們的薪資貸款和信用卡連續第十個月出現下滑。汽車貸款市佔率也達到16.2%，穩居汽車細分市場第三位。另一方面，由於利率上升，我們開始看到抵押貸款逐漸如預期放緩。存款方面，與去年第一季相比，我們實現了14.6%的穩健成長。這主要得益於定期存款的良好表現，得益於我們專注於增加新客戶零售存款的策略以及同期幾乎翻倍的較高利率，定期存款年增接近52%。我們的主要機會仍然是增加個人活期存款的市場份額，2月為9.8%，比去年下降20個基點。另外值得注意的是，雖然我們將個人存款佔存款總額的貢獻度從2016年的24%提高到40%，但活期存款佔存款總額的貢獻度卻從今年第一季的73%下降到了64%。去年第一季的%。這是由於利潤的強勁增長。一季度，消費貸款穩健成長，資產品質仍維持良好水準。不良貸款率為1.96%，較去年第一季下降83個基點；風險成本為1.62%，下降79個基點。這項結果凸顯了我們審慎的風險管理策略，由風險團隊與所有業務部門協調一致執行。在獲利能力方面，我們今年第一季的業績反映了塗料個人的實力，無論是在信貸和存款方面，還是我剛才提到的出色的風險管理方面。因此，我們實現了近 18% 的股本回報率，比一年前高出 560 個基點。由於穩健的營收成長和嚴格的成本控制，我們的效率也較去年同期提高了644個基點，第一季末為40.8%。值得注意的是，我們仍然是在高通膨環境下所取得的成就。此外，我們繼續保持強勁的資產負債表，這反映在我們穩健的資本比率和流動性狀況遠高於我們規模的系統性銀行的監管要求。一季末，總資本率為22.1%，流動性覆蓋率為212%。在我們開始問答環節之前，我想先簡單總結一下本季。我們在零售貸款方面實現的健康成長，加上風險成本的降低和我們維持的有效成本控制，帶來了穩健的淨利潤成長，並在各種措施的基礎上持續取得強勁的業績。我們將繼續執行多項成長計劃，並攜手推進銀行轉型，我們的策略重點是透過提高產品和營運的數位化程度來進一步增強客戶忠誠度。創新和市場領先的數位進步將使我們能夠不斷提高我們的產品和數位產品的價值。總而言之，建立更強大的特許經營權並成為為所有客戶提供最佳客戶體驗的銀行的目標仍然是我們的首要任務。我們準備好的演講到此結束。

We're now ready to take your questions. Operator, please open the call for questions.

我們現在準備好回答您的問題。接線員，請打開電話提問。

We will now begin the question-and-answer session. (Operator Instructions) If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time, your question has been addressed, and you would like to withdraw your question, please # then 2. At this time, we will pause momentarily to assemble our roster.

我們現在開始問答環節。 （操作說明）如果您使用免持電話，請在按鍵前拿起聽筒。如果在任何時候，您的問題已解決，而您想撤回您的問題，請# 然後 2。此時，我們將暫時暫停以集合我們的名冊。

Our first question comes from Nicolas Riva with Bank of America.

我們的第一個問題來自美國銀行的 Nicolas Riva。

I have a few questions. The first one, if you can comment -- give us an update on the 2028 bonds. I remember last earnings call, you mentioned that you had asked for approval from the Banco regulator, I believe, to call this bond in October. If you can confirm what's the plan for the -- regarding the call option in October of that bond? And if you plan to issue a new Tier 2 bond, which would be majorities ascribed by the parent company than in the past. So that's my first question on the 28. Second question, if you can explain a bit more the driver for that big jump in the CET1 ratio this quarter to 17.7% I think up from I believe 13.9% or so last quarter. And also -- so that's the second question. Third question, of course, the parent company carried the tender offer on the shares. I think the ownership has increased to 99.8%. If you can give us an update in terms of when you expect the delisting from the stock exchange to be completed? And also if the delisting would mean that you wouldn't be able to issue in the future AT1s, which are convertible into shares stand in the past? Or if you could still do that because the AT1s in the past have been fully bought by the parent company instead of going to the market.

我有幾個問題。第一個，如果您可以發表評論，請給我們介紹 2028 年債券的最新情況。我記得上次財報電話會議上，您提到您已請求銀行監管機構批准，我相信，在 10 月調用該債券。如果您能確認關於該債券 10 月份的看漲期權的計劃是什麼？如果你打算發行新的二級債券，母公司將比過去獲得多數支持。這是我關於 28 號的第一個問題。第二個問題，如果您能多解釋本季 CET1 比率大幅躍升至 17.7% 的驅動因素，我認為上個季度的 CET1 比率為 13.9% 左右。而且──這是第二個問題。第三個問題，當然是母公司對股份進行了要約收購。我認為所有權已經增加到99.8%。您能否向我們介紹一下您預計何時完成從證券交易所退市的最新情況？另外，如果退市意味著您將來無法發行過去可以轉換為股票的AT1？或者如果你仍然可以這樣做，因為過去的AT1都是被母公司完全收購而不是進入市場。

Regarding your first question, I think that we have defined our responsibility to do what (inaudible) for our shareholders. So we have started the approval process for doing what we (inaudible) for our shareholders. So it could be calling the bonds, it could be issuing new ones. So the approval process before the Central Bank takes some time. So we are prudent that we already started that. We will make a decision as to what is best for the company, okay? So we will remain with all our options open, okay?

關於你的第一個問題，我認為我們已經明確了為股東做些什麼（聽不清楚）的責任。因此，我們已經開始批准流程，為股東做我們（聽不清楚）的事情。因此，它可能會贖回債券，也可能會發行新債券。因此央行的審批過程需要一些時間。因此，我們謹慎地認為我們已經開始這樣做了。我們將做出對公司最有利的決定，好嗎？所以我們將保留所有選擇，好嗎？

And one thing, if I can just -- sorry, just to ask a follow-up question there. If you were -- at least, can you say if you were to call these bonds in October, in that case, would you replace them with a new Tier 2 bond with the same structure 10-year non-call 5? Can you say anything about that or not?

還有一件事，如果我可以──抱歉，只是問一個後續問題。如果你——至少，你能說，如果你要在 10 月贖回這些債券，在這種情況下，你會用結構相同的 10 年期非贖回 5 債券來替換它們嗎？你能對此說些什麼嗎？

What I can tell you is that we will analyze all the options available at that time, and we'll make the decision as we will do.

我可以告訴你的是，我們將分析當時所有可用的選項，然後做出我們將要做的決定。

Okay.

好的。

Then regarding your second question, the CET jump, we used to have a finance company as a subsidiary of the bank. We merged that. So in the past, as it was a subsidiary, you had to depart the capital invested in that finance company from core Tier 1. So by merging it, you will increase actually CET1. So that's obviously retained earnings also contributed for the increase in CET1, and we haven't paid dividends. So we are still accumulating capital. So that's on your second question.

那麼關於你的第二個問題，CET跳躍，我們曾經有一家財務公司作為銀行的子公司。我們合併了。所以在過去，因為它是一家子公司，你必須把投資於該金融公司的資本從核心層級剝離出來。所以透過合併它，你實際上會增加CET1。所以很明顯留存盈餘也為CET1的增加做出了貢獻，而我們還沒有支付股利。所以我們還在累積資本。這是你的第二個問題。

Sorry to interrupt one second, just to clarify. So then there was a merger between Banco Santander Mexico and the consumer finance subsidiaries and tender consumers, so I believe it was the name -- and because the bank no longer needs to deduct that investment in subsidiary, then because of that, you had an increase in the CET1.

抱歉打擾一下，只是為了澄清。然後，墨西哥桑坦德銀行與消費者金融子公司和招標消費者之間進行了合併，所以我相信這就是名稱 - 因為銀行不再需要扣除對子公司的投資，因此，你有一個提高CET1。

Absolutely. That's correct. Then regarding your third question, as mentioned, we expect that we will be delisted from the New York stock exchange on May 4. We're still in the process of getting regulatory approval by the Mexican banking commission to the list in Mexico. So we expect that to happen soon because all conditions to the list have been made. So that will happen, I would guess during the following weeks. Now being or not being listed to not prevent us to issue for issuing AT1. That used to be a restriction that in a low in a regulation that I think was changed back in 2019, if I recall right. In the past, BBA was not able to issue these instruments in the Central Bank when they put in place these conditions to create an incentive for parts in Mexico to list their shares, they prevented them from issuing capital securities, okay? But sometimes they change their mind and they allow -- they actually, in my opinion, they made the right call because this is something that the market should consider. If they need to maybe convert into shares and the bank is not listed, well, that's an issue that investors should take into consideration, that's a risk. And obviously, there are several ways that you can value a bank, using alternative methods and not only by the listed company, okay? So we have been one of the banks most active in capital securities, and we will continue to do so going forward.

絕對地。這是正確的。那麼關於你的第三個問題，正如前面提到的，我們預計我們將於 5 月 4 日從紐約證券交易所下市。我們仍在獲得墨西哥銀行委員會對墨西哥上市的監管批准。因此，我們預計這很快就會發生，因為清單上的所有條件都已滿足。我猜這將在接下來的幾週內發生。現在上市或不上市並不妨礙我們發行AT1。如果我沒記錯的話，這曾經是一項法規中的一項限制，我認為在 2019 年就已經改變了。過去，BBA 無法在中央銀行發行這些工具，當他們制定這些條件來激勵墨西哥部分地區上市其股票時，他們會阻止他們發行資本證券，好嗎？但有時他們會改變主意並允許——實際上，在我看來，他們做出了正確的決定，因為這是市場應該考慮的事情。如果他們需要轉換成股票，而銀行沒有上市，那麼這是投資者應該考慮的問題，這是一個風險。顯然，您可以透過多種方式對銀行進行估值，可以使用其他方法，而不僅僅是上市公司，好嗎？因此，我們一直是資本證券領域最活躍的銀行之一，未來我們將繼續這樣做。

Okay. So the conclusion is you believe that in the future, you would be able to continue issuing AT1 that are convertible into shares despite not being listed?

好的。所以結論是，你們認為未來你們還可以繼續發行可以轉換成股票的AT1，儘管沒有上市？

Yes. And if I recall right, the current regulation has the option of not only competing but also writing down the AT1. So yes, that's some that you actually negotiate with the investors. -- depending on the conditions that you go forward in a prospectus and you get a pricing for that, okay?

是的。如果我沒記錯的話，目前的規定不僅可以選擇競爭，還可以選擇記下AT1。所以是的，這就是你與投資者實際談判的一些內容。 ——取決於你在招股說明書中提出的條件，你會得到一個定價，好嗎？

Okay. Okay. So basically, you could continue to issue AT1, so maybe instead of being converted into shares with that write-down feature. Okay. And last question. I already asked this in the last earnings call. Assuming the (inaudible) delisting goes through early May, this would be your last earnings call, right?

好的。好的。因此，基本上，您可以繼續發行 AT1，因此也許不必將其轉換為具有減記功能的股票。好的。最後一個問題。我在上次財報電話會議中已經問過這個問題。假設（聽不清楚）退市持續到五月初，這將是您最後一次財報電話會議，對嗎？

Yes. Actually, that time, some words, thanking you and everybody has been very helpful to us throughout this process. We continue to be listed. There was an extension in the tender offer time line. So that's why we still are listed. So we have an obligation before you that we are honoring, -- but yes, if during the following weeks, we are formally delisted, then yes, this would be our last earnings call. We will continue providing the information as required by regulation. And obviously, if there's any that you need from us, we know (inaudible).

是的。其實那一次，一些話，謝謝大家，謝謝大家，對我們整個過程來說是非常有幫助的。我們繼續上市。要約收購時間有所延長。這就是我們仍然被列出的原因。因此，我們在你們面前有一項我們正在履行的義務，但是，是的，如果在接下來的幾週內，我們正式退市，那麼，是的，這將是我們最後一次財報電話會議。我們將繼續按照法規要求提供資訊。顯然，如果您需要我們提供任何幫助，我們都會知道（聽不清楚）。

If there are no further questions, I'd like to turn the floor back to Mr. Hector Chavez for any closing comments.

如果沒有其他問題，我想請赫克托·查維斯先生發表最後評論。

Thank you, operator, and thanks, everyone, once again for joining Santa Ben, Mexico on this call. As always, you have a -- if you have additional questions, please don't hesitate to call or email us directly. Have a great day...

謝謝接線員，也謝謝大家再次加入墨西哥聖本的這次電話會議。像往常一樣，如果您還有其他問題，請隨時致電或直接發送電子郵件給我們。祝你有美好的一天...

This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.

今天的電話會議到此結束。此時您可以斷開線路。再次感謝您的參與。