6-K 1 financieroq321ingles.htm 6-K Document

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of October, 2021
Commission File Number: 001-12518
 
 
Banco Santander, S.A.
(Exact name of registrant as specified in its charter)
 
 
Ciudad Grupo Santander
28660 Boadilla del Monte (Madrid) Spain
(Address of principal executive office)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F  ☒            Form 40-F  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes  ☐            No  ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes  ☐            No  ☒







BANCO SANTANDER, S.A.
________________________

TABLE OF CONTENTS










































Part 1. January - September 2021 Financial Report




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January - September2021



Index


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This report was approved by the Board of Directors on 26 October 2021, following a favourable report from the Audit Committee. Important information regarding this report can be found on pages 88 and 89.


Key consolidated data

BALANCE SHEET (EUR million)Sep-21Jun-21%Sep-21Sep-20%Dec-20
Total assets1,578,295 1,568,636 0.6 1,578,295 1,514,242 4.2 1,508,250 
Loans and advances to customers958,311 954,518 0.4 958,311 910,714 5.2 916,199 
Customer deposits909,034 894,127 1.7 909,034 842,899 7.8 849,310 
Total funds1,140,322 1,121,969 1.6 1,140,322 1,039,608 9.7 1,056,127 
Total equity95,624 95,745 (0.1)95,624 91,310 4.7 91,322 
Note: Total funds includes customer deposits, mutual funds, pension funds and managed portfolios

INCOME STATEMENT (EUR million)Q3'21Q2'21%9M'219M'20%2020
Net interest income8,458 8,240 2.6 24,654 23,975 2.8 31,994 
Total income11,931 11,305 5.5 34,626 33,355 3.8 44,279 
Net operating income6,530 6,046 8.0 18,848 17,569 7.3 23,149 
Profit before tax3,802 3,812 (0.3)10,716 (3,271)— (2,076)
Attributable profit to the parent2,174 2,067 5.2 5,849 (9,048)— (8,771)
Changes in constant euros:
Q3'21 / Q2'21: NII: +1.5%; Total income: +4.3%; Net operating income: +6.5%; Profit before tax: -1.9%; Attributable profit: +3.3%
9M'21 / 9M'20: NII: +7.4%; Total income: +8.4%; Net operating income: +13.2%; Profit before tax: -/+; Attributable profit: -/+

EPS, PROFITABILITY AND EFFICIENCY (%)Q3'21Q2'21%9M'219M'20%2020
EPS (euros) (2)
0.117 0.112 4.4 0.313 (0.546)— (0.538)
RoE10.16 9.91 9.54 (8.54)(9.80)
RoTE12.56 12.29 11.82 3.30 1.95 
RoA0.65 0.64 0.61 (0.44)(0.50)
RoRWA1.76 1.74 1.66 (1.17)(1.33)
Efficiency ratio45.3 46.5 45.6 46.8 47.0 

UNDERLYING INCOME STATEMENT (1) (EUR million)
Q3'21Q2'21%9M'219M'20%2020
Net interest income8,458 8,240 2.6 24,654 23,975 2.8 31,994 
Total income11,931 11,305 5.5 34,626 33,605 3.0 44,600 
Net operating income6,530 6,046 8.0 18,848 17,879 5.4 23,633 
Profit before tax3,804 3,815 (0.3)11,432 7,016 62.9 9,674 
Attributable profit to the parent2,174 2,067 5.2 6,379 3,658 74.4 5,081 
Changes in constant euros:
Q3'21 / Q2'21: NII: +1.5%; Total income: +4.3%; Net operating income: +6.5%; Profit before tax: -1.9%; Attributable profit: +3.3%
9M'21 / 9M'20: NII: +7.4%; Total income: +7.6%; Net operating income: +11.1%; Profit before tax: +73.6%; Attributable profit: +86.6%

UNDERLYING EPS AND PROFITABILITY (1) (%)
Q3'21Q2'21%9M'219M'20%2020
Underlying EPS (euros) (2)
0.117 0.112 4.4 0.344 0.187 83.7 0.262 
Underlying RoE 10.16 9.91 10.18 5.32 5.68 
Underlying RoTE 12.56 12.29 12.61 7.08 7.44 
Underlying RoA 0.65 0.64 0.65 0.38 0.40 
Underlying RoRWA 1.76 1.74 1.76 1.01 1.06 


January - September 2021
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SOLVENCY (%)Sep-21Jun-21Sep-21Sep-20Dec-20
Fully-loaded CET1 ratio11.85 11.70 11.85 11.57 11.89 
Fully-loaded total capital ratio15.82 15.42 15.82 15.15 15.73 

CREDIT QUALITY (%)Q3'21Q2'219M'219M'202020
Cost of credit (3)
0.90 0.94 0.90 1.27 1.28 
NPL ratio3.18 3.22 3.18 3.15 3.21 
Total coverage ratio74 73 74 76 76 

MARKET CAPITALIZATION AND SHARESSep-21Jun-21%Sep-21Sep-20%Dec-20
Shares (millions)17,341 17,341 0.0 17,341 16,618 4.3 17,341 
Share price (euros) (2)
3.137 3.220 (2.6)3.137 1.533 104.6 2.538 
Market capitalization (EUR million)54,389 55,828 (2.6)54,389 26,582 104.6 44,011 
Tangible book value per share (euros) (2)
3.99 3.98 3.99 3.82 3.79 
Price / Tangible book value per share (X) (2)
0.79 0.81 0.79 0.40 0.67 

CUSTOMERS (thousands)Q3'21Q2'21%9M'219M'20%2020
Total customers152,365 150,447 1.3 152,365 147,312 3.4148,256 
Loyal customers24,687 24,169 2.1 24,687 22,058 11.922,838 
     Loyal retail customers22,587 22,100 2.2 22,587 20,189 11.920,901 
     Loyal SME & corporate customers2,100 2,069 1.5 2,100 1,869 12.41,938 
Digital customers46,623 45,352 2.8 46,623 41,365 12.742,362 
Digital sales / Total sales (%)57 54 54 44 44 

OTHER DATASep-21Jun-21%Sep-21Sep-20%Dec-20
Number of shareholders3,817,454 3,879,232 (1.6)3,817,454 4,103,069 (7.0)4,018,817 
Number of employees193,303 190,751 1.3 193,303 192,578 0.4 191,189 
Number of branches9,904 10,073 (1.7)9,904 11,520 (14.0)11,236 

(1) In addition to financial information prepared in accordance with International Financial Reporting Standards (IFRS) and derived from our consolidated financial statements, this report contains certain financial measures that constitute alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015, and other non-IFRS measures, including the figures related to “underlying” results, which do not include the items recorded in the separate line of “net capital gains and provisions”, above the line of attributable profit to the parent. Further details are provided in the “Alternative performance measures” section of the appendix to this report.

For further details of the APMs and non-IFRS measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the annual consolidated financial statements prepared under IFRS, please see our 2020 Annual Financial Report, published in the CNMV on 23 February 2021, our 20-F report for the year ending 31 December 2020 filed with the SEC in the United States on 26 February 2021, as updated by the Form 6-K filed with the SEC on 14 April 2021 in order to reflect our new organizational and reporting structure, as well as the “Alternative performance measures” section of the appendix to this report.
(2) Data adjusted for the capital increase in December 2020.
(3) Allowances for loan-loss provisions over the last 12 months / Average loans and advances to customers over the last 12 months

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January - September 2021

Business model
Group financial informationFinancial information by segmentsResponsible banking
Corporate governance
Santander share
Appendix

Our business model is based on three pillars
1. Our scale
Local scale and leadership. Worldwide reach through our global businesses
2. Customer focus
Unique personal banking relationships strengthen customer loyalty
3. Diversification
Our geographic and business diversification makes us more resilient under adverse circumstances


Geographic diversification3
balanced between mature
and emerging markets
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total customers in Europe
and the Americas
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Business diversification
between customer segments
(individuals, SMEs, mid-market
companies and large corporates)
1. Market share in lending as of June 2021 including only privately-owned banks. UK benchmark refers to the mortgage market. DCB refers to auto in Europe.2. NPS – Customer Satisfaction internal benchmark of active customers’ experience and satisfaction audited by Stiga / Deloitte.3. 9M'21 underlying attributable profit by region. Operating areas excluding Corporate Centre.

Our corporate culture
The Santander Way remains unchanged to continue to deliver for all our stakeholders.

Our purpose
To help people and businesses prosper.
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Our aim
To be the best open financial services
platform, by acting responsibly and
earning the lasting loyalty of our
people, customers, shareholders and
communities.
Our how
Everything we do should be
Simple, Personal and Fair.


January - September 2021
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HIGHLIGHTS OF THE PERIOD
u    In the quarter, the strength of our model once again enabled us to deliver another strong set of results in an environment marked by the recovery of activity in all regions, following progress in the vaccination process and the gradual lifting of covid-19 measures.
u    In view of the lifting of the European Central Bank's (ECB) recommendation that had limited shareholder remuneration until 30 September 2021, the board of directors approved the shareholder remuneration policy to be applied to 2021 results, with the following objectives:
Total remuneration of 40% of the Group's underlying profit.
Split in equal parts between cash dividends and share buybacks.
Two payment cycles: interim distributions around November and, subject to the appropriate corporate and regulatory approvals, a final distribution around May.
In line with this policy, the board decided to make an interim distribution from 2021 earnings amounting to a total value of c. EUR 1.7 billion, equivalent to 40% of underlying profit for the first half of 2021, which will be made in two parts:
A cash dividend of EUR 4.85 cents per share, to be paid from 2 November 2021.
A buyback programme that will have a maximum amount of EUR 841 million, equivalent to 20% of the Group's underlying profit in the first half of 2021, already approved by the ECB and included in the inside information disclosed on 6 October 2021.
u    In late July, the European Banking Authority (EBA) published the the results of its 2021 EU-wide stress test, which involved the main banks from the EU. According to these results, under the adverse scenario Santander would destroy 240 bps of phased-in CET1 capital compared to the peer average of almost 480 bps and to the average of European banking system of nearly 500 bps. In addition, in the adverse scenario, the cumulative projections of Grupo Santander's income statement show a profit of almost EUR 1 billion. This makes it the only bank among its peers capable of recording a positive accumulated result under this scenario.
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GROWTH
u    Digital adoption continued to accelerate: in 9M'21, 54% of sales were made through digital channels (57% in the third quarter) compared to 44% in 9M'20. The number of digital customers increased by more than 1 million in the quarter, reaching 47 million (+13% year-on-year).
u    Loyal customers have risen by 2.6 million since September 2020, totalling 25 million, and represented 33% of total active customers.
u    Business volumes grew at a good pace in a context of normalization, although high liquidity in the markets continued. In this environment, and excluding the exchange rate impact, loans and advances to customers rose more than EUR 8 billion (+1%) in the quarter and 4% year-on-year. Customer funds were up over EUR 21 billion, +2% in the quarter and +7% year-on-year.

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PROFITABILITY
u    Attributable profit amounted to EUR 2,174 million in Q3'21, with no net results recorded in the net capital gains and provisions line. Compared to the previous quarter, profit was 5% higher (+3% in constant euros).
u    9M'21 attributable profit was EUR 5,849 million. Excluding the EUR 530 million charge recorded in Q1'21 from bringing forward restructuring costs for the year as a whole, underlying attributable profit stood at EUR 6,379 million, 74% higher than in 9M'20 (+87% in constant euros), underpinned by the positive performance across regions, Digital Consumer Bank (DCB) and the global businesses.
u    These results were reflected in higher profitability: underlying RoTE of 12.6% (7.1% in 9M'20), underlying RoRWA was 1.76% (1.01% in 2020) and underlying earnings per share of EUR 0.344 (EUR 0.187 in 2020).
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STRENGTH
u    Cost of credit continued to improve reaching 0.90% in 9M'21 (1.28% in FY20 and 0.94% in June 2021). Total loan-loss reserves reached EUR 24.5 bn and total coverage of credit impaired loans increased in the quarter to 74%.
u    The fully-loaded CET1 ratio was 11.85%, with an organic generation of 48 bps. On the other hand, it was affected by regulatory impacts and models (-16 bps) and markets and others (-17 bps). On the other hand, the phased-in CET1 ratio rose to 12.26%.
u    TNAV per share was EUR 3.99 in September 2021. Including the EUR 2.75 cents dividend paid in May, and the approved in September (EUR 4.85 cents), growth was 1.4% in the quarter and 6.5% year-on-year.
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January - September 2021

GRUPO SANTANDER RESULTS
Grupo Santander. Summarized income statement
EUR million
ChangeChange
Q3'21Q2'21%% excl. FX9M'219M'20%% excl. FX
Net interest income8,458 8,240 2.6 1.5 24,654 23,975 2.8 7.4 
Net fee income (commission income minus commission expense)2,641 2,621 0.8 (0.4)7,810 7,559 3.3 8.1 
Gains or losses on financial assets and liabilities and exchange differences (net)326 243 34.2 31.7 1,220 1,725 (29.3)(26.6)
Dividend income95 244 (61.1)(61.2)404 322 25.5 26.2 
Share of results of entities accounted for using the equity method132 87 51.7 52.0 295 (90)— — 
Other operating income / expenses279 (130)— — 243 (136)— — 
Total income11,931 11,305 5.5 4.3 34,626 33,355 3.8 8.4 
Operating expenses(5,401)(5,259)2.7 1.8 (15,778)(15,786)(0.1)3.3 
   Administrative expenses(4,718)(4,561)3.4 2.5 (13,714)(13,686)0.2 3.6 
       Staff costs (2,767)(2,750)0.6 (0.2)(8,205)(8,098)1.3 4.4 
       Other general administrative expenses (1,951)(1,811)7.7 6.7 (5,509)(5,588)(1.4)2.4 
   Depreciation and amortization(683)(698)(2.1)(2.9)(2,064)(2,100)(1.7)1.4 
Provisions or reversal of provisions(516)(531)(2.8)(3.4)(2,006)(1,014)97.8 109.5 
Impairment or reversal of impairment of financial assets not measured at fair value through profit or loss (net)(2,196)(1,748)25.6 24.4 (6,000)(9,538)(37.1)(34.0)
Impairment on other assets (net)(4)— — (134)(10,256)(98.7)(98.7)
Gains or losses on non financial assets and investments, net(9)51 — — 43 89 (51.7)(50.1)
Negative goodwill recognized in results— — — — — (100.0)(100.0)
Gains or losses on non-current assets held for sale not classified as discontinued operations(3)(14)(78.6)(81.9)(35)(130)(73.1)(73.1)
Profit or loss before tax from continuing operations3,802 3,812 (0.3)(1.9)10,716 (3,271)  
Tax expense or income from continuing operations(1,251)(1,331)(6.0)(7.7)(3,725)(5,020)(25.8)(23.6)
Profit from the period from continuing operations2,551 2,481 2.8 1.2 6,991 (8,291)  
Profit or loss after tax from discontinued operations— — — — — — — — 
Profit for the period2,551 2,481 2.8 1.2 6,991 (8,291)  
Attributable profit to non-controlling interests(377)(414)(8.9)(9.3)(1,142)(757)50.9 56.5 
Attributable profit to the parent2,174 2,067 5.2 3.3 5,849 (9,048)  
EPS (euros) (1)
0.117 0.112 4.4 0.313 (0.546) 
Diluted EPS (euros) (1)
0.116 0.111 4.4 0.312 (0.546) 
Memorandum items:
   Average total assets1,575,975 1,557,364 1.2 1,550,943 1,543,361 0.5 
   Average stockholders' equity85,608 83,429 2.6 83,574 91,639 (8.8)
(1) Data adjusted for the capital increase in December 2020.
January - September 2021
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Executive summary
Profit (9M'21 vs. 9M'20)
Performance (9M'21 vs. 9M'20). In constant euros
Strong profit growth across regions and businessesHigher underlying profit driven by total income, cost control and significantly lower provisions
Attributable profitUnderlying attrib. profitTotal incomeCostsProvisions
EUR 5,849 mnEUR 6,379 mn
-EUR 9,048 mn in 9M'20EUR 3,658 mn in 9M'20+7.6%+3.7%-34.5%
EfficiencyProfitability
The Group's efficiency ratio improved strongly, mainly driven by EuropeStrong profitability improvement compared to 9M'20 and FY'20.
GroupEuropeRoTEUnderlying RoTERoRWAUnderlying RoRWA
45.6%50.3%11.8%12.6%1.66%1.76%
q 1.2 pp vs 9M'20
q 6.6 pp vs 9M'20
p 8.5 pp
p 5.5 pp
p 2.8 pp
p 0.8 pp
Changes vs. 9M'20

è Results performance compared to 9M'20
The Group presents, both at the total level and for each of the business units, the real changes in euros produced in the income statement, as well as variations excluding the exchange rate effect (FX), on the understanding that the latter provide a better analysis of the Group’s management. For the Group as a whole, exchange rates had a significant impact on revenue (-5 percentage points) and costs (-3 percentage points).
u Total income
Total income of EUR 34,626 million in the first nine months of 2021, up 4% with respect to 9M'20. If the FX impact is excluded, total income increased 8%, with growth in all regions and main countries, except Mexico, showing the strength provided by our geographic and business diversification. Net interest income and net fee income accounted for 94% of total income. By line:
Net interest income amounted to EUR 24,654 million, 3% higher compared to 9M'20. Stripping out the exchange rate impact, growth was 7%, mainly due to the net effect of higher average lending and deposit volumes and the lower cost of the latter, partly offset by the reduction in revenue from low interest rates, which fell even further in most markets.
Net interest income
EUR million
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constant euros
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By country, growth was recorded in the UK (+27%), through decisive management deposit repricing actions (mainly the 1I2I3 current account) as well as higher volumes (especially mortgages), Spain (+4%), driven by margin management; Brazil (+12%), due to greater volumes; and Chile (+12%), due to margin management and inflation.
The US remained flat due to volume pressures mainly due to the disposals made in previous quarters (Puerto Rico and Bluestem portfolio). Excluding these disposals, growth was 7%.
Mexico fell 4%, due to lower average interest rates and a smaller loan portfolio, mainly in corporates.
Net fee income rose 3% year-on-year to EUR 7,810 million. Excluding the exchange rate impact, they were 8% higher, showing a recovery path from the lows in Q2'20.
Transactional fees continued to be affected by lower activity in early 2021, while those from card turnover and points of sale increased (+25% and +40%, respectively). Asset management and insurance businesses, as well as SCIB, also recorded double-digit growth.
Net fee income
EUR million
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constant euros
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January - September 2021

Santander Corporate & Investment Banking surged 19% year-on-year driven by strong markets growth and the positive performance in banking businesses. Wealth Management & Insurance rose 11% (including fees ceded to the branch network). Overall, both businesses together accounted for approximately 50% of the Group’s total net fee income (SCIB: 17%; WM&I: 32%).
By region, Europe was up 7%, with generalized increases in all markets except the UK, due to regulatory changes affecting overdrafts since April 2020. North America was stable, affected by the disposals carried out in the US. Excluding them, growth was 7% in the region and 8% in the US. Mexico up 5% driven by transactional fees. South America increased 13% with overall growth in all markets.
Gains on financial transactions, accounted for 4% of total income and stood at EUR 1,220 million (EUR 1,725 million in the first nine months of 2020), with falls in Spain (-42%), Mexico (-43%), Chile (-31%) and the Corporate Centre. This was due to the favourable impact of foreign exchange hedging, higher portfolio sales and increased market volatility in 2020.
Dividend income was EUR 404 million, 25% higher than in the same period of 2020 (+26% excluding the exchange rate effect), having recovered several dividend payments, mainly in Europe, following reductions, delays or cancellations last year amid the pandemic.
The results of entities accounted for using the equity method amounted to EUR 295 million, due to the higher contribution from the entities associated to the Group.
Other operating income recorded a gain of EUR 243 million compared to a loss of EUR 136 million in the first nine months of 2020 due to higher results from leasing and insurance.


Total income
EUR million
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constant euros
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u Costs
Operating costs amounted to EUR 15,778 million, in line with the same period last year. Excluding the exchange rate impact, costs rose 4% due to the general upturn in inflation in 2021 and broad-based investments in technology and digital developments, including PagoNxt. Excluding inflation (i.e. in real terms) costs dropped 1%.
The efficiency ratio was 45.6%, improving 1.2 pp versus last year, mainly driven by Europe. This enabled Santander to remain one of the most efficient global banks in the world.
The cost trends by region and market in constant euros were as follows:
In Europe, costs were 1% lower year-on-year, -3% in real terms (excluding average inflation), making headway in our cost reduction plan. In real terms, falls were recorded in Spain (-9%), the UK (-4%), Portugal (-3%) and Poland rose 1% due to higher personnel expenses. The efficiency ratio in the region stood at 50.3% (-6.6 pp year-on-year).
In North America, costs rose 8%. In real terms, they were 5% higher driven by digitalization investments, the 5% increase in the US and the 2% fall in Mexico. The efficiency ratio in the region stood at 43.8%.
In South America, the rise in costs (+9%) was greatly distorted by the very high inflation in Argentina. In real terms, costs reduced 3% in the region: Brazil (-6%), Chile (-1%) and Argentina remained flat. The efficiency ratio in the region stood at 34.6%.
In Digital Consumer Bank, costs increased 4% due to perimeter and digital transformation investments. In real terms, costs rose 2%. The efficiency ratio stood at 45.4%.



Operating expenses
EUR million
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constant euros
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January - September 2021
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9

u Provisions or reversal of provisions
Provisions (net of provisions reversals) rose to EUR 2,006 million (EUR 1,014 million in 9M'20). This line item includes the charges for restructuring costs, as well as charges related to CHF mortgages in Poland and Digital Consumer Bank (EUR 185 million in 9M'21).
u Impairment or reversal of impairment of financial assets not measured at fair value through profit or loss (net)
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss (net) was EUR 6,000 million, down 37% year-on-year in euros and 34% in constant euros, mainly from additional provisions recorded in 2020 based on the IFRS 9 forward-looking view and the collective and individual assessments to reflect expected credit losses arising from covid-19.
u Impairment on other assets (net)
Impairment on other assets (net) stood at EUR 134 million. In 9M'20, this line item was EUR 10,256 million due to the valuation adjustment of goodwill of -EUR 10,100 million recorded in the second quarter.

Net loan-loss provisions
EUR million
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constant euros
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u Gains or losses on non-financial assets and investments (net)
This line item recorded EUR 43 million in the first nine months of 2021, compared to EUR 89 million in the same period of 2020.
u Negative goodwill recognized in results
This line item recorded EUR 0 million in 9M'21 (EUR 9 million in 9M'20).
u Gains or losses on non-current assets held for sale not classified as discontinued operations
This line item, which mainly includes impairment of foreclosed assets recorded and the sale of properties acquired upon foreclosure, totalled -EUR 35 million in the first nine months of 2021, compared to -EUR 130 million in the same period of 2020.
u Profit before tax
Profit before tax amounted to EUR 10,716 million in the first nine months of 2021, increasing from -EUR 3,271 million in the same period of 2020, spurred by growth in total income and lower provisions in 2021 and the valuation adjustment of goodwill in 2020.
u Income tax
Total corporate income tax was EUR 3,725 million (EUR 5,020 million in the first nine months of 2020, which recorded the EUR 2,500 million valuation adjustment to deferred tax assets).
u Attributable profit to non-controlling interests
Attributable profit to non-controlling interests amounted to EUR 1,142 million, up 51% year-on-year (+56% excluding the exchange rate impact).
u Attributable profit to the parent
Attributable profit to the parent amounted to EUR 5,849 million in 9M'21, compared with a loss of EUR 9,048 million in 9M'20.
RoTE stood at 11.8% (3.3% in 9M'20), RoRWA of 1.66% (-1.17% in 9M'20) and earnings per share stood at EUR 0.313 (-EUR 0.546 in 9M'20).
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January - September 2021

u Underlying attributable profit to the parent
Attributable profit to the parent recorded in the first nine months of 2021 and 2020 was affected by results that are outside the ordinary course of our business and distort the year-on-year comparison, and are detailed below:
In 9M'21, these results totalled -EUR 530 million for restructuring costs, fully recorded in Q1'21, as follows: -EUR 293 million in the UK, -EUR 165 million in Portugal, -EUR 16 million in Digital Consumer Bank and -EUR 56 million in the Corporate Centre.
In 9M'20, these results amounted to -EUR 12,706 million from the valuation adjustment of goodwill ascribed to various Group units (-EUR 10,100 million) and the valuation adjustment to deferred tax assets of the Spanish consolidated fiscal group with an impact of -EUR 2,500 million. In addition, restructuring costs and other provisions had a net impact of -EUR 106 million.
For further information see the 'Alternative performance measures' section of this report.
Excluding these results from the various P&L lines where they are recorded, and incorporating them separately in the net capital gains and provisions line, the adjusted or underlying attributable profit to the parent was EUR 6,379 million in the first nine months of 2021 and EUR 3,658 million in the same period last year.
The Group’s cost of credit (considering the last 12 months) stood at 0.90%.
Considering the first nine months of the year, it was 0.83%, performing better than expected, due to lower provisions in most markets, mainly in the US, Digital Consumer Bank, Brazil and Chile, together with the net releases in the UK.
Before the recording of loan-loss provisions, the Group's underlying net operating income (total income less operating expenses) was EUR 18,848 million, a 5% increase year-on-year +11% excluding the FX impact, with the following performance of the latter by line and region:
By line:
Total income up primarily driven by net interest income (+7%) and net fee income (+8%), which continued on the path of recovery.
Costs grew driven by the upturn in inflation. In real terms, broad-based declines across markets except Poland and the US.
By region:
In Europe, net operating income increased 29% with rises in all markets.
In North America, net operating income dropped 1%, with a 6% increase in the US and a 10% fall in Mexico. Excluding the disposals mentioned in other sections of this report, growth was 17% in the US and +5% in the region.
In South America, growth was 12% with rises in Brazil (+14%), Chile (+11%) and Argentina (+17%).
In Digital Consumer Bank, net operating income increased 4%.
In the first nine months of 2021, the Group’s underlying RoTE was 12.6% (7.1% in 9M'20), underlying RoRWA was 1.76% (1.01% in 9M'20) and underlying earnings per share EUR 0.344 (EUR 0.187 in 9M'20).
Summarized underlying income statement
EUR millionChangeChange
Q3'21Q2'21%% excl. FX9M'219M'20%% excl. FX
Net interest income8,458 8,240 2.61.524,654 23,975 2.87.4
Net fee income2,641 2,621 0.8(0.4)7,810 7,559 3.38.1
Gains (losses) on financial transactions (1)
326 243 34.231.71,220 1,725 (29.3)(26.6)
Other operating income506 201 151.7149.8942 346 172.3178.7
Total income11,931 11,305 5.54.334,626 33,605 3.07.6
Administrative expenses and amortizations(5,401)(5,259)2.71.8(15,778)(15,726)0.33.7
Net operating income6,530 6,046 8.06.518,848 17,879 5.411.1
Net loan-loss provisions(2,220)(1,761)26.124.8(5,973)(9,562)(37.5)(34.5)
Other gains (losses) and provisions(506)(470)7.77.1(1,443)(1,301)10.914.5
Profit before tax3,804 3,815 (0.3)(1.9)11,432 7,016 62.973.6
Tax on profit(1,253)(1,334)(6.1)(7.7)(3,911)(2,596)50.760.8
Profit from continuing operations2,551 2,481 2.81.27,521 4,420 70.281.1
Net profit from discontinued operations— — — — — — — (100.0)
Consolidated profit2,551 2,481 2.81.27,521 4,420 70.281.1
Non-controlling interests(377)(414)(8.9)(9.7)(1,142)(762)49.955.4
Net capital gains and provisions— — (36.1)(530)(12,706)(95.8)(95.8)
Attributable profit to the parent2,174 2,067 5.23.35,849 (9,048)
Underlying attributable profit to the parent (2)
2,174 2,067 5.23.36,379 3,658 74.486.6
(1) Includes exchange differences.
(2) Excludes net capital gains and provisions.
January - September 2021
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11

è Results performance compared to the previous quarter
In the third quarter, attributable profit to the parent amounted to EUR 2,174 million, with no net results recorded in the net capital gains and provisions line.
Attributable profit to the parent recorded a 5% increase in euros (+3% in constant euros) compared to the second quarter.
Attributable profit to the parent and underlying attributable profit, both in the second and third quarters, recorded the same amount as there were no items recorded outside the ordinary performance of our business.
The performance of the main lines of the income statement in constant euros was as follows:
Total income was 4% higher quarter-on-quarter driven by the positive performance by line.
Net interest income grew 1%, maintaining its upward trend; net fee income remained broadly stable, affected by some seasonality; gains on financial increased mainly driven by SCIB; and other operating income rose benefitting from the SRF contribution recorded in the second quarter.


Net operating income
EUR million
leyendaconstantesa07a.gif
constant euros
chart-dc6934e4e64940eca2ca.jpg


Continued rigorous expense management. However, the continued upturn in inflation in Q3 (especially in North and South America), and the signing and update of collective labour agreements in Brazil and Argentina, led to a 2% rise in the Group. In Europe, decreases were recorded in Spain, Portugal and the UK, on the back of the ongoing efficiency programmes.
Net loan-loss provisions increased 25% mainly due to the US (positive net charge-offs recorded in Q2), the UK, which registered releases in the second quarter, and Brazil, due to higher volumes and growth in retail.
Other gains (losses) and provisions recorded a -EUR 31 million charge related to CHF mortgages in Poland and Digital Consumer Bank.








Underlying attributable profit to the parent*
EUR million
leyendaconstantesa07a.gif
constant euros
chart-6d94c364bb744b1a837a.jpg
(*) Excluding net capital gains and provisions.




12
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January - September 2021

Grupo Santander. Condensed balance sheet
EUR million
Change
AssetsSep-21Sep-20Absolute%Dec-20
Cash, cash balances at central banks and other demand deposits191,035 148,175 42,860 28.9 153,839 
Financial assets held for trading 122,967 117,654 5,313 4.5 114,945 
   Debt securities30,834 34,107 (3,273)(9.6)37,894 
   Equity instruments14,586 7,235 7,351 101.6 9,615 
   Loans and advances to customers3,651 247 3,404 — 296 
   Loans and advances to central banks and credit institutions17,246 — 17,246 — 
   Derivatives56,650 76,065 (19,415)(25.5)67,137 
Financial assets designated at fair value through profit or loss42,126 67,007 (24,881)(37.1)53,203 
   Loans and advances to customers22,930 29,215 (6,285)(21.5)24,673 
   Loans and advances to central banks and credit institutions11,876 30,850 (18,974)(61.5)21,617 
   Other (debt securities an equity instruments)7,320 6,942 378 5.4 6,913 
Financial assets at fair value through other comprehensive income109,570 117,461 (7,891)(6.7)120,953 
   Debt securities98,016 105,574 (7,558)(7.2)108,903 
   Equity instruments2,690 3,075 (385)(12.5)2,783 
   Loans and advances to customers8,864 8,812 52 0.6 9,267 
   Loans and advances to central banks and credit institutions— — — — — 
Financial assets measured at amortised cost1,011,994 950,571 61,423 6.5 958,378 
   Debt securities34,079 27,316 6,763 24.8 26,078 
   Loans and advances to customers922,867 872,440 50,427 5.8 881,963 
   Loans and advances to central banks and credit institutions55,048 50,815 4,233 8.3 50,337 
Investments in subsidiaries, joint ventures and associates7,684 7,679 0.1 7,622 
Tangible assets32,446 33,277 (831)(2.5)32,735 
Intangible assets16,246 15,698 548 3.5 15,908 
    Goodwill12,645 12,359 286 2.3 12,471 
    Other intangible assets3,601 3,339 262 7.8 3,437 
Other assets44,227 56,720 (12,493)(22.0)50,667 
Total assets1,578,295 1,514,242 64,053 4.2 1,508,250 
Liabilities and shareholders' equity
Financial liabilities held for trading 80,147 88,128 (7,981)(9.1)81,167 
   Customer deposits4,809 — 4,809 — — 
   Debt securities issued— — — — — 
   Deposits by central banks and credit institutions5,350 — 5,350 — — 
   Derivatives55,086 73,044 (17,958)(24.6)64,469 
   Other14,902 15,084 (182)(1.2)16,698 
Financial liabilities designated at fair value through profit or loss47,900 59,459 (11,559)(19.4)48,038 
   Customer deposits36,694 40,469 (3,775)(9.3)34,343 
   Debt securities issued5,401 4,362 1,039 23.8 4,440 
   Deposits by central banks and credit institutions5,805 14,628 (8,823)(60.3)9,255 
   Other— — — — — 
Financial liabilities measured at amortized cost1,317,759 1,237,314 80,445 6.5 1,248,188 
   Customer deposits867,531 802,430 65,101 8.1 814,967 
   Debt securities issued238,882 240,195 (1,313)(0.5)230,829 
   Deposits by central banks and credit institutions180,221 169,646 10,575 6.2 175,424 
   Other31,125 25,043 6,082 24.3 26,968 
Liabilities under insurance contracts779 970 (191)(19.7)910 
Provisions9,815 10,118 (303)(3.0)10,852 
Other liabilities26,271 26,943 (672)(2.5)27,773 
Total liabilities1,482,671 1,422,932 59,739 4.2 1,416,928 
Shareholders' equity118,380 114,493 3,887 3.4 114,620 
   Capital stock8,670 8,309 361 4.3 8,670 
   Reserves104,702 116,894 (12,192)(10.4)114,721 
   Attributable profit to the Group 5,849 (9,048)14,897 — (8,771)
   Less: dividends(841)(1,662)821 (49.4)— 
Other comprehensive income(32,992)(32,747)(245)0.7 (33,144)
Minority interests10,236 9,564 672 7.0 9,846 
Total equity95,624 91,310 4,314 4.7 91,322 
Total liabilities and equity1,578,295 1,514,242 64,053 4.2 1,508,250 
January - September 2021
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13

GRUPO SANTANDER BALANCE SHEET
Executive summary *
Loans and advances to customers (excl. reverse repos)
Customer funds (deposits excl. repos + mutual funds)
Credit normalization following the uptick at the beginning of the pandemic, due to high liquidity in the systemStrong increase in customer funds benefiting from the higher propensity to save derived from the health crisis
942
p 1% QoQ
p 4% YoY
1,049
p 2% QoQ
p 7% YoY
billionbillion
 è By segment (YoY change):
 è By product (YoY change):
Growth backed by individuals and large corporatesOf note were demand deposits (which account for 66% of customer funds) and mutual funds
IndividualsSMEs and corporatesCIB and institutionsDemandTimeMutual funds
+4%-2%+9%+10%-9%+17%
(*) Changes in constant euros
è Loans and advances to customers
Loans and advances to customers stood at EUR 958,311 million in September, virtually unchanged in the quarter and 5% higher year-on-year.
The Group uses gross loans and advances to customers excluding reverse repos (EUR 941,739 million) for the purpose of analyzing traditional commercial banking loans. In addition, in order to facilitate the analysis of the Group's management, the comments below do not include the exchange rate impact.
In the third quarter, gross loans and advances to customers excluding reverse repos and without the exchange rate impact, increased 1%, as follows:
In Europe Portugal and Poland increased while Spain and the UK had no material change. The region as a whole increased 1%.
North America volumes remained flat both in the US and Mexico.
South America growth of 3% with all markets increasing, notably Argentina and Uruguay (+5% each) and Chile (+3%).
Digital Consumer Bank (DCB) was 1% lower, due to lower new auto lending. Openbank grew 10%.
Compared to September 2020, gross loans and advances to customers (excluding reverse repos and the FX impact) grew 4%, as follows:
In Europe, 3% growth with all markets increasing except for Spain that remained flat. Rises were recorded in Portugal (+4%), driven by mortgages and SMEs, Poland (+4%) due to mortgages, SMEs and CIB, and the UK (+1%), driven by residential mortgage activity. Growth was also recorded in SCIB branches.
In North America, Mexico decreased 2% weighed down by the fall in corporates, partly offset by the increase in individuals (mainly mortgages). Balances in the US increased 1%, even with the impact of the Bluestem portfolio disposal (+2% excluding this impact). The region as a whole recorded no material change (+1% excluding the aforementioned disposal).
Growth in South America was 10%. Argentina was up 33% mainly driven by SMEs and cards, Brazil +13% with positive performance in all segments and Uruguay rose 12%. Chile remained largely stable, as growth in mortgages was offset by the fall in corporates and consumer lending.
Digital Consumer Bank dropped 1% affected by the lower activity at the begining of the year due to the lockdown measures. Mixed performance across countries, with growth recorded in the UK, France and Italy. Openbank increased 41%.
As of September 2021, gross loans and advances to customers excluding reverse repos maintained a balanced structure: individuals (62%), SMEs and corporates (22%) and CIB (15%).
Gross loans and advances to customers (excl. reverse repos)
EUR billion
Gross loans and advances to customers (excl. reverse repos)
% operating areas. September 2021
chart-d9199808380a4e96bdda.jpg
+6 %
*
Sep-21 / Sep-20
chart-f95e4af728254aeeb8aa.jpg (*) In constant EUR: +4%
14
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January - September 2021

è Customer funds
Customer deposits amounted to EUR 909,034 million in September 2021, increasing 2% quarter-on-quarter and 8% year-on-year.
The Group uses customer funds (customer deposits excluding repos, plus mutual funds) for the purpose of analyzing traditional retail banking funds, which amounted to EUR 1,049,188 million.
In the quarter, customer funds increased 2%, with the following performance excluding exchange rate impacts:
By product, rises were recorded in demand deposits (+2%), time deposits (+1%) and mutual funds (+3%).
By primary segment, customer funds increased in all regions and most countries, notably in Argentina (+15%), Chile (+3%) and the US (+2%). Digital Consumer Bank rose 1%.
Compared to September 2020, customer funds were up 7%, excluding the exchange rate impact:
By product, deposits excluding repos rose 6%. Demand deposits grew 10% with rises in all markets, and time deposits fell 9%, with broad-based declines except Brazil, Chile and Argentina. Mutual funds surged 17% underpinned by net inflows and markets recovery.
By country, customer funds increased in all regions and countries. Of note was double-digit growth in Argentina (+53%), Chile (+17%), the US and Uruguay (both +13%) and Poland (+11%). More moderate growth was recorded in Portugal (+7%), Spain (+6%), Mexico (+5%), the UK and Brazil (+3% each).
Positive performance also in DCB, which rose 11%. Openbank increased 27%.
With this performance, the weight of demand deposits as a percentage of total customer funds rose 1 pp in the last 12 months to 66%, which resulted in a better cost of deposits.
In addition to capturing customer deposits, the Group, for strategic reasons, maintains a selective policy of issuing securities in the international fixed income markets and strives to adapt the frequency and volume of its market operations to the structural liquidity needs of each unit, as well as to the receptiveness of each market.
In the first nine months of 2021, the Group issued:
Medium- and long-term senior debt amounting to EUR 9,369 million and EUR 178 million of covered bonds placed in the market.
There were EUR 16,433 million of securitizations placed in the market.
In order to strengthen the Group’s situation, issuances to meet the TLAC requirement amounting to EUR 12,259 million (EUR 9,676 million of senior non-preferred; EUR 2,583 million of preferred).
Maturities of medium- and long-term debt of EUR 20,516 million.
The net loan-to-deposit ratio was 105% (108% in September 2020). The ratio of deposits plus medium- and long-term funding to the Group’s loans was 117%, underscoring the comfortable funding structure.
The Group's access to wholesale funding markets as well as the cost of issuances depends, in part, on the ratings of the rating agencies.
The ratings of Banco Santander, S.A. by the main rating agencies were: Fitch (long-term senior non-preferred debt at A- and short-term at F2), Moody's (A2 for long term debt and P-1 for short-term), Standard & Poor’s (A for long term debt and A-1 for short term) and DBRS (A high for long term debt and R-1 Middle for short-term), in all cases with a stable outlook. During the year, Moody's and DBRS confirmed their outlook, while Fitch and Standard & Poor's upgraded their outlooks from negative to stable.
While sometimes the methodology applied by the agencies limits a bank's rating to the sovereign rating assigned to the country where it is headquartered. Banco Santander, S.A. is still rated above the sovereign debt rating of the Kingdom of Spain by Moody’s and DBRS and at the same level by Fitch and S&P, which demonstrates our financial strength and diversification.

Customer funds
EUR billion
Customer funds
% operating areas. September 2021
chart-3a8c6dabcaba40da9bfa.jpg
+10 %
*
+19 %
+8 %
Total
Mutual funds
Deposits
exc. repos
Sep-21 / Sep-20
chart-95129bb406b34ca39aba.jpg
(*) In constant EUR: +7%
January - September 2021
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15

SOLVENCY RATIOS
Executive summary
Fully-loaded capital ratioFully-loaded CET1 ratio
The fully-loaded CET1 ratio was at the top of our 11-12% target range, following a strong quarterly increaseIn the quarter, strong organic generation driven by profit and RWA management
capitaleng.jpg
Organic generation  +48 bps
TNAV per share
TNAV per share was EUR 3.99, 1.4% higher quarter-on-quarter and +6.5% year-on-year including dividends
At the end of the quarter, the total fully-loaded capital ratio stood at 15.82% and the fully-loaded CET1 ratio at 11.85%, having increased 15 pp in the quarter.
This growth is driven by strong organic generation (+48 bps), due to the profit in the quarter and a 11 bp uplift from the decrease in risk-weighted assets (increased securitizations and optimization exercises).
Additionally in the quarter there was a 16 bp reduction stemming from regulatory and model impacts (market risk, NPL backstop, New Default Definition anticipation) and -17 bps from other concepts, mainly market performance.
Applying the IFRS 9 transitional arrangements, the phased-in CET1 ratio was 12.26% and the total phased-in capital ratio was 16.20%. We have a strong capital base, comfortably meeting the minimum levels required by the European Central Bank on a consolidated basis (13.01% for the total capital ratio and 8.86% for the CET1 ratio). This results in a CET1 management buffer of 340 bps, compared to the pre-covid-19 buffer of 189 bps.

The fully-loaded leverage ratio stood at 5.05%, and the phased-in at 5.20%.
Finally, the TNAV per share in Q3'21 was EUR 3.99, a 1.4% increase quarter-on-quarter and a 6.5% increase year-on-year. These growth rates include the EUR 4.85 cent dividend to be paid in November, but which has already been deducted from shareholder's equity in September, and the EUR 2.75 cents paid last May.

Eligible capital. September 2021
EUR million
Fully-loadedPhased-in*
CET168,467 70,787 
Basic capital78,264 80,897 
Eligible capital91,423 93,537 
Risk-weighted assets577,790 577,209 
CET1 capital ratio11.85 12.26 
Tier 1 capital ratio13.55 14.02 
Total capital ratio15.82 16.20 

Fully-loaded CET1 ratio performance
%
capital-escaleraeng.jpg
1.No net impact from shareholder remuneration in Q3 as the dividend accrual in September (corresponding to 20% of 9M’21 underlying profit plus the total amount of the first share buyback already approved) is equivalent to the accrual made in H1'21 (50% of H1’21 underlying profit).
2.Market risk, NPL backstop, New Default Definition anticipation.
3.Mainly HTC&S.

(*) The phased-in ratio includes the transitory treatment of IFRS 9, calculated in accordance with article 473 bis of the Capital Requirements Regulation (CRR) and subsequent modifications introduced by Regulation 2020/873 of the European Union. Total phased-in capital ratios include the transitory treatment according to chapter 2, title 1, part 10 of the CRR.
16
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January - September 2021

STRESS TEST
u    In late July, the European Banking Authority (EBA) published the results of its 2021 EU-wide stress test, which involved the main banks from the EU.
This exercise assesses the resilience of these banks' main balance sheet and income statement items under two different macroeconomic scenarios (baseline and adverse).
To this end, the balance sheets at the end of 2020 were taken as a starting point and the expected behaviour of business models was compared in order to gauge the expected losses and the ability of the balance sheet to withstand such losses without requiring external support.
On this occasion, as with previous exercises, there was no minimum capital threshold to meet. Instead, results will be taken into account when determining the SREP requirements.
The baseline scenario assumes the most likely economic performance according to the models used by the EBA. On the other hand, the very unlikely adverse scenario assumes a severe deterioration in both macroeconomic and global financial market conditions.
This year, the scenarios used to project the evolution of the Group's main businesses were as follows:



Gross Domestic Product (GDP)
Change (%)
eurozonaa.jpg
Eurozone
uka.gif
UK
usaa.gif
US
brazila.gif
Brazil
20212021-2320212021-2320212021-2320212021-23
Baseline scenario3.9 %11.0 %5.9 %11.0 %3.1 %8.0 %2.8 %8.0 %
Adverse scenario-1.5 %-4.0 %-3.6 %-4.0 %-3.5 %-4.0 %-5.2 %-5.0 %
iconosana.gif
Santander: resilience of our income statement was reflected in greater capital stability
In the last thirteen years, the Group has been submitted to eight stress tests, in all of which it has demonstrated the strength of its business model and, consequently, that its solvency levels would be sufficient to face the most severe macroeconomic scenarios.
Our geographic and business diversification enables us to have more stable and non-interrelated sources of income, so that even if the macroeconomic situation were to deteriorate globally, we would be capable of generating profit for our shareholders and thereby ensure an adequate capital position in line with regulatory requirements.
According to the results obtained in this stress test, under the adverse scenario Santander would destroy 240 bps of phased-in
CET1 capital compared to the peer average of almost 480 bps and to the average of European banking system of nearly 500 bps.
This implies that, in terms of legal enforceability, the Group would have a solvency position 30 bps better than the average of its European peers.
It is also worth noting that even in the adverse scenario, the cumulative projections of the Group's income statement show a profit of almost EUR 1 billion. This makes it the only bank among its peers capable of avoiding a negative accumulated result under this scenario.


Phased-in CET1 ratio 2020 vs. 2023
Adverse scenario. Basis points
Profit after tax (accumulated 3 years)
Adverse scenario. EUR million
stresstest-cet1eng.jpg stresstest-bdieng.jpg
Peer averageSystem
January - September 2021
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17

RISK MANAGEMENT
Executive summary
Credit riskMarket risk
Credit quality indicators maintained the positive trend of the first half of the year
Market risk profile remained low, with stable VaR in a context of economic recovery amid increased volatility
Cost of credit2
NPL ratioCoverage ratio
0.90%3.18%74%Q3'21Average
VaR
EUR 10.6 million
q 4 bps vs Q2'21
q 4 bps vs Q2'21
p 1 pp vs Q2'21
Structural and liquidity riskOperational risk
Robust and diversified liquidity buffer, with ratios well above regulatory limits
Losses continued to be within expected levels and were lower than Q2'21 in relative terms by Basel categories
LCR 164% 0 pp vs Q2'21
u Credit risk management
As of September 2021, Grupo Santander’s NPL ratio stood at 3.18%, a 4 bp decrease compared to June 2021 and a 3 bp increase year-on-year. The reduction in the quarter was mainly due to the positive performance in Europe with a reduction in its NPL ratio of 16 bps vs. Q2'21. This was partially offset by the increases in North and South America, as their NPL ratio increased by 27 bps and 2 bps, respectively, vs. the previous quarter.
Credit impaired loans amounted to EUR 33,046 million, in line with the previous quarter (in constant euros), while our loan book grew by 1% quarter-on-quarter.
Regarding loan-loss provisions, they amounted to EUR 2,220 million in the third quarter, a 25% increase vs. Q2’21 in constant euros, mainly explained by seasonality and normalization trends after stimulus policies deployed by governments to fight the effects of the pandemic, especially in the US, which are gradually starting to recede.

Considering the first nine months of the year, loan-loss provisions amounted to EUR 5,973 million, a 34% increase in constant euros, on a year-on-year basis, explained by provisions made in 2020 to cover the potential additional losses that could arise as a result of the covid-19 pandemic.
The Group's cost of credit stood at 0.90%, a 4 bp reduction compared to the previous quarter, and -37 bps year-on-year, supported by the good performance of the portfolio and the previously explained additional provisions in 2020.
Total loan-loss reserves in the third quarter stood at EUR 24,462 million, a 2% increase, in constant euros, compared to the previous quarter, with the total coverage of credit impaired loans at 74%, a 1 pp increase compared to the previous quarter.
A significant part of our portfolios in Spain and the UK has real estate collateral, which requires lower coverage levels.
Key metrics performance by geographic area
Loan-loss provisions 1
Cost of credit (%) 2
NPL ratio (%)Total coverage ratio (%)
9M'21Chg (%)
/ 9M'20
9M'21Chg (bps)
/ 9M'20
9M'21Chg (bps)
/ 9M'20
9M'21Chg (pp)
/ 9M'20
Europe1,877 (22.5)0.48 0 3.15 (14)51.1 2.4 
Spain1,390 0.0 1.01 21 5.99 48.8 2.8 
United Kingdom(67)— 0.01 (25)1.27 (6)36.6 (5.1)
Portugal95 (37.6)0.35 (7)3.44 (81)75.5 11.3 
Poland161 (33.7)0.82 (17)4.34 (24)74.6 3.8 
North America1,095 (63.6)1.46 (161)2.56 59 139.3 (62.3)
USA450 (79.8)1.06 (202)2.36 51 161.5 (67.3)
Mexico645 (16.9)2.69 (28)3.14 80 90.1 (42.5)
South America2,384 (17.8)2.52 (97)4.38 (2)98.8 1.5 
Brazil1,980 (9.7)3.60 (98)4.72 111.8 (3.1)
Chile266 (48.0)0.89 (69)4.36 (40)64.1 4.4 
Argentina88 (36.4)3.51 (203)3.85 98 149.3 (37.0)
Digital Consumer Bank449 (40.7)0.57 (22)2.15 (14)112.8 2.3 
TOTAL GROUP5,973 (34.5)0.90 (37)3.18 3 74.0 (1.9)
(1) EUR million and % change in constant euros
(2) Allowances for loan-loss provisions over the last 12 months / Average loans and advances to customers over the last 12 months
18
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January - September 2021

Regarding moratoria programmes, which were put in place to tackle the effects of covid-19, 99% of the total amount granted had already expired by the end of the third quarter, showing a payment performance aligned with expectations, with 6% classified in stage 3 (IFRS 9).
The outstanding moratoria at the end of the quarter amounted to EUR 1.3 billion (mainly Spain), the majority of which will expire next quarter, following the expiration of a significant volume of operations in Portugal in Q3.
Regarding IFRS 9 stages evolution:
Stage 1 exposures increased by 1% vs. the previous quarter, mainly due to new loan originations in Europe and South America.
Exposures in stage 2 decreased by 3% in the quarter, in line with the normalization trend observed after the increase recorded last year, which was mostly driven by macroeconomic deterioration caused by the pandemic.
Stage 3 remained stable in the quarter.
Coverage ratio by stage
EUR billion
Exposure1
Coverage
Sep-21Jun-21Sep-20Sep-21Jun-21Sep-20
Stage 19129048620.5 %0.5 %0.6 %
Stage 26770608.6 %8.2 %8.8 %
Stage 333333143.0 %42.2 %43.3 %
(1) Exposure subject to impairment. Additionally, in September 2021 there are EUR 27 billion in loans and advances to customers not subject to impairment recorded at mark to market with changes through P&L (EUR 26 billion in June 2021 and EUR 29 in September 2020).
Stage 1: financial instruments for which no significant increase in credit risk is identified since its initial recognition.
Stage 2: if there has been a significant increase in credit risk since the date of initial recognition but the impairment event has not materialized, the financial instrument is classified in Stage 2.
Stage 3: a financial instrument is catalogued in this stage when it shows effective signs of impairment as a result of one or more events that have already occurred resulting in a loss.
Credit impaired loans and loan-loss allowances
EUR million
Change (%)
Q3'21QoQYoY
Balance at beginning of period33,266 2.4 1.5 
   Net additions2,188 (14.6)37.2 
   Increase in scope of consolidation— — (100.0)
   Exchange rate differences and other(368)— (78.0)
   Write-offs(2,040)(3.7)15.5 
Balance at period-end33,046 (0.7)7.0 
Loan-loss allowances24,462 0.9 4.2 
   For impaired assets14,205 1.25 6.12 
   For other assets10,257 0.47 1.77 
u Market risk
The global corporate banking trading activity risk is mainly interest rate driven, focused on servicing our customer's needs and measured in daily VaR terms at 99%.
In the third quarter, VaR fluctuated around an average value of EUR 10.6 million, increasing slightly at the end of September after market volatility increased over concerns around a potential slowdown in global growth in H2’21, mainly due to supply chain disruptions and the surge in energy prices. The quarter’s closing VaR was EUR 14.9 million. These figures remain low compared to the size of the Group’s balance sheet and activity.

Trading portfolios (1). VaR by geographic region
EUR million
20212020
Third quarterAverageLatestAverage
Total10.6 14.9 10.2 
Europe9.9 13.7 9.0 
North America2.6 2.0 6.9 
South America5.9 6.1 4.8 
(1) Activity performance in Santander Corporate & Investment Banking markets.



Trading portfolios (1). VaR by market factor
EUR million
Third quarterMin.Avg.Max.Last
VaR total7.8 10.6 15.2 14.9 
Diversification effect(10.1)(13.8)(17.3)(13.8)
Interest rate VaR7.1 9.9 14.1 12.6 
Equity VaR2.2 3.3 6.5 3.3 
FX VaR2.4 3.3 6.2 4.5 
Credit spreads VaR2.9 6.0 7.9 7.2 
Commodities VaR1.1 1.9 3.5 1.1 
(1) Activity performance in Santander Corporate & Investment Banking markets.
NOTE: In the North America, South America and Asia portfolios, VaR corresponding to the credit spreads factor other than sovereign risk is not relevant and is included in the interest rate factor.

January - September 2021
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19

Trading portfolios1. VaR performance

EUR million
chart-02c9471afbb04d6ebbea.jpg(1) Corporate & Investment Banking performance in financial markets.

u Structural and liquidity risk
Regarding structural exchange rate risk, it is mainly driven by transactions in foreign currencies related to permanent financial investments, their results and related hedges. Our dynamic management of this risk seeks to limit the impact on the core capital ratio of foreign exchange rate movements. In the quarter, the ratio’s hedging stayed close to 100%.
In terms of structural interest rate risk, inflation pressures continued globally, leading to expectations of earlier interest rate hikes than previously thought. This, coupled with continued political instability in Latin America, added volatility to the markets, although no material events were detected and risk levels remained at comfortable levels.
In liquidity risk during the third quarter, the Group maintained a comfortable position, supported by a robust and diversified liquidity buffer, with ratios well above regulatory limits.



u Operational risk
Overall, our operational risk profile continued to be stable during the third quarter of 2021. The following aspects were closely monitored during this period:
Fraud and cyber risk threats across the financial industry, that lead to the reinforcement of the control environment (i.e., patching, browsing control, data protection controls, etc.), as well as reinforcing monitoring as a preventive measure. Development of the external fraud plans in our different country units.
Third party risk exposure, maintaining close oversight on critical providers, with focus on business continuity capabilities and compliance with service level agreements.
IT risk, mainly related to transformation plans, new system releases, as well as challenges related to IT services outsourcing.
People risk, due to our employees returning to offices and/or work from home situations. Measures have been implemented to ensure a suitable and safe working environment across our subsidiaries.
Regulatory compliance, due to increasing regulatory requirements (such as ESG, operational resilience, crypto-assets and others) across the Group.
As the situation continues to evolve, we are also monitoring the changes in the environment as well as the transition to digital banking in order to identify potential risk exposures and anticipate actions to reduce their impact.
In terms of the third quarter performance, level of losses in relative terms by Basel categories were lower than in the previous quarter.

20
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January - September 2021

GENERAL BACKGROUND
Grupo Santander conducted its business in the third quarter of 2021 in an environment marked by significant economic dynamism and progress in vaccination, but at the same time by a pronounced impact from the Delta variant and higher-than-expected inflation. The trend in pricing was the most relevant risk factor. The most likely scenario is a temporary rise that, in general, will not call for a tightening of monetary policy, although countries such as Mexico and especially Brazil and Chile have raised interest rates. The general tone of economic policy continued to be expansionary although uneven - more so in the mature economies - which, together with the adjustments the Chinese economy is going through, could lead to a more differentiated economic performance in the coming quarters.
Country
GDP Change1
Economic performance
eurozonaa.jpg
Eurozone
+6.0%
The reopening of economic activities restricted by the pandemic continued to boost GDP growth, which could return to pre-crisis levels by the end of 2021. The unemployment rate fell to 7.5% in August. Inflation rose to 3.4% in September due to temporary factors. The ECB insists that it will maintain loose funding conditions to consolidate the economic recovery.
spaina.gif
Spain
+5.6%
Restrictions to economic activity continued to ease, driving GDP growth. Inflation (4% in September) picked up due to the impact of energy prices and the normalization of some prices that had fallen due to the pandemic. Employment rose, bringing back to work a significant amount of employees who had been on the temporary workforce reduction scheme (ERTE) and reducing the unemployment rate (to 15.3% in Q2'21).
uka.gif
United Kingdom
+7.3%
UK economic recovery stalled in July amid worker shortages and bottlenecks. The labour market continued to improve (unemployment was 4.5% in August). Inflation (3.1% in September) exceeded the BoE's target, which kept interest rates stable (0.1%) and maintained the bond-buying target, although it expressed its willingness to bring forward monetary policy normalization.
portugala.gif
Portugal
+4.3%
The reopening of the economy, supported by a high vaccination rate (83% of the population) has enabled economic growth to progress towards pre-pandemic levels (still 5.8% below Q4'19), with private consumption as the main driver. The labour market improved (unemployment rate at 6.7% in Q2'21) and inflation picked up (1.5% in September), but without showing a clear acceleration pattern.
polanda.gif
Poland
+5.1%
The economy started to return to normal in Q2'21, with rapid GDP growth supported by domestic demand, especially consumption, but accompanied by high inflation (5.9% in September). The labour market remained solid (unemployment rate at 3.5%). In this context, the central bank raised Poland's official interest rate by 40 bps to 0.50% in early October.
usaa.gif
United States
+6.1%
GDP continued to grow strongly in Q2'21, thanks to the fiscal impulse and the reopening of the economy. Inflation rebounded (5.4% in September) due to higher prices in the areas most affected by the pandemic and supply-side problems. The spike in covid-19 cases in the summer somewhat delayed the recovery of the labour market, but the Fed considers this improvement to be sufficient and will start to tighten monetary policy with the announcement of tapering this year.
mexicoa.gif
Mexico
+6.9%
Economic growth gained momentum in Q2'21, driven by the reopening of the services sector and exports, but with some weakness in industry. Inflation rebounded sharply (6.0% in September), with widespread pressure on the prices of goods and services, leading the central bank to continue raising Mexico's official interest rate (+50 bps in Q3'21 to 4.75%).
brazila.gif
Brazil
+6.4%
Economic recovery continued to be driven by the reopening of the services sector, thanks to progress in vaccination and improved mobility, but international supply problems dampened growth in the industry. Inflation continued to pick up (10.25% in August) and the central bank continued to raise Brazil's interest rate, by 200 bps in Q3'21 (6.25%), and indicated that the hikes will continue.
chilea.gif
Chile+8.8%
Strong GDP growth in H1'21 driven by progress in vaccination and high fiscal impulses and liquidity (via partial withdrawals of savings from pension plans). Inflation picked up (5.3% in September) and the central bank started to raise the official interest rate in Q3'21, increasing it by 100 bps to 1.5%, and in October by 125 bps to 2.75%.
argentinaa.gif
Argentina+10.3%
After starting Q2'21 with a slight relapse due to the tighter restrictions imposed in the second wave of covid-19, economic growth resumed its recovery in the last few months, boosted by progress in vaccination and increased mobility. Inflation remains high (3.5% in September).
(1) Year-on-year change H1'21
January - September 2021
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21


DESCRIPTION OF SEGMENTS
We base segment reporting on financial information presented to the chief operating decision maker, which excludes certain statutory results items that distort year-on-year comparisons and are not considered for management reporting. This financial information (underlying basis) is computed by adjusting reported results for the effects of certain gains and losses (e.g. capital gains, write-downs, impairment of goodwill, etc.). These gains and losses are items that management and investors ordinarily identify and consider separately to better understand the underlying trends in the business.
Grupo Santander has aligned the information in this chapter with the underlying information used internally for management reporting and with that presented in Grupo Santander's other public documents.
Grupo Santander's executive committee has been selected to be its chief operating decision maker. Grupo Santander's operating segments reflect its organizational and managerial structures. The executive committee reviews internal reporting based on these segments to assess performance and allocate resources.
The segments are split by geographic area in which profits are earned and by type of business. We prepare the information by aggregating the figures for Grupo Santander’s various geographic areas and business units, relating it to both the accounting data of the business units integrated in each segment and that provided by management information systems. The general principles applied are the same as those used in Grupo Santander.
On 9 April 2021, we announced that, starting and effective with the financial information for the first quarter of 2021, we would carry out a change in our reportable segments to reflect our new organizational and management structure.
These changes in the reportable segments aim to align the segment information with their management and have no impact on the group’s accounting figures.
a.Main changes in the composition of Grupo Santander's segments
The main changes, which have been applied to management information for all periods included in the consolidated financial statements, are the following:
Primary segments
1.Creation of the new Digital Consumer Bank (DCB) segment, which includes:
Santander Consumer Finance (SCF), previously included in the Europe segment, and the consumer finance business in the United Kingdom, previously recorded in the country.
Our fully digital bank Openbank and the Open Digital Services (ODS) platform, which were previously included in the Santander Global Platform segment.

2.Santander Global Platform (SGP), which incorporated our global digital services under a single unit, is no longer a primary segment. Its activities have been distributed as follows:
Openbank and Open Digital Services (ODS), which, as mentioned above, are now included under the new Digital Consumer Bank reporting segment.
The business recorded in Global Payment Services (Merchant Solutions -GMS-, Trade Solutions -GTS- and Consumer Solutions -Superdigital and Pago FX-) has been allocated to the three main geographic segments, Europe, North America and South America, with no impact on the information reported for each country.
Secondary segments
1.Creation of the PagoNxt segment, which incorporates simple and accessible digital payment solutions to drive customer loyalty and allows us to combine our most disruptive payment businesses into a single autonomous company, providing global technology solutions for our banks and new customers in the open market, and which has been structured into three businesses, previously included in SGP:
Merchant Solutions: acquiring solutions for merchants.
Trade Solutions: solutions for SMEs and companies operating internationally.
Consumer Solutions: payment solutions for individuals, including the Superdigital platform, aimed at underbanked populations, and PagoFX, an international payment service in the open market.
2.Annual adjustment of the perimeter of the Global Customer Relationship Model between Retail Banking and Santander Corporate & Investment Banking and between Retail Banking and Wealth Management & Insurance.
3.Elimination of the Santander Global Platform reporting segment:
Openbank and ODS are now recorded in the Retail Banking segment.
Merchant Solutions, Trade Solutions, Superdigital and PagoFX form the new PagoNxt reporting segment.
The Group recasted the corresponding information of earlier periods considering the changes included in this section. As stated above, group consolidated figures remain unchanged.






22
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January - September 2021

b. Current composition of Grupo Santander segments
Primary segments
This primary level of segmentation, which is based on the Group’s management structure, comprises five reportable segments: four operating areas plus the Corporate Centre. The operating areas are:
Europe: which comprises all business activity carried out in the region, except that included in Digital Consumer Bank. Detailed financial information is provided on Spain, the UK, Portugal and Poland.
North America: which comprises all the business activities carried out in Mexico and the US, which includes the holding company (SHUSA) and the businesses of Santander Bank, Santander Consumer USA, the specialized business unit Banco Santander International, Santander Investment Securities (SIS) and the New York branch.
South America: includes all the financial activities carried out by Grupo Santander through its banks and subsidiary banks in the region. Detailed information is provided on Brazil, Chile, Argentina, Uruguay, Peru and Colombia.
Digital Consumer Bank: includes Santander Consumer Finance, which incorporates the entire consumer finance business in Europe, Openbank and ODS.
Secondary segments
At this secondary level, Grupo Santander is structured into Retail Banking, Santander Corporate & Investment Banking (SCIB), Wealth Management & Insurance (WM&I) and PagoNxt.
Retail Banking: this covers all customer banking businesses, including consumer finance, except those of corporate banking which are managed through Santander Corporate & Investment Banking, asset management, private banking and insurance, which are managed by Wealth Management & Insurance. The results of the hedging positions in each country are also included, conducted within the sphere of their respective assets and liabilities committees.
Santander Corporate & Investment Banking (SCIB): this business reflects revenue from global corporate banking, investment banking and markets worldwide including treasuries managed globally (always after the appropriate distribution with Retail Banking customers), as well as equity business.
Wealth Management & Insurance: includes the asset management business (Santander Asset Management), the corporate unit of Private Banking and International Private Banking in Miami and Switzerland and the insurance business (Santander Insurance).
PagoNxt: this includes digital payment solutions, providing global technology solutions for our banks and new customers in the open market. It is structured in three businesses: Merchant Solutions, Trade Solutions and Consumer Solutions.
In addition to these operating units, both primary and secondary segments, the Group continues to maintain the area of Corporate Centre, that includes the centralized activities relating to equity stakes in financial companies, financial management of the structural exchange rate position, assumed within the sphere of the Group’s assets and liabilities committee, as well as management of liquidity and of shareholders’ equity via issuances.
As the Group’s holding entity, this area manages all capital and reserves and allocations of capital and liquidity with the rest of businesses. It also incorporates amortization of goodwill but not the costs related to the Group’s central services (charged to the areas), except for corporate and institutional expenses related to the Group’s functioning.







The businesses included in each of the segments and business areas in this report and the accounting principles under which their results are presented here may differ from the businesses included and accounting principles applied in the financial information separately prepared and disclosed by our subsidiaries (some of which are publicly listed) which in name or geographical description may seem to correspond to the business areas covered in this report. Accordingly, the results of operations and trends shown for our business areas in this document may differ materially from those of such subsidiaries.
As described on the previous page, the results of our business areas presented below are provided on the basis of underlying results only and including the impact of foreign exchange rate fluctuations. However, for a better understanding of the actual changes in the performance of our business areas, we provide and discuss the year-on-year changes to our results excluding such impact.
On the other hand, certain figures contained in this report, including financial information, have been subject to rounding to enhance their presentation. Accordingly, in certain instances, the sum of the numbers in a column or a row in tables contained in this report may not conform exactly to the total figure given for that column or row.
January - September 2021
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23

January-September 2021
Main items of the underlying income statement
EUR million
Primary segmentsNet interest
income
Net fee
income
Total
income
Net operating
income
Profit
before tax
Underlying
attributable
profit to
the parent
Europe8,140 3,236 12,299 6,108 3,377 2,293 
     Spain3,009 1,821 5,359 2,822 995 730 
     United Kingdom3,268 352 3,625 1,688 1,623 1,145 
     Portugal569 325 1,042 613 492 339 
     Poland741 386 1,179 696 281 125 
     Other553 354 1,095 289 (14)(46)
North America6,085 1,247 8,266 4,649 3,504 2,288 
     US4,022 606 5,586 3,240 2,784 1,788 
     Mexico2,063 617 2,662 1,485 828 602 
     Other24 18 (77)(108)(102)
South America8,254 2,726 11,302 7,386 4,691 2,471 
     Brazil5,782 2,027 8,085 5,719 3,526 1,762 
     Chile1,476 294 1,834 1,125 857 463 
     Argentina708 272 929 375 193 180 
     Other289 133 454 167 115 65 
Digital Consumer Bank3,207 616 3,975 2,170 1,602 935 
Corporate Centre(1,033)(15)(1,216)(1,465)(1,741)(1,607)
TOTAL GROUP24,654 7,810 34,626 18,848 11,432 6,379 
Secondary segments
Retail Banking23,206 5,208 29,520 16,780 9,759 5,750 
Corporate & Investment Banking2,207 1,335 4,352 2,709 2,640 1,744 
Wealth Management & Insurance275 933 1,637 969 966 698 
PagoNxt(2)349 334 (145)(191)(206)
Corporate Centre(1,033)(15)(1,216)(1,465)(1,741)(1,607)
TOTAL GROUP24,654 7,810 34,626 18,848 11,432 6,379 

Underlying attributable profit to the parent distribution*
9M'21


chart-dc74558a50924e429c5a.jpg
(*) As a % of operating areas. Excluding the Corporate Centre.


Underlying attributable profit to the parent. 9M'21
EUR million. % change YoY in constant euros
Europe
uk1a.gif
esa.gif
pta.gif
pla.gif
North
America
usb.gif
mxa.gif
South
America
bra.gif
cla.gif
ara.gif
Digital Consumer BankDCB
Global businesses
sciba.gif
wmia.gif
pagonxta.gif
chart-70a05ed3560e4c1da33a.jpg
+407 %
+47 %
+39 %
-9 %
+305 %
+1 %
+29 %
+68 %
+43 %
+17 %
+26 %
+24 %
n.a.
24
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January - September 2021

January-September 2020
Main items of the underlying income statement
EUR million
Primary segmentsNet interest
income
Net fee
income
Total
income
Net operating
income
Profit
before tax
Underlying
attributable
profit to
the parent
Europe7,241 3,032 10,998 4,739 1,724 1,157 
     Spain2,890 1,740 5,150 2,417 696 497 
     United Kingdom2,521 398 2,932 994 308 220 
     Portugal592 285 979 538 350 243 
     Poland794 332 1,136 661 303 142 
     Other445 276 801 129 66 56 
North America6,415 1,282 8,335 4,873 1,653 1,055 
     US4,297 682 5,559 3,252 820 470 
     Mexico2,118 584 2,760 1,629 844 591 
     Other16 15 (9)(11)(6)
South America8,157 2,704 11,346 7,324 3,836 2,113 
     Brazil5,840 2,148 8,322 5,677 2,973 1,545 
     Chile1,293 240 1,669 988 500 269 
     Argentina721 202 902 411 185 161 
     Other304 114 454 248 178 138 
Digital Consumer Bank3,190 566 3,814 2,081 1,371 787 
Corporate Centre(1,029)(26)(889)(1,137)(1,567)(1,455)
TOTAL GROUP23,975 7,559 33,605 17,879 7,016 3,658 
Secondary segments
Retail Banking22,557 5,301 28,673 15,667 5,620 3,108 
Corporate & Investment Banking2,153 1,167 4,079 2,564 2,217 1,482 
Wealth Management & Insurance294 857 1,486 830 801 584 
PagoNxt0 259 256 (45)(55)(61)
Corporate Centre(1,029)(26)(889)(1,137)(1,567)(1,455)
TOTAL GROUP23,975 7,559 33,605 17,879 7,016 3,658 
January - September 2021
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25

europaa.gif
EUROPEUnderlying attributable profit
EUR 2,293 mn
Executive summary (changes in constant euros)
We are accelerating our One Santander business transformation in Europe to achieve superior growth and a more efficient operating model that should allow us to progress towards our medium-term underlying RoTE target of 10-12%1.
Positive P&L performance, with higher revenue (+12%) and lower costs (-1%) and provisions (-23%), which led to an underlying attributable profit of EUR 2,293 million (+98% year-on-year).
Volume growth in the last 12 months in almost all markets: loans grew 3% and deposits rose 4%, with positive trends since the beginning of the year.
Unless otherwise indicated, changes in the region and in countries with currencies other than the euro are reported at constant exchange rates. The balance sheet and P&L ratios, together with the changes at current exchange rates, are included in the appendix.
Strategy
Our goal with One Santander in Europe is to create a better bank where customers and our people feel a deep connection while delivering sustainable value for our shareholders. We aim to deliver a c.10-12% underlying RoTE in the medium term1 and make progress in the business transformation through our action plan, defined around three main blocks:
Grow our business by better serving our customers, focusing on capital efficient opportunities, which include SCIB and WM&I, simplifying our mass market value proposition, improving customer experience and engaging with PagoNxt.
Redefine how we interact with our customers, accelerating our digital agenda with one common mobile experience, re-imagining our branch network and transforming our contact centres, building a common solution for the region.
Create a common operating model, to serve our businesses through a common technology platform and automated operations, leveraging shared services and with one aligned team across Europe.
The key areas of progress by country in the quarter were:


Loyal customers. September 2021
Thousands. % loyal / active customers
37 %/ active customers36 %31%50%55%
europa-vinculadoseng.jpg
clientespaisesa01a.jpg
10,197
Spain: our priorities are to strengthen our customer base, increase customer satisfaction, simplify our offering to achieve profitable growth, and actively manage credit risk in the current market environment. We continued to improve our digital services, for which were named by Global Banking & Finance Review as Best Bank in Digital Services and Most Innovative Retail Banking app in Spain in 2021 .
United Kingdom: we continued to increase our digital customer base and foster mass market simplification through our customer journey. Customer margin management and better operational efficiency, backed by our Transformation for Success programme, helped to deliver strong profit growth.
Portugal: launch of OneApp just five months into the project; a big step forward in building One Santander in Europe. Our IT transformation programme continued its path. Although Q3 was still affected by the covid-19 pandemic, the end of moratoria did not have significant impacts due to proactive management supported by data and digital tools. In short, the Bank maintains its solid commitment to the transformation plan, aiming to provide the best customer experience in the market.


Digital customers. September 2021
Thousands. YoY % change
+6 %YoY+3 %+5%+9%+8%
europa-digitaleseng.jpg
clientesdigitalesa01a.jpg

15,884

1.Medium-term goals for underlying RoTE do not represent guidance. The actual underlying RoTE may vary materially in the medium term.
26
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January - September 2021

Poland: we continued to progress in our business and strategic transformation to become a simpler, faster, more efficient and more costumer centric organization. Our recent achievements include: maintaining our top 3 position in NPS among Polish banks; 16% growth in active mobile customers to 2.1 million; and the launching of new solutions and functionalities, such as online and mobile loan applications, Santander Future Wealth and a new website for brokerage customers with an enhanced UX.
We incorporate ESG management in our strategy and day-to-day activities: in Environment, by supporting the green transition and aiming to become a leader in Green Finance; in Social by building a more diverse and inclusive society and in Governance by performing our business responsibly.
In the first nine months of the year, we have focused on green buildings (prioritizing funding for houses with highest energy efficiency and we were the first mortgage provider in the UK to launch EnergyFact, a free home energy report) and supporting agribusinesses transition towards more sustainable use of resources (e.g. financing for irrigation modernization, machinery renewals).
Business performance
Gross loans and advances to customers excluding reverse repurchase agreements were 3% higher year-on-year, backed by the mortgage business, mainly in the UK and retail banking in Poland, Portugal and Spain. We had a very strong third quarter, despite usual seasonality, achieving very high levels of mortgage and UPL originations. Corporate activity slowed down as a result of government aid programmes and lower demand in recent months.
Customer deposits excluding repurchase agreements grew 4% year-on-year, with broad-based increases in all countries. Mutual funds +20%.
Results
Underlying attributable profit in the first nine months was EUR 2,293 million, 98% higher than in the same period of 2020, with the following detail:
Higher total income (+12%) spurred by a very positive NII performance in mortgages in the UK, sharp net fee income growth in Poland, strong results in SCIB and a solid management of funding costs.
Business performance. September 2021
EUR billion and YoY % change in constant euros
europaa.gif
567 +3%
europaa.gif
695 +6%
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Gross loans and advances to customers excl. reverse reposCustomer deposits excl.
repos + mutual funds
Costs decreased 1.5% as a result of the ongoing optimization plans in all countries, aligned with our savings targets for the region and after absorbing costs related to the development of technology platforms.
Loan-loss provisions dropped 23% compared to the first nine months of 2020, which was strongly affected by covid-19 related provisions.
By country:
Spain: underlying attributable profit in the first nine months surged 47% year-on-year, predominantly driven by the strong cost reductions. Total income rose 4% driven by effective NII management and net fee income (transactional, insurance and mutual funds), although they slowed in the quarter.
United Kingdom: underlying attributable profit was five times that of the same period of 2020, reflecting the benefits from provision releases, lower cost of deposits and greater mortgage and SME volumes.
Portugal: underlying attributable profit rose 39% compared to the previous year, driven by ALCO portfolio sales, lower costs and improved cost of credit performance, which remained solid despite the end of moratoria programmes.
Poland: underlying attributable profit was affected by interest rate cuts and charges related to CHF-indexed and based mortgages. These impacts were partially mitigated by net fee income growth, dividends and lower loan-loss provisions.
Other Europe: SCIB had an excellent performance in the first nine months of the year, on the back of strong Markets results (which started to normalize in recent months due to reduced market volatility).
In the quarter, underlying attributable profit increased 44%, primarily driven by continued cost savings, in line with our restructuring plan and the increase in total income, partly due to the contribution to the SRF recorded in Q2'21.

Europe. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue4,208 +7+712,299 +12+12
Expenses-2,048 -1-1-6,191 -1-1
Net operating income2,160 +16+156,108 +29+29
LLPs-676 +11+12-1,877 -22-23
PBT1,227 +33+333,377 +96+96
Underlying attrib. profit867 +45+442,293 +98+98
January - September 2021
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27

esa.gif
SpainUnderlying attributable profit
EUR 730 mn
Commercial activity and business performance
The pick up of activity in individuals was consolidated in the third quarter. Of note was new residential mortgage lending, where we once again exceeded the highest monthly new business volumes of the past 3 years, and consumer lending, which exceeded pre-pandemic levels. As a result, by July we had doubled our new business market share in both of these markets compared to the previous year. In addition, the good commercial dynamism in protection insurance was maintained and of note was the increase in cards turnover (+16%), transfers (+13%) and direct debits (+6%).
Regarding the self-employed, SMEs and corporates, positive working capital trends were also maintained (+12% in the quarter) while the slowdown in the demand for loans continued, mainly due to corporates.
In transactional products, we continued to grow in PoS with significant market share and customer base expansion, which was reflected in a 40% increase in turnover compared to the previous year.
Loans and advances to customers excluding reverse repos remained stable both quarter-on-quarter and year-on-year, with growth in individuals, institutions and private banking.
Customer deposits excluding repos increased 3% compared to the same period of 2020. Mutual funds were 18% higher, driven by sustained net positive inflows in the last 6 quarters.
Results
Underlying attributable profit in the first nine months amounted to EUR 730 million, 47% higher year-on-year. By line:
Total income increased 4% year-on-year, underpinned by net interest income (+4%) and net fee income (+5%) on the back of insurance, mutual funds and transactional fees.
We continued our cost reduction efforts (-7% year-on-year), on the back of the transformation of our operating model, which enabled net operating income to grow 17%.
Loan-loss provisions remained stable compared to the same period of 2020, after the start of an upward trend in the third quarter.
Compared to the second quarter, underlying attributable profit more than doubled due to the contribution to the SRF recorded in Q2, further efficiency improvements and lower loan-loss provisions.

Spain. Underlying income statement
EUR million and % change
Q3'21/ Q2'219M'21/ 9M'20
Revenue1,881 +115,359 +4
Expenses-818 -4-2,537 -7
Net operating income1,063 +262,822 +17
LLPs-449 -9-1,390 0
PBT453 +124995 +43
Underlying attrib. profit340 +130730 +47
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United KingdomUnderlying attributable profit
EUR 1,145 mn
Commercial activity and business performance
We continue our focus on building deeper customer relationships and a seamless customer experience. Our priorities are aligned to the One Santander strategy, which include accelerated customer digital adoption, reshaping of our property footprint and faster digitalization and automation.
Our strategic transformation programme continues. We have closed 111 branches this year, reflecting the shift by customers towards online and mobile banking. This shift was also evidenced by further gains in digital and mobile customers (+5% and +11%, respectively), continued increases in digital transactions (+17%) and digital sales accounting for nearly 85% of all sales. We also confirmed a 40% reduction in head office space.
Gross loans excluding reverse repos grew 1% since September 2020, reflecting growth in our residential mortgage portfolio from strong application volumes and GBP 30 bn of gross lending. This was partially offset by lower Corporate and CIB lending.
Customer funds excluding repos increased 3% year-on-year following strong growth in retail banking, retail savings and corporate deposits, mainly driven by lower consumer spending patterns during the covid-19 pandemic. This growth was partially offset by lower CIB deposits.
Results
Underlying attributable profit in the first nine months of 2021 of EUR 1,145 million, five times that of the same period in 2020. By line as follows:
Total income was up 21%, with increased net interest income driven by the repricing of deposits (1I2I3 Current Account), higher customer balances, higher mortgage and SME volumes. This was partly offset by base rate cuts, back-book mortgage margin pressure and regulatory changes to overdrafts that took effect in April 2020.
Costs reduced 2%, continuing to reflect efficiency savings from our transformation programme, partly offset by technology investments. As a result, the efficiency ratio improved significantly (-12.7 pp) to 53.4%.
Releases in loan-loss provisions totalling EUR 67 million in the first nine months of 2021, reflecting the improved economic forecast and the reduction in covid-19-related provisioning.
Cost of credit remained close to 0% and the NPL ratio was 1.27%.
Against Q2'21, underlying attributable profit increased 12% driven by higher NII (higher mortgage volumes) and further efficiency improvements, driven by higher revenue and an acceleration in cost reduction.
United Kingdom. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue1,303 +8+73,625 +24+21
Expenses-638 -2-2-1,937 0-2
Net operating income665 +18+171,688 +70+66
LLPs-1 67 
PBT625 +6+61,623 +426+414
Underlying attrib. profit452 +13+121,145 +420+407
28
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January - September 2021

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PortugalUnderlying attributable profit
EUR 339 mn
Commercial activity and business performance
We continued with our transformation strategy, simplifying our processes and commercial proposition, in order to provide the best customer service:
Positive business activity and volume performance, in line with economic recovery. New mortgage lending reached record levels.
The end of private moratoria (for individuals) had no impact on credit quality. Further NPL improvements.
The number of digital customers increased 9% year-on-year and digital sales now account for 58% of the total (+19 pp year-on-year).
Loans and advances to customers excluding reverse repos increased 4% year-on-year, backed by positive new lending performance in the quarter (preserving 20% market shares in new mortgage and SMEs lending in a growing market).
Customer funds excluding repos rose 7%. Of note was the increase in mutual funds, reflecting our diversification strategy towards off-balance sheet funds.
Results
Underlying attributable profit in the first nine months was 39% higher year-on-year at EUR 339 million, driven by:
Customer revenue increased 2% as net fee income (+14%) more than offset the impact of low interest rates on NII. Total income rose 6% year-on-year driven by ALCO portfolio sales and despite the higher SRF contribution.
Costs dropped 3% favoured by the ongoing transformation process, which resulted in a 3.9 pp efficiency improvement to 41.2%.
Loan-loss provisions declined 38% year-on-year. Credit quality indicators improved: the cost of credit down 7 bps to 0.35%, the NPL ratio fell 81 bps to 3.44% and coverage was higher.
Compared to the previous quarter, underlying attributable profit was 27% higher, due to higher net fee income, lower costs and provisions, and the SRF contribution in Q2.

Portugal. Underlying income statement
EUR million and % change
Q3'21/ Q2'219M'21/ 9M'20
Revenue312 +31,042 +6
Expenses-140 -2-429 -3
Net operating income172 +7613 +14
LLPs-25 -28-95 -38
PBT145 +27492 +41
Underlying attrib. profit100 +27339 +39

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PolandUnderlying attributable profit
EUR 125 mn
Commercial activity and business performance
Retail and SME banking activity continued to recover in the quarter, reflected in new customer acquisition, record mortgage loan sales (more than doubling the same quarter in 2020) and positive trends in personal accounts, bancassurance and leasing.
In Business Corporate Banking, there were positive performances in the corporate treasury and FX businesses in the context of customer activity. Additionally, CIB maintained its leading position in the Polish market.
Our responsible banking commitments continue to be a priority and we look to participate in green energy projects. For example, we financed a solar farm portfolio (>PLN 200 million) in the quarter.
Loans and advances to customers excluding reverse repos increased 4% year-on-year driven by solid growth in mortgages (+4%), SMEs (+5%) and SCIB (+19%), while cash loans and business banking were practically stable.
Customer deposits excluding repos were up 8% year-on-year with a marked increase in demand deposits (+20%) as our strategy to optimize funding costs continued. In particular, there was double-digit growth in individuals, SMEs and business banking. Mutual funds also jumped, up 33%.
Results
In the first nine months of 2021, underlying attributable profit was EUR 125 million, 9% lower year-on-year as results continued to be impacted by charges relating to Swiss franc mortgages (EUR 148 million) as net operating income after loan-loss provisions was up 34%:
Total income was 7% higher YoY as a surge in net fee income (+19%, transactional and asset management), was enough to more than offset NII pressure (-4%) stemming from several central bank rate cuts.
Total operating expenses were higher by 5% than last year, mainly driven by staff costs but also higher general and administrative costs due to the rebound in activity in 2021.
Loan-loss provisions decreased by 34% YoY, spread across all segments.
Compared to the previous quarter, underlying attributable profit doubled, mainly as a result of higher customer revenue, lower CHF mortgage related charges and cost control.
Poland. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue405 -3-21,179 +4+7
Expenses-162 -10-483 +2+5
Net operating income243 -4-4696 +5+8
LLPs-47 +4+5-161 -36-34
PBT140 +69+70281 -7-5
Underlying attrib. profit70 +109+110125 -12-9
January - September 2021
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29

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NORTH AMERICAUnderlying attributable profit
EUR 2,288 mn
Executive summary (changes in constant euros)
In North America, the Group's strategy is to accelerate profitable growth in the US, increase collaboration between countries and implementing local priorities.
In activity, customer funds surged 10% boosted by higher retail and corporate deposits in the US and mutual funds. Loans and advances to customers increased 1% (excluding the Bluestem portfolio disposal) driven by mortgage lending in Mexico and auto in the US.
Underlying attributable profit surged 122% year-on-year, driven largely by higher revenue in the US and lower LLPs in the region.
Unless otherwise indicated, changes in the region and countries are reported at constant exchange rates. The balance sheet and P&L ratios, together with the changes at current exchange rates, are included in the appendix.
Strategy
In line with our strategy to deploy capital to the most profitable businesses, in the quarter:
On 24 August, Santander Holdings USA, Inc. (SHUSA) and SC USA entered into a definitive agreement pursuant to which SHUSA will acquire all outstanding shares of common stock of SC USA that it does not own through a tender offer for USD 41.50 per share. SHUSA currently owns approximately 80% of SC USA's outstanding shares, and, once the transaction is completed, SC USA will become a wholly owned subsidiary of SHUSA. This transaction is subject to, among other customary conditions, Federal Reserve approval and is expected to close in the fourth quarter of 2021.
On 15 July, Banco Santander announced that SHUSA had reached an agreement to acquire Amherst Pierpont Securities, through the acquisition of its parent holding company, Pierpont Capital Holdings LLC, for a total consideration of c. USD 600 million. This acquisition is expected to be c.1% accretive to group EPS and generate a return on invested capital of c.11% by year 3 (post-synergies). The transaction is expected to have a -9 bp impact on Group capital at closing expected by the end of Q1'22, subject to regulatory approvals and customary closing conditions.
Regarding our regional strategy, synergies across countries are backed by joint initiatives that include:
Further development of the USMX trade corridor. SCIB and Commercial Banking continued to work to deepen relationships with existing customers, which was reflected in revenue growth.
Loyal customers. September 2021
Thousands. % loyal / active customers
38 %/ active customers23%40%
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4,144

Boost customer attraction and retention through loyalty strategies (such as initiatives to attract payrolls) and broadening our tailored service and product proposition for a better and simpler customer experience. At the same time, we are working on the development of payment alternatives for the USMX trade corridor and we are leveraging our global digital platform PagoNxt.
Improve customer interaction through improved segmentation. In the US, we set up a value proposition for affluent customers: Select and Private, and, in Mexico, we designed a service model for high-income customers, with the aim of differentiating the value proposition to its three segments: Select Black, Select and Evolution for young customers.
Drive cultural transformation and share best practices to improve customer and employee experience, such as the success in implementing loyalty programmes in Mexico and the Consumer Banking transformation programme at Santander Bank (SBNA), as well as SC USA's experience in the auto business.
To this end, we are consolidating IT functions in North America: operations know-how, digitalization, hubs, front-office and back-office, and addressing common challenges, together with the integration of the regional IT platform (MEXUS).

Digital customers. September 2021
Thousands. YoY % change1
+11 %YoY+4%+11%
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6,485

(1) Excluding Puerto Rico disposal impact
30
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January - September 2021

In addition, in terms of their local priorities:
United States
As the covid-19 crisis moves though different stages, we remain focused on customer experience and growing core customers and deposits through commercial, branch and digital transformation initiatives while continuing to leverage our deposit base to support our profitable growth in auto finance, CRE and CIB businesses.
The auto business, in particular, is ideally positioned to capture significant growth from the sustained demand for used vehicles and the strength of SC USA through its national dealer network.
Mexico
The multichannel innovation and boost to digital channels continued to strengthen our value proposition with new products and services, allowing us to make headway with our customer attraction and loyalty strategy.
In line with our goal to enhance customer experience and the distribution model, we continued to run projects to generate synergies between all commercial areas. Of note was the project to increase branch profitability by attracting new payrolls and portability. In addition, we improved the value proposition of our collections and payments business by including new commercial alliances with the main convenience store chains, with more than 28,000 points of service, which allow us to increase our capacity to receive payments and deposits from our customers.
We continued to promote the use of digital channels through campaigns and incentive programmes to boost the activation of the electronic signature and the use of digital cards with the launch of Like U, a credit card with a fully online contracting process, immediately available for use. It allows customers to make online purchases, tailor its benefits and support social causes.
In mortgages, we continued with the consolidation of the Hipoteca Online platform, with more than 96% of transactions processed through digital channels in the quarter.
In payroll loans, we remained focused on renewal offerings, with open term options for customers to choose the one that best suits their needs.


Business performance. September 2021
EUR billion and YoY % change in constant euros1
norteamericaa.gif
127 +1%
norteamericaa.gif
134 +10%
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Gross loans and advances to customers excl. reverse reposCustomer deposits excl.
repos + mutual funds
(1) Excluding Puerto Rico and Bluestem portfolio disposal impact

In SMEs, the digital strategy and customer-centric approach continue to be relevant levers for customer attraction through the partnership with Contpaqi and the ISOS strategy for POS placement. In addition, we signed commercial alliances with the country's main business chambers through the Oferta Integral Pyme. Moreover, we introduced the TDC Agro offer, providing financing with payment schemes adapted to the production cycles of this sector.
Business performance
Gross loans and advances to customers excluding reverse repos were 1% higher year-on-year boosted by mortgages in Mexico and lending growth in auto in the US. Considering the impact of Bluestem portfolio disposal, loans remained flat.
Solid year-on-year growth in customer funds (+10%) mainly driven by retail and corporate deposits in the US and the positive performance in mutual funds in both countries.
Results
In the first nine months of 2021, underlying attributable profit was 122% higher year-on-year at EUR 2,288 million (29% of the Group’s total operating areas). On a like-for-like basis, excluding the impact of Bluestem portfolio and Puerto Rico disposals, growth of 125%, as follows:
Total income increased 7%. Net interest income grew 3% as price management and hedging in the US more than offset lower net interest income in Mexico due to the contraction in lending and the negative impact of lower interest rates. Lease income increased 72% and net fee income grew 7%.
Costs rose 11%, primarily due to inflation and investments in digitalization. The efficiency ratio stood around 44%.
Loan-loss provisions plummeted by 61%. The cost of credit improved to 1.46%, the NPL ratio stood at 2.56% and coverage was 139%.
Compared to the previous quarter, underlying attributable profit decreased 25% primarily due to seasonality in LLPs in the US.


North America. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue2,779 +208,266 -1+3
Expenses-1,275 +7+5-3,617 +4+8
Net operating income1,504 -1-44,649 -5-1
LLPs-506 +160+157-1,095 -65-64
PBT959 -28-303,504 +112117
Underlying attrib. profit661 -23-252,288 +117+122
January - September 2021
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31

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United StatesUnderlying attributable profit
EUR 1,788 mn
Commercial activity and business performance
Santander US remains focused on supporting its customers and advancing its strategic initiatives, centred on improving customer experience and accretive capital allocation across its different businesses.
The work conducted over the last several years, the resilience of its core business lines, and the strength of its balance sheet has allowed Santander US to be uniquely positioned to benefit from current market conditions.
Auto originations increased 16% versus 9M'20 as Santander US continues to leverage its strong deposit base to support originations across the full credit spectrum.
Gross loans and advances excluding reverse repos and the impact of Bluestem portfolio disposal grew 2% year-on-year as lending growth in auto more than offset tepid corporate demand. Considering the Bluestem portfolio disposal impact, loans increased 1%.
Customer funds excluding repos again exhibited a strong performance, growing 13% year-on-year boosted by both retail and corporate deposits.
Results
Underlying attributable profit in the first nine months of 2021 was EUR 1,788 million (4x 9M'20 profit), supported by the 17% year-on-year increase in net operating income excluding the impact of Bluestem portfolio and Puerto Rico disposals (+6% considering them) and significantly improved cost of credit. By line, on a like-for-like basis:
Total income up 14%. Net interest income growth was 7% due to price management and hedging. Net fee income increased 8%. Other operating income improved 93%, primarily due to outstanding auto leasing results.
Expenses increased 12% because of higher activity and investments to execute strategic initiatives, including digital transformation, as well as a USD 50 million donation to our community foundation.
Loan-loss provisions decreased 79%, driven by the decrease in net charge-offs, as the improved macroeconomic outlook, customer loan relief and strong used car prices led to credit growth on a like-for-like basis.
Q3’21 underlying attributable profit was 28% lower QoQ, primarily driven by sequential normalization in CIB fees and auto leasing income, higher provisions in the quarter (releases in Q2) and the USD 50 million donation to our community foundation.

United States. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue1,849 1-25,586 0+7
Expenses-815 +4+2-2,346 +2+8
Net operating income1,034 -2-43,240 0+6
LLPs-294 -450 -81-80
PBT734 -32-342,784 +240+261
Underlying attrib. profit498 -26-281,788 +280+305
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MexicoUnderlying attributable profit
EUR 602 mn
Commercial activity and business performance
Gross loans and advances to customers, excluding reverse repurchase agreements, were down 2% year-on-year, driven by the reduction in corporate loans, somewhat offset by the 11% increase in individuals. Within individuals, cards fell 7%, although there seems to be a recent positive shift in trend and mortgages continued to increase strongly (+14%).
In this segment, we have innovative products and services such as Hipoteca Plus, which rewards customer relationships and reduces interest rates if they meet certain requirements, and Hipoteca Free, Mexico's first commission-, appraisal- and insurance-free mortgage. We were the first bank in Mexico to offer a tailored interest rate based on the customer’s profile, making us one of the top mortgage lenders in the market.
Customer deposits excluding repos were 4% higher year-on year, propelled by demand deposits (+11%). Mutual funds were up 7%.
Results
Underlying attributable profit in the first nine months of 2021 of EUR 602 million, 1% higher year-on-year. By line:
Total income was 5% lower impacted by the falls observed in gains on financial transactions (ALCO portfolio sales in 2020) and net interest income (-4%), the latter as a result of interest rate cuts and lower portfolio volumes. Net fee income was up 5% mainly from transactional fees.
Operating expenses increased 3% in nominal terms, mainly driven by technology costs and the increase in amortizations. In real terms, costs fell 2%.
Loan-loss provisions dropped 17% due to higher covid-19 related charges in 2020.
Against the previous quarter, underlying attributable profit increased 3% driven by the upturn in net interest income and gains on financial transactions, which offset the rise in costs, which were affected by IT projects and the insourcing of employees.




Mexico. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue919 +5+22,662 -4-5
Expenses-425 +12+10-1,177 +4+3
Net operating income494 -1-31,485 -9-10
LLPs-213 +4+2-645 -16-17
PBT280 -3-5828 -2-3
Underlying attrib. profit215 +5+3602 +2+1
32
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January - September 2021

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SOUTH AMERICAUnderlying attributable profit
EUR 2,471 mn
Executive summary (changes in constant euros)
We continued with our strategy to strengthen connectivity across the region and enable the exportation of positive experiences across units, capturing new business opportunities.
We remain focused on delivering profitable growth, increasing loyalty and customer attraction, and controlling costs, amid high inflation, and risks.
Double-digit growth year-on-year in both gross loans and advances to customers and customer deposits, underpinned by innovation in our product and service proposition. In addition, we are expanding ESG initiatives in the region.
Underlying attributable profit increased 31% year-on-year backed by positive customer revenue performance, improved efficiency and lower provisions.
Unless otherwise indicated, changes in the region and countries are reported at constant exchange rates. The balance sheet and P&L ratios, together with the changes at current exchange rates, are included in the appendix.
Strategy
South America is a region with great growth potential and opportunities for banking penetration and progress in financial inclusion. In this environment, we remained focused on growing the number of customers leveraging business opportunities, exchanging positive experiences across countries and enhancing digitalization and customer loyalty.
We maintained our strategy of capturing synergies across business units:
In consumer finance, Santander Brasil exported its new and used vehicle financing platform to other countries, as well as Cockpit, a platform to streamline management of car dealerships, is being rolled out in Argentina and Peru. These two countries also made progress in expanding the digital strategy for financing consumer loans and used vehicles. Santander Chile achieved favourable results in insurance sales and Colombia and Uruguay recorded strong activity in vehicle financing.
In payment methods, we are focused on e-commerce strategies and on providing immediate national and international transfers. We continued to consolidate Getnet in several countries, based on Santander Brasil's successful model. For example, in Chile, we reached a 15% market share in PoS in just seven months and in Brazil, we issued more than 650,000 cards per month, focusing on digital (99% through this channel).

Loyal customers. September 2021
Thousands. % loyal / active customers
29 %/ active customers26%41%52%23%
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10,043
We continued to make headway in the development of joint initiatives between SCIB and corporates to deepen relationships with multinational clients, boosting loyalty and customer acquisition in all countries, especially in Chile and Argentina.
We continued to promote inclusive and sustainable businesses, such as Prospera, our micro-credit programme in Brazil (with 667,000 active customers), Uruguay and Colombia (present in 110 municipalities), and with the launch of Surgir in Peru, a microfinance entity. In Chile, we launched the green SME product and in Uruguay we rolled out the first vehicle loan that seeks to neutralize emissions by acquiring neutral carbon credits. As a result, we were named the Best Bank for Sustainable Finance in Latin America by Euromoney and Santander Chile and Santander México were both recognized by Global Finance as Outstanding Leader in Sustainable Finance in Latin America.
The main initiatives by country were:
Brazil: we continued to significantly grow our customer base, gaining more than 1.5 million customers in the last quarter, and increased loyalty. Record customer acquisition and turnover in cards, and we established an important alliance with American Express focused on the high income segment. We maintained the strong growth rate of mortgage business and were leaders in the home equity segment with a 25% market share in new lending. Our digital business continued to grow and digital transactions already account for 90% of the total. In addition, Gente, an artificial intelligence channel, registered more than 18 million interactions per month.
Digital customers. September 2021
Thousands. YoY % change
+18 %YoY+20%+30%+1%+13%
sudamerica-digitaleseng.jpg
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23,531
January - September 2021
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33

On the other hand, our leadership in the wholesale sector consolidates our position as one of the best corporate banks, thanks to our experience as a global bank (being the largest bank in FX transactions for the last eight years), in infrastructure, in agribusiness (the largest agricultural commodities desk in the country) and equities.
Chile: we remained focused on digital banking and enhancing customer service. As a result, growth in current account openings doubled that of the Chilean financial system in the last twelve months, strongly supported by Santander Life. Superdigital also recorded strong growth in customer acquisition. In the acquiring business, we continued with Getnet's expansion. Also of note was the increase of Autocompara, reaching a 17% market share.
Argentina: we continued to improve our customer care model through digital transformation. Our app was rated as the best on iOS and Android, and, in addition, we launched Superdigital. Santander Consumer launched a 100% online platform to boost access to credit and consumption and Getnet continued to expand in the country.
Uruguay: we strengthened our position as the country's leading privately-owned bank while making headway in our technological transformation through measures such as market disruptive instant credit card issuances, and the roll-out of Soy Santander, a fully digital customer loyalty proposition for individuals. Our financial entities continued their positive performance, ranking first in consumer finance in the country.
Peru: we continued to progress on the digitalization of our services and internal processes; 86% of transactions are processed digitally through our office banking platform and Nexus, and introduced initiatives such as the digital onboarding of customers and the purchase of a digital platform for consumer and used vehicle financing.
Colombia: we continued to conduct infrastructure-related transactions, where we ranked top 5 in the market. We made progress in joint initiatives between SCIB and Corporates, with a particular focus on customer attraction and loyalty. In consumer finance, we hit an all-time record in new auto lending, with portfolio growth of 50% year-on-year.


Business performance. September 2021
EUR billion and YoY % change in constant euros
sudamericaa.gif
126 +10%
sudamericaa.gif
163 +10%
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recursossudamericaenga.jpg
Gross loans and advances to customers excl. reverse reposCustomer deposits excl.
repos + mutual funds
Business performance
Gross loans and advances to customers (excluding reverse repos) increased 10% year-on-year, with double-digit rises in all country units except Chile, which remained stable.
Customer deposits excluding repos grew 11% boosted by demand deposits (+16%) and, to a lesser extent, time deposits (+7%). Mutual funds rose 7%.
Results
Underlying attributable profit in the first nine months of 2021 amounted to EUR 2,471 million, up 31% year-on-year, as follows:
Total income increased 11% underpinned by net interest income (+13%) and net fee income (+13%).
Costs rose at a slower pace than total income, pushed up mainly by Argentina (affected by inflation). Of note was cost management in Brazil and Chile (+1% and +2%, respectively in nominal terms; -6% and -1% in real terms). The efficiency ratio improved 81 bps year-on-year to 34.6% enabling net operating income to increase 12%.
Loan-loss provisions dropped by 18% driven by covid-19 related provisions recorded in 2020. In credit quality, the NPL ratio fell to 4.38%, coverage increased to 99% and the cost of credit improved to 2.52%.
By country, double-digit underlying attributable profit growth in constant euros in all countries (except Uruguay), due to the positive performance in total income and lower provisions (except Peru and Colombia, which recorded increases). In Uruguay, the fall in profit was primarily due to lower net interest income (interest rate cuts).
Compared to the second quarter, underlying attributable profit dropped 7%, dampened by the rise in costs, partly driven by higher inflation, collective labour agreements in Brazil and wage adjustments in Argentina, and higher provisions, somewhat mitigated by positive NII performance and gains on financial transactions.

South America. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue3,991 +6+411,302 0+11
Expenses-1,398 +8+6-3,916 -3+9
Net operating income2,593 +5+37,386 +1+12
LLPs-892 +10+8-2,384 -26-18
PBT1,577 -2-44,691 +22+36
Underlying attrib. profit826 -5-72,471 +17+31

34
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January - September 2021

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BrazilUnderlying attributable profit
EUR 1,762 mn
Commercial activity and business performance
We continued to make headway with our commercial strategy:
In auto, we continued to develop a platform focused on end-to-end customer experience. As a result, we reached 20% market share in vehicles, including individuals and companies, and Santander Auto began to sell insurance to the corporate segment, achieving a penetration of 19%.
In cards, we reached a record high in customer acquisition, remaining third in terms of market share.
In mortgages, new lending to individuals continued to grow at a strong pace, +74% year-on-year, and we acquired a company to accelerate the development of integrated solutions for all customers. We remained leaders in the home-equity segment, with Usecasa.
Within the ESG sphere, we are the leader in sustainable solutions. We channelled BRL 33 billion into social and environmental businesses and continued to make progress on Plano Amazônia, in collaboration with the two other largest private-sector banks in Brazil. In addition, we created a new business unit in the region, which has already channelled BRL 270 mn. As a result, GPTW put Santander Brasil as the 8th best company to work for in Latin America.
As for volumes, gross loans and advances to customers excluding reverse repos grew 13% year-on-year. We saw positive performances in individuals and SMEs.
Customer deposits excluding repos increased 3%, driven by the increase in time deposits (+4%). Mutual funds were 4% higher.
Results
First nine months underlying attributable profit amounted to EUR 1,762 million (+29% year-on-year). Of note:
Total income rose 10% benefiting from the positive performance of net interest income (+12%, supported by larger volumes) and net fee income (+7%, driven by insurance and capital markets).
Costs fell 1%, well below inflation, which enabled net operating income to rise 14% and the efficiency ratio to improve by 2.5 pp year-on-year to 29.3%.
Net loan-loss provisions dropped 10%, due to higher provisions recorded in 2020 related to the pandemic. Cost of credit improved to 3.60%, the NPL ratio to 4.72% and coverage remained high at 112%.
Compared to the second quarter, underlying attributable profit was 9% lower as seasonally higher costs (collective labour agreements), higher inflation and increased provisions were only partially offset by the rise in NII and gains on financial transactions.
Brazil. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue2,882 7+48,085 -3+10
Expenses-864 +11+7-2,366 -11+1
Net operating income2,019 +6+35,719 +1+14
LLPs-757 +12+9-1,980 -20-10
PBT1,172 -2-63,526 +19+34
Underlying attrib. profit582 -6-91,762 +14+29
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ChileUnderlying attributable profit
EUR 463 mn
Commercial activity and business performance
We remained focused on gaining new customers, increasing loyalty and offering attractive returns:
Getnet's success enabled us to install more than 46,000 PoS. SMEs account for 94% of its customers, and 65% were sold digitally.
Santander Life continues to revolutionize the market with its proposition and digital onboarding, reaching 797,000 customers.
Superdigital continued to steadily increase the number of current account openings and has more than 208,000 customers.
In terms of ESG, Santander Chile became the first local bank to obtain the Iguala Conciliación Seal of Ministry of Women and Gender Equality.
All these measures led to a year-on-year increase in loyal (+11%) and digital customers (+30%), and we ended the quarter with the best NPS in the country.
In volumes, gross loans and advances to customers excluding reverse repurchase agreements had no material change (+0.5 year-on-year), as growth in mortgages matched the fall in corporates and CIB.
Customer deposits excluding repurchase agreements surged 20%, primarily driven by growth in demand deposits (+25%). Mutual funds increased 9%. In the quarter, there was a change in the funding mix as the rise in interest rates led to a 10% increase in time deposits, while demand deposits decreased slightly.
Results
Underlying attributable profit in the first nine months of 2021 amounted to EUR 463 million, 68% higher year-on-year, as follows:
Total income increased 8% driven by the 12% jump in net interest income (margin management and inflation) and the 20% increase in net fee income, propelled by transactional and insurance fees.
Costs rose 2%, at a slower pace than inflation, through efficient cost management. The efficiency ratio improved to 38.7% (-2.1 pp year-on-year).
Loan-loss provisions were 48% lower due to covid-19 related charges in 2020. Cost of credit improved to 0.89% and the NPL ratio to 4.36%.
In the quarter, profit declined 11% as the increase in net fee income did not offset the drop in net interest income due to higher cost of funding, lower gains on financial transactions (from highs in the second quarter) and greater provisions.
Chile. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue583 -9-31,834 +10+8
Expenses-229 -7-2-710 +4+2
Net operating income354 -10-51,125 +14+11
LLPs-84 +3+8-266 -47-48
PBT265 -16-11857 +72+68
Underlying attrib. profit142 -16-11463 +72+68
January - September 2021
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35

ara.gif
ArgentinaUnderlying attributable profit
EUR 180 mn
Commercial activity and business performance
We remained focused on transactional business and customer service through initiatives in innovation, an enhanced customer care model, and the digital transformation of processes and products.
In addition, we continued to progress in the development of our open financial services platform:
We rolled out Superdigital, to contribute towards improving the lives of people who do not have access to the traditional financial system, which offers, in this first stage, a fully digital and free account and a prepaid Mastercard card.
We enhanced Getnet's value proposition, reaching 40,000 active merchants since its launch in October 2020.
In the consumer segment, we launched Todo en Cuotas, a 100% online platform that seeks to promote access to credit and consumption, while we continued with the implementation of the CRM Cockpit system in dealerships.
MODO, the payment solution that promotes digital payments and financial inclusion, reached more than 2 million customers.
The sharp changes in volumes are affected by inflation, which is also reflected in the P&L variations. Gross loans and advances to customers excluding reverse repurchase agreements rose 33% year-on-year, driven by loans to corporates and cards. Dollar balances declined in the currency of origin.
Customer deposits excluding repurchase agreements rose 49% spurred on by both demand and time deposits. Mutual funds were 71% higher. Excess liquidity is placed in central bank notes.
Results
Underlying attributable profit in the first nine months was EUR 180 million, 43% higher compared tot he same period of 2020. By line:
Total income grew 32%, underpinned by net interest income, the strong upturn in net fee income, with significant increases in transactional fees, and gains on financial transactions, which more than offset the higher impact from the inflation adjustment.
Costs rose 44%, affected by inflation and the salary agreement. Net operating income soared 17%.
Loan-loss provisions fell 36% following additional covid-19 related provisioning in 2020. The cost of credit improved to 3.51%, the NPL ratio was 3.85% and coverage 149%.
In the quarter, profit was 15% higher, damped by tax normalization, as PBT surged 60% driven by positive revenue performance.
Argentina. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue365 21+19929 +3+32
Expenses-204 +14+12-554 +13+44
Net operating income161 +32+30375 -9+17
LLPs-40 +15+15-88 -50-36
PBT92 +63+60193 +4+33
Underlying attrib. profit73 +16+15180 +12+43
Other South America
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Uruguay
Gross loans and advances to customers, excluding reverse repurchase agreements were up 12%. Customer deposits excluding repos rose 13% primarily from demand deposits (+19%).
Underlying attributable profit in the first nine months of EUR 80 million, down 13% year-on-year, as follows:
Total income declined 5% mainly driven by the fall in net interest income (significant drop in interest rates) and lower gains on financial transactions. Conversely, positive net fee income performance (+13%), in line with business recovery.
Costs grew 9%, heavily affected by inflation.
Loan-loss provisions decreased 45%, the cost of credit improved to 1.39% and coverage was 121%.
Compared to the previous quarter, underlying attributable profit rose 13% driven by the positive performance of the main revenue lines and lower provisions.
Peru
Gross loans and advances to customers excluding reverse repos rose 26% year-on-year and customer deposits excluding repos were 17% higher on the back of demand deposits.
In the first nine months of 2021 underlying attributable profit amounted to EUR 43 million, 37% higher year-on-year, as follows:
Total income rose 39%, mainly led by customer revenue. Costs rose at a slower pace than income, improving the efficiency ratio to 28.9%.
Loan-loss provisions rose due to pre-emptive impairments. The NPL ratio was 0.84%, cost of credit was 0.85% and coverage stood at 178%.
Colombia
Gross loans and advances to customers excluding reverse repos were 51% higher year-on-year. Customer deposits excluding repos rose 16% due to demand deposits.
In the first nine months of 2021, underlying attributable profit of EUR 17 million, 25% higher year-on-year, due to:
Total income growth of 22% (driven by net interest income and net fee income), outpacing the 14% rise in costs.
Higher loan-loss provisions but maintaining good credit quality: the NPL ratio was 0.37%, cost of credit of 0.72% and coverage remained high (236%).

Other South America. Underlying income statement
EUR million and % change
Net operating incomeUnderlying attrib. profit
/ 9M'20/ 9M'20
9M'21%excl. FX9M'21%excl. FX
Uruguay132 -24-1580 -21-13
Peru77 +20+4243 +16+37
Colombia34 +23+3117 +17+25
36
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January - September 2021

DCBDIGITAL CONSUMER BANKUnderlying attributable profit
EUR 935 mn
Executive summary (changes in constant euros)
Ongoing execution of the strategic operations defined in 2020, aimed at increasing our business capabilities and generating significant growth.
New lending stood well above 9M'20 (+11% year-on-year), despite lockdowns in early 2021. Activity in the quarter was dampened by global production issues in the new auto market while used vehicle volumes were broadly flat. Conversely, consumer new lending increased.
Underlying attributable profit was EUR 935 million, improving 17% year-on-year, favoured by revenue growth (+4% year-on-year) and cost of credit improvement. Underlying RoTE rose to 13%, and RoRWA was 2.2% in SCF.
Unless otherwise indicated, changes are reported at constant exchange rates. In the tables below and in the appendix, these changes are included together with the changes at current exchange rates.
Strategy
Digital Consumer Bank is the leading consumer finance bank in Europe, created through the combination of Santander Consumer Finance's (SCF) scale and leadership in in consumer finance in Europe, and Openbank’s digital capabilities.
SCF is Europe's consumer finance leader, present in 18 countries (16 in Europe including the recent launch in Greece, China and Canada) and works through more than 130,000 associated points of sale (mainly auto dealers and retail merchants). In addition, it has a growing number of agreements with OEMs and retail distribution groups.
Openbank is the largest 100% digital bank in Europe. It offers current accounts, cards, loans, mortgages, a state-of-the-art robo-advisor service and open platform brokerage services. Openbank is currently active in Spain, the Netherlands, Germany and Portugal, and we are working on its expansion across Europe and the Americas.
The aim of Digital Consumer Bank is to generate synergies for both businesses:

Digital Consumer Bank. Loan distribution
September 2021
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Germany
Nordics
Spain
France
The UK
Italy
Poland
Others


SCF will leverage Openbank's IT capabilities to further improve its digital operating system and provide a better service to its customers and partners (OEMs, car dealers, retailers and individuals) at a lower cost.
Openbank will be able to offer retail banking products to SCF's large customer base to expand retail capabilities across Europe with lower acquisition costs.
Our main priorities for 2021 are to:
Auto: strengthen our auto financing leadership position, reinforce the leasing business and develop subscription services across our footprint. SCF is focusing on providing advanced digital financing capabilities to its partners, OEMs and dealers in order to help their sales growth strategy. We also generated almost 1.5 million new contracts to customers in 9M’21 and had an EUR 87 billion loan book at the end of September.
Consumer Non-Auto: gain market share in consumer financing solutions, leveraging our position to grow in e-commerce, checkout lending and Buy Now Pay Later (BNPL), serving customers through 55,000 physical and digital points of sale. We generated more than 4 million new contracts in 9M’21 and had a loan book of EUR 19 billion in September.
Retail: improve digital capabilities to increase customer loyalty among our 3.6 million customers (Openbank and SC Germany Retail), boosting digital banking activity, which currently has EUR 37.8 billion in customer funds.
Cost reduction and simplification: accelerate digitalization to transform the business and improve efficiency. The main drivers are:
Organizational simplification: transition from banking licenses to branches in the Western hub.
Streamlining IT: leveraging technology and data capabilities with Digital Banking apps (APIs) and a SaaS (Software as a Service) model.
January - September 2021
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37

Thanks to all these initiatives, we have great potential to enhance our business through our 19 million active customers, by creating stronger customer relationships while integrating Santander ESG criteria. We want to serve our current and future customers with a positive environmental impact by developing business solutions, such as: financing electric vehicles, carbon compensation services (already available in all countries); financing of electric chargers, solar panels, green heating systems, etc.
Business performance
In the first nine months of the year, new lending increased 11% year-on-year, absorbing the impacts of heavy lockdowns in some countries where Digital Consumer Bank operates at the beginning of the year.
In early 2021, restrictions arising from the pandemic affected commercial activity mainly in Central Europe, which recovered to pre-covid-19 levels in Q2 (positive performance in Germany and the Nordics). The third quarter was affected by the semiconductor shortage in the new auto market. Despite this, activity in September exceeded pre-covid-19 levels and was the highest monthly total income so far this year. SCF continues to gain market share across most auto markets.
Of note in 2021 was the enhancement of our pan-European leasing proposition and the deployment of the new consumer finance solution (for mobiles and modems) via the more than 2,500 retail points of sale in Italy, thanks to the creation of the TIMFIN joint venture. Also of note was the set-up of the new Western Hub's operating structure as we transition from banking licenses to branches in order to improve efficiency, and our focus in digitalization.
In the quarter, SCF acquired a 14.7% stake in Vinturas Holding, a company that offers a blockchain-based technology solution that allows manufacturers to digitally track vehicles throughout the entire logistics process.




Activity
September 2021. EUR billion and % change in constant euros
-1%
QoQ+1%
QoQ
114
-1%57+11%
YoYYoY
Gross loans and advances to customers excl. reverse reposCustomer deposits excl. repos + mutual funds

In addition, in order to compensate lost revenue during lockdowns in Q1'21, several measures were carried out, including expense reductions and income initiatives in pricing and cost of funding.
The stock of loans and advances to customers excluding reverse repos was EUR 114 billion, slightly lower than the same period of 2020, due to the impact from covid-19 previously mentioned isolation measures.
Results
Underlying attributable profit in the first nine months was EUR 935 million, 17% higher year-on-year. By line:
Total income increased 4% compared to 9M'20 driven by growth in net fee income (+9% due to increased volumes) and leasing. Net interest income decreased slightly.
Costs increased 4% due to perimeter (Sixt and TIMFIN) and our digital transformation investments. The efficiency ratio improved slightly to 45.4% and net operating income grew 4%. Excluding perimeter effects, costs were flat year-on-year and 1% lower than 2019.
Loan-loss provisions dropped 41% driven by covid-19 provisioning in 2020. Positive credit quality performance, with a cost of credit of 0.57% and an NPL ratio of 2.15% (-22 bps and -14 bps year-on-year, respectively).
By country, the largest contribution to underlying attributable profit came from Germany (EUR 292 million), the UK (205 million), the Nordic countries (EUR 168 million) and France (EUR 111 million).
Compared to the previous quarter, underlying attributable profit increased 32% mainly due to net fee income (+7%), continued cost reductions (-3%) and the contribution to the SRF in Q2.



Digital Consumer Bank. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue1,369 +5+53,975 +4+4
Expenses-591 -4-3-1,805 +4+4
Net operating income778 +13+132,170 +4+4
LLPs-141 -1-449 -40-41
PBT594 +18+191,602 +17+16
Underlying attrib. profit366 +32+32935 +19+17
38
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January - September 2021

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Corporate CentreUnderlying attributable profit
EUR -1,607 mn
Executive summary
In the current environment, the Corporate Centre continued to play its role supporting the Group and has gradually returned employees to the workplace, with a mixture of on-site and remote working, maintaining a high level of flexibility to meet individuals' needs.
The Corporate Centre’s objective is to aid the operating units by contributing value and carrying out the corporate function of oversight and control. It also carries out functions related to financial and capital management.
Underlying attributable loss increased 10% compared to the first nine months of 2020, mainly due to lower gains on financial transactions due to exchange rate differences from the hedging of the main units' results, as costs remained flat and other results and provisions decreased year-on-year.

Strategy and functions
The Corporate Centre contributes value to the Group in various ways:
Making the Group’s governance more solid, through global control frameworks and supervision.
Fostering the exchange of best practices in management of costs and generating economies of scale. This enables us to be one of the most efficient banks.
Contributing to the launch of projects that will be developed by our global businesses aimed at leveraging our worldwide presence to generate economies of scale.
It also coordinates the relationship with European regulators and supervisors and develops functions related to financial and capital management, as follows:
Financial Management functions:
Structural management of liquidity risk associated with funding the Group’s recurring activity and stakes of a financial nature.
This activity is carried out by the different funding sources (issuances and other), always maintaining an adequate profile in volumes, maturities and costs. The price of these operations with other Group units is the market rate plus the premium which, in liquidity terms, the Group supports by immobilizing funds during the term of the operation.
Interest rate risk is also actively managed in order to soften the impact of interest rate changes on net interest income, conducted via high credit quality, very liquid and low capital consumption derivatives.
Strategic management of the exposure to exchange rates in equity and dynamic in the countervalue of the units’ annual results in euros. Net investments in equity are currently covered by EUR 23,118 million (mainly Brazil, the UK, Mexico, Chile, the US, Poland and Norway) with different instruments (spot, fx, forwards).
Management of total capital and reserves: efficient capital allocation to each of the units in order to maximize shareholder return.

Results
First nine months underlying attributable loss of EUR 1,607 million, 10% higher than in 9M'20, as follows:
Gains on financial transactions were lower (EUR 327 million lower than in 2020) dampened by negative foreign currency hedging results in 2021 and positive results in 2020.
On the other hand, net interest income remained stable, as well as operating expenses, driven by ongoing streamlining and simplification measures.
Lastly, other results and provisions were lower than in 2020, due to one-off provisions recorded in 2020 for certain stakes whose value was affected by the crisis.
Corporate centre. Underlying income statement
EUR million
Q3'21Q2'21Chg.9M'219M'20Chg.
Total income-416 -430 -3%-1,216 -889 +37%
Net operating income-505 -511 -1%-1,465 -1,137 +29%
PBT-553 -553 0%-1,741 -1,567 +11%
Underlying attrib. profit-545 -535 +2%-1,607 -1,455 +10%


January - September 2021
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39


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Retail BankingUnderlying attributable profit
EUR 5,750 mn
Executive summary
Results. (9M'21 vs. 9M'20). % change in constant euros
Business performance. EUR bn. % change in constant euros
Profit growth driven by higher volumes and total income, improving the efficiency ratio and cost of creditLoans and advances to customers rose 2% and customer funds increased 7% year-on-year
Total incomeCostsProvisionsLoans and advances to customersCustomer funds
+7%+1%-35%791
p 2% YoY
773
p 7% YoY
Customers
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Unless otherwise indicated, changes are reported at constant exchange rates. In the tables below and in the appendix, these changes are included together with the changes at current exchange rates.
Commercial activity
The economic and social impacts arising from the global health crisis led us to further strengthen our commitment to our customers and society, seeking to become a key part of the business and economic recovery in the countries where we operate.
This situation has accelerated the implementation and development of our digital transformation strategy, focusing on our multi-channel strategy and the digitalization of processes and businesses. We are adapting channels to new business trends under a hybrid model that prioritizes digital customer service, and combines it with the activity carried out by physical branches, which are well equipped to handle the more complex operations and those that require greater service from our professionals.
This personalized support, tailored to the needs of each customer, also responds to one of our main goals, which is the continuous improvement of customer care and service. This orientation enabled us to rank top 3 in customer satisfaction, measured by NPS, in seven of our markets.
Our efforts to improve customer care and services, be one of the leaders of the digitalization process in the banking sector and meet our customers' needs, allowed us to exceed 152 million customers.
The number of loyal customers increased 12% year-on-year, with growth in both individuals (+12%) and corporates (+12%). Digital customers rose 13% year-on-year, an increase of more than 5 million compared to the previous year, while transactions through digital channels grew 39% year-on-year and digital sales accounted for 54% of total transactions.

Results
Underlying attributable profit in the first nine months of 2021 was EUR 5,750 million, 92% higher than in the first nine months of 2020. By line:
Total income grew 7% driven by positive customer revenue performance, which more than offset the fall in gains on financial transactions.
Costs increased sightly, well below total income, which enabled the efficiency ratio to improve 2.2 pp year-on-year to 43.2%.
Loan-loss provisions plummeted by 35%, as the previous year was strongly affected by covid-19 related provisions.
Retail Banking. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue10,173 +4+329,520 +3+7
Expenses-4,336 +2+1-12,740 -2+1
Net operating income5,837 +5+416,780 +7+12
LLPs-2,199 +27+26-5,708 -38-35
PBT3,194 -5-79,759 +74+82
Underlying attrib. profit1,960 0-15,750 +85+92
40
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January - September 2021

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Santander Corporate & Investment BankingUnderlying attributable profit
EUR 1,744 mn
Executive summary
Results (9M'21 vs 9M'20). % change in constant euros
Our strategic pillars
Strong profit and profitability improvement backed by total income growth across businesses and countries
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Total incomeUnderlying profitRoRWA
+12%+26%2.4%
Revenue growth by business and region*Other highlights in the quarter
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+19%
Leading positions in the rankings of different products
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-8%Structured financeDebt capital
markets (DCM)
Equity capital markets (ECM)
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+13%
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Green Global
(*) EUR million and % change in constant euros
Unless otherwise indicated, changes are reported at constant exchange rates. In the tables below and in the appendix, these changes are included together with the changes at current exchange rates.
Strategy
SCIB continued to make headway in the execution of its strategy to strengthen its position as our clients' strategic advisor of choice, boosting specialized high value-added products and services, which enabled us to optimize the return on capital.
In line with this strategy, SCIB is focused on high growth potential sectors that require a high degree of specialization.
In 2020, SCIB created the global Environmental, Social and Governance (ESG) solutions team to support our clients in their business transformation towards more sustainable alternatives, such as renewable energies, zero carbon transition, etc.
Since its creation, the ESG team has been involved in a number of transactions in different sectors and markets. Of note in the third quarter of 2021 was the Vineyard Wind 1 operation, a landmark transaction for the US renewable industry, as it is the first large-scale offshore wind farm built in the country. SCIB acted as Sole Financial Advisor in the structuring and execution of the transaction, coordinator of the Green Loan, joint lead arranger and agent for the joint venture between Avangrid Renewables (Iberdrola) and Copenhagen Infrastructure Partners.
Also of note in the quarter was that Santander Argentina led the country's first Sustainability Linked Bond, issued by San Miguel.
The DSG (Digital Solutions Group) team, which was created in Q1'21 to support the development and digital transformation of our current and potential customer base, participated in several operations, such as the IPO of Robinhood in the US. It is one of the most relevant operations of the year on the NASDAQ.
In addition, the European Investment Bank first digital bond issue, which took place in the first half of 2021 and in which Santander acted as Joint Lead Manager, was recognized by the Euromoney Global Awards for Excellence 2021 with the Financial Innovation of the Year award.
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We continued to back our geographic diversification by accelerating growth in the US with the acquisition of broker-dealer Amherst Pierpont, a market-leading franchise in fixed income and structured products. This acquisition, which is subject to regulatory approvals and customary closing conditions, will strengthen our product offering, value proposition and distribution capabilities in the US while boosting our global business through the incorporation of 230 experienced employees serving more than 1,300 institutional clients in New York, Chicago, San Francisco and other US locations.
Regarding product positioning, SCIB held leading positions in different rankings:
In Structured Finance, SCIB ranked first in Latin America and Europe by number of transactions, promoting renewable energies, the cornerstone of the ESG strategy.
In DCM (Debt Capital Markets) we are the market leaders in Spain and ranked top 5 by volume of corporate debt placed in Europe and in Latin America.
In ECM (Equity Capital Markets) we ranked top 3 in Spain, Mexico and Poland.

January - September 2021
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41

In the quarter, SCIB received numerous awards in several categories, including Global Finance and Euromoney.
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Results
Underlying attributable profit in 9M'21 amounted to EUR 1,744 million, 26% more than in the same period of 2020. Total income rose 12% to EUR 4,352 million, backed by higher gains on financial transactions, driven by strong growth in markets, Corporate Finance and the positive performance of Banking businesses.
Revenue performance by business was as follows (in constant euros):
Markets: significant revenue growth (+20% vs 9M'20) underscored by market volatility and the higher volume of client business, which we continued to support with the structuring of hedging products.
Positive performance of market results, with growth in most geographic areas, particularly the contribution of the sales business in Iberia, Brazil and Chile, as well as the books of Iberia, Argentina and Asia.
The first market products with an ESG approach were developed, such as the ESG Linked Derivatives, in which the price is linked to the KPI compliance of the corporate ESG programmes of the bank and its customers, and the first ESG Impact Derivatives, in which Santander uses part of its revenue to develop environmental projects.
GDF (Global Debt Financing): Santander continued to support its clients in accessing liquidity sources, which was reflected in a substantial increase in funding volumes in the quarter, particularly indirect financing (distribution to other banks and institutional investors). As a result, total income was 13% higher year-on-year.
We consolidated our sustainable financing proposition through green and sustainability-linked loans and bonds. Of note was the sharp rise recorded in debt capital markets (DCM) compared to the overall decrease recorded in the global market.
Santander continued to be a global benchmark in structured finance, ranking first in Latin America and Europe.
GTB (Global Transactional banking): income from customer balance management decreased by low interest rates in our core geographies, being partially offset by volume growth in the Export & Agency Finance and Working Capital Solutions businesses.


CF (Corporate Finance): total income was up 42% versus 9M'20 driven by an increase in mergers and acquisitions (M&A) and equity capital markets (ECM) activity, particularly in Europe and Brazil.
The third quarter was marked by strong M&A activity in the telecommunications and technology sectors. Santander acted as Global Coordinator in the IPO of Brisanet in Brazil, a deal worth BRL 1.4 billion, as Telefónica's sole financial advisor in the creation of a FiberCo in Colombia. In the technology area, Santander acted as Joint Bookrunner in the IPO of Clearsale, which raised BRL 1.1 billion, and also as Joint Bookrunner in the follow-on of Totvs, for BRL 1.4 billion.
In the energy sector, Santander advised the Brazilian company Compass on the purchase of 51% of Gaspetro (Petrobras Gas) for USD 400 million.
In ECM, SCIB continued to consolidate its leading position in Spain as bookrunner in the IPO of Acciona Energia, and as advisor in the dissemination of Masmovil's takeover bid over Euskaltel.
In the rest of Europe, SCIB participated in the GBP 1.25 billion capital increase of the British airline easyJet. Santander also participated as advisor to Vivendi in the listing of Universal Media Group.
In Brazil, Santander completed 9 share offerings (7 IPOs and 2 follow-ons), including the IPOs of Armac Logistica (BRL 1,533 million) and Brisanet, where we were lead-left bookrunner.
Operating expenses increased 12% compared to the first nine months of 2020 due to investments in products and franchises under development. However, efficiency improved year-on-year and remained a benchmark in the sector (37.7%).
Sharp improvement in loan-loss provisions compared to 9M'20, due to the significant increases recorded in 2020 related to the widespread macroeconomic deterioration caused by the pandemic.
Compared to the previous quarter, underlying attributable profit grew 10%, mainly driven by the increase in total income and lower provisions, which offset the rise in costs.


SCIB. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue1,414 +10+94,352 +7+12
Expenses-574 +6+5-1,642 +8+12
Net operating income840 +13+122,709 +6+12
LLPs-7 -65-66-75 -74-73
PBT832 +11+102,640 +19+28
Underlying attrib. profit547 +11+101,744 +18+26
42
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January - September 2021

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Wealth Management & InsuranceUnderlying attributable profit
EUR 698 mn
Executive summary
Results (9M'21 vs. 9M'20). % change in constant euros
Growth drivers 9M'21
Solid performance across our three businesses
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Total fee income generatedTotal contribution to profitAssets under managementRoRWANet new moneyNet salesGross written premiums
+11%+16%+12%7.7%EUR 7.9 bnEUR 6.3 bn+5%
vs 9M'20
Total contribution to profit by businessOther highlights in the period
Constant EUR million (incl. fee income ceded to the Group)Private Banking
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SAM
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Insurance
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Customer growth
+13% vs. 9M'20
ESG AUM
EUR 9,600 mn +75% vs. Sept. 20
Fee income
EUR 1,090 mn +14% vs. 9M'20
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Unless otherwise indicated, changes are reported at constant exchange rates. In the tables below and in the appendix, these changes are included together with the changes at current exchange rates.
Commercial activity
We maintain our objective to become the best responsible Wealth & Protection Manager in Europe and Latin America, with it being one of the Group's growth drivers:
In Private Baking, we continued to renew our product offering, with a particular focus on sustainable (ESG), alternative and thematic products. We also continued to grow our discretionary advisory service, to offer our clients value-added solutions tailored to their specific investment needs and risk profiles. These platforms recorded a 13% growth in the period.
As regards the ESG investment range, through both SAM and third-party products, assets under management amounted to more than EUR 2 billion, integrating a wide range of sustainability strategies.
Santander Future Wealth is our range of thematic funds and structured products, launched with the aim of bringing customers closer to investing in innovation and disruptive technologies. This joint initiative with SAM has reached EUR 4.2 billion of investment funds alone since its launch. On the other hand, the range of alternative products (private equity, infrastructure, real estate, debt and multi-asset) exceeded EUR 1.5 billion in both SAM and third-party funds.
Total volume of shared business across our markets stood at EUR 9,450 million, 43% more than in the same period of 2020, mainly driven by operations in Mexico, Brazil, the US, the UK, Portugal and Switzerland, reflecting the success of our global platform.
Collaboration volumes
Constant EUR million
9,450
u+43%
/ Sep 20
In Santander Asset Management, we continued to improve and complete our local and global product proposition. Of note was the launch of Santander ON, a range of solutions aimed at covering the different investment needs of our clients. This range follows a systematic and quantitative management methodology, including different investment themes and our ESG integration model.
The Santander GO range continued to increase strongly, reaching EUR 3.7 billion and the platform in Luxembourg amounted to more than EUR 11 billion.
The Future Wealth fund has exceeded EUR 1 billion since its launch, attracting customers mainly in Spain, International Private Banking, Chile, Portugal and Mexico.
We made further headway in our ESG strategy, offering over 23 ESG products globally, and assets under management exceeded EUR 9.6 billion.
The range of alternative products aimed primarily at our institutional clients is becoming increasingly robust, with 3 funds already launched and several more planned for Q4'21.
As for operational and technological transformation, this year we fully implemented the Aladdin platform in all our countries.
In Insurance, we maintained a positive rate of growth in premiums (+5% year-on-year) and our main growth driver continued to be the non-credit related business. Of note were the increases in net fee income in Brazil (+11%), Spain (+30%) and Argentina (+52%), recording an overall net fee income growth of 14%.
Regarding our digital strategy, we strongly increased the number of insurance policies distributed through our digital channels, which doubled and now account for 16% of the total sales volumes.

January - September 2021
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43

Also noteworthy was the progress in the agreement with Allianz in Poland (subject to regulatory approval and other customary conditions for this type of operation), through which we expect to strengthen our position in this market.
Of note in the Americas was the good performance of Autocompara across the region, with more than 1.7 million vehicles insured and strong revenue growth (+35% compared to the same period last year), as well as Santander Auto in Brazil, which grew at double-digit rates.
Business performance
Total assets under management amounted to EUR 396 billion, 12% higher year-on-year in constant euros, driven by the gradual recovery of activity since the months most affected by the health crisis in 2020.

Business performance: SAM and Private Banking
Constant EUR billion
Total Assets Under Management
Funds and investment *
SAM
Private Banking
Custody of customer funds
Customer deposits
Customer loans
chart-eb80079d230343edaf9a.jpg
/ Jun-21/ Sep-20
+2 %+12 %
+2 %+10 %
+2 %+7 %
+1 %+18 %
+2 %+23 %
+2 %+3 %
+5 %+25 %
Note: Total assets marketed and/or managed in 2021 and 2020.
(*) Total adjusted customer funds of private banking managed by SAM.

In Private Banking, the volume of customer assets and liabilities grew 17% year-on-year to EUR 250 billion, boosted by market improvement and continued strong commercial activity. Net new money amounted to EUR 7.9 billion in 9M'21 (3.2% of total volume), and of note were the EUR 3.7 billion reached in funds.
Net profit in the first nine months was EUR 322 million, up 10% compared to the same period of 2020, primarily backed by growth in net fee income (15%). Private Banking customers rose 13%.
In SAM, total assets under management increased 7% compared to September 2020 to EUR 192 billion. Cumulative net sales YTD remained at record highs at EUR 6.3 billion (3.3% of the total), mainly in Spain, Mexico, Chile, Luxembourg and Poland.
Total contribution to the Group's profit (including ceded fee income) was EUR 392 million, 8% higher year-on-year, mainly due to greater volumes and the gradual recovery of margins.
In Insurance, the volume of gross written premiums in the first nine months amounted to EUR 6.4 billion (+5% year-on-year), despite lower loan activity stemming from the crisis. Net fee income grew 14% with 16% growth in non-credit related protection business. Total contribution to profit (including ceded fee income) increased 21% year-on-year to EUR 1,019 million.
Results
Underlying attributable profit was EUR 698 million in the first nine months of 2021, up 24% year-on-year:
Total income increased 14% mainly driven by the higher volume of assets under management, net fee income growth, and greater insurance protection activity, notably non-credit related business.
Total fee income generated, including fees ceded to the branch network amounted to EUR 2,494 million (+11% year-on-year) and represented 32% of the Group's total.
Total fee income generated
EUR million
2,494
u11%32%
vs 9M'20/ total Group
Operating expenses were 5% higher than in 9M'20, due to the investments carried out together with higher costs related to increased commercial activity.
The total contribution to the Group (including net profit and total fees generated net of tax) was EUR 1,733 million in the first nine months, 16% higher than in 9M'20.
Compared to the previous quarter, underlying attributable profit rose 38%, primarily driven by the positive performance in total income.

Total contribution to profit
EUR million and % change in constant euros
Q3'219M'21
wmcontriba.jpg
644
wmcontriba.jpg
1,733
+15 %/ Q2'21+16 %/ 9M'20


WM&I. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue616 +19+181,637 +10+14
Expenses-221 -2-3-668 +2+5
Net operating income395 +35+34969 +17+21
LLPs-6 +114+114-14 -39-39
PBT405 +40+40966 +21+25
Underlying attrib. profit292 +39+38698 +20+24
44
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January - September 2021

pagonxta.gif
Underlying attributable profit
EUR -206 mn
Executive summary
PagoNxt
Merchant Solutions
Combining our most innovative payments businesses into a single, autonomous company:
Through the expansion of our Getnet platform to become a leading global acquirer
pagonxtsolucionesa.jpg
SME customers in LatAm and EuropeActive
merchants
Total Payments Volume
> 4 million
1.19 mn +11% YoY
EUR 81.2 bn +53% vs. 9M'20*
Trade SolutionsConsumer Solutions
For SMEs & Corporates who operate internationally and want state-of-the-art digital solutionsDelivering engaging payment solutions for individuals in emerging and developed markets
SME customers
who operate internationally
Active customers
Superdigital in Brazil
220,000+13% YoY
(*) % change in constant EUR
Unless otherwise indicated, changes are reported at constant exchange rates. In the tables below and in the appendix, these changes are included together with the changes at current exchange rates.
Strategy
PagoNxt is an autonomous company within the Group, with the talent, processes, and corporate governance that provide the needed base for faster growth and achieve our ambition to build a leadership position, both in the Americas and Europe. It comprises three businesses which deliver simple and accessible digital payment solutions to drive loyalty across consumers and corporate customers.
In its early stage, PagoNxt has been deploying its initiatives within our Banks, enabling better solutions for Santander customers. We are now beginning a new phase of our journey to turn PagoNxt into a growth engine in all our markets.
Digitalization of customers' payments and accessibility to our services are at the core of PagoNxt's strategy, embracing Santander's goals as a responsible bank. Our wide range of merchant and trade solutions will contribute to the development of all type of businesses, helping them digitalize their operations and payments, and our consumer solutions will benefit the lives of our customers through financial inclusion.
PagoNxt leverages Santander's deep local knowledge of the markets where it operates, customizing its global offerings to fulfil local needs. Merchant, trade and consumer solutions are provided in partnership with Santander local banks, leveraging our customer base of 152 million individual and corporate customers.
Additionally, PagoNxt will directly pursue open market opportunities and revenue pools with new customer segments and in new geographic areas, leveraging the Group's scale.
Commercial activity
The roll-out of PagoNxt platforms by country continues to progress, as the three businesses expand their footprint:

Merchant solutions
PagoNxt Merchant solutions 2021 strategy is focused on enhancing our global acquiring platform, leveraging the Wirecard assets acquisition, and also on expanding the platform to additional countries in LatAm and Europe.
PagoNxt Merchant solutions, through its global franchise Getnet, is already one of the top 3 acquirers in Latin America. Its global strategy leverages Getnet's capabilities to enable efficient processing of in-store and e-commerce payments and provides best-in-class value added services, not only to Santander customers but also in the open market.
The Getnet franchise continues to deliver growth: despite pandemic-related challenges, the number of active merchants and total payments volume grew across all geographies, and revenue growth accelerated in the last few months in spite of margin pressures.
We continued to expand our global franchise and product offerings during the quarter and made further progress on our global merchant platform through product development across our technology hubs in Porto Alegre, Munich, Chennai and Dubai, and through selective acquisitions. In Brazil, for example, we are developing new services for large e-commerce retailers, which will provide a single integration point to operate in different markets. We acquired a majority stake in a tech company called MIT (Mercadotecnia, Ideas y Tecnología) in Mexico and a payments provider called NAD (New Age Data) in Uruguay.
Our franchise in Brazil, Getnet Brazil, has recorded very significant market share gains in the country (16% and > 30% in e-commerce).

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January - September 2021
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45

In Europe, Getnet incorporated Santander España Merchant Services (SEMS) and continued with the integration of Wirecard's technology assets and talent acquired last January. Europe opened a branch in Munich, which will support the provision of our integrated offerings for European customers.
Merchant solutions
Active merchantsTotal Payments Volumes
MillionsEUR billion
1.19
1.07+11%81.2 
+53%
53.0
Sep-20Sep-219M'209M'21
Trade solutions
PagoNxt Trade delivers digital, simple and integrated trade, international payments and FX solutions for businesses of all sizes, supporting them in their international expansion.
Santander is an experienced player in payments services, with a strong customer base of 220,000 companies trading internationally, and 3.4 million international payments processed in 2020.
Our priorities for Trade Solutions in 2021 are connecting additional Santander customers to the platform, covering our entire footprint, deploying new core functionalities in all transactional services (payments, FX and trade finance), and reaching customers beyond Santander's customer base.
Active corporate / business clients
September 2021
logoonetrade.jpg
7,300
To this end, we are leveraging our experience to develop a new global technology platform that incorporates innovative new services, bringing Santander international flows into a single platform operating under the global brand of One Trade. This platform is being connected to all our banks, and existing clients are seamlessly accessing these new services, which will also be available for new, open market customers.
The global roll-out of our One Trade platform is well underway. As of September, platform adoption grew steadily in eight countries (Brazil, Mexico, Spain, the UK, Chile, Portugal, Colombia and Poland) and active corporate and business clients increased from 4,100 in March to 7,300 in September.
Consumer solutions
PagoNxt Consumer is focused on delivering economic inclusion across Latin America, allowing underbanked customers to have access to digital financial services.
Superdigital's plan is to launch its global multi-country platform in all Santander countries in LatAm. We began to operate in Argentina in Q3.
In the year ahead, Superdigital will continue to promote financial inclusion, focusing on rolling out the platform across seven countries in the region, combining geographical expansion and efficiency
improvement across its operations, and expanding its banking services in the platform. We will continue to test new alternative payment models that enable us to offer unique solutions to our clients.
In line with its financial inclusion agenda, Superdigital joined the Regional Alliance for the Digitalization of Women in Latin America and the Caribbean, to support a significant customer base through digital skill development.

superdigitala.jpg

PagoNxt Results
In the first nine months of 2021, underlying attributable profit decreased year-on-year to -EUR 206 million (-EUR 61 million in 9M'20).
This fall was driven by investments in project developments and platforms, mainly in Trade, together with the integration of Wirecard's assets into Merchant solutions in January 2021.
On the other hand, total income increased 41% year-on-year, boosted by the strong jump in net fee income (+45% at constant exchange rates).
PagoNxt. Revenue performance
Constant EUR million
334 
237+41%+49%142 
95
9M'209M'21H1'21*Q3'21
(*) H1'21 quarterly average
This performance was backed by the recovery of activity in last two quarters, with volumes exceeding pre-pandemic levels, mainly in Merchant Solutions (strong increase in the number of transactions, merchants and Total Payments Volume in most of the countries).
PagoNxt. Underlying income statement
EUR million and % change
/ Q2'21/ 9M'20
Q3'21%excl. FX9M'21%excl. FX
Revenue144 +18+15334 +30+41
Expenses-181 +11+10-479 +59+67
Net operating income-36 -8-4-145 +225+191
LLPs-2 +1-2-7 -32-23
PBT-73 +61+65-191 +248+220
Underlying attrib. profit-79 +42+44-206 +237+223
46
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January - September 2021

RESPONSIBLE BANKING

Santander strives every day to contribute to the progress of people and companies in a Simple, Personal and Fair way in all that we do, to earn the confidence of our employees, customers, shareholders and society.
In order to meet our commitment to be a more responsible bank and help society address the main global challenges, we are incorporating social, environmental and good governance surrounding business decision making criteria to respond to two challenges: adapt to the new business environment and contribute to more inclusive and sustainable growth. In 2019 we set clear and ambitious goals on which we made progress in 2020 and have continued to do so during 2021. We achieved carbon neutrality in our own operations in 2020 and met our 2021 commitments a year ahead of schedule. In doing so, we continue to contribute to the achievement of the Sustainable Development Goals.
In 2021, we continued to progress towards our goals:
br1a.jpg
Santander Responsible Banking targets
More information on our goals in responsible banking can be found on our website.
bancaresponsableenga.jpg

Note: H1’21 data not audited
*    9M’21 provisional and not audited data
1.Includes Santander overall contribution to green finance: project finance, syndicated loans, green bonds, capital finance, export finance, advisory, structuring and other products to help our clients in the transition to a low carbon economy. Commitment from 2019 to 2030 is EUR 220 bn.
2.In those countries where it is possible to certify renewable sourced electricity for the properties occupied by the Group.
3.According to relevant external indices in each country (Great Place to Work, Top Employer, Merco, etc.).
4.Senior positions represent 1% of total workforce.
5.Calculation of equal pay gap compares employees of the same job, level and function. Data reported annually.
6.People (unbanked, underbanked or financially vulnerable), who are given access to the financial system, receive tailored finance and increase their knowledge and resilience through financial education.
7.People supported through Santander Universities initiative (students who will receive a Santander scholarship, will achieve an internship in an SME or participate in entrepreneurship programmes supported by the bank). Commitment refreshed after early completion in 2020 (200k).
8.People helped through our community investment programmes (excluded Santander Universities and financial education initiatives).

January - September 2021
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47

br1a.jpg
9M'21 highlights
Euromoney recognized Santander as the World’s Best Bank for Financial Inclusion and Best Bank for Sustainable Finance in Latin America. In addition, we were named the most innovative entity in digital banking by The Banker for our financial inclusion initiatives. In this regard, Global Finance also singled out Santander as the leading bank in Sustainable Finance in Latin America; recognizing SCIB at the Sustainable Finance Awards for its global and regional leadership.
Santander Brasil was named by Great Place to Work as one of the four best places to work for women, and included Santander UK in the list of the best companies for women to work for in the super large category.
We continued to contribute to the public debate on climate change at the Santander International Banking Conference 2021 and to incorporate ESG aspects into our operations.
The main initiatives are set out below:
br2.jpg
Environmental
As part of its commitment to the transition to a green economy, Santander continued to finance green alternatives and renewable energy. We reached EUR 51 billion in green finance1 (of which EUR 17 billion in 9M'21), making progress towards our commitment to reach EUR 120 billion by 2025.
SCIB acted as sole financial advisor in the merger of Enel Green Power Colombia, and its mainland energy subsidiaries, and Grupo de Empresas de Bogotá. In addition, Santander México launched its first sustainable fund with a global approach; an equity fund that invests in companies with strong ESG standards and high growth potential.
Santander Argentina also led the first issuance and placement of a sustainability-linked corporate bond for more than USD 50 million. SCIB Chile executed, for the first time in Latin America, a sustainability-linked swap with the shipping company Ultranav.
Lastly, Santander Uruguay launched its first carbon-neutral car loan.
iconoinclusiona.jpg
Social
Ü Thanks to Santander Finance for All, Santander's response to support financial inclusion and empowerment, we have empowered 6.2 million people1. Under this framework, Santander Perú launched Surgir, its microcredit programme to provide access to finance for micro-entrepreneurs in the country, and Santander México signed an agreement with Soriana, and now offers around 30,000 access points to banking services to its customers where they can carry out simple transactions. Superdigital joined the 'Regional Alliance for the Digitalization of Women in Latin America and the Caribbean' seeking to provide a virtual educational platform that boosts women's digital skills. Santander US joined the Financial Literacy for All initiative, a group comprising US companies that aim to promote financial inclusion.
Ü We continued to invest in the communities where we operate. Santander México introduced the new LikeU credit card, which allows customers to personalize benefits according to their needs, and promotes support for social causes, such as reforestation or the fight against breast cancer. Santander Universidades launched the Santander Skills | Upskill your talent scholarships to develop soft skills, the Santander Technology | Digital Experience Amazon Web Services initiative, which provides 1,000 scholarships to boost digital skills, and the Santander Languages Scholarships | English to boost your career together with the University of Pennsylvania.
Ü Banco Santander joined the Spanish Ministry of Equality's Punto Violeta initiative against gender violence and in favour of equality, awareness and social inclusion of victims.

We also continue to be part of several sustainability indices, providing non-financial information to markets, investors and ESG analysts.
logosbancarespondable21a.jpg
(1) Aggregated data 2019-9M'21. Unaudited 9M'21 provisional monitoring data.
48
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January - September 2021

CORPORATE GOVERNANCE
A responsible bank has a solid governance model with well-defined functions, it manages risks and opportunities prudently and defines its long-term strategy looking out for the interests of all its stakeholders and society in general
gobiernocorpotatia01a.jpg

à    Changes in the organizational structure of Grupo Santander's Senior Management
Mr Javier San Félix has taken the position of Chief Executive Officer of PagoNxt, an independent digital payments entity within Grupo Santander, and has left his senior management functions at Banco Santander as Head of Santander Global Payments.

à    Amendment of the Rules and regulations of the board
On 27 July, the board of directors approved the amendment of the Rules and regulations of the board to adapt them to the new provisions introduced by Law 5/2021, of 12 April, amending the Companies Act.
The main amendments related to:
the update of the regimen for the approval and supervision of related-party transactions and the establishment of a procedure for periodic information and control of those transactions whose approval has been delegated by the board, in accordance with the provisions of the new law; and
the directors' remuneration regimen, introducing technical updates regarding the content of the directors' remuneration policy and the annual report.
The amendment was registered in the Commercial Registry of Cantabria on 16 August 2021 and submitted to the National Securities Market Commission.


January - September 2021
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49

SANTANDER SHARE
Banco Santander approved its shareholder remuneration policy for 2021. The updated policy targets a total shareholder remuneration of approximately 40% of the group’s underlying profit, split in equal parts between cash dividends and share buybacks. According to the revised policy, interim distributions will be made around November and final distributions around May following the bank’s annual shareholder meeting.
The board of Banco Santander announced its decision to make an interim distribution from 2021 earnings through a cash dividend and share buyback amounting to a total value c. EUR 1.7 billion - equivalent to 40% of underlying profit for the first half of 2021. The board’s decision has been taken in view of the lifting of the European Central Bank's (ECB) recommendation that had limited shareholder remuneration until 30 September 2021.
Shareholder remuneration will be made in two parts:
A cash dividend of EUR 4.85 cents per share, which will be paid from 2 November 2021.
A buyback programme that will have a maximum amount of EUR 841 million, equivalent to 20% of the Group's underlying profit in the first half of 2021, already approved by the ECB and included in the inside information disclosed on 6 October 2021.
The repurchase programme will have the following characteristics:
Expected duration from 6 October 2021 to 17 December 2021, however, the Bank reserves the right to terminate the buyback programme if, prior to its expiry date, the maximum monetary amount is reached or if any other circumstances so advise.
The average purchase price of shares will not exceed EUR 3.98, corresponding to the tangible book value per share at 30 June 2021.
The maximum number of shares that may be acquired will depend on the average price at which they are acquired, but will not exceed 9.7% of the Bank’s share capital.
The bank plans to announce a further and final remuneration from 2021 earnings in the first quarter of 2022, subject to the appropriate corporate and regulatory approvals.

à Share price performance
The Santander share is listed in five markets, in Spain, Mexico and Poland as an ordinary share, in the US as an ADR and in the UK as a CDI. The global economy continued to recover, despite the Delta variant spreading across the board, in a context of excess liquidity and expansionary fiscal policies. This positive performance favoured the rise in commodity prices in recent months and increased inflationary pressures, which rebounded in the US and the Eurozone to the highest levels in a decade. These price increases could be transitory, and driven by supply constraints, associated with the end of the pandemic, rather than being a consequence of excess demand.
In this environment, the Federal Reserve (Fed) could announce the reduction of stimulus (tapering) soon, and, if the environment allows it, it might start raising interest rates once the tapering process concludes, around H2'22. On the other hand, the European Central Bank, after increasing its growth forecast for 2021 and estimating a return to the pre-pandemic levels by 2023, announced that it would moderately reduce its asset purchases under the pandemic programme (PEPP), maintaining its expansionary policy.
The main global equity markets ended September with significant aggregate gains in the first nine months of the year. The banking sector recorded an overall better performance, the DJ Stoxx Banks rose 30.1% while the MSCI World Banks rose 21.6%, compared to the Ibex 35 9.0% increase and the DJ Stoxx 50 12.6% growth. Santander recorded a rise of 23.6%.
Share price
accion4a.jpg
accin3a01a.jpg
START 31/12/2020
END 30/09/2021
€2.538€3.137
accionmaxa.jpg
accionmina.jpg
Maximum 03/06/2021
Minimum 28/01/2021
€3.509€2.375
Comparative share performance
chart-01d0fae22f3f4ab48cda.jpg
50
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January - September 2021

àMarket capitalization and trading
As at 30 September 2021, Santander was the second largest bank in the Eurozone by market capitalization and the 30th in the world among financial entities (EUR 54,389 million).
The share’s weighting in the DJ Stoxx Banks index was 7.2% and 11.7% in the DJ Euro Stoxx Banks. In the domestic market, its weight in the Ibex 35 as at end September was 11.3%.
A total of 9,283 million shares were traded in the period for an effective value of EUR 28,060 million and a liquidity ratio of 54%.
The daily trading volume was 48 million shares with an effective value of EUR 146 million.

àShareholder base
The total number of Santander shareholders at 30 September 2021 was 3,817,454, of which 3,529,544 were European (75.27% of the capital stock) and 276,578 from the Americas (23.17% of the capital stock).
Excluding the board, which holds 1.05% of the Bank’s capital stock, retail shareholders account for 39.63% and institutional shareholders account for 59.32%.



Share capital distribution by geographic area
September 2021
The AmericasEuropeOther
23.17%75.27%1.56%
accionfinala01a.jpg
globo-europa2a.gif
2nd
Bank in the Eurozone by market capitalization
EUR 54,389 million

The Santander share
September 2021
Shares and trading data
Shares (number)17,340,641,302 
Average daily turnover (number of shares)48,347,400 
Share liquidity (%)54
(Number of shares traded during the year / number of shares)
Stock market indicators
Price / Tangible book value (X)0.79
Free float (%)99.95




Share capital distribution by type of shareholder
September 2021
chart-cb76602aad2e418f817a.jpg
Institutions
59.32%
Board *
1.05%
Retail
39.63%
(*) Shares owned or represented by directors.

January - September 2021
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51




2021 A P P E N D I X
anexoenga.jpg


52
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January - September 2021


Net fee income. Consolidated
EUR million
Q3'21Q2'21Change (%)9M'219M'20Change (%)
Fees from services1,412 1,429 (1.2)4,255 4,270 (0.4)
Wealth management and marketing of customer funds968 931 4.02,751 2,543 8.2
Securities and custody261 261 804 746 7.8
Net fee income2,641 2,621 0.87,810 7,559 3.3


Underlying operating expenses. Consolidated
EUR million
Q3'21Q2'21Change (%)9M'219M'20Change (%)
Staff costs2,767 2,750 0.68,205 8,095 1.4
Other general administrative expenses1,951 1,811 7.75,509 5,531 (0.4)
   Information technology548 553 (0.9)1,596 1,551 2.9
   Communications100 102 (2.0)299 360 (16.9)
   Advertising131 115 13.9364 382 (4.7)
   Buildings and premises187 168 11.3519 561 (7.5)
   Printed and office material24 23 4.366 76 (13.2)
   Taxes (other than tax on profits)130 124 4.8394 386 2.1
   Other expenses831 726 14.52,271 2,215 2.5
Administrative expenses4,718 4,561 3.413,714 13,626 0.6
Depreciation and amortization683 698 (2.1)2,064 2,100 (1.7)
Operating expenses5,401 5,259 2.715,778 15,726 0.3

Operating means. Consolidated
EmployeesBranches
Sep-21Sep-20ChangeSep-21Sep-20Change
Europe62,577 69,928 (7,351)3,265 4,700 (1,435)
     Spain23,038 27,053 (4,015)1,948 3,110 (1,162)
     United Kingdom20,008 22,741 (2,733)450 564 (114)
     Portugal5,716 6,431 (715)397 499 (102)
     Poland9,776 10,698 (922)458 515 (57)
     Other4,039 3,005 1,034 12 12 — 
North America43,135 38,289 4,846 1,888 2,014 (126)
     US15,484 16,189 (705)514 584 (70)
     Mexico27,027 21,770 5,257 1,374 1,430 (56)
     Other624 330 294 — — — 
South America69,961 66,517 3,444 4,443 4,447 (4)
     Brazil47,877 43,689 4,188 3,591 3,562 29 
     Chile10,570 11,200 (630)332 354 (22)
     Argentina8,715 9,267 (552)408 427 (19)
     Other2,799 2,361 438 112 104 
Digital Consumer Bank15,920 16,101 (181)308 359 (51)
Corporate Centre1,710 1,743 (33)
Total Group193,303 192,578 725 9,904 11,520 (1,616)

Underlying net loan-loss provisions. Consolidated
EUR million
Q3'21Q2'21Change (%)9M'219M'20Change (%)
Non-performing loans2,548 2,054 24.16,901 10,388 (33.6)
Country-risk— — — (1)(6)(83.3)
Recovery of written-off assets(328)(293)11.9(927)(820)13.0
Net loan-loss provisions2,220 1,761 26.15,973 9,562 (37.5)
January - September 2021
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53

Loans and advances to customers. Consolidated
EUR million
Change
Sep-21Sep-20Absolute%Dec-20
Commercial bills42,316 28,454 13,862 48.737,459 
Secured loans525,118 496,769 28,349 5.7503,014 
Other term loans276,474 272,961 3,513 1.3269,143 
Finance leases38,083 35,751 2,332 6.536,251 
Receivable on demand9,549 8,771 778 8.97,903 
Credit cards receivable18,570 17,468 1,102 6.319,507 
Impaired assets31,629 29,873 1,756 5.930,815 
Gross loans and advances to customers (excl. reverse repos)941,739 890,047 51,692 5.8904,092 
Reverse repos40,358 43,474 (3,116)(7.2)35,702 
Gross loans and advances to customers982,097 933,521 48,576 5.2939,794 
Loan-loss allowances23,786 22,807 979 4.323,595 
Loans and advances to customers958,311 910,714 47,597 5.2916,199 


Total funds. Consolidated
EUR million
Change
Sep-21Sep-20Absolute%Dec-20
Demand deposits697,371 621,361 76,010 12.2642,897 
Time deposits167,035 180,571 (13,536)(7.5)171,939 
Mutual funds184,782 155,479 29,303 18.8164,802 
Customer funds1,049,188 957,411 91,777 9.6979,638 
Pension funds15,828 15,073 755 5.015,577 
Managed portfolios30,678 26,157 4,521 17.326,438 
Repos44,628 40,967 3,661 8.934,474 
Total funds1,140,322 1,039,608 100,714 9.71,056,127 


Eligible capital (phased in) 1. Consolidated
EUR million
Change
Sep-21Sep-20Absolute%Dec-20
Capital stock and reserves115,063 125,333 (10,271)(8.2)125,449 
Attributable profit5,849 (9,048)14,897 (8,771)
Dividends(1,276)— (1,276)(478)
Other retained earnings(34,968)(35,383)415 (1.2)(35,345)
Minority interests6,658 6,741 (82)(1.2)6,669 
Goodwill and intangible assets(15,781)(16,692)910 (5.5)(15,711)
Other deductions(4,757)(4,423)(334)7.6(2,415)
Core CET170,787 66,528 4,259 6.469,399 
Preferred shares and other eligible T110,110 8,963 1,147 12.89,102 
Tier 180,897 75,492 5,406 7.278,501 
Generic funds and eligible T2 instruments12,639 10,987 1,652 15.012,514 
Eligible capital93,537 86,479 7,058 8.291,015 
Risk-weighted assets577,209 555,122 22,086 4.0562,580 
CET1 capital ratio12.2611.980.2812.34
T1 capital ratio14.0213.600.4213.95
Total capital ratio16.2015.580.6316.18
(1) The phased-in ratio includes the transitory treatment of IFRS 9, calculated in accordance with article 473 bis of the Regulation on Capital Requirements (CRR) and subsequent amendments introduced by Regulation 2020/873 of the European Union. Additionally, the Tier 1 and total phased-in capital ratios include the transitory treatment according to chapter 2, title 1, part 10 of the aforementioned CRR.
54
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January - September 2021

EUROPE
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income2,744 (0.2)(0.5)8,140 12.4 11.9 
Net fee income1,079 (0.6)(0.6)3,236 6.7 6.9 
Gains (losses) on financial transactions (1)
101 20.3 15.9 569 (18.4)(18.0)
Other operating income284 — — 354 — — 
Total income4,208 6.8 6.5 12,299 11.8 11.5 
Administrative expenses and amortizations(2,048)(1.2)(1.3)(6,191)(1.1)(1.5)
Net operating income2,160 15.5 15.2 6,108 28.9 28.8 
Net loan-loss provisions(676)11.4 11.6 (1,877)(22.3)(22.5)
Other gains (losses) and provisions(258)(25.0)(25.2)(854)42.7 42.6 
Profit before tax1,227 33.4 32.8 3,377 95.9 96.5 
Tax on profit(328)8.3 8.2 (1,033)106.1 106.7 
Profit from continuing operations899 45.7 44.8 2,344 91.7 92.2 
Net profit from discontinued operations— — — — — — 
Consolidated profit899 45.7 44.8 2,344 91.7 92.2 
Non-controlling interests(31)80.4 71.3 (51)(21.8)(19.1)
Underlying attributable profit to the parent867 44.7 44.0 2,293 98.1 98.3 
Balance sheet
Loans and advances to customers590,822 1.0 1.1 590,822 4.8 2.3 
Cash, central banks and credit institutions247,362 1.5 1.4 247,362 14.1 12.6 
Debt instruments70,762 (8.7)(8.4)70,762 (14.8)(15.4)
Other financial assets48,326 (2.2)(2.2)48,326 (8.9)(9.1)
Other asset accounts30,408 (6.9)(6.9)30,408 (22.8)(23.8)
Total assets987,681 0.0 0.0 987,681 3.3 1.4 
Customer deposits608,939 1.6 1.7 608,939 6.3 4.0 
Central banks and credit institutions194,697 (1.3)(1.5)194,697 10.1 9.4 
Marketable debt securities75,468 (4.5)(4.5)75,468 (16.2)(19.2)
Other financial liabilities51,041 (7.0)(7.0)51,041 (15.3)(15.5)
Other liabilities accounts11,208 (6.3)(6.2)11,208 (6.7)(8.5)
Total liabilities941,353 (0.1)(0.1)941,353 3.2 1.3 
Total equity46,328 1.7 1.8 46,328 6.1 4.2 
Memorandum items:
Gross loans and advances to customers (2)
567,283 0.9 0.9 567,283 5.9 3.5 
Customer funds694,670 1.9 2.0 694,670 8.2 6.2 
Customer deposits (3)
589,067 1.8 1.9 589,067 6.2 4.0 
 Mutual funds105,603 2.9 2.9 105,603 20.9 20.4 
Ratios (%), operating means and customers
Underlying RoTE8.35 2.39 7.63 3.70 
Efficiency ratio48.7 (3.9)50.3 (6.6)
NPL ratio3.15 (0.16)3.15 (0.14)
Total coverage ratio51.06 2.7 51.1 2.4 
Number of employees62,577 (2.7)62,577 (10.5)
Number of branches3,265 (4.0)3,265 (30.5)
Number of loyal customers (thousands)10,197 0.2 10,197 2.7 
Number of digital customers (thousands)15,884 1.3 15,884 5.6 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
55

Spain
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%9M'21%
Net interest income975 (3.9)3,009 4.1 
Net fee income616 (0.1)1,821 4.6 
Gains (losses) on financial transactions (1)
95 (22.6)351 (41.5)
Other operating income194 — 178 — 
Total income1,881 11.1 5,359 4.1 
Administrative expenses and amortizations(818)(4.0)(2,537)(7.2)
Net operating income1,063 26.3 2,822 16.8 
Net loan-loss provisions(449)(8.7)(1,390)0.0 
Other gains (losses) and provisions(162)9.8 (438)32.4 
Profit before tax453 123.7 995 42.9 
Tax on profit(113)104.9 (265)32.7 
Profit from continuing operations340 130.7 730 47.1 
Net profit from discontinued operations— — — — 
Consolidated profit340 130.7 730 47.1 
Non-controlling interests— (93.7)— (15.7)
Underlying attributable profit to the parent340 130.5 730 47.0 
Balance sheet
Loans and advances to customers193,129 0.2 193,129 0.1 
Cash, central banks and credit institutions133,062 3.5 133,062 18.4 
Debt instruments15,869 (15.9)15,869 (27.1)
Other financial assets2,459 (1.5)2,459 (4.4)
Other asset accounts17,644 0.3 17,644 (22.4)
Total assets362,161 0.5 362,161 2.8 
Customer deposits257,488 1.7 257,488 2.8 
Central banks and credit institutions50,581 0.7 50,581 6.4 
Marketable debt securities25,840 (3.1)25,840 (1.2)
Other financial liabilities8,604 (20.3)8,604 9.5 
Other liabilities accounts4,046 5.1 4,046 0.9 
Total liabilities346,559 0.5 346,559 3.2 
Total equity15,602 1.0 15,602 (4.7)
Memorandum items:
Gross loans and advances to customers (2)
199,614 0.3 199,614 0.3 
Customer funds335,646 1.9 335,646 6.0 
    Customer deposits (3)
257,488 1.7 257,488 2.8 
    Mutual funds78,158 2.5 78,158 18.0 
Ratios (%), operating means and customers
Underlying RoTE9.01 5.08 6.48 2.27 
Efficiency ratio43.5 (6.8)47.3 (5.7)
NPL ratio5.99 (0.23)5.99 0.01 
Total coverage ratio48.8 2.8 48.8 2.8 
Number of employees23,038 (2.7)23,038 (14.8)
Number of branches1,948 0.1 1,948 (37.4)
Number of loyal customers (thousands)2,751 (0.3)2,751 6.4 
Number of digital customers (thousands)5,294 (0.1)5,294 3.3 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
56
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January - September 2021

United Kingdom
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income1,168 6.2 5.4 3,268 29.6 26.6 
Net fee income114 (2.9)(3.7)352 (11.7)(13.8)
Gains (losses) on financial transactions (1)
18 — — (85.0)(85.4)
Other operating income— — — — 
Total income1,303 7.6 6.8 3,625 23.6 20.7 
Administrative expenses and amortizations(638)(1.5)(2.3)(1,937)0.0 (2.4)
Net operating income665 18.1 17.3 1,688 69.8 65.8 
Net loan-loss provisions(1)— — 67 — — 
Other gains (losses) and provisions(39)(38.1)(38.9)(132)24.8 21.9 
Profit before tax625 6.5 5.6 1,623 426.4 413.9 
Tax on profit(174)(7.5)(8.3)(478)443.5 430.6 
Profit from continuing operations452 13.0 12.2 1,145 419.6 407.3 
Net profit from discontinued operations— — — — — — 
Consolidated profit452 13.0 12.2 1,145 419.6 407.3 
Non-controlling interests— — — — (100.0)(100.0)
Underlying attributable profit to the parent452 13.0 12.2 1,145 419.6 407.3 
Balance sheet
Loans and advances to customers261,841 0.3 0.2 261,841 5.4 (0.4)
Cash, central banks and credit institutions60,317 (3.9)(3.9)60,317 29.5 22.4 
Debt instruments8,032 (3.1)(3.2)8,032 (42.2)(45.4)
Other financial assets541 (40.7)(40.7)541 (69.5)(71.1)
Other asset accounts6,163 (18.0)(18.0)6,163 (32.5)(36.2)
Total assets336,894 (1.1)(1.1)336,894 5.3 (0.4)
Customer deposits242,678 (0.4)(0.4)242,678 8.2 2.2 
Central banks and credit institutions30,699 0.3 0.3 30,699 79.0 69.1 
Marketable debt securities41,830 (6.0)(6.0)41,830 (26.2)(30.3)
Other financial liabilities2,895 7.6 7.5 2,895 (1.9)(7.3)
Other liabilities accounts3,213 (13.1)(13.1)3,213 (26.5)(30.5)
Total liabilities321,314 (1.2)(1.2)321,314 5.2 (0.6)
Total equity15,580 0.5 0.5 15,580 9.3 3.3 
Memorandum items:
Gross loans and advances to customers (2)
243,757 0.5 0.4 243,757 7.4 1.5 
Customer funds234,041 (0.7)(0.8)234,041 8.7 2.7 
    Customer deposits (3)
225,411 (0.8)(0.8)225,411 8.4 2.4 
    Mutual funds8,630 0.4 0.4 8,630 16.3 9.9 
Ratios (%), operating means and customers
Underlying RoTE13.18 1.08 11.53 9.29 
Efficiency ratio48.9 (4.5)53.4 (12.7)
NPL ratio1.27 (0.03)1.27 (0.06)
Total coverage ratio36.6 (0.8)36.6 (5.1)
Number of employees20,008 (4.1)20,008 (12.0)
Number of branches450 (18.6)450 (20.2)
Number of loyal customers (thousands)4,397 (0.5)4,397 (1.8)
Number of digital customers (thousands)6,532 2.1 6,532 5.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
57

Portugal
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%9M'21%
Net interest income185 (3.5)569 (3.9)
Net fee income115 4.3 325 13.9 
Gains (losses) on financial transactions (1)
(2)— 151 43.2 
Other operating income14 — (3)2.2 
Total income312 3.0 1,042 6.3 
Administrative expenses and amortizations(140)(2.0)(429)(2.8)
Net operating income172 7.5 613 13.9 
Net loan-loss provisions(25)(27.8)(95)(37.6)
Other gains (losses) and provisions(2)(84.7)(26)(28.2)
Profit before tax145 27.4 492 40.5 
Tax on profit(45)27.2 (153)43.0 
Profit from continuing operations100 27.5 339 39.4 
Net profit from discontinued operations— — — — 
Consolidated profit100 27.5 339 39.4 
Non-controlling interests— 32.9 (1)78.3 
Underlying attributable profit to the parent100 27.5 339 39.3 
Balance sheet
Loans and advances to customers39,168 1.0 39,168 4.2 
Cash, central banks and credit institutions9,177 5.2 9,177 34.9 
Debt instruments8,752 (3.0)8,752 (25.0)
Other financial assets1,566 7.8 1,566 5.1 
Other asset accounts1,329 (3.9)1,329 (23.3)
Total assets59,992 1.0 59,992 1.2 
Customer deposits41,817 0.9 41,817 4.1 
Central banks and credit institutions9,487 0.0 9,487 (2.5)
Marketable debt securities2,651 6.8 2,651 (19.0)
Other financial liabilities218 (0.2)218 (17.8)
Other liabilities accounts1,671 (1.3)1,671 (8.2)
Total liabilities55,844 0.9 55,844 1.0 
Total equity4,148 2.8 4,148 2.9 
Memorandum items:
Gross loans and advances to customers (2)
40,204 0.9 40,204 4.0 
Customer funds45,982 1.3 45,982 6.5 
    Customer deposits (3)
41,817 0.9 41,817 4.1 
    Mutual funds4,165 5.7 4,165 39.7 
Ratios (%), operating means and customers
Underlying RoTE9.79 1.92 11.19 2.68 
Efficiency ratio44.9 (2.3)41.2 (3.9)
NPL ratio3.44 (0.27)3.44 (0.81)
Total coverage ratio75.5 2.6 75.5 11.3 
Number of employees5,716 (5.5)5,716 (11.1)
Number of branches397 (5.0)397 (20.4)
Number of loyal customers (thousands)845 1.2 845 5.5 
Number of digital customers (thousands)980 (0.1)980 8.6 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
58
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January - September 2021

Poland
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income251 0.4 1.3 741 (6.7)(4.0)
Net fee income133 4.9 5.7 386 16.2 19.5 
Gains (losses) on financial transactions (1)
22 4.4 5.3 63 (1.5)1.3 
Other operating income(1)— — (11)(80.1)(79.6)
Total income405 (3.0)(2.2)1,179 3.8 6.7 
Administrative expenses and amortizations(162)(0.8)0.0 (483)1.7 4.6 
Net operating income243 (4.4)(3.7)696 5.3 8.3 
Net loan-loss provisions(47)4.2 5.3 (161)(35.5)(33.7)
Other gains (losses) and provisions(56)(55.7)(55.2)(254)134.7 141.4 
Profit before tax140 68.6 69.6 281 (7.3)(4.7)
Tax on profit(37)10.4 11.3 (104)6.8 9.9 
Profit from continuing operations103 108.9 109.9 177 (14.0)(11.6)
Net profit from discontinued operations— — — — — — 
Consolidated profit103 108.9 109.9 177 (14.0)(11.6)
Non-controlling interests(32)107.9 108.8 (52)(18.7)(16.4)
Underlying attributable profit to the parent70 109.3 110.3 125 (11.9)(9.4)
Balance sheet
Loans and advances to customers28,925 0.1 1.9 28,925 2.5 4.1 
Cash, central banks and credit institutions1,746 (7.5)(5.9)1,746 (10.7)(9.4)
Debt instruments14,595 (3.8)(2.1)14,595 10.0 11.6 
Other financial assets824 5.9 7.8 824 53.2 55.6 
Other asset accounts1,277 (0.8)1.0 1,277 (8.6)(7.2)
Total assets47,367 (1.4)0.4 47,367 4.4 6.0 
Customer deposits36,247 0.6 2.4 36,247 6.8 8.4 
Central banks and credit institutions2,008 (11.8)(10.2)2,008 (22.8)(21.6)
Marketable debt securities1,944 (21.1)(19.7)1,944 (0.7)0.8 
Other financial liabilities885 4.8 6.7 885 35.6 37.6 
Other liabilities accounts1,210 (2.5)(0.7)1,210 6.3 7.9 
Total liabilities42,293 (1.3)0.5 42,293 4.9 6.5 
Total equity5,074 (2.0)(0.3)5,074 (0.1)1.4 
Memorandum items:
Gross loans and advances to customers (2)
29,955 0.2 2.0 29,955 2.6 4.1 
Customer funds41,042 0.7 2.5 41,042 9.1 10.8 
    Customer deposits (3)
36,247 0.6 2.4 36,247 6.8 8.4 
    Mutual funds4,795 1.0 2.8 4,795 31.2 33.2 
Ratios (%), operating means and customers
Underlying RoTE8.60 4.50 5.10 (0.82)
Efficiency ratio40.0 0.9 41.0 (0.8)
NPL ratio4.34 (0.24)4.34 (0.24)
Total coverage ratio74.6 2.1 74.6 3.8 
Number of employees9,776 (1.6)9,776 (8.6)
Number of branches458 (2.8)458 (11.1)
Number of loyal customers (thousands)2,205 1.8 2,205 6.7 
Number of digital customers (thousands)2,917 2.4 2,917 7.9 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
59

Other Europe
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income165 (15.2)(15.2)553 24.3 25.8 
Net fee income101 (11.9)(12.5)354 28.2 30.2 
Gains (losses) on financial transactions (1)
(33)(47.3)(43.1)— — 
Other operating income74 4.9 7.4 187 13.0 12.6 
Total income307 (3.3)(4.1)1,095 36.7 38.8 
Administrative expenses and amortizations(290)8.9 9.1 (806)20.0 21.5 
Net operating income17 (66.7)(69.7)289 123.4 129.4 
Net loan-loss provisions(153)26.8 26.4 (299)548.0 549.4 
Other gains (losses) and provisions— — — (4)(79.8)(80.4)
Profit before tax(136)103.4 105.5 (14)  
Tax on profit41 342.2 296.8 (34)259.1 295.4 
Profit from continuing operations(95)65.2 70.5 (47)  
Net profit from discontinued operations— — — — — — 
Consolidated profit(95)65.2 70.5 (47)  
Non-controlling interests— — — — 
Underlying attributable profit to the parent(94)58.2 60.4 (46)  
Balance sheet
Loans and advances to customers67,760 7.1 6.6 67,760 20.0 19.8 
Cash, central banks and credit institutions43,060 2.9 2.6 43,060 (12.4)(12.5)
Debt instruments23,514 (10.0)(10.0)23,514 4.8 4.8 
Other financial assets42,937 (1.9)(1.9)42,937 (8.0)(8.0)
Other asset accounts3,995 (18.0)(18.3)3,995 (9.4)(9.8)
Total assets181,266 0.8 0.5 181,266 1.2 1.1 
Customer deposits30,709 22.5 22.2 30,709 26.6 26.5 
Central banks and credit institutions101,922 (2.6)(2.9)101,922 2.2 2.0 
Marketable debt securities3,203 10.3 10.3 3,203 58.4 58.4 
Other financial liabilities38,440 (4.6)(4.7)38,440 (20.8)(20.8)
Other liabilities accounts1,069 (28.2)(28.2)1,069 59.7 59.6 
Total liabilities175,343 0.5 0.3 175,343 0.1 0.0 
Total equity5,923 9.4 8.7 5,923 50.5 50.0 
Memorandum items:
Gross loans and advances to customers (2)
53,754 5.8 5.2 53,754 29.0 28.6 
Customer funds37,959 26.7 26.5 37,959 30.0 29.9 
Customer deposits (3)
28,104 35.3 34.8 28,104 26.9 26.8 
    Mutual funds9,855 7.5 7.5 9,855 39.7 39.7 
Resources
Number of employees4,039 7.2 4,039 34.4 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
60
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January - September 2021

NORTH AMERICA
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income2,070 3.0 0.7 6,085 (5.1)(1.5)
Net fee income386 (5.7)(8.0)1,247 (2.8)— 
Gains (losses) on financial transactions (1)
70 120.1 116.1 200 (16.3)(14.5)
Other operating income252 (5.6)(7.8)734 84.2 98.7 
Total income2,779 2.2 (0.1)8,266 (0.8)3.0 
Administrative expenses and amortizations(1,275)6.8 4.5 (3,617)4.5 8.5 
Net operating income1,504 (1.4)(3.8)4,649 (4.6)(1.0)
Net loan-loss provisions(506)159.8 156.6 (1,095)(65.2)(63.6)
Other gains (losses) and provisions(38)— — (50)(34.8)(31.9)
Profit before tax959 (28.3)(30.4)3,504 112.0 117.4 
Tax on profit(187)(42.3)(44.3)(808)93.1 98.3 
Profit from continuing operations772 (23.8)(25.9)2,696 118.4 123.8 
Net profit from discontinued operations— — — — — — 
Consolidated profit772 (23.8)(25.9)2,696 118.4 123.8 
Non-controlling interests(112)(29.8)(31.8)(408)127.7 137.6 
Underlying attributable profit to the parent661 (22.7)(24.8)2,288 116.9 121.5 
Balance sheet
Loans and advances to customers128,339 1.6 0.1 128,339 4.5 1.4 
Cash, central banks and credit institutions37,244 0.5 (0.8)37,244 30.7 25.1 
Debt instruments37,367 5.2 4.7 37,367 1.8 (4.0)
Other financial assets10,919 0.5 0.4 10,919 (37.3)(41.3)
Other asset accounts21,040 0.4 (1.3)21,040 0.1 (2.3)
Total assets234,911 1.8 0.6 234,911 3.7 (0.2)
Customer deposits122,906 6.8 5.4 122,906 13.5 9.4 
Central banks and credit institutions25,336 (17.3)(18.0)25,336 (14.6)(18.6)
Marketable debt securities40,025 4.5 2.7 40,025 0.2 (2.5)
Other financial liabilities13,249 (6.7)(6.6)13,249 (28.7)(33.3)
Other liabilities accounts6,059 0.7 (0.4)6,059 (5.2)(9.1)
Total liabilities207,575 1.6 0.4 207,575 2.3 (1.6)
Total equity27,335 3.1 1.7 27,335 15.9 12.3 
Memorandum items:
Gross loans and advances to customers (2)
127,113 1.2 (0.3)127,113 3.6 0.5 
Customer funds133,978 3.0 1.8 133,978 14.2 10.1 
Customer deposits (3)
108,528 3.2 1.9 108,528 12.2 8.4 
    Mutual funds25,450 2.1 1.4 25,450 23.6 17.7 
Ratios (%), operating means and customers
Underlying RoTE11.03 (3.81)13.39 6.71 
Efficiency ratio45.9 2.0 43.8 2.2 
NPL ratio2.56 0.27 2.56 0.59 
Total coverage ratio139.3 (13.0)139.3 (62.3)
Number of employees43,135 3.5 43,135 12.7 
Number of branches1,888 (1.7)1,888 (6.3)
Number of loyal customers (thousands)4,144 1.3 4,144 10.2 
Number of digital customers (thousands)6,485 2.9 6,485 11.0 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
61

United States
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income1,359 2.5 0.1 4,022 (6.4)(0.4)
Net fee income174 (9.2)(11.7)606 (11.2)(5.5)
Gains (losses) on financial transactions (1)
34 67.5 62.6 124 14.8 22.2 
Other operating income282 (5.1)(7.3)834 76.5 87.8 
Total income1,849 0.7 (1.6)5,586 0.5 6.9 
Administrative expenses and amortizations(815)4.0 1.7 (2,346)1.7 8.2 
Net operating income1,034 (1.7)(4.1)3,240 (0.4)6.0 
Net loan-loss provisions(294)— — (450)(81.1)(79.8)
Other gains (losses) and provisions(6)— — (6)(89.8)(89.1)
Profit before tax734 (31.7)(33.7)2,784 239.6 261.3 
Tax on profit(141)(45.5)(47.3)(634)191.7 210.4 
Profit from continuing operations593 (27.4)(29.4)2,150 256.8 279.7 
Net profit from discontinued operations— — — — — — 
Consolidated profit593 (27.4)(29.4)2,150 256.8 279.7 
Non-controlling interests(96)(33.2)(35.1)(361)173.4 190.9 
Underlying attributable profit to the parent498 (26.2)(28.2)1,788 280.3 304.6 
Balance sheet
Loans and advances to customers95,953 2.4 0.1 95,953 2.2 0.9 
Cash, central banks and credit institutions27,322 7.4 5.0 27,322 63.8 61.7 
Debt instruments16,025 0.6 (1.6)16,025 10.7 9.2 
Other financial assets4,039 12.9 10.4 4,039 (19.0)(20.1)
Other asset accounts17,458 1.2 (1.1)17,458 (1.7)(3.0)
Total assets160,798 3.1 0.8 160,798 8.8 7.4 
Customer deposits87,316 10.0 7.5 87,316 19.1 17.6 
Central banks and credit institutions11,675 (32.8)(34.3)11,675 (25.5)(26.4)
Marketable debt securities33,838 5.3 3.0 33,838 3.9 2.6 
Other financial liabilities4,058 4.1 1.8 4,058 (18.9)(19.9)
Other liabilities accounts3,938 1.5 (0.8)3,938 2.4 1.1 
Total liabilities140,825 3.1 0.7 140,825 8.0 6.6 
Total equity19,973 3.6 1.3 19,973 15.0 13.5 
Memorandum items:
Gross loans and advances to customers (2)
95,318 1.9(0.4)95,318 2.71.3
Customer funds90,837 4.21.890,837 14.312.8
    Customer deposits (3)
77,141 4.21.877,141 11.910.4
    Mutual funds13,696 4.21.813,696 30.128.4
Ratios (%), operating means and customers
Underlying RoTE11.27 (4.90)14.31 10.31 
Efficiency ratio44.1 1.4 42.0 0.5 
NPL ratio2.36 0.36 2.36 0.51 
Total coverage ratio161.5 (24.2)161.5 (67.3)
Number of employees15,484 (0.8)15,484 (4.4)
Number of branches514 (5.5)514 (12.0)
Number of loyal customers (thousands)360 (4.7)360 2.1 
Number of digital customers (thousands)1,032 0.7 1,032 3.5 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
62
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January - September 2021

Mexico
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income711 3.9 1.7 2,063 (2.6)(3.6)
Net fee income203 (3.6)(5.8)617 5.7 4.6 
Gains (losses) on financial transactions (1)
37 211.9 211.4 76 (41.9)(42.5)
Other operating income(31)11.1 8.8 (94)27.8 26.4 
Total income919 4.7 2.4 2,662 (3.5)(4.5)
Administrative expenses and amortizations(425)12.2 9.9 (1,177)4.1 3.0 
Net operating income494 (1.0)(3.2)1,485 (8.8)(9.8)
Net loan-loss provisions(213)4.1 1.9 (645)(16.0)(16.9)
Other gains (losses) and provisions(1)(78.1)(80.0)(13)(29.7)(30.4)
Profit before tax280 (3.0)(5.2)828 (1.9)(2.9)
Tax on profit(49)(27.5)(29.7)(179)(13.0)(13.9)
Profit from continuing operations231 4.5 2.3 649 1.7 0.6 
Net profit from discontinued operations— — — — — — 
Consolidated profit231 4.5 2.3 649 1.7 0.6 
Non-controlling interests(16)(0.4)(2.6)(47)(1.1)(2.1)
Underlying attributable profit to the parent215 4.9 2.7 602 1.9 0.9 
Balance sheet
Loans and advances to customers32,368 (0.8)0.2 32,368 12.0 2.8 
Cash, central banks and credit institutions9,682 (15.2)(14.3)9,682 (17.4)(24.2)
Debt instruments21,343 8.9 10.1 21,343 (4.0)(11.9)
Other financial assets6,880 (5.6)(4.6)6,880 (44.3)(48.9)
Other asset accounts3,300 (3.8)(2.8)3,300 8.2 (0.7)
Total assets73,572 (1.0)0.0 73,572 (6.0)(13.8)
Customer deposits35,581 (0.4)0.6 35,581 1.9 (6.5)
Central banks and credit institutions13,625 2.8 3.8 13,625 (2.6)(10.6)
Marketable debt securities6,187 0.4 1.4 6,187 (16.3)(23.1)
Other financial liabilities9,144 (10.9)(10.0)9,144 (32.6)(38.1)
Other liabilities accounts2,077 (1.6)(0.6)2,077 (17.9)(24.7)
Total liabilities66,615 (1.3)(0.3)66,615 (8.0)(15.5)
Total equity6,957 1.8 2.8 6,957 18.0 8.3 
Memorandum items:
Gross loans and advances to customers (2)
31,777 (1.0)0.0 31,777 6.6 (2.1)
Customer funds43,132 0.6 1.6 43,132 14.1 4.7 
    Customer deposits (3)
31,377 0.9 1.9 31,377 13.1 3.8 
    Mutual funds11,754 (0.1)0.9 11,754 16.8 7.2 
Ratios (%), operating means and customers
Underlying RoTE14.06 0.15 13.56 (1.57)
Efficiency ratio46.2 3.1 44.2 3.2 
NPL ratio3.14 0.03 3.14 0.80 
Total coverage ratio90.1 (0.5)90.1 (42.5)
Number of employees27,027 5.8 27,027 24.1 
Number of branches1,374 (0.1)1,374 (3.9)
Number of loyal customers (thousands)3,784 1.9 3,784 11.0 
Number of digital customers (thousands)5,292 3.4 5,292 11.5 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
63

Other North America
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income— 75.7 75.7 — (29.2)(29.2)
Net fee income22.9 22.9 24 49.4 49.4 
Gains (losses) on financial transactions (1)
— — — — (82.6)(82.6)
Other operating income— — (6)— — 
Total income10 92.9 92.9 18 14.7 14.7 
Administrative expenses and amortizations(35)10.7 10.7 (94)285.7 285.7 
Net operating income(25)(6.1)(6.1)(77)751.2 751.2 
Net loan-loss provisions— — — — — — 
Other gains (losses) and provisions(31)— — (31)— — 
Profit before tax(55)106.6 106.6 (108)870.0 870.0 
Tax on profit53.9 53.9 10.1 10.1 
Profit from continuing operations(52)110.6 110.6 (102)  
Net profit from discontinued operations— — — — — — 
Consolidated profit(52)110.6 110.6 (102)  
Non-controlling interests— (77.7)(77.7)— (21.3)(21.3)
Underlying attributable profit to the parent(52)111.1 111.1 (102)  
Balance sheet
Loans and advances to customers18 2.0 2.0 18 53.8 53.8 
Cash, central banks and credit institutions240 12.3 12.3 240 145.2 145.2 
Debt instruments— — — — (100.0)(100.0)
Other financial assets(59.4)(59.4)(99.2)(99.2)
Other asset accounts282 6.3 6.3 282 30.0 30.0 
Total assets541 8.5 8.5 541 34.9 34.9 
Customer deposits(9.6)(9.6)(37.8)(37.8)
Central banks and credit institutions36 124.7 124.7 36 32.9 32.9 
Marketable debt securities— — — — — — 
Other financial liabilities46 (0.4)(0.4)46 158.6 158.6 
Other liabilities accounts44 94.7 94.7 44 219.7 219.7 
Total liabilities136 42.3 42.3 136 83.4 83.4 
Total equity406 0.5 0.5 406 24.0 24.0 
Memorandum items:
Gross loans and advances to customers (2)
18 (1.3)(1.3)18 51.1 51.1 
Customer funds(9.6)(9.6)(37.8)(37.8)
    Customer deposits (3)
(9.6)(9.6)(37.8)(37.8)
    Mutual funds— — — — — — 
Resources
Number of employees624 20.7 624 89.1 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
64
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January - September 2021

SOUTH AMERICA
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income2,920 5.8 4.2 8,254 1.2 12.8 
Net fee income956 3.1 0.8 2,726 0.8 13.2 
Gains (losses) on financial transactions (1)
206 16.3 15.8 589 (3.0)6.4 
Other operating income(92)(0.7)(1.4)(267)118.5 156.5 
Total income3,991 5.8 4.0 11,302 (0.4)11.0 
Administrative expenses and amortizations(1,398)7.6 6.1 (3,916)(2.7)8.6 
Net operating income2,593 4.8 2.9 7,386 0.9 12.4 
Net loan-loss provisions(892)10.3 8.0 (2,384)(26.0)(17.8)
Other gains (losses) and provisions(124)123.8 119.9 (312)17.2 36.2 
Profit before tax1,577 (2.0)(3.7)4,691 22.3 36.3 
Tax on profit(613)3.0 0.6 (1,807)26.6 41.8 
Profit from continuing operations964 (4.9)(6.1)2,883 19.7 33.1 
Net profit from discontinued operations— — — — — — 
Consolidated profit964 (4.9)(6.1)2,883 19.7 33.1 
Non-controlling interests(138)(3.2)(2.1)(413)39.8 48.6 
Underlying attributable profit to the parent826 (5.2)(6.8)2,471 16.9 30.8 
Balance sheet
Loans and advances to customers121,133 (2.9)3.3 121,133 11.1 10.0 
Cash, central banks and credit institutions47,010 (6.8)(1.3)47,010 15.2 13.7 
Debt instruments51,730 3.6 9.8 51,730 19.4 16.5 
Other financial assets16,326 31.1 40.9 16,326 (3.8)(4.3)
Other asset accounts15,777 (2.9)2.9 15,777 (1.1)(3.0)
Total assets251,976 (0.7)5.5 251,976 11.4 9.9 
Customer deposits121,470 (2.4)3.4 121,470 10.0 8.8 
Central banks and credit institutions45,869 2.5 9.1 45,869 24.6 23.2 
Marketable debt securities22,810 (0.7)6.4 22,810 10.0 7.8 
Other financial liabilities33,881 6.8 13.9 33,881 7.4 5.3 
Other liabilities accounts8,066 (11.8)(6.4)8,066 2.1 (0.3)
Total liabilities232,096 (0.4)5.8 232,096 11.9 10.4 
Total equity19,881 (4.4)1.3 19,881 6.5 5.1 
Memorandum items:
Gross loans and advances to customers (2)
126,335 (2.9)3.4 126,335 11.2 10.1 
Customer funds162,588 (3.4)2.5 162,588 11.0 9.6 
    Customer deposits (3)
111,092 (3.9)1.9 111,092 11.6 10.9 
    Mutual funds51,496 (2.4)3.8 51,496 9.6 6.7 
Ratios (%), operating means and customers
Underlying RoTE19.58 (1.54)20.13 3.07 
Efficiency ratio35.0 0.6 34.6 (0.8)
NPL ratio4.38 0.02 4.38 (0.02)
Total coverage ratio98.8 0.6 98.8 1.5 
Number of employees69,961 4.1 69,961 5.2 
Number of branches4,443 0.1 4,443 (0.1)
Number of loyal customers (thousands)10,043 4.5 10,043 23.5 
Number of digital customers (thousands)23,531 3.8 23,531 18.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
65

Brazil
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income2,083 8.5 5.1 5,782 (1.0)11.9 
Net fee income696 (0.2)(3.7)2,027 (5.6)6.7 
Gains (losses) on financial transactions (1)
122 55.7 53.0 328 (7.3)4.8 
Other operating income(19)34.4 31.1 (52)177.0 213.2 
Total income2,882 7.5 4.0 8,085 (2.8)9.8 
Administrative expenses and amortizations(864)10.8 7.3 (2,366)(10.5)1.1 
Net operating income2,019 6.1 2.7 5,719 0.7 13.9 
Net loan-loss provisions(757)12.4 8.9 (1,980)(20.1)(9.7)
Other gains (losses) and provisions(89)215.8 222.5 (214)(5.6)6.7 
Profit before tax1,172 (2.3)(5.8)3,526 18.6 34.1 
Tax on profit(517)0.3 (3.2)(1,563)24.3 40.6 
Profit from continuing operations655 (4.3)(7.7)1,963 14.4 29.3 
Net profit from discontinued operations— — — — — — 
Consolidated profit655 (4.3)(7.7)1,963 14.4 29.3 
Non-controlling interests(73)12.0 8.6 (201)17.9 33.3 
Underlying attributable profit to the parent582 (6.0)(9.5)1,762 14.0 28.9 
Balance sheet
Loans and advances to customers70,737 (4.0)1.8 70,737 18.2 12.7 
Cash, central banks and credit institutions29,913 (8.3)(2.8)29,913 6.0 1.0 
Debt instruments38,036 1.0 7.1 38,036 14.2 8.8 
Other financial assets6,178 3.7 10.0 6,178 3.2 (1.6)
Other asset accounts11,084 (5.5)0.2 11,084 (3.0)(7.5)
Total assets155,948 (3.5)2.3 155,948 12.4 7.1 
Customer deposits73,772 (3.7)2.1 73,772 6.2 1.2 
Central banks and credit institutions27,768 (3.7)2.2 27,768 38.4 31.9 
Marketable debt securities14,160 4.4 10.8 14,160 17.5 12.0 
Other financial liabilities22,303 (0.6)5.4 22,303 14.9 9.5 
Other liabilities accounts5,126 (22.8)(18.2)5,126 (14.6)(18.6)
Total liabilities143,129 (3.3)2.5 143,129 12.7 7.4 
Total equity12,819 (5.7)0.0 12,819 9.2 4.1 
Memorandum items:
Gross loans and advances to customers (2)
74,431 (3.8)2.1 74,431 18.3 12.7 
Customer funds103,765 (5.1)0.7 103,765 8.6 3.5 
    Customer deposits (3)
63,422 (6.4)(0.7)63,422 8.3 3.2 
    Mutual funds40,343 (2.9)2.9 40,343 9.0 3.9 
Ratios (%), operating means and customers
Underlying RoTE20.56 (2.17)21.64 3.27 
Efficiency ratio30.0 0.9 29.3 (2.5)
NPL ratio4.72 0.17 4.72 0.08 
Total coverage ratio111.8 (0.5)111.8 (3.1)
Number of employees47,877 6.1 47,877 9.6 
Number of branches3,591 — 3,591 0.8 
Number of loyal customers (thousands)7,509 5.1 7,509 25.9 
Number of digital customers (thousands)18,247 4.5 18,247 20.0 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
66
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January - September 2021

Chile
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income467 (8.7)(3.5)1,476 14.1 11.8 
Net fee income104 8.5 14.0 294 22.5 20.0 
Gains (losses) on financial transactions (1)
29 (39.8)(35.9)110 (29.5)(31.0)
Other operating income(17)(3.7)0.6 (45)130.8 126.0 
Total income583 (8.6)(3.5)1,834 9.9 7.6 
Administrative expenses and amortizations(229)(6.7)(1.6)(710)4.2 2.1 
Net operating income354 (9.7)(4.7)1,125 13.8 11.5 
Net loan-loss provisions(84)2.5 8.5 (266)(46.9)(48.0)
Other gains (losses) and provisions(5)— — (2)— — 
Profit before tax265 (15.9)(11.1)857 71.5 67.9 
Tax on profit(59)(15.7)(11.1)(183)71.4 67.9 
Profit from continuing operations206 (16.0)(11.2)674 71.5 68.0 
Net profit from discontinued operations— — — — — — 
Consolidated profit206 (16.0)(11.2)674 71.5 68.0 
Non-controlling interests(64)(16.3)(11.5)(211)70.4 66.9 
Underlying attributable profit to the parent142 (15.9)(11.0)463 72.0 68.5 
Balance sheet
Loans and advances to customers37,851 (5.2)3.4 37,851 (1.3)0.4 
Cash, central banks and credit institutions9,573 (18.5)(11.2)9,573 47.0 49.5 
Debt instruments9,682 16.4 26.9 9,682 46.4 48.9 
Other financial assets9,901 57.3 71.5 9,901 (7.9)(6.3)
Other asset accounts3,011 4.4 13.9 3,011 (0.6)1.2 
Total assets70,017 1.2 10.4 70,017 7.3 9.2 
Customer deposits31,509 (5.4)3.1 31,509 17.4 19.5 
Central banks and credit institutions12,903 10.6 20.6 12,903 3.0 4.8 
Marketable debt securities8,323 (8.4)(0.1)8,323 (2.7)(1.0)
Other financial liabilities10,683 25.5 36.8 10,683 (6.5)(4.9)
Other liabilities accounts2,230 19.2 29.9 2,230 77.3 80.4 
Total liabilities65,648 1.9 11.1 65,648 8.3 10.2 
Total equity4,370 (7.3)1.1 4,370 (6.4)(4.7)
Memorandum items:
Gross loans and advances to customers (2)
38,927 (5.3)3.2 38,927 (1.2)0.5 
Customer funds40,165 (5.1)3.5 40,165 15.1 17.1 
    Customer deposits (3)
31,480 (5.4)3.1 31,480 17.5 19.6 
    Mutual funds8,684 (3.8)4.8 8,684 7.2 9.1 
Ratios (%), operating means and customers
Underlying RoTE18.23 (1.68)18.46 7.47 
Efficiency ratio39.3 0.8 38.7 (2.1)
NPL ratio4.36 (0.20)4.36 (0.40)
Total coverage ratio64.1 0.3 64.1 4.4 
Number of employees10,570 (0.5)10,570 (5.6)
Number of branches332 — 332 (6.2)
Number of loyal customers (thousands)807 3.8 807 11.0 
Number of digital customers (thousands)1,934 3.6 1,934 29.9 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
image6a.jpg
67

Argentina
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income268 13.9 11.7 708 (1.8)25.6 
Net fee income110 26.3 23.8 272 34.6 72.2 
Gains (losses) on financial transactions (1)
43 26.6 23.6 108 113.3 172.9 
Other operating income(56)0.5 (1.2)(159)122.6 184.8 
Total income365 21.3 18.9 929 3.0 31.8 
Administrative expenses and amortizations(204)14.2 11.6 (554)12.7 44.2 
Net operating income161 31.8 29.6 375 (8.7)16.9 
Net loan-loss provisions(40)15.1 15.0 (88)(50.3)(36.4)
Other gains (losses) and provisions(29)(7.4)(9.7)(94)94.8 149.3 
Profit before tax92 63.4 60.3 193 4.3 33.5 
Tax on profit(19)— — (11)(50.7)(36.9)
Profit from continuing operations73 16.4 14.8 182 12.0 43.3 
Net profit from discontinued operations— — — — — — 
Consolidated profit73 16.4 14.8 182 12.0 43.3 
Non-controlling interests— 18.0 16.5 (1)(0.6)27.2 
Underlying attributable profit to the parent73 16.4 14.8 180 12.1 43.4 
Balance sheet
Loans and advances to customers4,652 4.4 5.2 4,652 3.3 32.2 
Cash, central banks and credit institutions4,101 27.9 29.0 4,101 33.1 70.3 
Debt instruments2,394 9.4 10.4 2,394 13.4 45.1 
Other financial assets79 2.9 3.7 79 24.7 59.6 
Other asset accounts865 3.5 4.4 865 4.8 34.0 
Total assets12,092 12.3 13.3 12,092 14.2 46.2 
Customer deposits8,860 13.8 14.7 8,860 16.5 49.1 
Central banks and credit institutions834 1.3 2.1 834 (15.0)8.8 
Marketable debt securities63 (0.8)0.1 63 172.0 248.1 
Other financial liabilities762 12.9 13.9 762 24.0 58.7 
Other liabilities accounts356 13.7 14.7 356 (5.3)21.2 
Total liabilities10,875 12.6 13.5 10,875 13.3 45.0 
Total equity1,216 10.3 11.3 1,216 23.6 58.1 
Memorandum items:
Gross loans and advances to customers (2)
4,928 4.6 5.4 4,928 3.8 32.9 
Customer funds11,285 14.0 15.0 11,285 19.8 53.3 
    Customer deposits (3)
8,860 13.8 14.7 8,860 16.5 49.1 
    Mutual funds2,425 15.0 15.9 2,425 33.5 70.9 
Ratios (%), operating means and customers
Underlying RoTE27.64 0.62 25.33 (3.90)
Efficiency ratio55.9 (3.5)59.6 5.1 
NPL ratio3.85 0.52 3.85 0.98 
Total coverage ratio149.3 (18.3)149.3 (37.0)
Number of employees8,715 (1.1)8,715 (6.0)
Number of branches408 — 408 (4.4)
Number of loyal customers (thousands)1,604 2.3 1,604 20.1 
Number of digital customers (thousands)2,713 (0.1)2,713 0.9 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
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Other South America
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income102 9.5 8.3 289 (5.1)6.2 
Net fee income45 (2.2)(2.9)133 16.0 27.0 
Gains (losses) on financial transactions (1)
13 (26.5)(25.6)44 (8.7)2.2 
Other operating income— — (11)(10.7)(4.9)
Total income161 5.6 4.8 454 0.0 11.4 
Administrative expenses and amortizations(101)5.8 4.8 (287)38.9 52.1 
Net operating income60 5.2 4.6 167 (32.4)(23.6)
Net loan-loss provisions(11)(39.9)(39.3)(50)(24.1)(15.3)
Other gains (losses) and provisions(1)9.7 5.4 (3)(20.0)(15.9)
Profit before tax47 27.9 26.7 115 (35.7)(26.9)
Tax on profit(18)12.2 12.0 (50)22.6 39.8 
Profit from continuing operations30 39.4 37.4 65 (52.9)(46.4)
Net profit from discontinued operations— — — — — — 
Consolidated profit30 39.4 37.4 65 (52.9)(46.4)
Non-controlling interests— (54.3)(53.1)— 2.9 2.9 
Underlying attributable profit to the parent30 39.0 36.9 65 (52.7)(46.3)
Balance sheet
Loans and advances to customers7,893 17.5 17.6 7,893 23.7 28.3 
Cash, central banks and credit institutions3,423 20.0 17.3 3,423 14.4 17.2 
Debt instruments1,618 (9.2)(10.1)1,618 24.4 24.8 
Other financial assets168 31.7 35.2 168 (5.5)(2.0)
Other asset accounts817 2.5 2.4 817 21.9 22.6 
Total assets13,919 13.4 12.7 13,919 20.8 24.2 
Customer deposits7,329 8.0 5.8 7,329 11.9 14.1 
Central banks and credit institutions4,363 27.6 30.5 4,363 34.4 40.6 
Marketable debt securities264 1.2 0.7 264 151.1 185.1 
Other financial liabilities133 21.5 21.4 133 48.5 53.9 
Other liabilities accounts354 10.2 9.6 354 34.4 36.5 
Total liabilities12,444 14.2 13.5 12,444 21.3 24.9 
Total equity1,476 6.9 6.3 1,476 16.5 18.7 
Memorandum items:
Gross loans and advances to customers (2)
8,048 17.1 17.2 8,048 23.6 28.2 
Customer funds7,373 8.0 5.8 7,373 11.9 14.1 
    Customer deposits (3)
7,329 8.0 5.8 7,329 11.9 14.1 
    Mutual funds44 1.6 (2.4)44 16.7 16.3 
Resources
Number of employees2,799 6.0 2,799 18.6 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - September 2021
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69

DIGITAL CONSUMER BANK
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income1,077 0.2 0.5 3,207 0.5 (0.1)
Net fee income222 7.4 7.5 616 8.8 8.8 
Gains (losses) on financial transactions (1)
(3)— — — — 
Other operating income73 263.5 261.0 144 144.8 140.2 
Total income1,369 5.2 5.4 3,975 4.2 3.6 
Administrative expenses and amortizations(591)(3.6)(3.4)(1,805)4.1 3.7 
Net operating income778 13.0 13.3 2,170 4.3 3.6 
Net loan-loss provisions(141)(1.1)(0.4)(449)(40.4)(40.7)
Other gains (losses) and provisions(43)(3.0)(2.4)(119)— — 
Profit before tax594 18.4 18.5 1,602 16.8 16.0 
Tax on profit(132)1.3 1.6 (398)10.0 9.5 
Profit from continuing operations462 24.4 24.5 1,204 19.3 18.3 
Net profit from discontinued operations— — — — (100.0)(100.0)
Consolidated profit462 24.4 24.5 1,204 19.3 18.3 
Non-controlling interests(96)2.6 2.5 (269)21.4 21.4 
Underlying attributable profit to the parent366 31.8 31.9 935 18.7 17.5 
Balance sheet
Loans and advances to customers111,667 (0.9)(1.0)111,667 1.1 (0.5)
Cash, central banks and credit institutions29,690 4.4 4.3 29,690 44.6 43.0 
Debt instruments5,117 (10.8)(10.7)5,117 (7.9)(8.4)
Other financial assets46 10.4 10.3 46 37.6 35.5 
Other asset accounts6,700 3.4 3.3 6,700 4.7 3.2 
Total assets153,221 (0.1)(0.2)153,221 7.1 5.6 
Customer deposits54,396 0.7 0.6 54,396 8.8 7.4 
Central banks and credit institutions46,553 (3.0)(3.0)46,553 18.9 16.6 
Marketable debt securities34,259 1.5 1.5 34,259 (4.6)(5.6)
Other financial liabilities1,447 (0.5)(0.5)1,447 (12.6)(13.5)
Other liabilities accounts4,335 3.0 3.0 4,335 6.0 5.1 
Total liabilities140,990 (0.3)(0.4)140,990 7.8 6.3 
Total equity12,231 1.8 1.7 12,231 0.1 (1.8)
Memorandum items:
Gross loans and advances to customers (2)
114,420 (1.0)(1.0)114,420 1.0 (0.6)
Customer funds56,628 0.8 0.7 56,628 12.0 10.6 
    Customer deposits (3)
54,396 0.7 0.6 54,396 8.8 7.4 
    Mutual funds2,232 3.9 3.9 2,232 291.4 291.4 
Ratios (%), operating means and customers
Underlying RoTE15.73 3.7 13.23 2.27 
Efficiency ratio43.2 (3.9)45.4 0.0 
NPL ratio2.15 — 2.15 (0.14)
Total coverage ratio112.8 0.9 112.8 2.3 
Number of employees15,920 0.5 15,920 (1.1)
Number of branches308 (1.9)308 (14.2)
Number of total customers (thousands)19,120 (1.6)19,120 (4.5)
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
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January - September 2021

CORPORATE CENTRE
EUR million
Underlying income statementQ3'21Q2'21%9M'219M'20%
Net interest income(354)(355)(0.5)(1,033)(1,029)0.4 
Net fee income(2)(8)(76.4)(15)(26)(40.6)
Gains (losses) on financial transactions (1)
(49)(52)(4.5)(145)182 — 
Other operating income(11)(15)(27.2)(23)(17)38.4 
Total income(416)(430)(3.4)(1,216)(889)36.8 
Administrative expenses and amortizations(89)(81)11.0 (249)(248)0.2 
Net operating income(505)(511)(1.1)(1,465)(1,137)28.8 
Net loan-loss provisions(6)(9)(37.3)(168)(27)522.5 
Other gains (losses) and provisions(43)(33)27.9 (108)(403)(73.1)
Profit before tax(553)(553)0.0 (1,741)(1,567)11.1 
Tax on profit19 (59.0)135 113 20.1 
Profit from continuing operations(545)(534)2.1 (1,606)(1,454)10.4 
Net profit from discontinued operations— — — — — — 
Consolidated profit(545)(534)2.1 (1,606)(1,454)10.4 
Non-controlling interests— (1)(94.3)(1)(1)116.7 
Underlying attributable profit to the parent(545)(535)1.9 (1,607)(1,455)10.5 
Balance sheet
Loans and advances to customers6,350 5,832 8.9 6,350 4,827 31.5 
Cash, central banks and credit institutions81,150 71,908 12.9 81,150 63,947 26.9 
Debt instruments1,423 1,605 (11.3)1,423 2,100 (32.2)
Other financial assets2,157 2,016 7.0 2,157 2,067 4.4 
Other asset accounts116,606 118,374 (1.5)116,606 114,295 2.0 
Total assets207,687 199,736 4.0 207,687 187,236 10.9 
Customer deposits1,324 1,017 30.2 1,324 1,074 23.3 
Central banks and credit institutions46,173 38,914 18.7 46,173 42,654 8.3 
Marketable debt securities71,720 69,217 3.6 71,720 57,866 23.9 
Other financial liabilities1,495 534 179.9 1,495 1,143 30.8 
Other liabilities accounts7,197 8,009 (10.1)7,197 7,645 (5.9)
Total liabilities127,909 117,691 8.7 127,909 110,382 15.9 
Total equity79,778 82,044 (2.8)79,778 76,854 3.8 
Memorandum items:
Gross loans and advances to customers (2)
6,589 6,138 7.4 6,589 5,008 31.6 
Customer funds1,324 1,021 29.6 1,324 1,089 21.6 
    Customer deposits (3)
1,324 1,017 30.2 1,324 1,074 23.3 
    Mutual funds— (90.0)— 15 (97.1)
Resources
Number of employees1,710 1,743 1,710 1,743 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.

January - September 2021
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71

RETAIL BANKING
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income7,968 2.6 1.5 23,206 2.9 7.2 
Net fee income1,746 (0.4)(1.5)5,208 (1.8)3.1 
Gains (losses) on financial transactions (1)
216 26.0 22.8 633 (27.8)(27.5)
Other operating income243 100.8 97.2 472 — — 
Total income10,173 3.7 2.5 29,520 3.0 7.3 
Administrative expenses and amortizations(4,336)2.1 1.2 (12,740)(2.0)1.3 
Net operating income5,837 4.9 3.5 16,780 7.1 12.3 
Net loan-loss provisions(2,199)27.4 26.1 (5,708)(38.1)(34.9)
Other gains (losses) and provisions(445)(3.9)(4.8)(1,312)58.3 66.3 
Profit before tax3,194 (5.4)(6.8)9,759 73.6 81.6 
Tax on profit(905)(14.4)(16.1)(3,010)60.8 70.7 
Profit from continuing operations2,288 (1.3)(2.7)6,749 80.1 86.9 
Net profit from discontinued operations— — — — — (57.7)
Consolidated profit2,288 (1.3)(2.7)6,749 80.1 86.9 
Non-controlling interests(329)(9.6)(10.4)(999)56.0 60.6 
Underlying attributable profit to the parent1,960 0.3 (1.2)5,750 85.0 92.4 
(1) Includes exchange differences.

CORPORATE & INVESTMENT BANKING
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income747 1.1 0.0 2,207 2.5 7.5 
Net fee income435 0.2 (0.8)1,335 14.4 19.0 
Gains (losses) on financial transactions (1)
144 42.7 42.6 656 7.8 18.6 
Other operating income87 888.7 928.7 154 2.0 0.8 
Total income1,414 10.2 9.2 4,352 6.7 12.1 
Administrative expenses and amortizations(574)5.7 4.9 (1,642)8.4 11.8 
Net operating income840 13.5 12.4 2,709 5.7 12.3 
Net loan-loss provisions(7)(65.1)(66.0)(75)(73.5)(73.5)
Other gains (losses) and provisions(1)— — — — 
Profit before tax832 10.9 9.7 2,640 19.1 27.8 
Tax on profit(245)13.8 12.3 (779)21.8 31.5 
Profit from continuing operations587 9.8 8.7 1,861 17.9 26.3 
Net profit from discontinued operations— — — — — — 
Consolidated profit587 9.8 8.7 1,861 17.9 26.3 
Non-controlling interests(40)(1.9)(2.0)(117)22.1 32.0 
Underlying attributable profit to the parent547 10.7 9.5 1,744 17.7 25.9 
(1) Includes exchange differences.

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WEALTH MANAGEMENT & INSURANCE
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income96 4.9 3.8 275 (6.6)(2.4)
Net fee income321 1.8 0.8 933 8.9 11.9 
Gains (losses) on financial transactions (1)
17 (24.6)(25.4)77 33.2 40.8 
Other operating income181 102.9 102.4 351 27.2 30.4 
Total income616 18.6 17.7 1,637 10.2 13.6 
Administrative expenses and amortizations(221)(2.4)(3.4)(668)1.9 4.7 
Net operating income395 34.8 34.0 969 16.7 20.7 
Net loan-loss provisions(6)113.9 114.2 (14)(39.4)(39.1)
Other gains (losses) and provisions16 — — 12 — — 
Profit before tax405 40.3 39.5 966 20.7 24.9 
Tax on profit(105)49.2 48.5 (242)27.6 31.3 
Profit from continuing operations300 37.5 36.7 724 18.5 22.9 
Net profit from discontinued operations— — — — — — 
Consolidated profit300 37.5 36.7 724 18.5 22.9 
Non-controlling interests(8)(2.7)(1.9)(26)(3.5)1.6 
Underlying attributable profit to the parent292 39.2 38.2 698 19.5 23.9 
(1) Includes exchange differences.




PAGONXT
EUR million
/ Q2'21/ 9M'20
Underlying income statementQ3'21%% excl. FX9M'21%% excl. FX
Net interest income— (2)396.4847.6
Net fee income141 10.58.0349 34.545.4
Gains (losses) on financial transactions (1)
(2)228.8221.9(1)(4.1)(13.4)
Other operating income— — (13)548.1 588.5 
Total income144 17.715.1334 30.340.9
Administrative expenses and amortizations(181)11.410.4(479)59.267.0
Net operating income(36)(8.1)(4.2)(145)224.9191.3
Net loan-loss provisions(2)1.0 (2.5)(7)(31.7)(23.4)
Other gains (losses) and provisions(34)889.8 884.9 (39)— — 
Profit before tax(73)60.864.9(191)247.7220.5
Tax on profit(6)(44.6)(49.7)(15)110.6198.9
Profit from continuing operations(79)41.643.3(207)231.8218.8
Net profit from discontinued operations— — — — — — 
Consolidated profit(79)41.643.3(207)231.8218.8
Non-controlling interests— — (57.6)(57.6)
Underlying attributable profit to the parent(79)42.043.7(206)236.9223.4
(1) Includes exchange differences.
January - September 2021
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73

ALTERNATIVE PERFORMANCE MEASURES (APMs)
In addition to the financial information prepared under IFRS, this consolidated directors’ report contains financial measures that constitute alternative performance measures (‘APMs’) to comply with the guidelines on alternative performance measures issued by the European Securities and Markets Authority on 5 October 2015 and non-IFRS measures.

The financial measures contained in this consolidated directors’ report that qualify as APMs and non-IFRS measures have been calculated using the financial information from Santander but are not defined or detailed in the applicable financial information framework or under IFRS and have neither been audited nor reviewed by our auditors.

We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. We consider these APMs and non-IFRS financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period. While we believe that these APMs and non-IFRS financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute of IFRS measures. In addition, the way in which Santander defines and calculates these
APMs and non-IFRS measures may differ from the calculations and by other companies with similar measures and, therefore, may not be comparable.

The APMs and non-IFRS measures we use in this document can be categorised as follows:

Underlying results
In addition to IFRS results measures, we present some results measures which are non-IFRS measures and which we refer to as underlying measures. These underlying measures allow in our view a better year-on-year comparability as they exclude items outside the ordinary performance of our business which are grouped in the non-IFRS line net capital gains and provisions and are further detailed on page 11 of this report.
In addition, in the section "Financial information by segments", relative to the primary and secondary segments, results are presented on an underlying basis in accordance with IFRS 8, and reconciled on an aggregate basis to our IFRS consolidated results to the consolidated financial statements, which are set out below.
Reconciliation of underlying results to statutory results
EUR million
January-September 2021
Underlying resultsAdjustmentsStatutory results
Net interest income24,654 — 24,654 
Net fee income7,810 — 7,810 
Gains (losses) on financial transactions (1)
1,220 — 1,220 
Other operating income942 — 942 
Total income34,626  34,626 
Administrative expenses and amortizations(15,778)— (15,778)
Net operating income18,848  18,848 
Net loan-loss provisions(5,973)— (5,973)
Other gains (losses) and provisions(1,443)(716)(2,159)
Profit before tax11,432 (716)10,716 
Tax on profit(3,911)186 (3,725)
Profit from continuing operations7,521 (530)6,991 
Net profit from discontinued operations— — — 
Consolidated profit7,521 (530)6,991 
Non-controlling interests(1,142)— (1,142)
Attributable profit to the parent6,379 (530)5,849 
(1) Includes exchange differences.

Explanation of adjustments:
Restructuring costs for a net impact of -EUR 530 million: -EUR 293 million in the UK, -EUR 165 million in Portugal, -EUR 16 million in Digital Consumer Bank and -EUR 56 million in the Corporate Centre.
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January - September 2021

Reconciliation of underlying results to statutory results
EUR million
January-September 2020
Underlying resultsAdjustmentsStatutory results
Net interest income23,975 — 23,975 
Net fee income7,559 — 7,559 
Gains (losses) on financial transactions (1)
1,725 — 1,725 
Other operating income346 (250)96 
Total income33,605 (250)33,355 
Administrative expenses and amortizations(15,726)(60)(15,786)
Net operating income17,879 (310)17,569 
Net loan-loss provisions(9,562)— (9,562)
Other gains (losses) and provisions(1,301)(9,977)(11,278)
Profit before tax7,016 (10,287)(3,271)
Tax on profit(2,596)(2,424)(5,020)
Profit from continuing operations4,420 (12,711)(8,291)
Net profit from discontinued operations— — — 
Consolidated profit4,420 (12,711)(8,291)
Non-controlling interests(762)(757)
Attributable profit to the parent3,658 (12,706)(9,048)
(1) Includes exchange differences.


Explanation of adjustments:
Adjustment to the valuation of goodwill of EUR -10,100 million, adjustment has been made to deferred tax assets of the Spanish consolidated fiscal group of EUR -2,500 million and restructuring costs and other for a net impact of EUR -106 million.



January - September 2021
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75

Profitability and efficiency ratios
The purpose of the profitability and efficiency ratios is to measure the ratio of profit to capital, to tangible capital, to assets and to risk weighted assets, while the efficiency ratio measures how much general administrative expenses (personnel and other) and amortization costs are needed to generate revenue.
Additionally, the goodwill adjustments have been removed from the RoTE numerator as, since they are not considered in the denominator, we believe this calculation is more correct.

RatioFormulaRelevance of the metric
RoEAttributable profit to the parentThis ratio measures the return that shareholders obtain on the funds invested in the Bank and as such measures the company's ability to pay shareholders.
(Return on equity)
Average stockholders’ equity 1 (excl. minority interests)
Underlying RoE Underlying attributable profit to the parentThis ratio measures the return that shareholders obtain on the funds invested in the Bank excluding items outside the ordinary performance of our business.
Average stockholders’ equity 1 (excl. minority interests)
RoTE
Attributable profit to the parent2
This indicator is used to evaluate the profitability of the company as a percentage of its tangible equity. It's measured as the return that shareholders receive as a percentage of the funds invested in the entity less intangible assets.
(Return on tangible equity)
Average stockholders' equity 1 (excl. minority interests) - intangible assets
Underlying RoTEUnderlying attributable profit to the parentThis indicator measures the profitability of the tangible equity of a company arising from ordinary activities, i.e. excluding items outside the ordinary performance of our business.
Average stockholders' equity 1 (excl. minority interests) - intangible assets
RoAConsolidated profitThis metric measures the profitability of a company as a percentage of its total assets. It is an indicator that reflects the efficiency of the company's total funds in generating profit.
(Return on assets)Average total assets
Underlying RoAUnderlying consolidated profitThis metric measures the profitability of a company as a percentage of its total assets, excluding non-recurring results. It is an indicator that reflects the efficiency of the company's total funds in generating underlying profit.
Average total assets
RoRWAConsolidated profitThe return adjusted for risk is a derivative of the RoA metric. The difference is that RoRWA measures profit in relation to the bank's risk-weighted assets.
(Return on risk weighted assets)Average risk-weighted assets
Underlying RoRWAUnderlying consolidated profitThis relates the consolidated profit (excluding items outside the ordinary performance of our business) to the bank's risk-weighted assets.
Average risk-weighted assets
Efficiency ratio
Operating expenses 3
One of the most commonly used indicators when comparing productivity of different financial entities. It measures the amount of funds used to generate the bank's total income.
Total income
1. Stockholders’ equity = Capital and Reserves + Accumulated other comprehensive income + Attributable profit to the parent + Dividends.
2. Excluding the adjustment to the valuation of goodwill.
3. Operating expenses = Administrative expenses + amortizations.
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Profitability and efficiency (1) (2) (3) (4)
Q3'21Q2'219M'219M'20
RoE10.16 %9.91 %9.54 %-8.54 %
Attributable profit to the parent8,6968,2687,975-7,829
Average stockholders' equity (excluding minority interests)85,60883,42983,57491,639
Underlying RoE10.16 %9.91 %10.18 %5.32 %
Attributable profit to the parent8,6968,2687,975-7,829
(-) Net capital gains and provisions-530-12,706
Underlying attributable profit to the parent8,6968,2688,5054,877
Average stockholders' equity (excluding minority interests)85,60883,42983,57491,639
RoTE12.56 %12.29 %11.82 %3.30 %
Attributable profit to the parent8,6968,2687,975-7,829
(+) Goodwill impairment-10,100
Attributable profit to the parent (excluding goodwill impairment)8,6968,2687,9752,271
Average stockholders' equity (excluding minority interests)85,60883,42983,57491,639
(-) Average intangible assets16,36616,13116,10922,748
Average stockholders' equity (excl. minority interests) - intangible assets69,24367,29867,46668,892
Underlying RoTE12.56 %12.29 %12.61 %7.08 %
Attributable profit to the parent8,6968,2687,975-7,829
(-) Net capital gains and provisions-530-12,706
Underlying attributable profit to the parent8,6968,2688,5054,877
Average stockholders' equity (excl. minority interests) - intangible assets69,24367,29867,46668,892
RoA0.65 %0.64 %0.61 %-0.44 %
Consolidated profit10,2049,9249,498-6,818
Average total assets1,575,9751,557,3641,550,9431,543,361
Underlying RoA0.65 %0.64 %0.65 %0.38 %
Consolidated profit10,2049,9249,498-6,818
(-) Net capital gains and provisions-530-12,711
Underlying consolidated profit10,2049,92410,0285,893
Average total assets1,575,9751,557,3641,550,9431,543,361
RoRWA1.76 %1.74 %1.66 %-1.17 %
Consolidated profit10,2049,9249,498-6,818
Average risk weighted-assets580,226570,828570,653583,448
Underlying RoRWA1.76 %1.74 %1.76 %1.01 %
Consolidated profit10,2049,9249,498-6,818
(-) Net capital gains and provisions-530-12,711
Underlying consolidated profit10,2049,92410,0285,893
Average risk-weighted assets580,226570,828570,653583,448
Efficiency ratio45.3 %46.5 %45.6 %46.8 %
   Underlying operating expenses5,4015,25915,77815,726
      Operating expenses5,4015,25915,77815,786
      Net capital gains and provisions impact in operating expenses-60
   Underlying total income11,93111,30534,62633,605
      Total income11,93111,30534,62633,355
      Net capital gains and provisions impact in total income250
(1) Averages included in the RoE, RoTE, RoA and RoRWA denominators are calculated using 4 months' worth of data in the case of quarterly figures (from June to September in Q3 and March to June in Q2) and 10 months in the case of annual figures (December to September).
(2) For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoE and RoTE is the annualized underlying attributable profit to which said results are added without annualizing.
(3) For periods less than one year, and if there are results in the net capital gains and provisions line, the profit used to calculate RoA and RoRWA is the annualized underlying consolidated profit, to which said results are added without annualizing.
(4) The risk weighted assets included in the denominator of the RoRWA metric are calculated in line with the criteria laid out in the CRR (Capital Requirements Regulation).

January - September 2021
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77

Efficiency ratio
9M'219M'20
%   Total income   Operating expenses%   Total income   Operating expenses
Europe50.3 12,299 6,191 56.9 10,998 6,259 
   Spain47.3 5,359 2,537 53.1 5,150 2,734 
   United Kingdom53.4 3,625 1,937 66.1 2,932 1,938 
   Portugal41.2 1,042 429 45.1 979 442 
   Poland41.0 1,179 483 41.8 1,136 475 
North America43.8 8,266 3,617 41.5 8,335 3,462 
   US42.0 5,586 2,346 41.5 5,559 2,307 
   Mexico44.2 2,662 1,177 41.0 2,760 1,130 
South America34.6 11,302 3,916 35.5 11,346 4,023 
   Brazil29.3 8,085 2,366 31.8 8,322 2,644 
   Chile38.7 1,834 710 40.8 1,669 681 
   Argentina59.6 929 554 54.5 902 491 
Digital Consumer Bank45.4 3,975 1,805 45.4 3,814 1,733 





Underlying RoTE
9M'219M'20
%   Underlying attributable profit to the parent   Average stockholders' equity (excl. minority interests) - intangible assets%   Underlying attributable profit to the parent   Average stockholders' equity (excl. minority interests) - intangible assets
Europe7.63 3,057 40,079 3.93 1,543 39,242 
   Spain6.48 973 15,021 4.21 662 15,716 
   United Kingdom11.53 1,527 13,239 2.24 294 13,121 
   Portugal11.19 452 4,036 8.50 324 3,810 
   Poland5.10 166 3,264 5.91 189 3,193 
North America13.39 3,051 22,787 6.68 1,407 21,054 
   US14.31 2,385 16,668 3.99 627 15,708 
   Mexico13.56 802 5,918 15.13 787 5,205 
South America20.13 3,294 16,361 17.06 2,818 16,514 
   Brazil21.64 2,349 10,856 18.37 2,060 11,217 
   Chile18.46 617 3,344 10.99 359 3,264 
   Argentina25.33 240 949 29.23 215 734 
Digital Consumer Bank13.23 1,246 9,419 10.96 1,050 9,580 






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Credit risk indicators
The credit risk indicators measure the quality of the credit portfolio and the percentage of non-performing loans covered by provisions.
RatioFormulaRelevance of the metric
NPL ratio
(Non-performing loans)
Credit impaired loans and advances to customers, customer guarantees and customer commitments grantedThe NPL ratio is an important variable regarding financial institutions' activity since it gives an indication of the level of risk the entities are exposed to. It calculates risks that are, in accounting terms, declared to be credit impaired as a percentage of the total outstanding amount of customer credit and contingent liabilities.
Total Risk 1
Total coverage ratioTotal allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments grantedThe total coverage ratio is a fundamental metric in the financial sector. It reflects the level of provisions as a percentage of the credit impaired assets. Therefore it is a good indicator of the entity's solvency against client defaults both present and future.
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted
Cost of creditAllowances for loan-loss provisions over the last 12 monthsThis ratio quantifies loan-loss provisions arising from credit risk over a defined period of time for a given loan portfolio. As such, it acts as an indicator of credit quality.
Average loans and advances to customers over the last 12 months
(1) Total risk = Total loans and advances and guarantees to customers (including credit impaired assets) + contingent liabilities granted that are credit impaired




Credit risk (I)Sep-21Jun-21Sep-21Sep-20
NPL ratio3.18 %3.22 %3.18 %3.15 %
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted33,04633,26633,04630,894
Gross loans and advances to customers registered under the headings “financial assets measured at amortized cost” and "financial assets designated at fair value through profit or loss" classified in stage 3 (OCI), excluding POCI (Purchased or Originated Credit Impaired) that is currently impaired31,23731,70531,23729,298
POCI exposure (Purchased or Originated Credit Impaired) that is currently impaired392431392563
Customer guarantees and customer commitments granted classified in stage 31,4091,1221,4091,022
Doubtful exposure of loans and advances to customers at fair value through profit or loss88811
Total risk1,038,7961,032,0841,038,796982,286
Impaired and non-impaired gross loans and advances to customers982,097978,096982,097933,509
Impaired and non-impaired customer guarantees and customer commitments granted56,69953,98856,69948,777


January - September 2021
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Credit risk (II)Sep-21Jun-21Sep-21Sep-20
Total coverage ratio74 %73 %74 %76 %
Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted24,46224,23924,46223,465
Total allowances to cover impairment losses on loans and advances to customers measured at amortised cost and designated at fair value through OCI23,78623,57723,78622,797
Total allowances to cover impairment losses on customer guarantees and customer commitments granted676662676668
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted33,04633,26633,04630,894
Gross loans and advances to customers registered under the headings “financial assets measured at amortized cost” and "financial assets designated at fair value through profit or loss" classified in stage 3 (OCI), excluding POCI (Purchased or Originated Credit Impaired) that is currently impaired31,23731,70531,23729,298
POCI exposure (Purchased or Originated Credit Impaired) that is currently impaired392431392563
Customer guarantees and customer commitments granted classified in stage 31,4091,1221,4091,022
Doubtful exposure of loans and advances to customers at fair value through profit or loss88811
Cost of credit0.90 %0.94 %0.90 %1.27 %
Underlying allowances for loan-loss provisions over the last 12 months8,5848,8998,58412,135
Average loans and advances to customers over the last 12 months956,925948,351956,925956,416




NPL ratio
9M'219M'20
%Credit impaired loans and advances to customers, customer guarantees and customer commitments granted   Total risk%Credit impaired loans and advances to customers, customer guarantees and customer commitments granted   Total risk
Europe3.1520,088 638,207 3.2919,914 605,380 
   Spain5.9913,283 221,787 5.9813,159 220,032 
   United Kingdom1.273,354 263,747 1.333,339 250,906 
   Portugal3.441,437 41,833 4.251,711 40,291 
   Poland4.341,415 32,586 4.581,452 31,711 
North America2.563,588 140,314 1.962,617 133,219 
   US2.362,474 104,794 1.851,877 101,499 
   Mexico3.141,114 35,520 2.33740 31,707 
South America4.386,095 139,167 4.405,447 123,682 
   Brazil4.723,947 83,610 4.643,240 69,886 
   Chile4.361,801 41,278 4.761,976 41,483 
   Argentina3.85191 4,951 2.88137 4,765 
Digital Consumer Bank2.152,469 114,781 2.292,599 113,607 


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Total coverage ratio
9M'219M'20
%Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments grantedCredit impaired loans and advances to customers, customer guarantees and customer commitments granted%Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments grantedCredit impaired loans and advances to customers, customer guarantees and customer commitments granted
Europe51.110,258 20,088 48.79,699 19,914 
   Spain48.86,486 13,283 46.06,052 13,159 
   United Kingdom36.61,226 3,354 41.61,389 3,339 
   Portugal75.51,086 1,437 64.31,100 1,711 
   Poland74.61,055 1,415 70.81,028 1,452 
North America139.34,999 3,588 201.65,277 2,617 
   US161.53,994 2,474 228.84,296 1,877 
   Mexico90.11,004 1,114 132.6981 740 
South America98.86,019 6,095 97.25,295 5,447 
   Brazil111.84,412 3,947 114.93,721 3,240 
   Chile64.11,155 1,801 59.71,181 1,976 
   Argentina149.3285 191 186.3255 137 
Digital Consumer Bank112.82,785 2,469 110.62,873 2,599 



Cost of credit
9M'219M'20
%Underlying allowances for loan-loss provisions over the last 12 monthsAverage loans and advances to customers over the last 12 months%Underlying allowances for loan-loss provisions over the last 12 monthsAverage loans and advances to customers over the last 12 months
Europe0.482,805 585,485 0.482,761 578,190 
   Spain1.012,000 198,956 0.801,566 196,460 
   United Kingdom0.0130 216,521 0.26670 256,439 
   Portugal0.35136 39,473 0.42156 37,315 
   Poland0.82241 29,586 0.99300 30,354 
North America1.461,868 128,061 3.074,193 136,521 
   US1.061,011 95,385 3.083,204 103,905 
   Mexico2.69856 31,829 2.97989 33,285 
South America2.523,086 122,237 3.504,237 121,097 
   Brazil3.602,519 70,034 4.583,291 71,837 
   Chile0.89360 40,279 1.59629 39,660 
   Argentina3.51137 3,897 5.54231 4,164 
Digital Consumer Bank0.57653 115,012 0.79908 114,757 
January - September 2021
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Other indicators
The market capitalization indicator provides information on the volume of tangible equity per share. The loan-to-deposit ratio (LTD) identifies the relationship between net customer loans and advances and customer deposits, assessing the proportion of loans and advances granted by the Group that are funded by customer deposits.
The Group also uses gross customer loan magnitudes excluding reverse repurchase agreements (repos) and customer deposits excluding repos. In order to analyze the evolution of the traditional commercial banking business of granting loans and capturing deposits, repos and reverse repos are excluded, as they are mainly treasury business products and highly volatile.

RatioFormulaRelevance of the metric
TNAV per share
 Tangible book value 1
This is a very commonly used ratio used to measure the company's accounting value per share having deducted the intangible assets. It is useful in evaluating the amount each shareholder would receive if the company were to enter into liquidation and had to sell all the company's tangible assets.
(Tangible equity net asset value per share)  Number of shares excluding treasury stock
Price / tangible book value per share (X)
Share price
This is one of the most commonly used ratios by market participants for the valuation of listed companies both in absolute terms and relative to other entities. This ratio measures the relationship between the price paid for a company and its accounting equity value.
TNAV per share
LTD ratio Net loans and advances to customersThis is an indicator of the bank's liquidity. It measures the total (net) loans and advances to customers as a percentage of customer deposits.
(Loan-to-deposit) Customer deposits
Loans and advances (excl. reverse repos) Gross loans and advances to customers excluding reverse reposIn order to aid analysis of the commercial banking activity, reverse repos are excluded as they are highly volatile treasury products.
Deposits (excl. repos) Customer deposits excluding reposIn order to aid analysis of the commercial banking activity, repos are excluded as they are highly volatile treasury products.
PAT + After tax fees paid to SAN (in Wealth Management & Insurance) Net profit + fees paid from Santander Asset Management and Santander Insurance to Santander, net of taxes, excluding Private Banking customersMetric to assess Wealth Management & Insurance's total contribution to Grupo Santander profit.
(1) Tangible book value = Stockholders' equity - intangible assets


OthersSep-21Jun-21Sep-21Sep-20
TNAV (tangible book value) per share (2)
3.993.983.993.82
   Tangible book value69,14268,91769,14266,048
   Number of shares excl. treasury stock (million) (2)
17,33117,30617,33117,310
Price / Tangible book value per share (X)0.790.810.790.40
   Share price (euros) (2)
3.1373.2203.1371.533
   TNAV (tangible book value) per share (2)
3.993.983.993.82
Loan-to-deposit ratio105 %107 %105 %108 %
   Net loans and advances to customers958,311954,518958,311910,714
   Customer deposits909,034894,127909,034842,899
Q3'21Q2'219M'219M'20
PAT + After tax fees paid to SAN (in WM&I) (Constant EUR million)6445611,7331,496
   Profit after tax299219724589
   Net fee income net of tax3453421,008906
(2) September 2020 data adjusted for the capital increase in December 2020.
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Local currency measures
We make use of certain financial measures in local currency to help in the assessment of our ongoing operating performance. These non-IFRS financial measures include the results of operations of our subsidiary banks located outside the Eurozone, excluding the impact of foreign exchange. Because changes in foreign currency exchange rates do not have an operating impact on the results, we believe that evaluating their performance on a local currency basis provides an additional and meaningful assessment of performance to both management and the company’s investors.
The Group presents, at both the Group level as well as the business unit level, the real changes in the income statement as well as the changes excluding the exchange rate effect, as it considers the latter facilitates analysis, since it enables businesses movements to be identified without taking into account the impact of converting each local currency into euros.
Said variations, excluding the impact of exchange rate movements, are calculated by converting P&L lines for the different business units comprising the Group into our presentation currency, the euro, applying the average exchange rate for the first nine months of 2021 to all periods contemplated in the analysis.


The Group presents, at both the Group level as well as the business unit level, the changes in euros in the balance sheet as well as the changes excluding the exchange rate effect for loans and advances to customers excluding reverse repos and customer funds (which comprise deposits and mutual funds) excluding repos. As with the income statement, the reason is to facilitate analysis by isolating the changes in the balance sheet that are not caused by converting each local currency into euros.
These changes excluding the impact of exchange rate movements are calculated by converting loans and advances to customers excluding reverse repos and customer funds excluding repos, into our presentation currency, the euro, applying the closing exchange rate on the last working day of September 2021 to all periods contemplated in the analysis.
The average and period-end exchange rates for the main currencies in which the Group operates are set out in the table below.





Exchange rates: 1 euro / currency parity
Average (income statement)Period-end (balance sheet)
9M'219M'20Sep-21Jun-21Sep-20
US dollar1.196 1.124 1.160 1.186 1.175 
Pound sterling0.863 0.884 0.858 0.858 0.908 
Brazilian real6.367 5.632 6.300 5.941 6.610 
Mexican peso24.069 24.318 23.826 23.587 25.963 
Chilean peso882.025 900.730 941.091 863.161 924.900 
Argentine peso111.546 75.359 114.500 113.539 89.483 
Polish zloty4.547 4.420 4.599 4.519 4.530 
January - September 2021
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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
CONSOLIDATED INCOME STATEMENT
NOTE:    The following financial information for the first nine months of 2021 and 2020 (attached herewith) corresponds to the condensed consolidated financial statements prepared in accordance with the International Financial Reporting Standards.
Interim condensed consolidated balance sheet
EUR million
ASSETSSep-21Dec-20Sep-20
Cash, cash balances at central banks and other deposits on demand191,035 153,839 148,175 
Financial assets held for trading122,967 114,945 117,654 
Non-trading financial assets mandatorily at fair value through profit or loss5,156 4,486 4,293 
Financial assets designated at fair value through profit or loss36,970 48,717 62,714 
Financial assets at fair value through other comprehensive income109,570 120,953 117,461 
Financial assets at amortized cost1,011,994 958,378 950,571 
Hedging derivatives5,404 8,325 10,866 
Changes in the fair value of hedged items in portfolio hedges of interest risk991 1,980 2,155 
Investments7,684 7,622 7,679 
Joint ventures entities1,669 1,492 1,306 
Associated entities6,015 6,130 6,373 
Assets under insurance or reinsurance contracts257 261 1,582 
Tangible assets32,446 32,735 33,277 
Property, plant and equipment31,515 31,772 32,327 
For own-use12,619 13,213 13,233 
Leased out under an operating lease18,896 18,559 19,094 
Investment property931 963 950 
Of which : Leased out under an operating lease821 793 821 
Intangible assets16,246 15,908 15,698 
Goodwill12,645 12,471 12,359 
Other intangible assets3,601 3,437 3,339 
Tax assets24,544 24,586 26,397 
Current tax assets5,008 5,340 6,405 
Deferred tax assets19,536 19,246 19,992 
Other assets8,745 11,070 11,086 
Insurance contracts linked to pensions157 174 186 
Inventories
Other8,584 10,891 10,896 
Non-current assets held for sale4,286 4,445 4,634 
TOTAL ASSETS1,578,295 1,508,250 1,514,242 
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Interim condensed consolidated balance sheet
EUR million
LIABILITIESSep-21Dec-20Sep-20
Financial liabilities held for trading 80,147 81,167 88,128 
Financial liabilities designated at fair value through profit or loss47,900 48,038 59,459 
Financial liabilities at amortized cost1,317,759 1,248,188 1,237,314 
Hedging derivatives5,821 6,869 6,099 
Changes in the fair value of hedged items in portfolio hedges of interest rate risk 402 286 265 
Liabilities under insurance or reinsurance contracts779 910 970 
Provisions9,815 10,852 10,118 
Pensions and other post-retirement obligations3,337 3,976 4,034 
Other long term employee benefits1,298 1,751 1,120 
Taxes and other legal contingencies2,025 2,200 2,189 
Contingent liabilities and commitments674 700 672 
Other provisions2,481 2,225 2,103 
Tax liabilities 8,516 8,282 8,667 
Current tax liabilities2,269 2,349 2,480 
Deferred tax liabilities6,247 5,933 6,187 
Other liabilities 11,532 12,336 11,912 
Liabilities associated with non-current assets held for sale— — — 
TOTAL LIABILITIES1,482,671 1,416,928 1,422,932 
EQUITY
Shareholders' equity118,380 114,620 114,493 
Capital 8,670 8,670 8,309 
Called up paid capital8,670 8,670 8,309 
Unpaid capital which has been called up— — — 
Share premium 47,979 52,013 52,446 
Equity instruments issued other than capital650 627 619 
Equity component of the compound financial instrument— — — 
Other equity instruments issued650 627 619 
Other equity165 163 171 
Accumulated retained earnings60,273 65,583 67,230 
Revaluation reserves— — — 
Other reserves(4,336)(3,596)(3,499)
(-) Own shares(29)(69)(73)
Profit attributable to shareholders of the parent5,849 (8,771)(9,048)
(-) Interim dividends(841)— (1,662)
Other comprehensive income (loss)(32,992)(33,144)(32,747)
Items not reclassified to profit or loss (4,522)(5,328)(5,056)
Items that may be reclassified to profit or loss(28,470)(27,816)(27,691)
Non-controlling interest10,236 9,846 9,564 
Other comprehensive income(2,120)(1,800)(1,905)
Other items12,356 11,646 11,469 
TOTAL EQUITY95,624 91,322 91,310 
TOTAL LIABILITIES AND EQUITY1,578,295 1,508,250 1,514,242 
MEMORANDUM ITEMS: OFF BALANCE SHEET AMOUNTS
Loan commitments granted252,301 241,230 235,812 
Financial guarantees granted12,069 12,377 12,247 
Other commitments granted78,730 64,538 71,430 




January - September 2021
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85

Interim condensed consolidated income statement
EUR million
9M'219M'20
Interest income33,629 35,131 
   Financial assets at fair value through other comprehensive income2,023 2,348 
   Financial assets at amortized cost29,397 30,519 
   Other interest income2,209 2,264 
Interest expense(8,975)(11,156)
Interest income/ (charges)24,654 23,975 
Dividend income404 322 
Income from companies accounted for using the equity method295 (90)
Commission income10,132 9,826 
Commission expense(2,322)(2,267)
Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net482 893 
   Financial assets at amortized cost95 (23)
   Other financial assets and liabilities387 916 
Gain or losses on financial assets and liabilities held for trading, net729 4,425 
   Reclassification of financial assets at fair value through other comprehensive income— — 
   Reclassification of financial assets from amortized cost— — 
   Other gains (losses)729 4,425 
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value
 through profit or loss
11 73 
   Reclassification of financial assets at fair value through other comprehensive income— — 
   Reclassification of financial assets from amortized cost— — 
   Other gains (losses)11 73 
Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net296 (91)
Gain or losses from hedge accounting, net91 120 
Exchange differences, net(389)(3,695)
Other operating income1,735 1,222 
Other operating expenses(1,706)(1,527)
Income from assets under insurance and reinsurance contracts1,114 1,030 
Expenses from liabilities under insurance and reinsurance contracts(900)(861)
Total income34,626 33,355 
Administrative expenses(13,714)(13,686)
   Staff costs(8,205)(8,098)
   Other general and administrative expenses(5,509)(5,588)
Depreciation and amortization(2,064)(2,100)
Provisions or reversal of provisions, net(2,006)(1,014)
Impairment or reversal of impairment of financial assets not measured at fair value
 through profit or loss and net gains and losses from changes
(6,000)(9,538)
   Financial assets at fair value through other comprehensive income(27)(7)
   Financial assets at amortized cost(5,973)(9,531)
Impairment of investments in subsidiaries, joint ventures and associates, net— — 
Impairment on non-financial assets, net(134)(10,256)
   Tangible assets(116)(105)
   Intangible assets(15)(10,149)
   Others(3)(2)
Gain or losses on non financial assets and investments, net43 89 
Negative goodwill recognized in results— 
Gains or losses on non-current assets held for sale not classified as discontinued operations(35)(130)
Operating profit/(loss) before tax10,716 (3,271)
Tax expense or income from continuing operations(3,725)(5,020)
Profit/(loss) for the period from continuing operations6,991 (8,291)
Profit/( loss) after tax from discontinued operations— — 
Profit/(loss) for the period6,991 (8,291)
Profit attributable to non-controlling interests1,142 757 
Profit/(loss) attributable to the parent5,849 (9,048)
Earnings/(losses) per share
Basic 0.31 (0.55)
Diluted0.31 (0.55)
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GLOSSARY
Active customer: Those customers who comply with the minimum balance, income and/or transactionality requirements as defined according to the business area
ADR: American Depositary Receipt
ALCO: Assets and Liabilities Committee
APM: Alternative Performance Measures
bps: basis points
CDI: CREST Depository Interest
CET1: Core equity tier 1
CIB: Corporate & Investment Banking
CNMV: Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores)
DCB: Digital Consumer Bank
DGF: Deposit guarantee fund
Digital customers: Every consumer of a commercial bank’s services who has logged on to their personal online banking and/or mobile banking in the last 30 days
EBA: European Banking Authority
ECB: European Central Bank
EPS: Earnings per share
ESG: Environmental, Social and Governance
ESMA: European Securities and Markets Authority
Fed: Federal Reserve
FX: Foreign Exchange
GDP: Gross Domestic Product
GPTW: Great Place to Work
ICO: Insitituto de Crédito Oficial (Official Credit Institution)
IFRS 9: International Financial Reporting Standard 9, regarding financial instruments
IMF: International Monetary Fund
Loyal customers: Active customers who receive most of their financial services from the Group according to the commercial segment that they belong to. Various engaged customer levels have been defined taking profitability into account.
LCR: Liquidity Coverage Ratio
NPLs: Non-performing loans
NPS: Net Promoter Score
P/E ratio: Price / earnings per share ratio
PBT: Profit before tax
POS: Point of Sale
pp: percentage points
PPI: Payment protection insurance
Repos: Repurchase agreements
RoA: Return on assets
RoE: Return on equity
RoRWA: Return on risk weighted assets
RoTE: Return on tangible equity
RWAs: Risk weighted assets
SAM: Santander Asset Management
SBNA: Santander Bank N.A.
SCF: Santander Consumer Finance
SCIB: Santander Corporate & Investment Banking
SC USA: Santander Consumer USA
SEC: Securities and Exchanges Commission
SGP: Santander Global Platform
SH USA: Santander Holdings USA, Inc.
SMEs: Small and medium enterprises
SPF: Simple, Personal and Fair
SRF: Single resolution fund
T1: Tier 1
TLAC: The total loss-absorption capacity requirement which is required to be met under the CRD V package
TLTRO: Targeted longer-term refinancing operations
TNAV: Tangible net asset value
UX: User experience
VaR: Value at Risk
WM&I: Wealth Management & Insurance
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IMPORTANT INFORMATION
Non-IFRS and alternative performance measures
This report contains, in addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, alternative performance measures (“APMs”) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015 (ESMA/2015/1415en) and other non-IFRS measures (“Non-IFRS Measures”). These financial measures that qualify as APMs and non-IFRS measures have been calculated with information from Santander Group; however those financial measures are not defined or detailed in the applicable financial reporting framework nor have been audited or reviewed by our auditors. We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. We consider these APMs and non-IFRS measures to be useful metrics for our management and investors to compare operating performance between accounting periods, as these measures exclude items outside the ordinary course performance of our business, which are grouped in the “management adjustment” line and are further detailed in Section 3.2 of the Economic and Financial Review in our Directors’ Report included in our Annual Report on Form 20-F for the year ended 31 December 2020. Nonetheless, these APMs and non-IFRS measures should be considered supplemental information to, and are not meant to substitute IFRS measures. Furthermore, companies in our industry and others may calculate or use APMs and non-IFRS measures differently, thus making them less useful for comparison purposes. For further details on APMs and Non-IFRS Measures, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see the 2020 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the “SEC”) on 26 February 2021, as updated by the Form 6-K filed with the SEC on 14 April 2021 in order to reflect our new organizational and reporting structure, as well as the section “Alternative performance measures” of the annex to this Banco Santander, S.A. (“Santander”) Q3 2021 Financial Report, published as Inside Information on 27 October 2021. These documents are available on Santander’s website (www.santander.com). Underlying measures, which are included in this report, are non-IFRS measures.
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Forward-looking statements
Banco Santander, S.A. (“Santander”) advises that this report contains “forward-looking statements” as per the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by words like “expect”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “RoRAC”, “RoRWA”, “TNAV”, “target”, “goal”, “objective”, “estimate”, “future” and similar expressions. Found throughout this report, they include (but are not limited to) statements on our future business development, economic performance and shareholder remuneration policy. However, a number of risks, uncertainties and other important factors may cause actual developments and results to differ materially from our expectations. The following important factors, in addition to others discussed elsewhere in this report, could affect our future results and could cause materially different outcomes from those anticipated in forward-looking statements: (1) general economic or industry conditions of areas where we have significant operations or investments (such as a worse economic environment; higher volatility in the capital markets; inflation or deflation; changes in demographics, consumer spending, investment or saving habits; and the effects of the COVID-19 pandemic in the global economy); (2) exposure to various market risks (particularly interest rate risk, foreign exchange rate risk, equity price risk and risks associated with the replacement of benchmark indices); (3) potential losses from early repayments on our loan and investment portfolio, declines in value of collateral securing our loan portfolio, and counterparty risk; (4) political stability in Spain, the United Kingdom, other European countries, Latin America and the US (5) changes in legislation, regulations, taxes, including regulatory capital and liquidity requirements, especially in view of the UK exit of the European Union and increased regulation in response to financial crisis; (6) our ability to integrate successfully our acquisitions and related challenges that result from the inherent diversion of management’s focus and resources from other strategic opportunities and operational matters; and (7) changes in our access to liquidity and funding on acceptable terms, in particular if resulting from credit spreads shifts or downgrade in credit ratings for the entire group or significant subsidiaries.
Numerous factors could affect our future results and could cause those results deviating from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this report and are informed by the knowledge, information and views available on such date. Santander is not required to update or revise any forward-looking statements, regardless of new information, future events or otherwise.
No offer
The information contained in this report is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person’s own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or
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appropriate in the circumstances and not in reliance on the information contained in this report. No investment activity should be undertaken on the basis of the information contained in this report. In making this report available Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this report nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this report is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.
Historical performance is not indicative of future results
Statements about historical performance or accretion must not be construed to indicate that future performance, share price or future (including earnings per share) in any future period will necessarily match or exceed those of any prior period. Nothing in this report should be taken as a profit forecast.
Third Party Information
In particular, regarding the data provided by third parties, neither Santander, nor any of its administrators, directors or employees, either explicitly or implicitly, guarantees that these contents are exact, accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case that any deficiency, error or omission were to be detected. Moreover, in reproducing these contents in by any means, Santander may introduce any changes it deems suitable, may omit partially or completely any of the elements of this document, and in case of any deviation between such a version and this one, Santander assumes no liability for any discrepancy.








This document is a translation of a document originally issued in Spanish. Should there be any discrepancies between the English and the Spanish versions, only the original Spanish version should be binding.


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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Banco Santander, S.A.
Date:    27 October 2021By:/s/ José García Cantera
Name:José García Cantera
Title:Chief Financial Officer