Presentation Santander Consumer Bank Nordic Group August 2020 - - PowerPoint PPT Presentation

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Santander Consumer Bank Nordic Group

August 2020

Q2 2020 Investor Presentation

• 1. SCB Nordic Overview Q2 2020
• 2. Financials Q2 2020
• 3. Capital and Funding Q2 2020
• 4. Appendix: Santander Group
• 5. Appendix: Santander Consumer Finance

2

Index

SCB Nordic Overview Q2 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 1,500 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 Q2 2020 Report and Management Figures 1) Adjusted for IFRS9 transitional rules 2) Compared against PBT Q2 2019 3) Based on Q2 2020 management figures 4) NII Ratio = Net Interest Income (annualized) / ANEA

Key Figures

Gross Outstanding Loans

183.3

NOK Billion People

1,522

Employees Core Capital CET11

17.5

Per cent Customers3

1.64

Million Total Deposit

75.4

NOK Billion Net Interest Income Ratio4

4.4

per cent Profit Before Tax

1,566

NOK Million Partners

4,869

Merchants

+5,500

Car Dealers

6

Q2 2020 (vs. Q4 2019)

(+11.4%) (-64bps) (+15.2%) (-32.3%)2 (+75) (-4bps)

83 322 118 991 127 852 147 970 162 802 165 331 184 252

2014 2015 2016 2017 2018 2019 Q2 2020

Loan growth in the Nordics

Source: SCB Annual Reports Reports (2014 – 2019) and Q2 2020 Report 1) Compound Annual Growth Rate 2014 – Q2 2020

7

mNOK

CAGR1 16%

mNOK mNOK mNOK mNOK mNOK mNOK

1 321 1 942 3 250 3 995 4 134 3 611 1 566

2014 2015 2016 2017 2018 2019 H1 2020 mNOK

Solid profitability

Source: SCB Annual Reports Reports (2014 – 2019) and Q2 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 Q2 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 H1 2020 Results

184.3 Bn

Gross Outstanding

1 599 MM

Profit Before Tax

Auto loans: 50.0 Bn Unsecured loans: 8.9 Bn Profit before tax: 604 MM Auto loans: 36.2 .2 Bn Bn Unsecured loans: 7.6 Bn Bn Profit before tax: 342 MM MM Auto loans: 36 36.7 .7 Bn Bn Unsecured loans: 16.4 .4 Bn Bn Profit before tax: 307 MM MM Auto loans: 38 38.4 .4 Bn Bn Unsecured loans: 4.6 Bn Bn Profit before tax: 173 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

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 Q2 2020 Report and Management Figures

Auto SME

12%

Non Std. Auto

7%

Consumer Loan

18%

Credit Card

3%

Auto Private Persons

60%

Total Unsecured 20% Total Auto 80%

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 Q2 2020
• Finland: Data from Finnish Transportation Safety Agency (Trafi) as per YTD Q2 2020
• Denmark: Data from Finans og Leasing as per YTD Q2 2020
• Sweden: Data from Finansbolagens Förening as YTD Q2 2020

#1

21%

market share

#1

28%

market share

#1

25%

market share

#4

10%

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

Source: SCB Management Figures

9.0

Million EUR Profit Before Tax

730

Million EUR (Retail & Leasing) Outstanding portfolio1

74

Across Nordics Employees

6.5%

Average across Nordics Market share

Unsecured products and portfolio

Distribution of Unsecured portfolio¹

Source: SCB Group Q2 2020 Report 1) Gross outstanding loans

24%

8.9 Bn

20%

7.6 Bn

44%

16.4 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

4,869 merchants 34 brokers +5,500 car dealers 22 brands

Financials

02

Q2 2020 | Santander Group key figures

23

Santander Group

Total assets 1.57 (€ trillion) Branches globally11,847 Headcount 194,284 Customers146 (million) Profit After Tax 1,908 (€ million)

Santander Consumer Finance Subgroup

Loans 114 (€ billion) European countries15 Headcount 14,628 Customers 19 (million) Profit After Tax 545 (€ million)

Source: Banco Santander and Santander Consumer Finance Q2 2020 Institutional Presentation

Stable financial performance

4.4 4.4 4.7 5.3 4.9 4.6 4.4

2014 2015 2016 2017 2018 2019 H1 2020

42 44 50 38 40 44 42

2014 2015 2016 2017 2018 2019 H1 2020

1.7 1.8 2.7 3.0 2.8 2.2 1.8

2014 2015 2016 2017 2018 2019 H1 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 Q2 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

Group Income Statement summary

Key changes year-on-year

• Net Interest Income: Improvement in interest income as a result
• f a larger outstanding portfolio of loans to customers due to the

acquired Forso Nordic portfolio 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 detrition of

credit quality in some portfolios, losses recognized both for Covid- 19 and for the newly acquired Forso Nordic portfolio, as well as lower gains on bad debt sale transactions compared to last year.

25

Source: SCB Group Q2 2020 Report

NOK million Q2 2020 Q2 2019 Δ 20/19 Interest income and similar income 4 596 4 237 359 Interest expenses and similar expenses

• 739
• 697
• 42

Net interest income 3 857 3 541 317 Commissions and fees 127 208

• 81

Other product and funding related income and cost

• 87

48

• 135

Gross margin 3 897 3 796 101 Salaries and personnel expenses

• 720
• 703
• 17

Administrative expenses

• 838
• 794
• 44

Depreciations and amortisation

• 96
• 100

4 Net operating income 2 243 2 199 44 Other incomes and costs 154 16 138 Total losses on loans, guarantees etc.

• 831

99

• 930

Profit before tax 1 566 2 314

• 748

Income tax

• 312
• 552

240 Profit after tax 1 254 1 762

• 508

Group Balance Sheet summary

Source: SCB Group Q2 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.

• 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. Capital

Markets issuances have been limited in Q2 due to the Covid-19.

26

NOK million Q2 2020 Q4 2019 Δ 20/19 Deposits with external institutions 11 865 4 034 7 831 Loans to customers (net) 179 901 161 392 18 509 Other financial assets 6 551 11 604

• 5 053

Other assets 5 135 3 911 1 224 Total assets 203 452 180 941 22 511 Debt to credit institutions 41 035 30 174 10 861 Deposits from customers 75 436 65 484 9 952 Debt established by issuing securities 50 933 53 403

• 2 470

Other liabilities 5 030 4 368 662 Subordinated loan capital 2 560 2 421 139 Total equity 28 458 25 090 3 368 Total liabilities and equity 203 452 180 941 22 511

Credit Risk Performance

Favourable product mix and stable customer behaviour

Risk Portfolio - Total (mNOK) 2017 2018 2019 Q2 2020 Current 136 821 92,2 % 150 284 92,5 % 152 639 91,8 % 174 133 93,5 % 5-30 dpd 6 806 4,6 % 7 258 4,5 % 7 090 4,3 % 5 546 3,0 % 31-60 dpd 1 329 0,9 % 1 218 0,7 % 1 495 0,9 % 1 249 0,7 % 61-90 dpd 510 0,3 % 462 0,3 % 672 0,4 % 581 0,3 % NPL 2 912 2,0 % 3 320 2,0 % 4 320 2,6 % 4 710 2,5 % Total 148 378 100,0 % 162 541 100,0 % 166 217 100,0 % 186 219 100,0 % Risk Portfolio - Secured (mNOK) 2017 2018 2019 Q2 2020 Current 106 859 93,9 % 119 752 93,9 % 121 727 93,6 % 140 797 95,0 % 5-30 dpd 4 787 4,2 % 5 389 4,2 % 5 311 4,1 % 4 221 2,8 % 31-60 dpd 753 0,7 % 691 0,5 % 917 0,7 % 820 0,6 % 61-90 dpd 231 0,2 % 226 0,2 % 365 0,3 % 329 0,2 % NPL 1 211 1,1 % 1 435 1,1 % 1 710 1,3 % 2 117 1,4 % Total 113 841 100,0 % 127 492 100,0 % 130 029 100,0 % 148 284 100,0 % Risk Portfolio - Unsecured (mNOK) 2017 2018 2019 Q2 2020 Current 29 963 86,8 % 30 532 87,1 % 30 912 85,4 % 33 336 87,9 % 5-30 dpd 2 019 5,8 % 1 869 5,3 % 1 780 4,9 % 1 325 3,5 % 31-60 dpd 576 1,7 % 526 1,5 % 578 1,6 % 428 1,1 % 61-90 dpd 279 0,8 % 237 0,7 % 308 0,9 % 252 0,7 % NPL 1 700 4,9 % 1 885 5,4 % 2 610 7,2 % 2 593 6,8 % 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 92.8

2015 2016 2017 2018 2019 Q2 2020

2.05 2.01 1.96 2.03 2.60 2.53

2015 2016 2017 2018 2019 Q2 2020

27

Capital and Funding

03

Capital requirements remain unchanged from Q1

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

Jun-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%

• Capital requirements remain unchanged since March-2020 when regulators decreased the countercyclical buffer requirement (CCyB) in light of the COVID-19 outbreak. The impact for

the Group was a reduction in CCyB from 1.6% to 0.3%.

• Capital requirements are expected to be reduced with further 1.6% per 31.12.20 due to the change in systemic risk buffer (SRB) in Norway that will enable banks to use the buffer in the

jurisdiction where it operates. The change is still not approved by the EU and there is a risk that it might be delayed. In such a scenario, SRB requirements are likely to remain unchanged at 3% at 2020 year-end.

Source: SCB Group Q2 2020 Report and Management figures

Solid capital adequacy

CET1 ratio of 17.5%

Source: SCB Group Q2 2020 Report

• The Group had per June 2020 a solid capital adequacy position with a

good margin of 288 bps over the regulatory requirement for CET1 (14.6%). CET1 has improved since Q1 2020 especially due to volume reduction and NOK strengthening as most of the equity is in NOK while RWA is in EUR, NOK, SEK and DKK. Profit for Q2 2020 has not been audited and therefore was not included in the CET1 capital.

• The Norwegian FSA has announced that it will not make new Pillar 2

decisions in the second half of 2020 (which would be applicable for 2021), unless special circumstances are identified indicating an increased need for capital.

• Change to the systemic risk buffer requirement, which is expected to

take place from year end 2020, will enable banks to use the buffer requirements in the jurisdictions where it operates. With operations in the Nordic countries, this will result in lower capital requirements for SCB Group.

• No dividend from 2019 has so far been paid in 2020 but this may be re-

assessed in Q4 2020. Such assessment will place particular emphasis

• n the importance of a solid capital situation in light of the COVID

pandemic and guidelines from regulators.

Phase-in capital ratios evolution SCB Group

Per cent 30

Q2 2020 developments

15.7 18.1 16.6 17.5 17.6 20.0 18.2 19.1 19.0 22.0 20.0 21.0 12.0 13.1 12.1 12.3

2018 2019 Q1 2020 Q2 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% 76%

2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2 2020

Self-funding ratio

Source: SCB Group Q2 2020 Report 1) Outstanding amounts/transactions as per Q2 2020

• In Norway deposits are guaranteed up to NOK 2

million

• In EU countries the guarantee is up to EUR 100,000
• NOK 75.4 billion in total deposits across Norway,

Sweden and Denmark

Deposits

• NOK 6,500 million outstanding in the bond market

including NOK 250 million in Commercial Paper

• SEK 7,645 million outstanding in the bond market

including SEK 540 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

38,0 Bn

23 %

75,4 Bn

45 %

13,0 Bn

8 %

40,7 Bn

24 %

Unsecured Bonds Deposits Securitization Parent Funding

Funding Composition1

NOK billion

Deposits at a glance

Consolidated total balance: NOK 75.4 billion

32

Distribution of Deposit portfolio and products

36%

• f total balance
• Savings account

33%

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

31%

• f total balance
• Savings account
• Notification product

N/A

Source: SCB Group Q2 2020 Report Deposit guarantees: Norway NOK 2 million | Sweden EUR 100,000 equivalent | Denmark EUR 100,000 equivalent 1) Weaker NOK against SEK and DKK contributes significantly to the Q2 2020 increase in deposit balance for Sweden and Denmark

Deposit balance development1

NOK billion

14.9 18.6 20.9 22.1 26.5 27.2 14.4 11.9 15.4 15.4 19.8 23.3 8.0 10.5 14.3 17.2 19.2 24.9

2015 2016 2017 2018 2019 Q2 2020

Norway Sweden Denmark

SCB 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 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 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 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

2020 summary

Source: Bloomberg 1) Outstanding amounts as per H1 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

• 1250 million

2 FRN

• DKK

2020

250 million 1

• 750 million

250 million 1 FXD 6,5 months

NOK

1,030 million 12

• 1,810 million

540 million 7 FXD 3 – 6 months

SEK

Senior Unsecured Commercial Paper

34

35

Unsecured Funding

Maturity profile H1 2020 – 2025 for Senior Unsecured and Commercial Paper

Total Maturity

(EUR MM)

88 125 267 120 52 215 154 215 96 500 500 500 500 67 101

2020 2021 2022 2023 2024 2025

DKK EUR SEK NOK

500 500 500 500

2020 2021 2022 2023 2024 2025

950 1 350 2 900 1 300

2020 2021 2022 2023 2024 2025

Commercial Paper Senior

2 250 1 605 2,250 1000 540

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 H1 2020) FX: EURNOK 10.8428 | EURSEK 10.4525 | EURDKK 7.4535

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) 1,573 Loans s and advance ces s to custo stomers rs (EUR billion) 935 Cust Customer r deposit sits s (EUR billion) 847 Bran anche ches 11, 1,84 847 H1’20 Underlying attributable profit (EUR million) 1,908 Market rket capit itali lisati tion (EUR billion) 36 36 People (headcount) 194,2 ,284 Cust ustomers

• mers (millions)

146 46 Share reholders rs (millions) 4.1 Comm Communit ities s in in 2019 (million people financially empowered) 2.0 H1’20 Highlights

Our strategy is built around a virtuous circle based on loyalty

Simple Personal Fair

40

Geographic and business diversification

YoY changes in constant euros Underlying profit contribution excludes Corporate Centre (EUR -1,125 mn) and Santander Global Platform. South America’s weight includes Uruguay & Andean Region (EUR 96 mn)

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 tain in a leadersh rship ip 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 greater ter collabora ratio tion across ss the Group to generate rate higher r revenue nue and efficie iciencie ncies

Marke ket t share ares

SGP SGP

41

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)

42

Santander H1’20 Highlights

Note: Changes in constant euros (1) In real terms (2) Data applying the IFRS 9 transitional arrangements (3) Subject to the normalisation of market conditions and regulatory guidance and approvals

43

Strong net operating income performance (+2% in constant euros), though profit affected by COVID-19 related provisions

(1) Provisions overlay in Q1 was included in the net capital gains and provisions line, but has now been allocated by country in this line (LLPs). (2) Excluding net capital gains and provisions

44

Net capital gains and provisions

Note: Data in EUR mn (1) PPI: Payment protection insurance

45

Capital ratios reinforced with Group CET1 of 11.84%, at the top end

• f our

11-12% target, after strong organic capital generation in the quarter

(1) Accrual of 6 basis points in the quarter to allow the flexibility to pay a cash dividend against 2020 results, as soon as market conditions normalise and subject to regulatory approvals and guidance. (2) Includes Ebury -0.05 (3) Markets -0.08, Pensions -0.06 and other deductions -0.05 Data applying the IFRS 9 transitional arrangements

46

Key takeaways

In the first half, we have grown our net operating income by 2% and CET1 to 11.84%, at the top end of our 11-12% target range

Note: Changes in constant euros (1) Subject to the normalisation of market conditions and regulatory guidance and approvals

47

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

48

Santander medium-term strategy

… doing business in a more responsible and sustainable way Sustaina tainabil ilit ity Fina inancial ial inc inclus lusion ion Co Communi unities ies Cult lture 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

05

Santander Consumer Finance

50

SCF is the European Leader in consumer finance industry

Ke Key Fig y Figur ures es H1’20

Lo Loan ans s (EUR billion)

114 114

Dep eposi

• 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

H1’20 Underlying attributable pro profit (EUR million)

545 545

Con

• ntribu

bution

• n to SAN Group’s pro

profit1 (%)

15 15

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 Jun’20 (%)

Prese sence nce in 17 countri tries es

SCF Management perimeter, including SC UK. Source: SCF Management Control Jun’20 figures (1) SCF excluding SC UK. As % of H1’20 SAN underlying attributable profit of operating areas excluding Corporate Centre and Santander Global Platform. Including SC UK, SCF represents 18% in H1’20

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

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: 114 114 bn bn€ (Jun’20) Total l SCF outstanding: 114 114 bn bn€ (Jun’20) Auto to 75% 75% Non- Auto 25% New 52% Used 33% Stock Finance 15% Consu nsumer 18% 18% Auto 75%

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

52

Outperforming Pan-European Peers in all relevant metrics

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).

53

Key contributor to SAN results in H1’20

Contrib ributi ution

• n to H1’20 underl

rlyin ying attrib ributa utable ble profit fit 1

Spain; 8%

SCF; ; 15% 15% 2

UK; 5% Portugal; 5% Poland; 2% US; 7% Mexico; 13% Other South America; 3% Argentina; 4% Chile; 6% Brazil; 32%

35% 35% 45% 45% 20% 20%

Europ rope Sout uth Americ erica Nort rth Americ erica

(1) As % of H1’20 SAN underlying attributable profit of operating areas excluding Corporate Centre and Santander Global Platform. (2) SCF excluding SC UK. Includ uding SC UK, SCF represents nts 18% in H1’20.

54

Healthy risk performance, better than peers average

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.

4,56% 4,56% 6,26% 6,26% 4,09% 4,57% 4,57% 2,34% 2,34% 2,12% 2,12% 2,11% 2,11%2,33% 2,33%

Cost of Risk (LLPs over ANEAS %) NPL L Ratio io (%)

1,73% 1,73% 2,53% 2,53% 0,33% 0,33% 0,39% 0,39% 0,46% 0,46% 0,94% 0,94% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H'20

55

Diversified funding structure

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

Reta tail il Depo posits sits 30% 30% Non Retail l Deposit sits 4% 4% Secured cured fund ndin ing 12% 12% ECB 10% 10% Inte terba rbank 17% 17% ECPs s & Pagares res 6% 6% MTNs & other r M/L Tern Unsc.

• c. Iss.

18% 18% T2 & T3 2% 2% As of Jun’20

56

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 Jun'20

10,64 12,18 11,88 12,04 12,28 12,54 13,13

57

Sustaina tainabil ilit ity SEK 1 bn bn Santander

Consumer Finance’s first green bond issuance

>25 k k Electric and hybrid vehicles

financed H1 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

SCF does business in a responsible and sustainable way

Lower volu

lumes es and Incom

• me:

e:

• New

w business ness June YTD D -21% % vs 2019

• Fees (-17%)

7%) and Gross

• ss Margin

in (-2%) 2%)

Hi

Higher LLPs: s:

• LLPs increa

ease e due to higher entries ies in non-performin forming of irregula ular custome

• mers

Lower volu

lumes es and hig igher LLPs partially ially compensat mpensated ed by aggres essiv ive e cost

• st reduct

uctio ions ns:

• OPEX better than in 2019:

2019: -5% 5%

NAP decre

reas asin ing g -30% % vs 2019

SCF Management perimeter, including SCUK. Figures provided by SCF Management Control.

J une YTD 2020 J une YTD 2019 Variation

2020/2019

• I. VOLUME

S New Business (w/o SF) 19.327 24.367

• 21%
• II. P&L

Net Interest Income 2.079 2.052 1% Net fees and commissions 351 422

• 17%

Gross Margin 2.445 2.492

• 2%

Operating Expenses

• 1.036
• 1.091
• 5%

Net Operating Inc

• me

1.409 1.400 +1% Net L

• an-L
• ss Provisions
• 530
• 194

> x2 Profit After Taxes 691 892

• 23%

Net Attributable Profit (Ordinary) 545 736

• 26%

Net Attributable Profit 517 736

• 30%

SCF’s June 2020 YTD Results: COVID-19 impact being paid

58

59

COVID-19 crisis impacts in SCF

* SCF excluding SCUK as of public accounts

In In H1 2020, new ew business ss fell by 18%* %* compared to the same period one year ago, however the stock k of credit rose.

 The largest falls in SCF’s new lending were recorded in Portugal (-46%),

, Spain (-38%), Poland d (-27%) and Italy (- 28%), countries more affected in the quarter by the isolation measures and decreased activity.

 Northern

ern European ean markets ts behaved ed much better r than Southern ern Europe, e, as the levels of economic lockdown were

• softer. In Germany new lending fell 6% and in the Nordic countries fell 11% in local currency.

 China, the first country

ry affecte cted, d, recover ered ed its usual levels in A April and now is maintaining productions well above those of last year.

 Italy,

, the first European country impacted by the coronavirus, after 14 weeks s had levels of producti ction n in l line with last

• year. The Spanish

h market is catching ng up though still showing weak behaviour. Ongoing g SCF business ss initiative ves s to stay close to custom

• mer

ers: s: OEMs, dealers, retailers and retail customers by offering them tailored refinancing alternatives to improve their payment affordability.

COVID ID-19 19 Consume umer r Busine ness ss Impact act H1’2020 business ness impacts cts

• n SCF countri

ntries es

 All markets

ts in which SCF operates es have been significa cantly ntly affecte cted d by COVID-19, 9, with a drop in new loan production starting in mid-March due to gradual al lockdowns wns in most of the Europe pean an countr tries es. .

 In this environm

nment ent, , the decrease se in n new lending year-on

• n-ye

year r at SCF was half that of European ean new passeng nger er cars. .

 Registr

tratio ations ns of passeng nger er cars by county were down year-on-year across countries: Germany Germany -35% in H1’20 vs H1’19, France e - 39% 39% (with Jun-20 greater than Jun-19), Italy -46% 46% and Spain -51% 51%.

 During the second

d quarter, SCF’s team continued to proactively manage the situation created by COVID-19. 9.

 Prioriti

ties s have been: (1) to protect employee’s health; (2) to ensure business continuity and service in branches and call centres, and (3) to suppor

• rt

t custome mers rs and partner ers s (OEMs, dealers and retailers) to be able to return to normality as and when required by them.

COVID ID-19 19 Main Acti tion

• ns

Note.- SCF Figures as of July 3rd . China more than13 weeks in a row with applications well above 100%. Active Cases Source: Johns Hopkins (Active cases = confirmed cases –deaths – recovered)

S trict lockdown

# Weekly SC F Auto New L

• an Applications 2020 / Same Week 2019 (%)

Week 17 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 17 Week 18 Week 19 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16

12% 14%

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16

0K 10K 50K 20K 40K 30K 60K

• Sem. 1
• Sem. 2
• Sem. 3
• Sem. 4
• Sem. 6
• Sem. 5
• Sem. 7
• Sem. 8
• Sem. 9
• Sem. 10
• Sem. 11
• Sem. 12
• Sem. 13
• Sem. 14

0K 20K 40K 60K 80K 100K 120K

Partial lockdown

C OVID-19 Active C ases in the C

• untry (K)

# SC F’s Auto New Loan Applications (2020 week vs 2019 in %)

C hina Spain

39% 100% 86% 65% 0% 3% 7% 42% 12% 74% 91% 96%97%

0K 5K 10K 15K 30K 25K 20K 35K 0K 50K 100K 150K 200K 40K 10K 0K 20K 50K 30K 70K 60K 80K

Germany United Kingdom Nordics

80% 91% 77% 86% 76% 86% 18% 139% 78% 25% 12 65% 97% 110% 63% 50% 85% 18% 28% 90% 80% 95% 104% 90% 101% 33% 116% 104%

40K 0K 120K 100K 80K 20K 60K

Italy

102% 101% 11% 11% 62% 67% 9% 9% 18% 78% 11% 9% 18%20% 18% 37% >100% 5% 2% 4% 4% 5% 7% 76% 64% 93% 41% 105% 114% 53% 118% 61% 148% 126% 159% 132 118% 88% 102% 138% 97% 101% 101 101% 124% 105% 116% 109 101% 121% 107% 125% 110 114% 99% 153% 14 14 131 156%

60

Business recovery in June in most of SCF markets

61

 Present

ent in 15 European

• pean countr

ntries ies (+ China and Canada)

 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 than 19 million

• n

exist istin ing g loan n contr tracts acts in 2019 Top Employ loyer er Europe

• pe 2020

2020

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

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 ands with ith thei their transfo transformation 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

exper erie ience nce

Management Control Perimeter, including SC UK.

BUSIN INES ESS S MOD ODEL

In short: Solid Business Model with Clear Strategic Priorities

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

Nordics