Banco Santander México Reports Fourth Quarter 2022 Net Income of Ps.6,277 Million

• Strong YoY total loan portfolio growth, highlighting a solid increase in individual loans, mainly due to double-digit growth in credit cards, payroll and auto loans. While loan volumes in the commercial portfolio were driven by increases of middle-market companies and financial entities.
• Total deposits showed a pick-up of 6.9% YoY, driven by term deposits on the back of a higher interest rate environment, while demand deposits reflected the Bank's profitability focus. Meanwhile, contribution of individuals in total deposits represented 41.4%, compared with 24.2% in 2016.
• Net income increased 19.7% YoY in 4Q22, mainly due to the solid increase in NII and fees, along with lower expenses resulting from disciplined cost control.

MEXICO CITY, Feb. 2, 2023 /PRNewswire/ -- Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (NYSE: BSMX; BMV: BSMX), ("Banco Santander México" or "the Bank"), today announced financial results for the three-month and twelve-month periods ending December 31^st, 2022. 

Banco Santander México reported net income of Ps.6,277 million in 4Q22, representing a YoY increase of 19.7% and a QoQ decrease 23.3%. On a cumulative basis, net income for 12M22 reached Ps.26,476 million, representing a 46.4% YoY increase. 

HIGHLIGHTS
Results (Million pesos)		4Q22		3Q22	4Q21				%QoQ	%YoY		12M22		12M21			%YoY
Net interest income		19,945		18,370	16,046				8.6	24.3		72,008		63,085			14.1
Fee and commission, net		5,118		5,271	4,760				(2.9)	7.5		20,544		18,982			8.2
Core revenues		25,063		23,641	20,806				6.0	20.5		92,552		82,067			12.8
Provisions for loan losses		4,712		785	4,289				—	9.9		12,227		20,817			(41.3)
Administrative and promotional expenses		12,310		10,400	12,636				18.4	(2.6)		42,313		43,235			(2.1)
Net income		6,277		8,188	5,245				(23.3)	19.7		26,476		18,080			46.4
Net income per share1		0.93		1.21	0.77				(23.3)	19.6		3.90		2.66			46.4
Balance Sheet Data (Million pesos)		Dec-22		Sep-22	Dec-21				%QoQ	%YoY		Dec-22		Dec-21			%YoY
Total assets		1,844,169		1,932,290	1,639,652				(4.6)	12.5		1,844,170		1,639,652			12.5
Total loans		810,081		802,319	750,966				1.0	7.9		810,081		750,966			7.9
Deposits		837,389		765,555	783,118				9.4	6.9		837,389		783,118			6.9
Shareholders´ equity		166,308		159,284	165,894				4.4	0.2		166,308		165,894			0.2
Key Ratios (%)		4Q22		3Q22	4Q21				bps QoQ	bps YoY		12M22		12M21			bps YoY
Net interest margin		5.28		4.94	4.46				34	82		4.88		4.51			37
Net loans to deposits ratio		94.39		102.28	92.94				(789)	145		94.39		92.94			145
ROAE		15.12		20.14	12.92				(502)	220		15.94		11.13			481
ROAA		1.44		1.83	1.20				(39)	24		1.52		1.03			49
Efficiency ratio		48.01		46.28	56.00				173	(799)		47.09		50.39			(330)
Capital ratio		19.38		18.90	21.56				48	(218)		19.38		21.56			(218)
NPLs ratio		1.88		2.01	2.18				(13)	—		1.88		2.18			—
Cost of Risk		1.56		1.54	2.90				2	(134)		1.56		2.90			(134)
Coverage ratio		145.82		133.58	141.38				1,224	—		145.82		141.38			—
Operating Data		Dec-22		Sep-22	Dec-21				%QoQ	%YoY		Dec-22		Dec-21			%YoY
Branches		1,037		1,036	1,036				0.1	0.1		1,037			1,036		0.1
Branches and offices2		1,345		1,344	1,346				0.1	(0.1)		1,345			1,346		(0.1)
ATMs		9,689		9,601	9,498				0.9	2.0		9,689			9,498		2.0
Customers		21,338,060		20,875,006	19,664,670				2.2	8.5		21,338,060			19,664,669		8.5
Employees		25,990		26,069	25,276				(0.3)	2.8		25,990			25,276		2.8

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

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

Felipe García, Banco Santander México Executive President and CEO, commented: "I am very pleased to share with you that we reported net income growth of 46% YoY and 24% higher than the pre-pandemic level in 2019.

During the fourth quarter, we maintained solid performance levels in our core businesses while maintaining excellent asset quality throughout the loan portfolio. Total loans grew almost 8% year on year, with strong performance across our entire loan book (except for SMEs). In individual loans, we had a solid increase compared to last year, mainly due to double-digit growth in credit cards, payroll, and auto loans.

In terms of deposits, we continue executing our strategy to attract and retain individual clients while letting go of some expensive corporate deposits. Also, it is worth noting that at the end of 2022, we achieved the greatest exposure to individual clients now contributing 41.4% of total deposits, a significant increase from 24.2% at the beginning of 2016. However, we are still far from where we want to be, so we will continue to focus on it until we are able to achieve a similar mix to what relevant peers have in the Mexican market. 

Also, during 2022, we achieved first place ever in the Local Debt Capital Market, with 60 issuances and reaching a market share of ~25% equivalent to an amount of Ps.80 billion pesos, demonstrating the significant trust from our clients in our execution capabilities. Our goal is to offer the best customer experience in both, the advisory business and the retail business.

In terms of financial inclusion, we are very proud of our leadership in the region and the positive impact we have made on our customers through Tuiio. As of the end of 2022, we have helped more than 390 thousand low-income customers, to support inclusive growth through financial empowerment and education. Thanks to these loans, 65% of our clients have experienced improvements in their lives in personal and economic terms. 

During 2023, we will continue advancing our strategic priorities, enhancing our products, digital offerings, distribution network, and, most importantly, the overall customer experience. Although we have made good progress with our bank's operational transformation, we are nevertheless mindful that we must step up the pace in working toward our goal of building a much stronger franchise and becoming the best banking option in Mexico." 

4Q22 Earnings Call Dial-In Information 

Date:	Friday, February 3rd, 2022
Time:	09:00 a.m. (MCT); 10:00 a.m. (US ET)
Dial-in Numbers:	1-877-407-4018 US & Canada 1-201-689-8471 International & Mexico
Access Code:	Please ask for Santander México Earnings Call
Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1594162&tp_key=4d615e6eff
Replay:	Starting: Friday, February 3rd, 2022 at 1:00 p.m. (US ET)
	Ending: Friday, February 10th, 2022 at 11:59 p.m. (US ET)
	Dial-in number: 1-844-512-2921 US & Canada; 1-412-317-6671 International & Mexico Access Code: 13735674

ABOUT BANCO SANTANDER MÉXICO (NYSE: BSMX; BMV: BSMX)

Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (Banco Santander México), one of Mexico's leading banking institutions, provides a wide range of financial and related services, including retail and commercial banking, financial advisory and other related investment activities. Banco Santander México offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of December 31^st, 2022, Banco Santander México had total assets of Ps.1,844 billion under Mexican Banking GAAP and more than 21.3 million customers. Headquartered in Mexico City, the Company operates 1,345 branches and offices nationwide and has a total of 25,990 employees. 

www.santander.com.mx

LEGAL DISCLAIMER

Banco Santander México cautions that this presentation may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in various places throughout this presentation and include, without limitation, statements regarding our intent, belief, targets or current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion of our distribution network; financing plans; competition; impact of regulation and the interpretation thereof; action to modify or revoke our banking license; exposure to market risks including interest rate risk, foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk; projected capital expenditures; capitalization requirements and level of reserves; investment in our information technology platform; liquidity; trends affecting the economy generally; and trends affecting our financial condition and our results of operations. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, many important factors could cause actual results to differ substantially from those anticipated in forward-looking statements. These factors include, among other things: changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de México); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes and tax laws; competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of allowance for impairment losses and other losses; increased default by borrowers; our inability to successfully and effectively integrate acquisitions or to evaluate risks arising from asset acquisitions; technological changes; changes in consumer spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations or their interpretation; and certain other risk factors included in our annual report on Form 20-F. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could adversely affect our business and financial performance. The words "believe," "may," "will," "aim," "estimate," "continue," "anticipate," "intend," "expect," "forecast" and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. We undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this presentation because of new information, future events or other factors. In light of the risks and uncertainties described above, the future events and circumstances discussed herein might not occur and are not guarantees of future performance.

Note: The information contained in this presentation is not audited. Nevertheless, the consolidated accounts are prepared on the basis of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in millions of Mexican pesos, unless otherwise indicated. Historical figures are not adjusted by inflation.

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SOURCE Banco Santander México, S.A.

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