Banco Santander SA (SAN) 2007 Q4 法說會逐字稿

(Audio begins in progress). (Interpreted). Presentation on the results of Santander for the year 2007 splitting it up into three sections, first of all, I'll talk about fundamental aspects. They have been fundamental in the year 2007. Then I will go over the Group's results, and subsequently Jose Antonio Alvarez, the CFO of the Santander Group, will develop the main business areas. And finally, I will close once again with my opinion on the outlook for this year.

The first idea I'd like to put across is that Santander has achieved excellent results in a much more complex environment than in previous years. It is precisely in such complex environments where we can see which are the good and well managed banks as compared to the rest. And Santander is one of the good banks. The figures at the end of 2007 and their comparison with those of our competitors clearly place us as one of the winning banks in this year.

There are four aspects that make 2007 a great year for the Group, the figure of profits, the strong growth of our earnings per share, the total return that we have offered to our shareholders and finally, the successful acquisition of ABN Amro. And I will dwell on each one of these points.

We closed 2007 with total profits of EUR2.60 billion. After deducting capital gains and extraordinary write-offs, which I will comment on later, the attributable profit was EUR8.111 billion with an increase of 23%. As a result, Santander for the first time ever is among the world's top five banks by total profit.

The growth of profit is almost entirely translated into earnings per share, which before capital gains increased 21.4%. This figure already includes in the denominator the number of obligatorily convertible shares that will be issued in due course for the exchange of the Santander stocks. This EPS growth places Santander in the top three within our peer group. That is to say the one which is taken as a basis to establish the long term incentive plans of the Group, including 20 large international banks which, because of their size features a degree of competence, are the banks to beat. The list of these banks can be seen in the lower part of the slide.

Just as important as year on year growth is the quarterly performance of profits and EPS. In our quarterly performance Santander shows a very sound evolution in the quarter, in contrast with the losses in the last quarters of some of our main international competitors. Specifically, the Group for the third quarter running offers recurrent profits that exceed EUR2 billion and a growth of earnings per share in like for like trends with previous quarters without ABN of 26%.

The sound performance of EPS, our payout policy and the confidence in our capacity to generate earnings enables us to propose to the next shareholders' meeting an increase of 25% in dividends per share. We increase 25% for the third consecutive year. In other words, we have doubled the dividend we pay to our shareholders in three years.

If we look at the total shareholder return in longer periods of time, we see how Santander has remained in the leading group during different periods. And it improved its relative position in the last few years. Moreover, in all these periods we have maintained positive and rising profitability spreads with the benchmark banking indices, such as the case of the Dow Jones stock bank.

While the volume of profits, the growth and the high shareholder return made 2007 a tremendous year for Santander, the fourth point that we see here, the acquisition of ABN Amro assets, makes it a really great year. Because of the stronger potential to generate profits for the coming years, because of the perfect fit with our strategy in Brazil we will compete head on with the country's largest banks. And because of the efficient way, in which the operation was financed, enabling us to meet our strict financial criteria without a capital increase.

Let me summarize now the assets acquired from ABN Amro and which have been the latest movements regarding them. As you know, as a result of the initial agreement for their partners, Royal Bank of Scotland and Fortis, we acquired the businesses of ABN Amro in Latin America without the global clients, the Antonveneta Group in Italy, the proceeds from the sale of some small consumer businesses in Europe, as well as a proportional part of shared businesses, all of that for a total in euros of EUR19.9 billion.

In parallel and during the process of segregation of the different units, we thought that it was advisable to keep the majority business in Brazil. So, we have acquired global customers for EUR750 million from RBS. We are also looking at the possibility that the Asset Management business in Brazil will go to Santander. The strategic fit is clear. The global customers are an independent unit from an accounting and reporting viewpoint, but not from an operational viewpoint, since the fully integrated Banco Real with whom they share all services. Maintaining this business we avoid risks of execution in the separation, while at the same time we will be able to generate synergies with the Group's Wholesale Banking.

The financial fit is also attractive and we have an ROI -- expected ROI of 9% approximately. In the appendices you will find details of the operation. As for all these operations, the total estimated investment is around EUR10.5 billion, which will enable us to attain an ROI of 19% in 2010 and an increase in the earnings per share after the first full year of management.

To conclude this part I will use a slide that explains the profit of strategic impact of this operation for Santander. Santander's strategy is to place all its businesses in the lower right quadrant, the good quadrant, where we have strong market positions with the market shares close to -- or about 10% and with very good cost to income ratios, below 50%.

As you can see, a big business in retail banking is already there. At Abbey we're working on this. With a mortgage market share of 9% we have improved strongly its cost to income ratio in the last three years and we are at 50% now vis-a-vis the 70% which Abbey had when we bought it.

The acquisition of Banco Real will enable us to place Brazil in this good quadrant. Our market share for the whole of Brazil has risen from 5% to more than 10% and the cost to income ratio remains below 50%.

Finally, this framework also explains the decision to sell Antonveneta. Even reporting the synergies envisaged for the next years, that Group would still be outside the "good" quadrant for which we would need additional investments. Its sale has enabled us to obtain the returns envisaged for the next few years without making new investments.

Let's now take a look at the Group's results.

As in previous quarters to describe the result of the group, I will use the little house scheme that includes the main aspects, first of all, the strong growth of results and especially of earnings per share, their sustainability and quality. The second driver is the strength of recurrent revenues in all the Group's units. A third important point is the continuous improvement in efficiency. And fourthly, we have to say that our provisions remained in line with expectations, which produces a big rise in net operating income, net of provisions. And finally the fifth point, which should be the first as the foundations of the building of results, is our strong and sound balance sheet in terms of credit quality, solvency and liquidity. On all these points, I will elaborate now.

I will go over the account from the bottom to the top. The total profits are EUR9.060 billion. Excluding capital gains, we have 8.111 billion, a figure that includes a net impact of ABN of EUR60 million. This figure of EUR60 million is made up of a profit figure of EUR2 million, because of the profit from Banco Real, and financing cost after taxes of EUR81 million, which is the cost of EUR13 billion we paid since acquisition to date. It does not include any profits from Antonveneta.

Without the Real, we have earned EUR8.051 billion, 22% higher than in 2006. Or in other words, we have made EUR1.468b additional that -- in the previous year. Let me say that this growth exceeds the profits obtained by the third largest bank in Spain in the year 2007.

How did we achieve this growth? Well we've done it the same way as in other quarters, with an excellent vertical quality of our income statement. Gross operating income was up by 21%, doubling the growth in costs. The soundness of our revenues brings us to arrive at 32% in net operating income, which after provisions was 30%. Moreover, our zero exposure to sub prime mortgages and our marginal presence in complex structure products means that we have not had any impact on earnings from these items. And I repeat this to make it crystal clear, zero impact on Santander's income statement.

I will now briefly look the main lines, always excluding ABN Amro.

The fundamental for source of growth continues to be the different revenues, net interest income, fees and insurance, which together generated 85% of the total increase in revenues. The net interest income increased 24.2%, the highest paid of the year. Fees rose 15% and an insurance activity of 26%. This positive performance is due to the larger business volumes accompanied by an improvement in customer spreads in most of the Group's units and, therefore, in the totality of the same, on the other hand, a rise in the number of customers and greater loyalty that we are obtaining in our businesses.

Also gains on financial transactions also registered a strong rise partly because of the euro-dollar position and the euro-sterling which, as you know, act as a hedge against the negative impact on the business areas of converting exchange rates to euros.

Besides the excellent year on year growth, revenues are very consistent. This chart shows how the core revenues, the net interest income without dividends plus fees, plus the insurance activities, increased quarter after quarter over the last three years. This performance is really the best reflection of the business drive of our units and the soundness and recurrence that we get from a high degree of geographic and business diversification.

The third point that I would like to speak about as a basic lever of our results is improvement in cost to income ratio. For many years, we have been improving our cost to income ratio by jointly managing revenues and costs. We ended the year 2006 and 2007 with jaws of around 10 percentage points.

As a result, we've moved from a cost to income ratio of 53% in 2005 to 42% in 2007, improving by almost nine points in three years this figure. It is Santander, the bank that has improved the most in this period among its peer group. And we have been consistently getting ahead and we will continue this trend of improvement in 2008, where I shall tell you that we have a very demanding budget in terms of costs.

The fourth point, which is key for our P&L account, is provisions. On the left hand side, we see how the Group's total loan loss provisions made in 2007 rise 41%. If we eliminate the impact of the integration of Drive, which was not consolidated in 2006, the increase for the year was 24%.

Now, this increase is consistent with a Group's growth strategy in volumes and revenues and change in the mix of some units. As we see on the right hand side, the net operating income, net of provisions rose by almost 30%, almost in line with the increase of 32% in the gross operating income, so nothing new about provisions as regards what we have been saying in the previous quarters and nothing new either in our more detailed analyses by business areas.

The increase of specific provisions is largely due to two factors -- the consolidation of Drive, which was not included in 2006, which accounted for two-thirds of the rise in Europe and the increase in North America, mostly Brazil and Mexico, because of the greater activity we have had on the change of mix as well.

In Brazil, all the increase was due to the greater volume of business in the change of mix since the NPLs remained basically unchanged in both years. In Mexico, that growth mix effect was accentuated by the strong expansion in the credit card business, which has a deterioration in its NPL ratio. But Santander continues to be lower from that of our competitors. Nevertheless, in these last quarters we have slowed down the growth going from an increase of 48% in 2006 to only an increase of 8% in 2007.

The movement in generic provisions were also equal to those that we spoke about in the third quarter, the reduction due to lower needs in Wholesale Banking in contrast with high ones in 2006. On the contrary, we have larger provisions in Brazil and in Chile.

The fifth factor is our very strong balance sheet. In the last few years, the international banking sector has been tempted to grow faster by assuming more financial market and credit risks than naturally required by our relations with customers. We never entered into this dynamics. We know that during good times we need to have the strictest discipline in risks and this is what we've done.

Therefore, in an uncertain environment, like today's -- the current one our strong balance sheet gives us a big competitive advantage, because of two things. First of all, our Group has a low to medium profile and one that is predictable. Our portfolio is basically retail and very diversified. We have a high a quality of our risks, with NPLs, which are very, very low, and with high coverages, and we have a very marginal position in complex structure products.

Secondly, we manage the balance sheet very cautiously. This is reflected in a comfortable position of liquidity, high solvency with our core capital above 6%, and a conservative manage of coverage to preserve our capital base.

And now I'd like to go into further on each of these aspects. As I said earlier, our risk profile is firstly backed by a lending portfolio that is essentially retail. 91% of it is generated by our retail networks and by Consumer Banking, compared to only 9% from Wholesale Banking. This has two implications. Firstly, that our loans are generated by many small operations, which means that risk is low and predictable. And second, our Wholesale Banking is not leveraged on financing large operations in order to attain its results.

Our loans are also appropriately diversified by geographic area. Only 5% of loans are to non-investment grade countries. Europe accounts for 88% of the total. And Spain and the UK are the only countries with significant shares in total lending.

The next slide looks precisely at this point, more specifically and referring to Santander's mortgage activity in Spain and in the UK. In Spain, mortgages, which account for 28% of total loans, are an instrument to link good customers. For example, 96% of home mortgages are to finance first residence. Furthermore, our traditional exigency in risks means our guarantees and customers are of high quality. The portfolios average loan to value, in other words the credit as a percentage of the home's value, is very comfortable, 50%.

So, to is the average annual payment of our customers at their -- for their home as a percentage of household income, which at 29% is lower than the average during the 1990s, despite the rise in interest rates and house prices. Moreover, for Spain, that rate is 36%. Moreover, loans to retail estate developers converted into mortgages for new customers, only represent 7% of total lending and show no problems of bad depth.

The quality of our credit portfolio in Spain is reflected in the evolution of the NPL ratios of the Santander branch network and of Banesto. Their ratios have risen the least among their peer group.

In the UK, Abbey's origin as a building society means that mortgages are its main business, 86% of total lending. And they are of high quality as they are aimed at the most prime segment of the market. 99% of mortgages for homes are for the first residence. And the quality ratios of mortgages are also very good. The average loan to value of the portfolio is 46%. And the income multiple, the value of the loan to total income, is 3.1 times.

Lastly, social housing represents 5% of total lending. This refers to a regulated sector with a guarantee of various public administrations, making social housing a business with virtually no NPLs. The high quality of credit, or credit quality, has consistently enabled Abbey since 2003 to have one of the best NPL ratios in the system. At the end of 2007, only 0.69% of loans were in arrears of more than three months, compared to the latest figure for the market which is of 1.06%.

The second aspect I'd like to emphasize is that we also maintain notable high -- notable risk quality standards. The NPL ratio is 0.95%, slightly higher than in previous quarters. Coverage remains high at 151%. These figures compare very well with international standards. The average of European banks included in our peer group is double in NPLs, and has half our coverage level. A key element in coverage is a large volume of generic provisions, GBP6.027 billion, which continued to increase during the year.

And the third aspect that I'd like to underline is the fact that we have very marginal exposure to complex structure products. We have no exposure to sub prime mortgages. We have a low volume in structured derivative products, and a very marginal exposure to other problem products. And even more important, as I said at the beginning of my presentation, is that unlike in many other international banks, they have had no negative impact on our results.

Liquidity, the first idea that I'd like to convey is that we have a comfortable liquidity position. Given our Retail Banking nature, we have a structurally liquid balance sheet. In Latin America deposits are larger than loans. Therefore, there are no problems there and the convertible currencies, euro, sterling and dollars, our deposits and capital, finance 75% of lending. The rest is financed medium to long term with a structure tailored to our needs.

As well as this good starting point, Santander has wide access to the liquidity market. Our high ratings, which enabled us to issue securities at the worst moment in 2007, because of our scant recourse to short term financing, which only represents 70% of the outstanding balance it should. And lastly, by the Group's high discounting capacity in the European Central Bank, which means having a variable around GBP30 billion.

For all these reasons, we do not envisage liquidity tensions in coming quarters, which will enable us to meet the demand for loans by our customers as we have done so far.

The second idea is that Santander is very solvent, with core capital at target level of 6.25%. This is a basic aspect in today's climate of intensive search for capital by international banks hit the hardest by the loss of value of their assets. This high solvency comes from three sources, the strong generation of ordinary profits, active management of businesses in 2007, which combines big investments, such as that of ABN Amro, with significant disposals such as the sale of Antonveneta, Intesa Sanpaolo, and the pension fund institutions in Latin America, optimization of the balance sheet, which produces more efficient use of available capital, and whose best example was the sale and renting of premises in Spain, which also generated a capitals gain of GBP1.6 million -- billion. And a detail of these operations we will see on the next slide.

As a result of these factors, we were able to complete the acquisition of ABN Amro assets, without the need for initially envisaged capital increase.

Lastly, I would like to point out that, as well as our already solid capital position, we have additional sources of capital, such as unrealized capital gains and generic provisions, which could contribute more than one percentage point of core capital.

In 2007 we have obtained EUR2,348 million in net capital gains from the sale of non core business, excluding EUR605 million from the sale of Financial Santander last month. Of this figure, EUR1.398 billion was allocated to various provisions, Sovereign value adjustment of EUR737 million.

With this adjustment, we value Sovereign stake according to the expected recurrent profit. This adjustment has nothing to do with the write down done by Sovereign in its balance sheet, almost all of which corresponds to the amortization of the goodwill of all the acquisitions of the goodwill of old acquisitions. In consequence none of these write-downs is a result of the US sub prime crisis.

Early amortization of goodwill from the purchase of payrolls in Brazil, as you know, it is the normal practice in this country to acquire the payrolls of public entities. Something we have done since the end of 2007 and during 2007. After the acquisition of Banco Real we decided to stop this policy and make an early amortization. We also assigned EUR242 million to pensions and early retirements. After these applications net capital gains recorded on the income statement were EUR950 million.

And lastly, and in order to preserve the capital base, the Group covered the book value of its subsidiaries abroad via structured options. Banco Real has already been incorporated and we have covered 100% of the estimate book value and this coverage joins that also made by the Group on the results of the subsidiaries in Latin America, the US and the UK.

Now, I'd like to give the floor to our Chief Financial Officer, Jose Antonio Alvarez, who is going to talk about the different business areas.

Good morning. As the CEO, said I am now going to look at the different business areas and in order to have time for questions at the end you will see that on this occasion my presentation is going to be shorter, although in the appendixes you will find all the information that we usually give on all the business areas. And in any case, I am at your disposal during the Q&A session where you can ask the -- whatever clarifications you think you need on the business areas.

And if I start by the main segments, the key elements to emphasize are, and here there is a certain reoccurrence I have to say, is the high horizontal quality, or in other words all the units are contributing to profit growth and diversification by geographically and business.

Of course, it depends whether you operate in dollars are euros, but when we take a look at the financial management you will see that there is a clear correlation with the profits we have obtained. And, therefore, all the areas in their currency management are growing at more than 20%.

And then we have a high level of diversification in our businesses, so we can generate recurrent businesses. We have nine units, which are generating more than EUR500 million in net profits a year. So, strong growth plus diversification I think give us a very good possibility to generate value and profit.

If we take a look first of all at Continental Europe, I'd like to express a series of ideas. In 2007 we have been working basically on individual customers. We're still working on the idea to lock in our clients, focusing on return and rather than volume. The environment has changed in 2007. There has been less growth in the mortgage business, and stronger growth in Personal Banking SMEs and Corporate Banking.

We have made strong investments. We will take a look at this when we look at the costs. The costs of the global businesses have grown more, because we're focusing on all these business. And in terms of earnings attributable profits are growing at 27%, although I wanted to mention the evolution of the net operating income.

As you can see, it looks like it's not growing very much, the net operating income in Retail Banking. But that doesn't reflect underlying trends, because there's several things there increase in cost in Santander Consumer Finance, because of some start ups that we began in France, Denmark and Russia, apart from the seasonal profile in Portugal, an impact on the revenue of the Santander branch network of replacement of convertible bonds. That has now represented in an inflow in our accounts. And, therefore, this is penalizing the generation of results of our network in Spain.

The Global businesses you can see that from previous year's figures. There is more volatility there. After an exceptionally good first quarter it has become weaker during the rest of the year and this is why the net operating income is what you see there on screen.

If now we talk about the main units of Continental Europe, we see a lot of soundness in our units. All units -- all retail units have double digit growth in revenues, are all leveraged on cost to bring this growth to around 20% or more in net operating income. In Banesto we had [Umbris] resource that we don't have this year. All of them grow more than 20%.

In Consumer Finance it is true that the perimeter has changed, because of the inclusion of Drive. Without Drive profits would grow at 8%. Consumer is the area that has suffered the most in margins, because of an increase in interest rates. I will talk more about this later on. And Portugal again grew by more than 20%.

In total Global businesses the main component is Global Wholesale Banking, where profits are growing strongly. Costs have grown. I already mentioned that we have been developing global projects and we have reduced our loan loss provisions. We will take a look at this in further detail.

Now, there's been a strong growth of generic provisions, because of some specific transactions. And we already saw in the first quarters of the year that that was decreasing and, therefore, this is why we see a strong growth of achievable profit. Opposite to what happened last year.

If we focus now on the different units, the Santander's branch network had an excellent year in terms of spread. Our spread has gone up by 53 basis points this year. I think this is one of the best in the industry and the net interest income has grown 22%. We've done quite well, although there's been a displacement of the business from the mortgage business. That grew 10% to SME and Corporate Banking that is growing 18%. And in terms of provisions the cost of credit is still very low, 0.09% in the year.

And Banesto it already presented its earnings. It has met its objectives. You know that they have public objectives in terms of market share return on equity efficiency and their NPL ratio. They have a very good profile in terms of growth, very low NPL ratio, 0.47% is by how much it has grown, and it has done better than its peers in this variable.

Santander Consumer Finance, I mentioned before that there was a change in the perimeter. In Europe there's been an impact of interest rates and a slowdown in spread when interest rates go up in this business. That has an impact that is noticed 6 or 12 months after. Here we also have higher cost because of start ups. In the UK, France and Russia etc. we have a series of operations that are just starting that still are not bringing in any revenue.

Drive exceeds forecasts in revenues and profits. The NPL ratio remains stable and in a more complex American context we are able to (inaudible) the cycle the rating in the US at the same time that we improve the spread. So, we feel reasonably comfortable given the evolution of drive.

In Portugal the environment is still extremely competitive. There's strong competition. The spreads have been falling, but now they seem to be stabilizing. We do believe that this will improve the spreads. And if we look at the figures in the balance sheet, we haven't grown our balance sheet, because of falls in assets and liabilities, which don't combine very well with the increase in revenue. The fall in volume is in companies -- large companies -- large corporations where margins are very small. They are excellent results from Portugal that give us figures of 20%.

Moving on to the UK now, I would say that Abbey is very consistent in generation of results. It has also met with expectations in a more complicated environment. The personal services is not growing as much, but we have grown at 7% with lower fees and a net interest income of 11%. So, we're very satisfied of the pace of growth of the revenues of Abbey from personal financial services and others.

Besides that, and quite important for Abbey, where we've finished the first three year plan we have rolled out Partenon and we're launching new products, investment bonds and that -- we've launched projects to cooperate and develop Private Banking, Wholesale Banking and also the card business that has grown quite well.

If we focus on revenue performance we see that there are three drivers. The net interest income has worked very well, because of higher spreads, we have 14 basis points in a combination of a narrowing in mortgages, 8 basis points and I said that because this spread in mortgages in the UK has improved gradually. In the second part of the year we have spreads of 50 or 60 basis points in a higher spread than those we had a year ago. So, this is trend that will change and will be more effective if the market continues in 2009.

In personal loans we have increased by 90 basis points, in deposits of 12 basis points. So, that has led to improving this. We have 14 basis points and growth in volumes that are more modest, but we have an 11% growth in net interest revenues and we have all this.

In terms of provisions there are not very many news. The quality of our portfolio is pretty high. I'm speaking about mortgages. And in personal loans we have fallen by 54%. That's a reduction of 34% in the portfolio. So, we have no concerns in that.

And for Latin America I would say that the growth figures are very high. The main areas in management have been the same as for the Retail business in Europe getting more customers, locking them in, although commercial franchises are very high in Latin America. We have opened up 300 branches more than 1,000 ATMs and 1,600 new [points] in call centers. And the growth of the business is derived from that.

We see that in Retail Banking. We see that the evolution of the net operating income down below is very favorable. We had one of $1.2 million to $1.3 million and in the fourth quarter we're close to $1.9 billion. So, the underlying trends are very good and revenues grow by 40% more or less. And after provisions we will move to profits, a growth of 27% in the managed currency, which is the dollar.

Per country, just as we said in Europe, they'll grow about 10%. Here they will grow about 20%. They all increased the difference between revenues and costs. Brazil and Mexico are growing in profits above 30%, Chile by over 20%, practically 30%, before minority interest and the rest of the countries do it by 16%. Argentina and Venezuela are growing quite well, but we have the restructuring in Puerto Rico and some other operations in Columbia that distort the basis.

Private Banking, this is a business which is also growing close to 30%.

Now per country, Brazil, we have strong growth and business of 30%. The risk premium, and that was mentioned by the CEO, is stable. If we look at it quarter by quarter there are some situations that are located between 3% to 6%, 3% to 7%, and 4% and we have been 6% or 7%, where the risk premium has been we have been at that situation.

In Mexico there are large volumes. So, there is a change in the NPL for cars. That was mentioned before. So, the risk premium for the entire Bank goes 1.2% to 3% and that of cars moves from 5% to 12% and that's below the market. But there's been a strong increase of NPLs in cars. It is the only significant change in the behavior of credit that we have in the region.

In Chile, for many years we've increased a lot more in the minority areas and revenues are going well. There's an increase in provisions. But after three years of growth at the Retail area over 20% to 25% and the Wholesale area a 1 digit growth this is the tendency we were expecting, because of the nature of the credit portfolio that has been generated in these last years.

And finally in Financial Management let me say something about the results of the FX coverage of results. We have a significant increase in return on volume and the exchange rate that is at 80% to 85% or 15% to 20%. It is the coverage of the area that has been $4.2 billion and these are the results. This is the greatest change that takes place here besides higher costs, because of some global project sponsorships and draw downs. But mostly the main change comes from the results of FX, foreign exchange.

If we look at this transversally the secondary segments, there are very few changes here in the previous quarter. We have to say that Retail Banking continues to represent 80%. If we take into account Insurance and Assets we have 80% to 85% of the operating areas profit. It represents 16% when we speak about Wholesale Banking. Both grow very strongly and Asset Management and Insurance, as we will see, because of the investments in Spain are growing slowly. The total area's growth is 26%.

If we that in the Retail Banking it is based on profits and net operating income it's growing over 20%. In Wholesale Banking now after a second part of the year, which was very, very complex, pretax profits are 28% on [28] of total gross operating income comes from customers. The lower need for provisions in 2006, as compared to the previous year, brings up revised [end profit] for taxes.

And the Asset Management and Insurance, which account for 4% of the Group's profit before taxes has been quite homogenous and it's been affected by the no growth of the investment funds in Spain.

In Wholesale Banking now, I will concentrate on two -- the two most relevant aspects, the growth of revenues 13%, which has two different aspects, those that come from customer treasury grow by 24% with an increase in Investment Bank, 66%. And I'd like to point to the increasingly accelerated growth of Global Transaction Banking. That is growing at 16% and it has accelerated its growth quarter to quarter.

The second noteworthy aspect, the provisions, we have quarterly growth. In the last quarter there was a provision for generics for EUR100 million and in the previous one there was a free up or no provisions when some of the operations were cleared up from the previous year. This joint effect makes that to lead to a fall of 84% in generic provisions. Although the distribution of EUR52 million in 2007 is not homogenous. We have figures that are negative in previous quarters.

Finally Asset Management and Insurance, I've talked about the investment funds. The insurance area is growing at 22% and in Latin America we're growing at a pace of 50 some percent.

And I will give the floor to the CEO who will give us the conclusions and the prospects for 2008.

Let's see, summing up what we've done in 2007.

On the good evolution that we've shown you of the Group and of the business areas is a proof of how Santander can get very good results in a very complex environment for the Bank and also in the financial markets. Specifically we've done it quite well in terms of revenues and cost to income ratios in all areas at the same time that we have strengthened the strength of our balance sheet.

We've had an EPS growth of over 20%, practically unattainable for most international banks. And that led us to significantly improve our return on assets and our return on equity. But not everything has been to get results for today. We've been working to build the P&L for the next years.

Santander has invested very strongly this year. We have invested in business networks with over 300 new branches and with over 1,500 ATMs. We've captured over 3.5 million in Retail Banking customers and we have locked up over 1.5 million customers. We have propelled Abbey's operations and our Global businesses, and we have acquired the assets of ABN Amro. All these investments I'm sure will produce excellent dividends in the coming years.

How do we see 2008? I think we all agree that we have an environment of growth which is, I would say, good but with a lot of uncertainty. The world will continue to grow although below the figures of 2007, because of the deceleration that is taking place in some very developed economies, although the emerging economies will still lead the growth.

And, all in all, the large area for Santander will maintain sufficient moment. Spain will continue to grow more than Europe and the UK will be inline with that. And Latin America will continue to give us good years of growth, because of its economic potential, its greater macroeconomic stability and its growing number of banks.

And from the financial viewpoint it will also be a very demanding year, as I've said before in the past year.

The banks will have to get used to an environment without liquidity surplus as of previous years. We're taking risks. We'll require an appropriate prize and where customer relations, efficiency or cost to income ratio and deposits will have a high value. It is an environment in which many of our competitors are considering returning to traditional businesses, back to basics. And we have the advantage that we are already there, because we really never left it. We never left the basic businesses.

Under this environment those institutions that focus on universal banking, on capturing funds as opposed to just lending and being in high growth markets, such as the emerging markets will give us an advantage.

This is a theoretical profile in which Santander fits perfectly well. But it isn't only a theoretical point. It is also a practical point, because in 2008 Santander will face up that year from an excellent starting point, and there are seven reasons for my claim.

First of all, our business is basically Retail Banking. It is well diversified and, therefore, our revenues are recurrent and sustainable. Secondly, this business profile is of very high quality, so our risk is low. And more importantly, it is a predictable risk. Thirdly, we have a very strong balance sheet with more than ample liquidity and solvency levels that make us feel very comfortable. Fourthly, our business portfolio has a combination of differentiating activities in developed and emerging markets, which contribute to high growth.

Fifth, this growth will be benefited from investments made in these recent years and we will do that having a good track record in costs. That track record in costs has enabled us to strengthen our front office and assume big investments in capacity, while constantly improving our cost to income ratio.

And finally and very importantly, we will have the contribution of the ABN's businesses, which will give us critical mass in Brazil to compete with the country's large players, and that makes us the only international bank with a significant presence in a BRIC country.

So, Santander faces 2008 with a sound positioning and a great capacity of proven execution, which puts us in a better position than our competitors.

And to get the most out of this situation we have a management focus that is quite well defined and let me break that down. First of all, a greater focus on management of spreads, secondly paying priority attention to costs as the basic lever for managing the jaws, thirdly, a special focus on risks and their impact on the provisions. Fourthly, a greater focus and greater importance attached to deposits and we will emphasize strongly our customers, as well as the quality of services.

All of that without forgetting our discipline in financial and capital management and our permanent obsession with developing and extracting value from our global reach via Global businesses and technology.

With all of that, we are confident that in the year 2008 Santander will continue to grow and to create value as we've seen in the medium to long term.

And let me finish by saying that in spite of the more difficult environment we ratify this in the EPS expectations announced during September's Investor Day last year.

And that's all. Thank you very much.

Good morning. We'll now open the Q&A session. It will last only until 11.30. We have some 35 to 40 minutes for questions. But we'll try to answer all your questions now. If that is not possible the Investor Relations department will take care of all questions that are left pending.

The first one we have is from --

Ladies and gentlemen, the Q&A session starts now. (OPERATOR INSTRUCTION).

-- process, etc. Are you expecting any additional impact on capital when Banco Real is fully integrated? It could be in the second semester of 2008. Could we get data about provisions and costs for 2008?

Well, let's see purchasing global businesses and global clients. In the presentation we included in one of the annexes what this business is. This is a business that has an operating income or has had an operating income of EUR140 million and generates a net profit of EUR44 million in 2007.

The multiples that we expected, we expected an ROI in 2010 that is to be found on page 59. And the [TR] is what we paid to the agreement with ABN Amro, which is what we have to do in the consortium.

So, these figures have been calculated with relatively conservative synergies. The cost to income will be 45% in this business, because it is integrated in the business or the Wholesale area of Banco Real. That's why we bought it, because it was producing a disruption in the capacity to generate business in Brazil.

The second question refers to all the numbers of the goodwill in Banco Real and all the ABN Amro. We include all that in the core capital that we have given to you, which is 6.25.

The goodwill expected for the entire operation will be around EUR8 billion which, as I said, has already been included in the core capital figures that we've given to you.

As for the timing of the Banco Real operation, which I think was the other question. When will Banco Real be legally integrated into Santander? Well, we're different on two factors. One is the squeeze out of the minority part of ABN, may be May. And another one, Banco Real will be transferred to Santander, more or less, on the third quarter. That will be when, legally, Banco Real will be fully integrated in the Santander Group.

There was one last part regarding provisions and risks, provisions and cost of the risk in 2008. We don't have different information from the one we gave on the Investor Day. We have no update, nor anything that will make us think that we will be out of what we gave you before.

It's been improving and on Investors Day we said the risk premium would go up. And the only place where we've seen a significant increase of the risk premium of the cost of loans is in cars in Mexico and in Spain, where we have a tendency that we've been seeing lately. And we mentioned that on the Investors Day.

[Samuel Lopez] from Global Asset Management. What would be the summary of the acquisition of Drive? Has it been a good move or not? And should it be corrected? I don't know exactly what this person means by this, but what is your opinion on Drive?

Well, I think the acquisition of Drive was a very good business. I think, in the last presentation of results, I said that we had been very positively surprised by this business, because it is the first time that we had experienced at the Santander Group of this type of business.

First of all, in the US and also because of the nature of the business, it was new to us. And, although it is true that some figures might indicate that NPLs are growing, and that is true, it is also true that spreads are growing. Production is at reasonable levels. Repossession is increasing and the cost of it as well, but we have a very efficient unit to repossess vehicles. And, as a whole, Drive's prospects for 2008 are very good, excellent outlook.

So, I don't think we should be correcting anything really. Much to the contrary, I would say, that our perception is that it's been a very interesting acquisition for the Group.

Marco Troiano from Standard & Poor's has several questions. One of them has already been answered, which was the consolidation of Banco Real and ABN, what is the strategy with regards to Societe Generale?

And what about Peru, can you tell us a bit about the M&A strategy in Peru, perhaps?

What about Basel II, how is that going to affect your core capital?

And do you see any risk in completing the Antonveneta operation with Monte dei Paschi di Siena? And if there are any penalization clauses, in case [Paschi] decides to take a step back?

Well, I don't remember all of them. There were many questions. Let me take them one by one. First of all, consolidation of Banco Real, that was already answered by Jose Antonio, a minute again.

Then, Societe de Generale, nothing to say.

Then, the impact of -- the impact of Basel -- of BIS II, the Bank will publish its rules in the spring. And, as you know, there is a transition period. So, initially we will probably need less capital, when we strictly apply the Basel II rules. But, as you know, you cannot reduce capital under 90% of BIS I. So, we'll have to see how these things can be made compatible. But I don't think it's going to have really a lot of impact on our capital figures.

And with regards to completion risk, which I said was one of the operations, regarding Antonveneta. Well, we don't see any risk there, of this getting complicated or not happening. And there is no penalization clause, but it's not required because it's going to be completed and fast.

Have I left any out? No.

Javier Bernat from Caja Madrid. Could you explain, in further detail the impact of the exchange rate euro dollar, euro pound sterling in the trading gains? If the direction changes for the dollar and pound sterling, does that mean that the trading gains would go down?

With regards to the intermediation spread in Consumer Finance, well, it seems that's the different margins are stagnated.

What was the first question again? Yes, the exchange rate, the impact of the exchange rate. The exchange rate, perhaps Jose Antonio can say a bit more about this, about this point.

But basically, in 2007, we've had exchange rate profits, because of a hedge that guarantees that we can transfer our results from Latin America into euros in our consolidated P&L. And, for some time now -- for years we hedge for these results. We've had positive results, therefore, in the corporate center -- positive results of this hedging operation, which are parallel and similar to the negative ones that we got from the consolidation into our income statement of pounds and dollars. One thing offsets the other, but in different items.

If the exchange rate changes direction, then perhaps we will see less trading gains. But, in turn, that will mean better results in the consolidated P&L, because what is being transferred from Latin American units will be worth more.

Jose Antonio, would you like to add anything to that?

And then the other question was? Yes, the spread of Santander Consumer Finance. Consumer Finance is a business, and we've already said this in the past, that when interest rates go up, it increases the spread and the other way around.

In 2007, we've had a period where interest rates, either nominal or real interest rates, have gone up, that on the one hand. On the other hand, there's been more competition and that explains why margins are becoming smaller. In 2008, in part, we'll probably see a change in the trend, at least when it comes to interest rates, because they might go down.

This business, we think, is going to grow this year, in terms of revenue. And we're going to have to make a strong effort, in terms of costs. It is true that costs went up in 2007, basically due to expansion programs and investment programs, even at a constant perimeter. But in 2008 our cost budget is more in line with the idea of this business.

Now, revenue and cost is going to give us -- that combination is going to give us a very acceptable level of earnings.

I don't know whether I left out one of the questions? No.

A couple of questions on Brazil, the regulatory environment. How do you think that the new standards set by the Central Bank for leasing operations is going to affect you in Brazil?

Well, in leasing that doesn't really affect us. Perhaps in Santander Banesto -- well Banco Real [it was] anticipated, but not so much in the other bank, because we have very -- a very limited in leasing business. So, it's not really going to affect us. It's not significant for us.

Now, other regulatory issues. Well, we'll have to see what the real impact is. Undoubtedly, in Brazil, there's been a rationalization of the conditions to make things simpler and more transparent for the consumer, which is probably a good thing. It's clearly good for the Brazilian consumer and it's also more rational for the Bank.

What is its impact? Well we haven't yet valued this. There is going to be an impact. We don't think it's going to be extraordinarily strong. We do think, nevertheless, that there will be an impact as a consequence of these changes, which also entail a reduction. But -- well, in the next few months we can probably be explicit about this, because it's not simply applying the law arithmetically to our fees and commissions. It's a bit more complex than that. But our first impression, although we think it's going to have a bit of an impact, we don't think it's going to be too important.

Alberto Cordara from ABN. Could you please clarify the trend of the net interest income? How is -- because of its performance in the last quarter and what do you expect for this year and also for the trading gains?

Well trading gains, let's start by the second question. We've had the positive affect. Well, there's been several more, because of the selling of a few businesses. But the impact has been in the exchange rate. Of course, that effect might be the contrary -- the opposite if the exchange rate change trend, if they fluctuate as one of your colleagues said.

Regarding the net interest income our forecast in our budget for 2008 expects a reduction of net interest -- income. In fact, in September in Investors Day we already said this.

If I remember correctly we expected the revenue of the Group that instead of growing 21% as they did in 2007 -- as we've seen now they've grown by 21%. We think it's going to grow 12% or 10% to 12% in this year, in 2008/2009. So, we're already getting ahead of that impact of lower volumes. We're already expecting lower net interest income.

And I've said this before, and I'd like to confirm it, the guidance that we gave in Investors Day is still applicable. It's applicable to this question.

Was there anything else for this question?

No.

Luis Pena, M&B. The contribution RFS to the income statement, could you clarify this using the equity method?

The trading question has already been answered.

With regard to the Santander network, what about the evolution in fees and commissions? It seems a bit weak, why is that?

And what is your estimate of your cost of risk for 2008?

Provisions for loan losses in the fourth quarter increased quite a lot. Has there been any extraordinary operation? And if not, why is that?

And what cost performance can we expect in the three most important Latin American countries?

Would you like to answer the first part that you know better?

Yes about RFS. The net affect of the RFS transaction was -- RFS, I have to say, is the company that acquired ABN Amro. Well, the net affect was EUR60 million which comes from -- because of the use of the equity method, plus greater financial expenses, EUR80 million.

I also would like to go back to your previous question. Is that in the net interest revenue? Well yes, that is the impact of RFS on our accounts.

Yes, fees and commissions in the Santander network, that's quite logical that they should go -- fall, because we shouldn't forget that about 50% of fees and commissions of the retail network in Spain come from Mutual Funds. And Mutual Funds have fallen in 2007 and they will continue to fall this year, because of structural reasons and also because of commercial policy reasons. We're going to focus more on deposits, on a formula that can give us more liquidity.

So, I can anticipate that they will continue to fall, but not because of strange reasons but simply, because the weight of Mutual Funds. And any change on the Mutual Fund policy has an impact on fees and commission.

He also mentioned provisions for loan losses in Wholesale Banking in Europe. Well, basically these are generic provisions and they have a lot to do with the increase of guarantees not -- it's not so much based on large corporate operations as was the case in 2006.

And I think you also asked about costs in Latin America, Brazil, Mexico and Chile. Well, in Latin America this year 2008, we think it's going to be very strong in terms of cost. Brazil and Chile costs won't go more than inflation. In Mexico perhaps they will grow a point more, because it's still going through an expansion period. But, of course, I'm talking about the local banks, and also measuring cost in local currency.

Ignacio Cerezo from JP Morgan. He has quite a lot of questions. I'm going to try to just give you the ones that have now been answered yet.

What is the rational for the calculation of the write-down of Sovereign? The 737 million is that after taxes? We already said that, yes.

Have you also included 25% on Sovereign losses when you use the equity method for the corporate center? That would be my first question on Sovereign.

Sorry, [Anjel], would you like to answer that question before you go on with the questions?

Yes, in affect like I said it's that net from taxes. How have we -- this is a price where we value Sovereign at about $13. I think it's $12.9. That's the valuation. Where do we get that from?

Well, at that price we are appropriately valuing the possibilities of Sovereign of generating recurrent profits in the current circumstances.

So, how we reach this figure? Well, we, of course, talked about it with our auditors. We also looked at the markets opinion and we do think that the value of Sovereign in our books is reasonable. It does reflect the current market circumstances.

They ask about the increase in provisions for Wholesale Banking, the significant fall of fees and commissions. We already answered these two questions.

What about the general provisions in Brazil, Chilly and Mexico?

In Mexico it's 70%. In Brazil and Chilly the answer would be yes.

What is your estimate of the provisions as generic provisions in Abbey, given the increases second half of the year?

No, we don't have it. I don't have any figure in my head which will entail a change vis-a-vis the situation we've had in the past few quarters.

And in the budget, given the nature of Abbey's portfolio we have about -- like two portfolios where we represent 95% which is prime mortgages. They have been valued at loan to value. We've already given all the information about this portfolio. It's very prime in nature. We don't expect any significant changes.

Now, in the UPL portfolio the performance hasn't been that good in terms of NPL. Also, in the presentation I mentioned that production had gone by 54% and the stock had gone down by 28% at the same time that we increased our spread by 90 or 90 something basis points. So, in terms of the cost of risk in Abbey I would say that we don't expect significant changes from what we have at present.

And the other questions from Ignacio Cerezo have already been answered.

Carlos Garcia from ING. How do you expect new NPLs to evolve in 2008 if they continue to go up, might you have to increase your provisions? What about by geographical area?

That's I think a bit too much detail that they ask for?

Well, yes, there is going to more and NPLs -- new NPLs this year. We already said that in the Investors Day.

We have taken that into account when drawing up the budget. So, the answer would be yes. But, yes, that has already been taken into account in our guidance and with the figures we gave in Investors Day and in our budget.

As [Anjel] said, if we do it by geographical area where are NPLs going to come from, I think the investor -- the -- our relationship with investors department can answer your question, because that will be too much detail to give now.

Could you tell us about the changes of the legislation in Brazil?

We already answered that question.

Would that change the guidance of 15% [BPA]?

Well, we already answered that.

Why negative trading gains in the fourth quarter in Wholesale Banking?

It's basically in Spain, in treasury. It's been the weakest fourth quarter, because there was more volatility in the markets. And our trading activities in Madrid have generated EUR30 million negative trading gains, but there's no specific cause. There's no single reason for this. Trading in general has not done well that quarter.

Two questions that we could answer directly. In Brazil minus EUR126 millions what is the influence of that and the growth of personal cost which is pretty strong in the fourth quarter in Brazil? I think these are details that could be answered later.

Antonio Ramirez from Keefe, which would be the (inaudible) process in Spain if the GDP growth were below 2%, which would be the liquidity position in Abbey?

And in the UK are we -- do you think problems of competitors to gain market share or are we still focused on the margins?

Well, I think that to give you a growth hypothesis of GDP below 2% in Spain would be rather dramatic. Obviously, we have studies and sensitivity analysis for different scenarios and the scenario of that type is not reasonably to be expected I don't think.

About the liquidity and commercial policy of Abbey, Abbey as you know perfectly well, has two businesses, mortgages sold through intermediaries and sold directly. We continue our policy to grow our business through the sales in the [offices]. And we've done that in 2007 and we will continue in 2008 growing in that business, because I think things are favorable for us giving more importance to the growth of margins than wishing to increase the growth in volumes. But I think in the year 2008 we will be with the wind in favor for that market.

As for the liquidity, well, we've said that the Group has a comfortable liquidity position.

[A question] about the write-off of intangibles for EUR351 million in Brazil, is it because of the business bought that -- from Royal Bank of Scotland and which would have been the recurrent write-down?

Well, we're talking about purchase of customers from the public sector, which has been done and it has been done during the last three years, which was a big part of the customer increasing policy of Santander Banesto. And as a consequence of the acquisition of Banco Real, this policy makes no sense any more.

So, what we've done is simply to, all of a sudden, bite off something that was accounted for as a charge to be written down. That meant EUR70 million a year and that's what was written off completely in our books.

[Christian Sawley] from Dexia Asset Management has a question. Can we explain the EUR68 million write-downs in Portugal? And on the exposure we have is that the real estate sector?

As regards the Portugal write-down it's four or five concepts. There's not just one. There are some that relate to reclassification of some accounting terms, others relate to the implementation of personnel in Portugal in 2008 and some others. But there are four or five different concepts there.

One is the classification and the other three, the most relevant is personnel for Portugal for that figure of EUR68 million.

As for the second question, the real estate sector, well, our positions have been 7% more or less of the portfolio in Spain. And there has been a lot of talk about developers. We don't have to add any more.

The quality of the portfolio here and the market, although there's been a lot of talk, we have an exceptionally good portfolio quality. I think we talked about NPLs below 10 basis points for the developers and we mentioned that before.

The sales have slowed down and the ratio that we talked about, which is the percentages of units pre-sold in the developer's portfolio have been going down. It's a bit over 40% now, but in September we talked about 45% to 46%. Now, it's 41% to 42%. Therefore, there's been a deceleration of sales.

The percentage of works in our portfolio is 50% some. We have a percentage of houses under construction that have been pre-sold at 40% some and the other is 50% in the process of deceleration of the sectors, which is quite well known by all of you.

[Catherine Maqura] asks do we have any update on the goals for synergies in Brazil after acquiring the global clients business.

In Brazil, since we still are in a situation which is known by all of you, our intention, just like we did for Abbey, is to present to the market in the month of September/October, a detailed plan as to what we aim to achieve in Brazil in the coming three years 2008, 2009 and 2010 with all the synergies and activities that we plan to do in Brazil.

Right now, it would be frivolous on our part to say whether we confirm something. At a minimum, we have to do what was foreseen in the acquisition. But to be more specific, we need to take effective control of Banco Real and work during a few months on the plans that we will develop. And we will be talking about them in September/October more or less.

The last series of questions from [Giovanni Javier] from -- before we take the phone questions.

Expectations of quality of loans and delinquency in Consumer Finance, could we give any data for 2008, 2009?

Is there any change in strategy in the US after the Sovereign announcement in the [add on] lending field and then securitization in the [productional] drive?

Well, in terms of quality of credit, we have done what we said in -- on the Investors Day. It's increase in the risk premium, specifically in terms of the Consumer Finance, where we would have to elaborate country by country.

But we don't see significant changes. In some areas we're improving. In others, such as Spain, things are getting worse. But we don't see any significant changes in Santander Consumer Finance Europe.

In the US the write-down was mentioned made by Drive for cars. I think we mentioned that we have a EUR3.3 billion portfolio in the US. But if that portfolio was designed -- all the commercial policy is designed for the segment in which it operates. So, I've also said that because of the situation of the market we were able since February, March last year to bring out the cycle (inaudible).

Delinquency is pretty much on the line. For 2007 we have a budget that includes those variables. So, something else the Mannheim Index that is used in the US for secondhand cars has fallen down. So, there'll be more severity in the loans. But with the increasing cycle (inaudible) I don't think we will be affected for the generation of results.

As for securitization, Drive up until the last securitization done in October, although it was more expensive, as Drive used to securitize LIBOR plus 5 plus 10 basis points, the last securitization which was 65 to 70, including everything 80 basis points. That, which in other businesses is a very high increase as regards the yield of Drive, which is over 20 more or less, is a significant change. But in terms of the business it is not that significant since, as mentioned before, the yields are going up and the cycle is improving. So, it's not as representative for that business as it could be for other businesses.

Two questions have been answered. The impact on capital of goodwill of the ABN Amro is included in the [625 core] capital and the details on fees in Santander.

The one through the Internet would relate to Abbey. Have we noticed a crunch in the loan book and deposits for the quarter?

Is that due to the lesser number of personal loans? Or is it because of the mortgage situation?

Basically as for the production of mortgages it has slowed down, even more than what we had foreseen. And Abbey notices that, especially with the policy that it follows. But the most important item, what really Abbey has done significantly as a good commercial policy is to reduce drastically the UPLs done through intermediaries and it's concentrated UPLs through the branches, and that's the position. That's the important thing.

As for the rest, nothing new.

And I think we have two more questions please over the phone?

Hello good morning. My first question will be asked by Mr. Arturo de Frias from Dresdner, please go ahead.

Good morning I had two or three questions. One relates to Brazil. You've said that surely you will not do the consolidation until the third quarter. The question will be when you do the consolidation will you take off the effect? Or will you bring back the effect to January 1? Will it be consolidating the accounts in Brazil for the entire 2008? Or the first two quarters will be done as you have done it before through the equity method?

Another question, I think you've said something, but will you be interested in what is happening with Societe Generale? I think the answer will be no, but please clear that up.

The third question will be whether you could make some comments as to how you see the situation of Wholesale financing in Spain. How the certificate markets are? Do you consider doing something else? Do you think 2008 will be still a difficult year?

And then the very last question, although I think it was asked of you five or ten minutes ago, as regards growth of GDP in Spain could you make a more extensive comment on the situation in Spain, not focusing on developers or delinquency, more -- a more macroeconomic comment? The latest days that you've had are very worrisome. We have had bad employment data. So, the slowdown in Spain is going quicker than expected. So, I wanted to know what you think about all that.

In answer to your first question, that of consolidation in effect, as we've said before, we consider that we will have absolute control and, therefore, we'll globally integrate Brazil from September on more or less. At that time, although we won't be able to do it in the global account of the Group for comparative effects, we will include the P&L of Brazil, of course. Although I don't think we can include it in the global accounts.

The question about Societe Generale he answered it himself. No, of course, and the Wholesale situation in Spain Jose Antonio you'd better answer that.

The matter of Wholesale financing and I think he spoke about mortgage certificates, we made an issue in November when the market was at a bad situation.

We think that it's true that things have grown, but the market is quite receptive to issues of mortgage certificates. We're not thinking about doing something in the short term basically, because of one reason, because the percentage that we have issued on the eligible portfolio the limit is 70. We're in -- at 60 some. So, we do not wish to stretch that limit. But operations at three to five years can be placed at 20 basis points over [LIBOR], which is something, a level in which we can work. And I hope that some of the financial institutions in Spain will be doing something.

As for GDP we don't have much to say. We're far from consensus although the data in these last years have not been good, but it's too soon I think to infer from these data something similar or worse now. Our vision is one of deceleration and we have been looking at in the several months that have gone by is a deceleration, especially in the real estate sector. And we think that the deceleration will bring us to 2.4 to 2.7. That's for consensus as such.

We don't think there's anything else besides that.

Well, thank you very much. If there are any additional questions as I said before we'll be very happy to take care of you through the Investors Relations department. Thank you very much.

Portions of this transcript that are noted Interpreted were interpreted on the conference call by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.