Presentation Santander Consumer Bank Nordic Group May 2020 Index - - PowerPoint PPT Presentation

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Santander Consumer Bank Nordic Group

May 2020

Q1 2020 Investor Presentation

• 1. SCB Nordic Overview Q1 2020
• 2. Financials Q1 2020
• 3. Capital and Funding Q1 2020
• 4. Appendix: Santander Group
• 5. Appendix: Santander Consumer Finance

2

Index

SCB Nordic Overview Q1 2020

01

4

Who we are

We are one of the largest Nordic banks providing loans and credits, credit cards, deposits and insurance to private and business customers. We work with the best people in an engaged, challenging and passionate organization, which provides great opportunities for professional growth. Santander Consumer Bank AS is a Nordic bank with more than 1,400 colleagues in Sweden, Norway, Denmark and Finland, with a long history in the Nordics, and with global strength through being a part of Banco Santander.

4

Regulated in Norway, owned by Banco Santander

SCB AS is regulated by the Norwegian FSA

Santander Consumer Finance S.A.

Fitch/Moody’s/S&P A-/A2/A- Santander Consumer Bank AS Fitch/Moody’s A-/A3

Santander Consumer Bank Denmark (Branch) Santander Consumer Finance Finland (Subsidiary) Santander Consumer Bank Sweden (Branch)

Banco Santander S.A.

Fitch/Moody’s/S&P A-/A2/A

5

Source: SCB Group Q1 2020 Report and Management Figures 1) Adjusted for IFRS9 transitional rules 2) Compared against PBT Q1 2019 3) Based on year end 2019 figures 4) NII Ratio = Net Interest Income (annualized) / ANEA

Key Figures

Gross Outstanding Loans

193.1

NOK Billion People

1,447

Employees Core Capital CET11

16.7

Per cent Customers3

1.60

Million Total Deposit

72.8

NOK Billion Net Interest Income Ratio4

4.6

per cent Profit Before Tax

709

NOK Million Partners

5,079

Merchants

+5,500

Car Dealers

6

Q1 2020 (vs. Q4 2019)

(+17%) (-140bps) (+11.1%) (-11.4%)2 (-37) (+11bps)

83 322 118 991 127 852 147 9702 162 8022 165 331 193 137

2014 2015 2016 2017 2018 2019 Q1 2020

Loan growth in the Nordics

Source: SCB Annual Reports Reports (2014 – 2019) and Q1 2020 Report 1) Compound Annual Growth Rate 2014 – Q1 2020

7

mNOK

CAGR1 17%

mNOK mNOK mNOK mNOK mNOK mNOK

1 321 1 942 3 250 3 9952 4 1342 3 611 709

2014 2015 2016 2017 2018 2019 Q1 2020 mNOK

Solid profitability

Source: SCB Annual Reports Reports (2014 – 2019) and Q1 2020 Report 1) Compound Annual Growth Rate 2014 – 2019

8

mNOK mNOK mNOK mNOK mNOK

CAGR1 22%

mNOK

9

SCB Group overview

Source: SCB Group Q1 2020 Report (All figures in NOK) Note: NOK 154 million in bargain purchase gain related to the acquisition of Ford Credit has not been credited to any specific country’s PBT

Nordic Q1 2020 Results

193.1 Bn

Gross Outstanding

709 MM

Profit Before Tax

Auto loans: 50.9 Bn Unsecured loans: 9.9 Bn Profit before tax: 224 MM Auto loans: 34.2 .2 Bn Bn Unsecured loans: 8.3 Bn Bn Profit before tax: 147 MM MM Auto loans: 28.3 .3 Bn Bn Unsecured loans: 16.9 .9 Bn Bn Profit before tax: 83 83 MM MM Auto loans: 40.0 .0 Bn Bn Unsecured loans: 4.6 Bn Bn Profit before tax: 98 98 MM MM

History

Bankia Bank acquired (credit cards) ELCON Finance becomes Santander Consumer Bank AS (SCB) ELCON Finance A leading Norwegian company within equipment leasing, factoring and auto financing Santander Consumer Finance S.A. acquires ELCON Finance Company demerges and auto finance is retained in Norway and Sweden Launch consumer loans Norway Skandiabanken Bilfinans acquired in Denmark (auto finance) Start up auto finance in Finland GE Finland acquired (auto finance, consumer loans) Consumer loans in Sweden (2012) and Denmark (2013) Deposits launched in Norway and Sweden (2013) Deposits launched in Denmark (2014)

1963 2004 2005 2006/07 2009 2012/13 2015

SCB merges with GE Money Bank SCB becomes leader within car finance and unsecured loans in the Nordic region

2017

Solidified position in sales finance with the

• nboarding of

Elkjøp/Elgiganten, Power and Media Markt

10

Forso Nordic AB SCB acquires the captive finance operation of Ford in the Nordics1

2020

1) Forso Nordic AB, the captive finance operation of Ford Motor Company in the Nordics, agreed to an acquisition by Santander Consumer Bank AS in November 2019. Part of the transaction is a long-term agreement on retail and wholesale finance to Ford dealers under the Ford brand. The transaction closed on 28 February 2020.

Executive Committee

Michael Hvidsten

CEO

Michael started in GE (first in GE Capital, later in GE Money Bank) in 2000, where he held various key position within risk

• management. He

joined Santander in 2005 as Nordic Chief Risk Officer, and was appointed Nordic CEO in 2012.

Anders Bruun-Olsen

CFO

Anders has held several senior positions within banking institutions like DNB, Eksportfinans and

• Handelsbanken. He joined

Santander in 2011.

Knut Øvernes

MD Norway Commercial B2B

Knut has held various business management positions in GE Money Bank and Santander since he started in 1996.

Peter Sjöberg

MD Finland Strategy and M&A

Peter has 20 years experience from banking and financial services. He has held several leadership positions in SCB. Joined Santander in 2010.

Andres Diez

Chief Risk Officer

Andres has held different leadership positions within Risk and Credit. Joined Santander in 2007.

Martin Brage

MD Sweden Commercial B2C

Martin joined GE in 1999. With his long and extensive experience within the financial sector and Santander, he has built up years of experience within auto and unsecured.

11

Tina Krogsrud Fjeld

IT & Ops Director

Tina has vast experience within commercial, business development, compliance, group strategy and Non Financial Risk. She joined Santander in 2019.

12

Internal environment Inclusive and sustainable growth

Ensuring we have the right culture, skills, governance, digital and business practices Supporting to create new jobs and helping people access finance, supporting the financing

• f the low carbon economy and fostering

sustainable consumption

Responsible procurement Stakeholder value Risk focus Responsible business practices Strong corporate culture Talented and motivated team

SUSTAINABLE GROWTH INCLUSIVE GROWTH

Responsible Banking Strategy

Creation of a holistic bank culture centered on responsible banking principles

SCB ESG strategy

We act in a manner that is in line with the values of Banco Santander: Simple, Personal and Fair.

13

Leverage of market position to increase awareness Strong collaboration with dealers, partnerships and local

• rganisations
• Our Bank has a strong retail focus, and as a

market leader in the Nordic car and leisure finance, SCB can help not only to build awareness but also drive customer behaviour changes through various initiatives, impacting carbon footprint. These initiatives support Banco Santander’s goal to be carbon neutral already in 2020

• As a market leader in financing passenger vehicles

in the Nordics, we have the opportunity to shape the future of sustainable mobility at country level

• We ensure the integration of ethical, social and

environmental criteria in the development of business, contributing to the economic and social prosperity of people and businesses in a responsible and sustainable way

• We contribute to the prosperity of the communities

in which we operates via our lending activity, as well as via donations and partnerships with local

• rganizations

SCB AS: Contributing to value creation in the Nordics

Sustainable Mobility Supporting local communities Strong retail focus Donations & Partnerships

Pursuing active contribution to the UN SDGs

Overview of other highly relevant SDGs for SCB AS

14

GOAL 4: Ensure inclusive and equitable quality education and promote lifelong learning

• pportunities for all

SCB AS is a Gold partner supporting “Right To Play”, an

• rganization that protects,

educates and empowers children to rise above adversity using the power of play GOAL 3: Ensure healthy lives and promote well-being for all

• Partnering with “Team

Rynkeby”, a charity cycling team that raise money for children with critical illnesses

• Engaging employees in

“Kræftens Bekæmpelse”, the Danish Cancer Society GOAL 7: Ensure access to affordable, reliable, sustainable and modern energy In 2013 Santander pioneered the All- in-One product suite in Finland, speeding up renewal of one of the

• ldest car parks in Europe

GOAL 13: Combat climate change and its impacts by regulating emissions and promoting developments in renewable energy SCB AS has partnered with CHOOOSE, a global leader in retiring carbon credits and a platform for climate action, battling emissions from big polluters

Through its general business activity and its community work, SCB AS directly contributes to the achievement of UN SDG 3, 4, 7, 13

Auto & Leisure Unsecured Insurance Deposits

Saving products with high interest rates provided to private customers Insurance products related to payment protection, auto, health and travel, offered to private customers Loans, credit cards and sales finance services

• ffered to private customers

Loans and financial services provided to private customers, SMEs and car dealers

Products

15

Gross outstanding loans and distribution by product

Total Auto and Unsecured

Source: SCB Group Q1 2020 Report and Management Figures

Auto SME

11%

Non Std. Auto

7%

Consumer Loan

18%

Credit Card

4%

Auto Private Persons

60%

Total Unsecured 21% Total Auto 79%

16

Auto market share and products

Position and market share in the Nordics¹

Source: Based on internal calculations by SCB

• Norway: Data from Finansieringsselskapenes Forening as per YTD Q1 2020
• Finland: Data from Finnish Transportation Safety Agency (Trafi) as per YTD Q1 2020
• Denmark: Data from Finans og Leasing as per YTD Q1 2020
• Sweden: Data from Finansbolagens Förening as YTD Q1 2020

#1

19%

market share

#1

27%

market share

#1

24%

market share

#4

9%

market share

17

Auto Loans & Hire Purchase

Customers

• Private Customers
• Business Customers

Distribution

• Online direct distribution
• Indirect distribution with

dealers and importers

• Cross sale

Auto Leasing

Customers

• Private Customers
• Business Customers

Distribution

• Dealers direct
• SME direct

Stock & Demo Financing

Customers

• Inventory financing for

dealers Distribution

• New cars: Importer

agreements

• Used Cars: Direct to

dealers

Responding to mobility trends through digital strategy

18

SHFT

A subscription marketplace for cars, powered by Santander. Cars provided by partner dealerships

eCOMMERCE

Quotation and checkout service connected to OEMs, dealerships and marketplaces

All In-1

Platorm to enable bundling of 3rd party services in one invoice to the customer

Ford credit acquisition

19

The acquisition represents an exclusive long term strategic partnership agreement (i.e. a White Label Agreement) and presents SCB with new

• pportunities through extended service offering for our customers and provides a major growth opportunity for our company across the Nordics

Source: SCB Management Figures 1) As per closing of the acquisition on 28 February

2.7

Million EUR Profit Before Tax

1.3

Billion EUR (Retail, Leasing & Wholesale) Outstanding portfolio

116

Across Nordics Employees1

5.7%

Average across Nordics Market share

Unsecured products and portfolio

Distribution of Unsecured portfolio¹

Source: SCB Group Q1 2020 Report 1) Gross outstanding loans

25%

9.9 Bn

21%

8.3 Bn

42%

16.9 Bn

12%

4.6 Bn

20

Sales finance Credit cards Direct loans

Distribution Online Stores Cross sale Portfolio Management Distribution Online Stores Cross sale Distribution Online Agents Cross sale

Partnerships are a key success factor

21

5,079 merchants 38 brokers +5,500 car dealers 22 brands

Financials

02

Q1 2020 | Santander Group key figures

23

Santander Group

Total assets 1.54 (€ trillion) Branches globally11,902 Headcount 194,948 Customers146 (million) Profit After Tax 1,977 (€ million)1

Santander Consumer Finance Subgroup

Loans 115 (€ billion) European countries15 Headcount 14,760 Customers 19 (million) Profit After Tax 336 (€ million)

Source: Banco Santander and Santander Consumer Finance Q1 2020 Institutional Presentation 1) Provisions overlay of EUR 1,600 million related to COVID-19 and restructuring costs not included.

Stable financial performance

4.4 4.4 4.7 5.3 4.9 4.6 4.6

2014 2015 2016 2017 2018 2019 Q1 2020

42 44 50 38 40 44 43

2014 2015 2016 2017 2018 2019 Q1 2020

1.7 1.8 2.7 3.0 2.8 2.2 1.7

2014 2015 2016 2017 2018 2019 Q1 2020

Return on Assets1

Per cent

Net Interest Income Ratio2

Per cent

Cost / Income Ratio3

Per cent

Source: SCB Annual Reports Reports (2014 – 2019) and Q1 2020 Report 1) ROA = PBT (annualized) / ANEA 2) NII Ratio = Net Interest Income (annualized) / ANEA 3) Cost/Income Ratio = OPEX / Gross Margin (OPEX: Total Operating Costs)

Normalised KPI’s as a results of higher growth in the Auto portfolio

24

NOK million Q1 2020 Q1 2019 Δ 19/18 Interest income and similar income 2 279 2 110 169 Interest expenses and similar expenses

• 379
• 340
• 39

Net interest income 1 900 1 770 130 Commissions and fees 72 121

• 49

Other product and funding related income and cost

• 90

29

• 119

Gross margin 1 882 1 920

• 38

Salaries and personnel expenses

• 378
• 339
• 39

Administrative expenses

• 386
• 382
• 4

Depreciations and amortisation

• 48
• 49

1 Net operating income 1 069 1 150

• 81

Other incomes and costs 162 11 151 Total losses on loans, guarantees etc.

• 523
• 361
• 162

Profit before tax 709 800

• 91

Income tax

• 72
• 198

126 Profit after tax 636 602 34

Group Income Statement summary

Key changes year-on-year

• Net Interest Income: improvement in interest income as a result
• f higher lending volumes and stronger SEK, DKK and EUR

against NOK

• Commissions and fees: The introduction of IDD in Denmark

(Danish: “Forsikringsdistributionsdirektivet”) has driven insurance sales lower

• Other product and funding related income and costs: Costs

increased due to FX exposures in SEK and DKK.

• Other income and costs: Increase related to recognition of a

purchase bargain gain of NOK 154 MM NOK from the Forso Nordic acquisition

• Total losses on loans: Increase is mainly driven by two factors,

losses recognized for the newly acquired portfolio in Forso Nordic and that losses in Q1 2019 were unusually low due to specific releases on Auto, making losses in Q1 2020 comparatively high

25

Source: SCB Group Q1 2020 Report

NOK million Q1 2020 Q4 2019 Δ 19/18 Deposits with external institutions 10 116 4 034 6 082 Loans to customers (net) 188 407 161 392 27 015 Other financial assets 9 545 11 604

• 2 059

Other assets 5 398 3 911 1 487 Total assets 213 466 180 941 32 525 Debt to credit institutions 48 801 30 174 18 627 Deposits from customers 72 764 65 484 7 280 Debt established by issuing securities 56 539 53 403 3 136 Other liabilities 4 733 4 368 365 Subordinated loan capital 2 566 2 421 145 Total equity 28 062 25 090 2 972 Total liabilities and equity 213 466 180 941 32 525

Group Balance Sheet summary

Source: SCB Group Q1 2020 Report

Key changes year-to-date

• Deposits with external institutions: Significant increase due to cash

placements in the Norwegian and Swedish Central banks, liquidity loan from central bank and cash buffer funded through intragroup loans

• Loans to customers: Growth driven by the Forso Nordic acquisition and

increased portfolios in Sweden and Finland as a result stronger SEK, DKK against NOK

• Other financial assets: Decrease as proceeds from liquidity portfolio has

been kept as cash buffer through Covid-19 crisis

• Other assets: Increase primarily due to recognition of Forso Nordic on

balance sheet

• Debt to credit institutions: The acquisition of Forso Nordic has been

funded primarily by intragroup loans from the parent Santander Consumer Finance S.A.

• Deposits from customers: Increase due to higher inflow caused by higher

market rates, but also due to the weakening of NOK

• Debt established by issuing securities: Net negative issuances, but

increased due to stronger SEK, DKK and EUR against NOK

26

Credit Risk Performance

Favourable product mix and stable customer behaviour

Risk Portfolio - Total (mNOK) 2017 2018 2019 Q1 2020 Current 136 821 92,2 % 150 284 92,5 % 152 639 91,8 % 168 264 92,2 % 5-30 dpd 6 806 4,6 % 7 258 4,5 % 7 090 4,3 % 6 612 3,6 % 31-60 dpd 1 329 0,9 % 1 218 0,7 % 1 495 0,9 % 1 557 0,9 % 61-90 dpd 510 0,3 % 462 0,3 % 672 0,4 % 710 0,4 % NPL 2 912 2,0 % 3 320 2,0 % 4 320 2,6 % 5 391 3,0 % Total 148 378 100,0 % 162 541 100,0 % 166 217 100,0 % 182 534 100,0 % Risk Portfolio - Secured (mNOK) 2017 2018 2019 Q1 2020 Current 106 859 93,9 % 119 752 93,9 % 121 727 93,6 % 134 309 94,0 % 5-30 dpd 4 787 4,2 % 5 389 4,2 % 5 311 4,1 % 5 035 3,5 % 31-60 dpd 753 0,7 % 691 0,5 % 917 0,7 % 1 028 0,7 % 61-90 dpd 231 0,2 % 226 0,2 % 365 0,3 % 401 0,3 % NPL 1 211 1,1 % 1 435 1,1 % 1 710 1,3 % 2 046 1,4 % Total 113 841 100,0 % 127 492 100,0 % 130 029 100,0 % 142 819 100,0 % Risk Portfolio - Unsecured (mNOK) 2017 2018 2019 Q1 20203 Current 29 963 86,8 % 30 532 87,1 % 30 912 85,4 % 33 955 85,5 % 5-30 dpd 2 019 5,8 % 1 869 5,3 % 1 780 4,9 % 1 577 4,0 % 31-60 dpd 576 1,7 % 526 1,5 % 578 1,6 % 529 1,3 % 61-90 dpd 279 0,8 % 237 0,7 % 308 0,9 % 309 0,8 % NPL 1 700 4,9 % 1 885 5,4 % 2 610 7,2 % 3 345 8,4 % Total 34 537 100,0 % 35 049 100,0 % 36 188 100,0 % 39 715 100,0 %

Source: SCB Group Risk Department 1) NPL ratio = Non-performing loans / Gross loans 2) Coverage Ratio = Loan Loss Reserves (Write Downs) / NPL 3) The increases in NPL ratio for unsecured is mainly due to the change in write-off policy in Sweden, Denmark and Finland during Oct 2018 and Norway in July 2019. The policy extends the time before contracts get written off from 180 to 720 days past due

NPL ratio1

Coverage ratio2

107.7 113.6 96.9 109.7 93.5 87.9

2015 2016 2017 2018 2019 Q1 2020

2.05 2.01 1.96 2.03 2.60 2.95

2015 2016 2017 2018 2019 Q1 2020

Capital and Funding

03

Capital requirements after reduction in CcB

Group CET1-ratio requirement from Dec-2019 to Dec-2020

29

Dec-2019

~11.6% Pillar 1 CET1- requirement 4.3% Pillar 2 CET1- requirement

~15.9% Minimum CET1 requirement 4.5% Conservation buffer 2.5% Countercyclical buffer 1.6% Systemic risk buffer 3% ~11.6% Pillar 2 Req. 3.3% Pillar 2 Guidance 1% ~4.3%

• 130 bps

Mar-2020

~10.3% Pillar 1 CET1- requirement 4.3% Pillar 2 CET1- requirement

~14.6% Minimum CET1 requirement 4.5% Conservation buffer 2.5% Countercyclical buffer 0.3% Systemic risk buffer 3% ~10.3% Pillar 2 Req. 3.3% Pillar 2 Guidance 1% ~4.3%

• 160 bps

Dec-2020

~8.7% Pillar 1 CET1- requirement 4.3% Pillar 2 CET1- requirement

~13.0% Minimum CET1 requirement 4.5% Conservation buffer 2.5% Countercyclical buffer 0.3% Systemic risk buffer 1.4% ~8.7% Pillar 2 Req. 3.3% Pillar 2 Guidance 1% ~4.3%

• Countercyclical buffer reduced from 1.6% to 0.3% in Mar-2020 as a result of the Covid-19 virus outbreak
• Capital requirements expected to be reduced with further 1.6% per 31.12.20 due to change in systemic risk buffer. Although systemic risk buffer (SRB) in Norway will

increase from 3% to 4.5%, the change will enable banks to use the buffer in the jurisdiction where it operates (forecasted year-end 2020 SRB in SW/DK/FI = 0%), thus reducing overall systemic risk buffer for SCB

Source: SCB Group Q1 2020 Report and Management figures

Strong capital adequacy

CET1 ratio of 16.7%

Source: SCB Group Q1 2020 Report

• NOK depreciation has impacted SCB’s capital ratios as most of

the equity is in NOK while risk weighted assets are in EUR, NOK, SEK and DKK. After the regulatory reduction of countercyclical buffer (“CCB”) and NOK strengthening end of March, the Group’s capital position is considered to be strong with 206 bps over the regulatory requirement for CET1.

• In order to ensure sufficient capital after the acquisition of Ford

Credit in February, no dividend payment from 2019 was proposed to the Board and the owner provided an increase in core equity of NOK 2 billion. Capital figures per Q1 2020 therefore include Ford Credit and the NOK 2 billion capital increase.

• In light of the coronavirus pandemic outbreak, regulators have

provided temporary capital relief to banks. The Norwegian FSA reduced the countercyclical buffer in Norway from 2.5% to 1%. For Sweden, Denmark and Finland, the CCB is set at 0%. The result for the Group was a reduction of 1.3% in CCB requirements (from 1.6% to 0.3%) from March 2020.

Phase-in capital ratios evolution SCB Group

Per cent 30

Q1 2020 Developments

15,5 15,7 18,1 16,7 17,5 17,6 20,0 18,2 19,1 19,0 22,0 20,0 12,0 12,0 13,1 12,1

2017 2018 2019 Q1 2020

CET 1 Tier 1 Tier 2 Leverage ratio

Self-funding is a strategic focus

Three pillars approach provides funding flexibility

22% 28% 50% 62% 70% 70% 77% 73% 80% 73%

2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020

Self-funding ratio

Source: SCB Group Q1 2020 Report 1) Outstanding amounts/transactions as per Q1 2020

• In Norway deposits are guaranteed up to NOK 2

million

• In EU countries the guarantee is up to EUR 100,000
• NOK 72.8 billion in total deposits across Norway,

Sweden and Denmark

Deposits

• NOK 7,000 million outstanding in the bond market

including NOK 750 million in Commercial Paper

• SEK 8,485 million outstanding in the bond market

including SEK 1,380 million in Commercial Paper and SEK 1,000 million in green bonds

• DKK 1,250 million outstanding in the bond market
• EUR 2,000 million outstanding from four benchmark

transactions

Unsecured

• 5 outstanding transactions across Nordics
• Represents a low-cost and stable funding source

Securitization

31

40,8 Bn

23 %

72,8 Bn

41 %

15,8 Bn

9 %

47,7 Bn

27 %

Unsecured Bonds Deposits Securitization Parent Funding

Funding Composition1

NOK billion

Deposits at a glance

Consolidated total balance: NOK 72.8 billion

32

Distribution of Deposit portfolio and products

35%

• f total balance
• Savings account

34%

• f total balance
• Savings account
• Notification product
• Term deposits (closed)

31%

• f total balance
• Savings account
• Notification product

N/A

Source: SCB Group Q1 2020 Report Deposit guarantees: Norway NOK 2 million | Sweden EUR 100,000 | Denmark EUR 100,000 equivalent 1) Weaker NOK against SEK and DKK contributes significantly to the Q1 2020 increase in deposit balance for Sweden and Denmark

Deposit balance development1

NOK billion

14.9 18.6 20.9 22.1 26.5 25,8 14.4 11.9 15.4 15.4 19.8 22,4 8.0 10.5 14.3 17.2 19.2 24,5

2015 2016 2017 2018 2019 Q1 2020

Norway Sweden Denmark

SCB AS Green Bond Framework

Defining an ambitious Framework, in line with best practices and standards

33

Use of Proceeds Rationale for issuing Green Bond Following best practice and latest market developments SCB AS Green Bond Framework description Project Evaluation and Selection Management of proceeds Reporting External Review

• Financing and / or refinancing of new and existing retail

loan and lease contracts for electric passenger vehicles (EVs only) SCB AS Green Bond Framework:

• Is in line with the ICMA Green Bond Principles 2018
• Follows the recommendations of draft EU Taxonomy and of CBI

Low Carbon Transport Standards

• Will be updated to reflect emerging good practices, such as the

EU Green Bond Standard SCB AS intends to:

• Align its sustainability strategy to its funding strategy
• Contribute to the development of a sustainable financial market,

while playing a role in the transition to a low carbon economy

• Contribute to the achievement of the UN SDGs
• Diversify the investor base targeting SRI and dark green

investors, while fostering the relationship with existing investors

• In accordance with the Eligibility Criteria and carried out

by the Green Bond Working Group (‘GBWG’)

• Green Bonds net proceeds managed in a portfolio

approach

• Allocation reporting annually until full allocation
• Pre-issuance impact reporting. Impact calculation by

expert consultant Multiconsult

• SPO by Sustainalytics and CBI Certification for the

upcoming transaction

• Auditor limited assurance report on the allocation report

SCB AS Green Bond Framework is aligned with ICMA GBP 2018 and Eligibility Criteria comply with the recommendation of the draft Technical Expert Group (TEG) report on the EU Taxonomy

Unsecured Senior & Commercial Paper Funding

Q1 2020 summary

Source: Bloomberg 1) Outstanding amounts as per Q1 2020

New Issuances Volume New Issuances # Taps # Maturities Outstanding Volume¹ Outstanding bonds/CP’s # Format Issued Tenor

• 1,091 million

6,250 million 8 FRN

• 1,000 million

1 (Green)

• 1,000 million

7,105 million 9 (1 Green) FRN 3,25 year 500 million 1

• 500 million

2,000 million 4 FXD 5 year

NOK SEK EUR

• 1,250 million

2 FRN

• DKK

2020

250 million 1

• 250 million

750 million 4 FXD 6 - 6,5 months

NOK

880 million 9

• 820 million

1,380 million 12 FXD 3 – 6 months

SEK

Senior Unsecured Commercial Paper

34

35

Unsecured Funding

Maturity profile Q1 2020 – 2025 for Senior Unsecured and Commercial Paper

Total Maturity

(EUR MM)

124 115 248 111 125 204 145 204 91 500 500 500 500 67 100

2020 2021 2022 2023 2024 2025

DKK EUR SEK NOK

500 500 500 500

2020 2021 2022 2023 2024 2025

1,450 1 350 2 900 1 300

2020 2021 2022 2023 2024 2025

Commercial Paper Senior

2 250 1 605 2,250 1000 1,380

2020 2021 2022 2023 2024 2025

Commercial Paper Senior Green Senior

NOK million SEK million EUR million

Source: Bloomberg, Management Figures (outstanding amounts as per Q1 2020) FX: EURNOK 11.6888 | EURSEK 11.0375 | EURDKK 7.4667

500 750

2020 2021 2022 2023 2024 2025

DKK million Total Maturity (EUR million)

Key takeaways

• Anchored by a global banking

franchise

• Sustained market leader in auto

and strengthening position through acquisitions

• Building out position in

unsecured space through new digital offerings and strong partnership

• Robust financial results
• Prudent credit risk

36

Appendix

Santander Group & Santander Consumer Finance

Section divider

04

Santander Group

39

Santander, a leading financial group

People le Custo stomers rs Commun uniti ities Shareh rehold lders ... ... resu sult ltin ing in hig igher r inve vest stment t in the community … ... which ich drive ives s profi fita tabil ilit ity y and susta stain inable le growth wth ... … more motivated and engaged emplo loye yees s ... ... make ke our r custo stomers s more re sati tisfi sfied and loya yal l ... To Tota tal l ass ssets ts (EUR billion) 1,540 Cust Customer l r loans s (EUR billion excluding reverse repos) 909 Cust Customer d r deposit sits s + mutu tual l funds s (EUR billion excluding repos) 923 Branch ches 11,9 ,902 Q1’20 Att ttrib ributa table profi rofit t (EUR million) 331 Q1’20 Underlyin rlying att ttrib ributa table profi rofit t (EUR million) 1,977 Market rket capit itali lisati tion (EUR billion; 31-03-20) 37 37 People (headcount) 194,9 ,948 Cust Customers rs (millions) 146 Share reholders rs (millions) 4.0 Comm Communit ities s in in 2019 (million people financially empowered) 2.0 Q1’20 Highli lights ts

Our strategy is built around a virtuous circle based on loyalty

Simple Personal Fair

40

Geographic diversification in three regions

With a good balance between mature and developing markets

Spain; 14% SCF; 12% UK; 8% Portugal; 5% Poland; 2% US; 11% Mexico; 10% Other South America; 2% Argentina; 2% Chile; 5% Brazil; 29%

41% 41% 38% 38% 21% 21%

Europ rope Sout uth Americ erica Nort rth Americ erica

2

Contributio ion to Q1’20 underlyin ing attribu buta tabl ble profit1

Customer stomer lo loans ns Customer stomer funds ds

72% 14% 14%

Europ

• pe

South h Ameri erica ca North h Ameri erica ca

70% 16% 13%

Europe

• pe

South h Ameri erica ca North h Ameri erica ca

Hig igher er exposur

• sure in

in Europe,

• pe, great

ater r

• pport

rtunity unity to grow

• w in

in the Ameri ricas cas Well ll-bala balanced nced profit it dis istribution ibution between een Europe

• pe and the Ameri

ricas. cas. SCIB and

and WM&I contr tribut ibution: ion: 30%

Mar Mar-20 Group’s contribution3 by regions ns

SGP 1%

Note: customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds SCF excluding SCUK 1. As a % of operating areas, excluding Corporate Centre and Santander Global Platform 2. Uruguay, Peru and Colombia 3. As a percentage of operating areas

41

Business diversification among customer segments

(Individuals, SMEs, Corporates and Large Corporates)

Individuals demand deposits, 39% Individuals time deposits, 10% Individuals mutual funds, 12% Consumer, 4% SMEs, 10% Corporates, 14% SCIB, 11%

Custom

• mer

er funds funds

Custo stomer r funds s by busin siness, ss, Mar-20 20 Other individuals, 10% Home mortgages, 36% Consumer, 17% SMEs, 10% Corporates, 13% SCIB, 14%

Loans Loans

Custo stomer r loans s by busin siness, ss, Mar-20 20

Note: customer loans excluding reverse repos. Customer funds: customer deposits excluding repos + marketed mutual funds

Leadership position in its core markets with global reach backed by global businesses

Global lobal businesse esses s (SCIB and WM&I) Santa tand nder r Global al Platf tform rm We mainta ntain in a leaders rship hip positio tion in our 10 core markets kets

Top 3 auto auto finan ance 17% 17% Loans 19% 19% Deposit s 18% 18% Loans 16% 16% Deposit s 10% 10% Loans 8% Deposit s 12% 12% Loans 12% 12% Deposit s

Europe pe

3% 3% Loans 3% 3% Deposit s 13% 13% Loans 13% 13% Deposit s

Top 7 in reta tail l auto to lending ing

North th America ica

10% 10% Loans 10% 10% Deposit s 10% 10% Loans 12% 12% Deposit s 18% 18% Loans 17% 17% Deposit s

South th America ica Enabli ling ng greater ter collab aboratio ration across ss the Group p to generate rate higher r revenu nue and efficiencies iciencies

Marke ket t share res

SGP SGP

42

Market share data: as at Dec-19 and the US and SCF latest available. The UK: includes London Branch. Poland: including SCF business in

• Poland. The US: in all states where Santander Bank operates. Brazil: deposits including debenture, LCA (agribusiness notes), LCI (real estate

credit notes), financial bills (letras financeiras) and COE (certificates of structured operations)

43

Our strength and resilience of our model drives predictable and profitable growth

Pre-pr provision

• vision prof
• fit, EUR bn

bn EPS volat latili ility calc lcula ulated ed usin ing g quart arter erly ly data a from

• m Jan-99

99 to 20191

Net t profi fit t increa crease se 1999-2019

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

18 23 24 24 24 20 23 24 23 25 26 26

3,03% 3,28% 3,26% 3,25% 3,06% 2,94% 3,04% 2,90% 2,83% 2,97% 2,89% 2,80% 1,02%1,36% 1,40% 1,65% 2,44% 1,69%1,43% 1,25% 1,18% 1,07% 1,00% 1,00%

Cost of credi dit Pre-pr provision

• vision prof
• fit / lo

loans ns

Recurring pre-provision profit with the lowest earnings per share volatility

Source: Bloomberg, with GAAP criteria. Standard deviation of the quarterly EPS starting from the first available data since Jan-99

44

Santander Q1’20 Highlights

 Steady

dy growth th in volumes YoY (loans +7%, deposits +6%). Pick up in March: loans +EUR 26 bn and deposits +EUR 24 bn. New lending exceeded typical monthly levels, driven by corporates and SCIB

 Our digital product

cts s and services es have been more importan ant t than ever: strong quarterly increase in our digital custome mer r base (+1.5 mn) and digital sales stood at 43% of the total sales in March. Accesse sses s and transac acti tion

• ns

s grew +23% and +22% YoY

 The COVID-19 outbreak has caused an unprecedented worldwide

de health crisis. Today’s financial system is more resilient and banks are part of the solution to the current economic situation

 We have implemented specific

c measures es for each of our stakeho holder ders s to help protect our employees, customers, shareholders and investors, ensure business continuity and mitigate economic and social costs

 Q1’20 underlyi

ying ng attributa utabl ble profit of EUR 1,977 mn (+8% YoY), driven by increased revenue, cost control and stable cost of credit. Delivered a solid underlying ng RoTE of 11.1%

 Q1’20 attribu

butab table profit of EUR 331 mn, affected by a provision

• ns overlay

y of EUR 1,600 mn r related d to COVID ID-19 19

 Credit quality

y maintaine ned d in Q1’20: NPL ratio (3.25%), Coverage ratio (71%) and Cost of credit (1.00%)

 Mar-20

20 CET1 ratio: 11.58%. . Continued organic generation and dividend measures reinforced the ratio (+36 bps). However, significantly affected by strong increase in volumes, together with regulatory, corporate transactions and markets impacts

COVID ID-19 19 Growth wth Profitab fitabil ility ity Stren ength gth

Note: Changes in constant euros

45

Q1’20 underlying results continued to grow, marginally affected by the crisis

(1) In Q1’20: Provisions overlay EUR 1,600 mn related to COVID-19 and

restructuring costs and others of EUR 46 mn.

EUR R mn mn

Const nstant ant euros

• s

Euros

• s

Q1’20

% vs. Q1’19 1 832 1 975 2 056 2 007 1 977

Q1'19 Q2 Q3 Q4 Q1'20

Constant EUR mn

Underly lying ng attributable butable profit it

Attrib ributa table le profi fit

+8%

Net interest income 8,487

• 2

3 Net fee income 2,853

• 3

3 Customer revenue 11,340

• 2

3 Trading and other income 474 2 Total income 11,814

• 2

3 Operating expenses

• 5,577
• 3

1 Net operating income 6,237

• 1

5 Loan-loss provisions

• 2,309

6 12 Other results

• 372
• 21
• 17

Underlying PBT 3,556

• 3

3 Underlying attributable profit 1,977 1 8 Net capital gains and provisions1

• 1,646

— — Attributable profit 331

• 82
• 80

1,675 1,269 450 2,656 331

Note: Contribution to the SRF (net of tax) recorded in Q2’19 (EUR -162 mn). Contribution to the DGF in Spain (net of tax) in Q4’19 (EUR -160 mn)

46

Santander medium-term strategy

Based on three main pillars to drive profitable growth…

Improve prove

• perat

erating ing perform formance ance Acc ccele elerate rate dig igita itali lisati tion n throu

• ugh

gh Sant ntan ander er Glo lobal l Pla latform

• rm

Optimi imise se capital pital all llocati tion

47

Santander medium-term strategy

… doing business in a more responsible and sustainable way Su Sustai tainability Financial inclusion Co Commun unities Culture re 2.0 mn

people financially empowered

69 k

scholarships granted

1.6 mn

people helped through our community programmes Women en

40% Group Board 23% 23% Group leadership

(+2p 2pp p vs. 2018) 18)

EUR UR 277 mn

credit to microentrepreneurs3 (+73 73% vs. 2018 18)

EUR UR 1 bn bn

Santander first green bond issuance Engag gagem ement nt

86% of employees

proud to work for Santander (+1p 1pp p vs 2018 18)

EUR UR 19 bn bn

mobilised in Green finance

Dow Jones index2

Leader

Note: figures as of 2019 and changes on a YoY basis (2019 vs. 2018) 1. Dow Jones Sustainability index 2019 2. Microentrepreneurs are already included in the people financially empowered metric

48

The best t way to support rt our share areho holde ders rs is to prioritise the health and safety of our employees, help our customers and communities, and ensure a profitable business continuity We are conf nfide dent nt about ut our r stren rengt gths hs and busine ness model el to ease the COVID-19 impact on our business:

• Scal

ale: e: we maintain a leadership position in our 10 core markets (Top 3 bank in 9 of our 10 core markets)

• Customer
• mer focus:

us: 146 million of customers with a unique personal banking relationship

• Geogra

graph phic and busine ness divers rsifi ficat ation: n: makes us more resilient under adverse circumstances

• Digi

gital tal trans nsfor

• rma

mation: tion: continued execution of our plans to be the best open financial services platform is critical While it is too early to be conclusive about the macro and financial effects of the current health crisis, the pillars ars of our strat ateg egy remain ain uncha hang nged ed:

• Improving operating performance
• Optimising capital allocation to the regions and businesses that generate the highest returns
• Accelerating the Group’s digital transformation

Our stron

• ng

g pre-pr prov

• vision
• n prof
• fit across the cycle, combined with our resilient balance sheet and capital position, are the key levers

to manage the economic downturn. In addition, we are acti tivat ating ng mana nage gemen ent acti tion

• ns in revenue and costs

Santander key takeaways

05

Santander Consumer Finance

50

SCF is the European Leader in consumer finance industry

Ke Key Figu y Figures es Q1’20

Gross

• ss cu

customer l er loa

• ans

ns (EUR billion)

115 115

Custo ustomer de depo posi sits s (EUR billion)

39 39

20 2019 19 Und nderl erlying ng at attribu butable e pro profit (EUR million)

1,470 1,470

Q1’20 Underlying attributable pro profit (EUR million)

336 336

Con

• ntribu

bution

• n to SAN Group’s pro

profit1 (%)

12 12

Europea uropean n cou count ntries es (number)

15 15

Marke ket po posi sition

• ns

s

Top 3

Custo ustomers (millions)

>19 >19

PoS par partne ners s (thousand)

>130 >130

China Canada

Outstanding as of Mar’20 (%)

Operati rating ng in 17 countri ntries es throug ugh 13 banks s and more than 40 relevan vant t units

SCF Management perimeter, including SC UK. Source: SCF Management Control Mar’20 figures (1) SCF excluding SC UK. As % of Q1’20 SAN underlying attributable profit of operating areas excluding Corporate Centre and Santander Global Platform. Including SC UK, SCF represents 14% in Q1’20

51

Monoliner businesses: Auto and Consumer Lending

• >75.000

75.000 POS partners

• Long

Long-sta tand ndin ing g base of Europe pean n captiv ive agreeme ments nts (+110 agreements with more than 15 car and bike manufacturers)

• Captives provide SCF with recurr

urrent nt volumes mes and better risk quality ty (first option financial provider)

• Captive

e business ess represe esents ts >60% of total auto PAT, multiplied x3 in the last five years.

• Model transforma

formati tion

• n based on digitaliz

lizatio tion, n, evolving to a customer centric and analytical business with enhanced propositions, optimized capabilities and lean cost basis

• >55.000 POS partners

Auto to 75% 75%

Non-Auto 25%

Consu sumer 18% 18%

Auto 75%

Others1 7% Direct 69% Cards 15% Durables 16%

New 51% Used 33% Stock Financ e 16%

SCF Auto portf tfoli lio breakd kdown & key figure res SCF Consume umer r portf tfolio

• lio breakdown

kdown & key figures res

Management Control Perimeter, including SC UK. Source: SCF Management Control.

• 1. Others: mainly mortgages

Total l SCF outstanding: 115 115 bn bn€ (Mar’20) Total l SCF outstanding: 115 115 bn bn€ (Mar’20)

52

Outperforming Pan-European Peers in all relevant metrics in 2019…

2,19% 9% 1,02% 2% 1,51% 1% 921 921 1 602 602 2 428 428 116 116 107 107* 92 92*

SCF business mix focused on Auto

42,46% 46% 43,78% 78% 48,94% 94%

Profit fit before

• re taxes

(as of 2019, mn€)

ROA (PBT/Ave

/Avera rage Outst tstandin ing as of FY19,%) ,%)

Outst stand nding ng

(as of 2019, , bn bn€) Non- Auto Auto

Effi ficie ciency cy (Cost

st-to to- Inco come as of FY19, %)

Compet petit itor 1 Compet petit itor 2

Source: SCF Management Control Perimeter, including SC UK. BNP Personal Finance and CA Consumer Finance public accounts ('Equity-Method/ Affiliates” reported after gross margin reclassified for comparative purposes with SCF). * Non-Auto business of BNP PF of >40 bn€, not including home loans of c.20 bn and CACF c.27 bn€, figures as of 2018.

53

138 138 113 113 575 575

Compet petit itor 1 Compet petit itor 2 SCF business mix focused on Auto

0,41%

… and in Q1’20

Profit fit before

• re taxes

(as of Q1’20, mn€)

ROA (PBT/Ave

/Avera rage Outst tstandin ing as of Q1’20,%)

Outst stand nding ng

(as of Q1’20, bn bn€) Non- Auto Auto

Effi ficie ciency cy (Cost

st-to to- Inco come as of Q1’20, %) %)

Source: SCF Management Control Perimeter, including SC UK. BNP Personal Finance and CA Consumer Finance public accounts ('Equity-Method/ Affiliates” reported after gross margin reclassified for comparative purposes with SCF). * Non-Auto business of BNP PF of >40 bn€, not including home loans of c.20 bn and CACF c.27 bn€, figures as of 2018.

115 115 110* 110* 91* 91* 42,96% 48,84% 53,10% 1,99% 0,60%

54

Key contributor to SAN results in Q1’20

Contribution to Q1’20 underlying attributable profit 1

Spain; 14%

SCF; ; 12% 12% 2

UK; 8% Portugal; 5% Poland; 2% US; 11% Mexico; 10% Other South America; 2% Argentina; 2% Chile; 5% Brazil; 29%

41% 41% 38% 38% 21% 21%

Europ rope Sout uth Americ erica Nort rth Americ erica

(1) As % of Q1’20 SAN underlying attributable profit of operating areas excluding Corporate Centre and Santander Global Platform. (2) SCF excluding SC UK. Including SC UK, SCF represents 14% in Q1’20.

55

Healthy risk performance, better than peers average

4,56% 4,56% 6,26% 6,26% 4,09% 4,57% 4,57% 2,34% 2,34% 2,12% 2,12% 2,11%2,19%

Cost of Risk (LLPs over ANEAS %) NPL Ratio

• (%)

1,73% 1,73% 2,53% 2,53% 0,33% 0,33% 0,39% 0,46% 0,46% 0,65% 0,65% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q'20

SCF Key risk metri rics cs

Management Control Perimeter, including SC UK.

• Ris

isk k KP KPIs better er than sector tor averag erage

• Strong capacity

pacity to bala lance nce adve verse se econ

• nomic
• mic cyc

ycles les across geographies

• Low

w cos

• st of ris

isk, despite important increase in SCF’s loan portfolio

• Adaptatio

ptation of risk management for the growing dig igita ital l business while being involved in the ecos

• sys

ystem em pla latfor

• rms initiatives.

56

Diversified funding structure

Reta tail il Deposit sits 29% 29% Non Retail l Deposit sits 4% 4% Secu cured red fundin ing 12% 12% ECB 10% 10% Inte terba rbank 18% 18% ECPs s & Pagares res 8% 8% MTNs & other r M/L Term Unsc. c. 18% 18% T2 & T3 2% 2% As of Mar’20

SCF’s funding structure (%)

Management Control Perimeter, including SC UK.

• High div

ivers ersific ificat ation ion of funding sources

• Capacity to do is

issuances uances in in a all ll coun untries ries

• Div

iver ersi sifica ication ion of deposits posits: different initiatives to develop retail deposits

• Increasing lo

long-term erm fin inance nce vs short term

57

Solid capital position

• So

Sound nd capital pital ratio

• Adequate to its ris

isks, ks, mar arket kets s and d regu gulat latory

• ry requir

quireme ments nts

• SCF strong performance

results in steady ady capit pital al gener nerat ation ion

SCF S.A. Legal Perimeter

SCF CET1 1 Fully lly-Lo Load aded ed Ratio tio (%)

Dec'14 Dec'15 Dec'16 Dec'17 Dec'18 Dec'19 Mar'20

10,64 12,18 11,88 12,04 12,28 12,54 12,62 12,62

58

Clear Strategic Priorities

 Present

ent in 15 European

• pean countr

ntries ies

 Monol

• liner

iner businesses nesses with c. 130, 0,000 000 point nt of sale e partner ners

‐ Auto (c. 75,000 POS): Long-standing base of European captive agreements (>110) with several OEMs ‐ Non-Aut Auto (c. 55,000 PoS): Agreements with main retailers chains, model evolution based on digitalisation

 More than

n 19 million ion custom tomers ers and more 19 million ion existing ting loan n contra racts ts in 2019 Top Employ loyer er Europe

• pe 2020

2020

(SC Austria, SC Belgium, SC Germany, SC Italy, SC Netherlands, SC Poland)

Best Place ce to to Work

(Denmark)

STRATEGI ATEGIC PRIORITIES ORITIES Prov Provide ide bes best service rvice to to ou

• ur au

auto to pa partne rtners, rs, OEM EMs and and car dea deale lers, rs, via ia di digi gital tal pro roje jects ts to to suppo upport rt

• u
• ur deale

dealers rs &brands brands with with thei their trans transfor formation mation plans ns Reinfor force our

• ur posit

ition ion in in cons nsumer umer financ ance and and e-com

• mmer
• merce. SCF digital

ital busines iness model el conv nver erging ging on

• n-line

ne and and off

• ff-line

ine payments ents and and financ ncing ing to to supp ppor

• rt our
• ur merchant

hant partners ners Simpli plificati fication,

• n, digitali

talisat ation ion & transform

• rmati

ation

• n

projec ects ts to to maxim imise ise efficienc iency and and customer

• mer

experi erienc ence

SCF

Management Control Perimeter, including SC UK.

59

Doing business in a responsible and sustainable way

Sustaina tainabil ilit ity SEK 1 bn bn Santander

Consumer Finance’s first green bond issuance

>15 k Electric and hybrid vehicles

financed Q1 2020 Our green

n financ nce e offer r includes:

financing of electric vehicles, electric chargers, solar panels, green heating systems… 3-year agreement with Technical University of Munich for a research project that will investigate the future

e of mobili lity ty and how a greener attitude will

affect car ownership and finance. Women

26% SCF Boards

Engagement t

74% of employees

proud to work for Santander

Cu Cult lture re

Plans in place in all 16 units to improve

Global al Engagem gagement ent Survey rvey results

and share best practices.

Gender er diversi ersity ty considered in talent

succession plans to improve Women In Senior Positions metric in the 2020–2025 period.

Co Communi unities ies 861 8611

scholarships granted in Germany

92 k

people helped through our community programmes

Note: figures as of 2019 (1) Santander Universities is only present in Santander Consumer Germany

Our purpose is to help people and business prosper. Our culture is based on believing that everything we do should be:

Thank You.

Nordics