Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 (6-k)
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 July, 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 - June 2021 Financial Report
3



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January - June 2021



Index

3
5
6
6
7
16
17
20
21
21
39
46
48
49
51
52
73
83
86
87
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This report was approved by the Board of Directors on 27 July 2021, following a favourable report from the Audit Committee. Important information regarding this report can be found on pages 87 and 88.

Key consolidated data

BALANCE SHEET (EUR million) Jun-21 Mar-21 % Jun-21 Jun-20 % Dec-20
Total assets 1,568,636  1,562,879  0.4  1,568,636  1,572,881  (0.3) 1,508,250 
Loans and advances to customers 954,518  939,760  1.6  954,518  934,796  2.1  916,199 
Customer deposits 894,127  882,854  1.3  894,127  846,832  5.6  849,310 
Total funds 1,121,969  1,095,970  2.4  1,121,969  1,039,996  7.9  1,056,127 
Total equity 95,745  92,686  3.3  95,745  91,859  4.2  91,322 
Note: Total funds include customer deposits, mutual funds, pension funds and managed portfolios

INCOME STATEMENT (EUR million) Q2'21 Q1'21 % H1'21 H1'20 % 2020
Net interest income 8,240  7,956  3.6  16,196  16,202  —  31,994 
Total income 11,305  11,390  (0.7) 22,695  22,268  1.9  44,279 
Net operating income 6,046  6,272  (3.6) 12,318  11,561  6.5  23,149 
Profit before tax 3,812  3,102  22.9  6,914  (6,410) —  (2,076)
Attributable profit to the parent 2,067  1,608  28.5  3,675  (10,798) —  (8,771)
Changes in constant euros:
Q2'21 / Q1'21: NII: +2.6%; Total income: -1.6%; Net operating income: -4.7%; Profit before tax: +21.4%; Attributable profit: +27.2%
H1'21 / H1'20: NII: +7.6%; Total income: +9.8%; Net operating income: +16.7%; Profit before tax: -/+; Attributable profit: -/+

EPS, PROFITABILITY AND EFFICIENCY (%) Q2'21 Q1'21 % H1'21 H1'20 % 2020
EPS (euros) (2)
0.112  0.085  31.4  0.197  (0.639) —  (0.538)
RoE 9.91  9.80  9.53  (9.28) (9.80)
RoTE 12.29  12.16  11.82  1.73  1.95 
RoA 0.64  0.62  0.61  (0.51) (0.50)
RoRWA 1.74  1.67  1.66  (1.34) (1.33)
Efficiency ratio 46.5  44.9  45.7  47.3  47.0 

UNDERLYING INCOME STATEMENT (1) (EUR million)
Q2'21 Q1'21 % H1'21 H1'20 % 2020
Net interest income 8,240  7,956  3.6  16,196  16,202  —  31,994 
Total income 11,305  11,390  (0.7) 22,695  22,518  0.8  44,600 
Net operating income 6,046  6,272  (3.6) 12,318  11,561  6.5  23,633 
Profit before tax 3,815  3,813  0.1  7,628  3,841  98.6  9,674 
Attributable profit to the parent 2,067  2,138  (3.3) 4,205  1,908  120.4  5,081 
Changes in constant euros:
Q2'21 / Q1'21: NII: +2.6%; Total income: -1.6%; Net operating income: -4.7%; Profit before tax: -1.3%; Attributable profit: -4.4%
H1'21 / H1'20: NII: +7.6%; Total income: +8.4%; Net operating income: +13.4%; Profit before tax: +122.9%; Attributable profit: +152.8%

UNDERLYING EPS AND PROFITABILITY (1) (%)
Q2'21 Q1'21 % H1'21 H1'20 % 2020
Underlying EPS (euros) (2)
0.112  0.116  (3.4) 0.227  0.094  141.5  0.262 
Underlying RoE 9.91  10.44  10.17  3.98  5.68 
Underlying RoTE 12.29  12.96  12.62  5.44  7.44 
Underlying RoA 0.64  0.65  0.65  0.31  0.40 
Underlying RoRWA 1.74  1.77  1.75  0.80  1.06 


January - June 2021
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3
SOLVENCY(3) (%)
Jun-21 Mar-21 Jun-21 Jun-20 Dec-20
CET1 phased-in 12.11  12.26  12.11  11.84  12.34 
Phased-in total capital ratio 15.82  16.12  15.82  15.48  16.18 

CREDIT QUALITY (%) Q2'21 Q1'21 H1'21 H1'20 2020
Cost of credit (4)
0.94  1.08  0.94  1.26  1.28 
NPL ratio 3.22  3.20  3.22  3.26  3.21 
Total coverage ratio 73  74  73  72  76 

MARKET CAPITALIZATION AND SHARES Jun-21 Mar-21 % Jun-21 Jun-20 % Dec-20
Shares (millions) 17,341  17,341  0.0  17,341  16,618  4.3  17,341 
Share price (euros) (2)
3.220  2.897  11.1  3.220  2.084  54.5  2.538 
Market capitalisation (EUR million) 55,828  50,236  11.1  55,828  36,136  54.5  44,011 
Tangible book value per share (euros) (2)
3.98  3.84  3.98  3.83  3.79 
Price / Tangible book value per share (X) (2)
0.81  0.75  0.81  0.54  0.67 

CUSTOMERS (thousands) Q2'21 Q1'21 H1'21 H1'20 2020
Total customers 150,447  148,641  1.2  150,447  146,010  3.0 148,256 
Loyal customers 24,169  23,428  3.2  24,169  21,507  12.4 22,838 
     Loyal retail customers 22,100  21,441  3.1  22,100  19,703  12.2 20,901 
     Loyal SME & corporate customers 2,069  1,987  4.1  2,069  1,804  14.6 1,938 
Digital customers 45,352  44,209  2.6  45,352  39,915  13.6 42,362 
Digital sales / Total sales (%) 54  50  52  44  44 

OTHER DATA Jun-21 Mar-21 % Jun-21 Jun-20 % Dec-20
Number of shareholders 3,879,232  3,937,711  (1.5) 3,879,232  4,080,201  (4.9) 4,018,817 
Number of employees 190,751  190,175  0.3  190,751  194,284  (1.8) 191,189 
Number of branches 10,073  10,817  (6.9) 10,073  11,847  (15.0) 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 annex 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 as well as the “Alternative performance measures” section of the annex to this report.
(2) Data adjusted for the capital increase in December 2020.
(3) 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 total phased-in capital ratio includes the transitory treatment according to chapter 2, title 1, part 10 of the aforementioned CRR.
(4) 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 - June 2021
Business model
Group financial information Financial information by segments Responsible 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 March 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. H1'21 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 - June 2021
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5
Group performance

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HIGHLIGHTS OF THE PERIOD
u In the second quarter of 2021, we once again demonstrated the strength of our model. We delivered strong results in an environment marked by the recovery of activity in all regions, following the progress in the vaccination process.
u In line with our strategy to deploy capital in the most profitable businesses:
•The Group announced on 15 July 2021 that Santander Holdings USA, Inc. (SHUSA, the parent company that comprises Santander's businesses in the US) has reached an agreement to acquire Amherst Pierpont Securities, a market-leading independent fixed-income broker dealer based in the US.
•SHUSA announced on 2 July 2021 a proposal to acquire all outstanding shares of common stock of Santander Consumer USA (SC USA) it does not already own. SHUSA currently owns approximately 80% of SC USA's outstanding shares, and, if the transaction is completed, SC USA would become a wholly owned subsidiary of SHUSA.
•These transactions follow our strategy to reduce complexity, increase profitability with minimal additional operational risk, increase business diversification by expanding our exposure to corporates and increase the weighting of earnings obtained in hard currency. Both transactions follow our rigorous financial discipline and goals and strengthen our business model and profitable growth.
u The cash dividend of EUR 0.0275 per share against 2020 results was paid in May, the maximum allowed in accordance with the limits set by the European Central Bank recommendation of 15 December 2020. This dividend was paid under the resolution for the distribution of share premium approved at the Bank’s general shareholders meeting on 27 October 2020.
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GROWTH
u Digital adoption continued to accelerate: in H1'21, 52% of sales were made through digital channels (44% in H1'20) and the number of digital customers amounted to more than 45 million (+14% year-on-year).
u Loyal customers rose by over 2 million since June 2020, totalling 24 million, and represented 33% of total active customers.
u Business volumes increased in Q2'21 despite still being affected by the pandemic and high liquidity in the markets. In this environment, and excluding the exchange rate impact, loans and advances to customers rose close to EUR 11 billion (+1%) in the quarter and 2% year-on-year. Customer funds were up EUR 21.3 billion, +2% in the quarter and +7% year-on-year, due to the higher propensity to save of individuals and corporates.

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PROFITABILITY
u Attributable profit amounted to EUR 2,067 million in Q2'21 with no material net results recorded in the net capital gains and provisions line. The quarter-on-quarter comparison was affected by the contribution to the SRF. Excluding this impact, profit rose 8% in constant euros compared to Q1'21 underlying attributable profit.
u H1'21 attributable profit was EUR 3,675 million. Excluding the EUR 530 million charge from expected restructuring costs for the year as a whole recorded in Q1'21, underlying attributable profit stood at EUR 4,205 million, 2.5 times higher than H1'20 (in constant euros), underpinned by the positive performance across regions, Digital Consumer Bank (DCB) and the global businesses. This figure was the highest first half underlying attributable profit recorded since 2010.
u These results were reflected in higher profitability: underlying RoTE of 12.6% (5.4% in H1'20), underlying RoRWA was 1.75% (0.80% in H1'20) and underlying earnings per share of EUR 0.227 (EUR 0.094 in H1'20).
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STRENGTH
u Cost of credit improved to 0.94% in H1'21 (1.28% in FY20). Total loan-loss reserves in the first quarter exceeded EUR 24 bn and total coverage of credit impaired loans was 73%.
u The CET1 ratio was 12.11% in June 2021, with an organic generation of 7 bps (including a -18 bps accrual for potential shareholder remuneration equivalent to 50% of Q2’21 underlying profit1). On the other hand, it was affected by regulatory impacts and models (-24 bps).
u TNAV per share was EUR 3.98 in June 2021, 4% higher quarter-on-quarter and up 6% compared to December (including the EUR 0.0275 dividend paid in May).
(1) This figure follows the indications of the consolidating supervisor to consider the maximum within the pay-out target range (40%-50%) of underlying profit.
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January - June 2021
Income statement
GRUPO SANTANDER RESULTS
Grupo Santander. Summarized income statement
EUR million
Change Change
Q2'21 Q1'21 % % excl. FX H1'21 H1'20 % % excl. FX
Net interest income 8,240  7,956  3.6  2.6  16,196  16,202  0.0  7.6 
Net fee income (commission income minus commission expense) 2,621  2,548  2.9  2.0  5,169  5,136  0.6  8.3 
Gains or losses on financial assets and liabilities and exchange differences (net) 243  651  (62.7) (62.7) 894  1,073  (16.7) (10.6)
Dividend income 244  65  275.4  274.9  309  265  16.6  17.6 
Share of results of entities accounted for using the equity method 87  76  14.5  12.1  163  (135) —  — 
Other operating income / expenses (130) 94  —  —  (36) (273) (86.8) (85.9)
Total income 11,305  11,390  (0.7) (1.6) 22,695  22,268  1.9  9.8 
Operating expenses (5,259) (5,118) 2.8  2.2  (10,377) (10,707) (3.1) 2.5 
   Administrative expenses (4,561) (4,435) 2.8  2.3  (8,996) (9,288) (3.1) 2.5 
       Staff costs (2,750) (2,688) 2.3  1.8  (5,438) (5,470) (0.6) 4.6 
       Other general administrative expenses (1,811) (1,747) 3.7  3.0  (3,558) (3,818) (6.8) (0.6)
   Depreciation and amortization (698) (683) 2.2  1.6  (1,381) (1,419) (2.7) 2.7 
Provisions or reversal of provisions (531) (959) (44.6) (45.0) (1,490) (614) 142.7  167.6 
Impairment or reversal of impairment of financial assets not measured at fair value through profit or loss (net) (1,748) (2,056) (15.0) (16.0) (3,804) (7,030) (45.9) (41.4)
Impairment on other assets (net) 8  (138) —  —  (130) (10,241) (98.7) (98.7)
Gains or losses on non financial assets and investments, net 51  1  —  —  52  27  92.6  96.4 
Negative goodwill recognized in results —  —  —  —  —  6  (100.0) (100.0)
Gains or losses on non-current assets held for sale not classified as discontinued operations (14) (18) (22.2) (23.3) (32) (119) (73.1) (73.1)
Profit or loss before tax from continuing operations 3,812  3,102  22.9  21.4  6,914  (6,410) —  — 
Tax expense or income from continuing operations (1,331) (1,143) 16.4  14.5  (2,474) (3,928) (37.0) (34.5)
Profit from the period from continuing operations 2,481  1,959  26.6  25.4  4,440  (10,338) —  — 
Profit or loss after tax from discontinued operations —  —  —  —  —  —  —  — 
Profit for the period 2,481  1,959  26.6  25.4  4,440  (10,338) —  — 
Attributable profit to non-controlling interests (414) (351) 17.9  17.3  (765) (460) 66.3  75.2 
Attributable profit to the parent 2,067  1,608  28.5  27.2  3,675  (10,798) —  — 
EPS (euros) (1)
0.112  0.085  31.4  0.197  (0.639) — 
Diluted EPS (euros) (1)
0.111  0.085  31.4  0.196  (0.639) — 
Memorandum items:
   Average total assets 1,557,364  1,526,899  2.0  1,539,167  1,548,851  (0.6)
   Average stockholders' equity 83,429  81,858  1.9  82,669  95,803  (13.7)
(1) Data adjusted for the capital increase in December 2020.
January - June 2021
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7
Income statement
Executive summary
Profit (H1'21 vs H1'20)
Performance (H1'21 vs H1'20). In constant euros
Strong profit growth across regions and businesses Higher underlying profit driven by total income, cost control and lower provisions
Attributable profit Underlying attrib. profit Total income Costs Provisions
EUR 3,675 mn EUR 4,205 mn
-EUR 10,798 mn in H1'20 EUR 1,908 mn in H1'20 +8.4% +3.1% -42.1%
Efficiency Profitability
The Group's efficiency ratio improved strongly, mainly driven by Europe Strong profitability improvement compared to H1'20 and FY'20.
Group Europe RoTE Underlying RoTE RoRWA Underlying RoRWA
45.7% 51.2% 11.8% 12.6% 1.66% 1.75%
q1.6 pp vs H1'20
q 8.0 pp vs H1'20
p 10.1 pp
p7.2 pp
p 3,0 pp
p 1.0 pp
Changes vs H1'20

è Results performance compared to H1'20
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 (-8 percentage points) and costs (-6 percentage points).
u Total income
Total income totalled EUR 22,695 million in the first half of 2021, up 2% with respect to H1'20. If the FX impact is excluded, total income increased 10%, with growth in all regions and 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 16,196 million, stable compared to H1'20. Stripping out the exchange rate impact, growth was 8%, mainly due to the net effect of the increase in revenue from higher average lending and deposit volumes and the lower cost of the latter, and the reduction in revenue from lower interest rates in many markets.
Net interest income
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
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On the one hand, growth was recorded in the UK (+29%), through decisive management deposit repricing actions (mainly the 1I2I3 current account), as well as higher customer balances; Spain (+10%), driven by margin management and TLTRO; Brazil (+10%), due to greater volumes that offset lower average interest rates; and Chile (+12%), due to margin management and inflation. Finally, the US (+1%), due to focused pricing actions and despite rate and volume pressures.
On the other hand, Mexico fell 4%, due to notably lower interest rates and reduced volumes in a market environment of falling lending.
•Net fee income rose 1% year-on-year at EUR 5,169 million. Excluding the exchange rate impact, they were 8% higher, returning to pre-crisis levels in the second quarter after being one of the most affected line items by the health crisis.
In this way, some continue to be affected, mainly transactional fees. However, the year-on-year growth in the acquiring business, combined with the increases in card (+26%) and points of sale (+54%) turnover, support a sound recovery path, which was also reflected in mutual funds, insurance and wholesale businesses.
Net fee income
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
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January - June 2021
Income statement
Santander Corporate & Investment Banking surged 18% year-on-year driven by strong markets growth and the positive performance in Banking businesses (GDF and GTB). Wealth Management & Insurance rose 10% (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, growth was seen across the board in all areas; North America grew 5% with rises in the US and Mexico; overall growth in South America (+14%); and Europe was up 5%, with generalized increases in all markets except the UK, due to regulatory changes affecting overdrafts since April 2020.
•Gains on financial transactions, accounted for 4% of total income and stood at EUR 894 million (EUR 1,073 million in the first half of 2020), with falls in Spain (-37%), Mexico (-63%), Chile (-26%) and Brazil (-4%). On the other hand, growth was recorded in Portugal (ALCO portfolio sales).
•Dividend income was EUR 309 million in the first half of 2021, 17% higher than in the same period of 2020 (+18% excluding the exchange rate effect), after the completion of several dividend payments following last years' reduction, delay or cancellation amid the pandemic.
•The results of entities accounted for using the equity method amounted to EUR 163 million, reflecting the higher contribution from the entities associated to the Group.
•Other operating income recorded a loss of -EUR 36 million compared to -EUR 273 million in the first half of 2020, as the greater contribution to the SRF in 2021 was offset by higher results from insurance and leasing.


Total income
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
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u Costs
Operating costs amounted to EUR 10,377 million, 3% lower year-on-year. Excluding the exchange rate impact, costs rose 3% given the general upturn in inflation in 2021 and the investments in technology and digital developments. Excluding inflation (i.e. in real terms) costs dropped 0.4%.
The efficiency ratio was 45.7%, improving 1.6 pp versus last year, mainly driven by Europe. This enabled Santander to remain one of the most efficient global banks in the world.
The trends by region and market in constant euros were as follows:
•In Europe, costs were 1% lower, -2% in real terms (excluding average inflation), making headway in our cost reduction plan. Falls were recorded in Spain (-7%), the UK and Portugal (-3%). Poland rose 2% due to higher personnel expenses. The efficiency ratio in the region improved notably to 51.2% (-8 pp year-on-year).
•In North America, costs increased 7%. In real terms, they were 4% higher, mainly driven by technology expenses and amortizations, with a 3% increase in the US and a 2% fall in Mexico. The efficiency ratio in the region stood at 42.7%.
•Finally, in South America, the increase in costs (+7%) 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 (+6%). The efficiency ratio in the region stood at 34.4%.



Operating expenses
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
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January - June 2021
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9
Income statement
u Provisions or reversal of provisions
Provisions (net of provisions reversals) rose to EUR 1,490 million (EUR 614 million in H1'20). This line item includes the charges for restructuring costs, as well as charges related to CHF mortgages in Poland and Digital Consumer Bank (EUR 154 million in H1'21).
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 3,804 million, down 46% year-on-year in euros and -41% 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 130 million. In H1'20, this line item was EUR 10,241 million due to the valuation adjustment of goodwill of -EUR 10,100 million recorded in the second quarter.

Net loan-loss provisions
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
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u Gains or losses on non-financial assets and investments (net)
This line item recorded EUR 52 million in the first half of 2021, compared to EUR 27 million in the same period of 2020.
u Negative goodwill recognized in results
This line item recorded EUR 0 million in H1'21 (EUR 6 million in H1'20).
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 32 million in the first half of 2021, compared to -EUR 119 million in the first half of 2020.
u Profit before tax
Profit before tax amounted to EUR 6,914 million in the first half of 2021, increasing from -EUR 6,410 million in the same period of 2020, spurred by growth in total income and lower provisions in 2021 and the valuation adjustment of goodwill accounted in H1'20.
u Income tax
Total corporate income tax was EUR 2,474 million (EUR 3,928 million in the first half 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 765 million, up 66% year-on-year (+75% excluding the exchange rate impact).
u Attributable profit to the parent
Attributable profit to the parent amounted to EUR 3,675 million in H1'21, compared with EUR 10,798 million in H1'20.
RoTE stood at 11.8% (1.7% in H1'20), RoRWA of 1.66% (-1.34% in H1'20) and earnings per share stood at EUR 0.197 (-EUR 0.639 in H1'20).
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January - June 2021
Income statement
u Underlying attributable profit to the parent
Attributable profit to the parent recorded in the first half 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 H1'21, these results totalled -EUR 530 million due to the recording in Q1'21 of restructuring costs 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 the first half of 2020, 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 4,205 million in the first half of 2021 and EUR 1,908 million in the same period last year.
The Group’s cost of credit (considering the last 12 months) stood at 0.94%, 0.79% considering the last 6 months, performing better than expected, due to lower provisions in most markets, mainly in Brazil, the US and the UK. The latter two recorded releases in the last quarter.
Before the recording of loan-loss provisions, the Group's underlying net operating income (total income less operating expenses) was EUR 12,318 million, a 4% increase year-on-year, which becomes a 13% rise 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 (+8%) and the rebound net fee income (+8%).
•Costs were higher on the back of the upturn in inflation. In real terms, broad-based declines across Europe, Brazil, Chile and Mexico.
By region:
•In Europe, net operating income increased 37% with rises in all markets.
•In North America, net operating income was 2% higher. By country, the US increased 13% and Mexico dropped 12%.
•In South America, growth was 11% with rises of 14% in Brazil, 10% in Chile and 6% in Argentina.
•In Digital Consumer Bank, net operating income increased 2%.
In the first half of 2021, the Group’s underlying RoTE was 12.6% (5.4% in H1'20), underlying RoRWA was 1.75% (0.80% in H1'20) and underlying earnings per share EUR 0.227 (EUR 0.094 in H1'20).
Summarized underlying income statement
EUR million Change Change
Q2'21 Q1'21 % % excl. FX H1'21 H1'20 % % excl. FX
Net interest income 8,240  7,956  3.6 2.6 16,196  16,202  0.0 7.6
Net fee income 2,621  2,548  2.9 2.0 5,169  5,136  0.6 8.3
Gains (losses) on financial transactions (1)
243  651  (62.7) (62.7) 894  1,073  (16.7) (10.6)
Other operating income 201  235  (14.5) (16.1) 436  107  307.5 309.0
Total income 11,305  11,390  (0.7) (1.6) 22,695  22,518  0.8 8.4
Administrative expenses and amortizations (5,259) (5,118) 2.8 2.2 (10,377) (10,653) (2.6) 3.1
Net operating income 6,046  6,272  (3.6) (4.7) 12,318  11,865  3.8 13.4
Net loan-loss provisions (1,761) (1,992) (11.6) (12.7) (3,753) (7,027) (46.6) (42.1)
Other gains (losses) and provisions (470) (467) 0.6 1.2 (937) (997) (6.0) (1.6)
Profit before tax 3,815  3,813  0.1 (1.3) 7,628  3,841  98.6 122.9
Tax on profit (1,334) (1,324) 0.8 (1.1) (2,658) (1,468) 81.1 101.8
Profit from continuing operations 2,481  2,489  (0.3) (1.3) 4,970  2,373  109.4 136.1
Net profit from discontinued operations —  —  —  —  —  —  —  — 
Consolidated profit 2,481  2,489  (0.3) (1.3) 4,970  2,373  109.4 136.1
Non-controlling interests (414) (351) 17.9 17.2 (765) (465) 64.5 73.4
Net capital gains and provisions —  (530) (100.0) — (530) (12,706) (95.8) (95.8)
Attributable profit to the parent 2,067  1,608  28.5 27.2 3,675  (10,798) — —
Underlying attributable profit to the parent (2)
2,067  2,138  (3.3) (4.4) 4,205  1,908  120.4 152.8
(1) Includes exchange differences.
(2) Excludes net capital gains and provisions.
January - June 2021
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11
Income statement
è Results performance compared to the previous quarter
In the second quarter, attributable profit to the parent amounted to EUR 2,067 million, with no material net results recorded in the net capital gains and provisions line.
Attributable profit to the parent recorded a significant jump (+29% in euros and +27% in constant euros) from EUR 1,068 million in Q1'21, which was affected by restructuring costs (-EUR 530 million).
Compared to Q1'21 underlying attributable profit (EUR 2,138 million, excluding restructuring costs), profit was 3% lower (-4% at constant exchange rates).
This decrease was mainly driven by the contribution to the SRF in Spain, Other Europe, Digital Consumer Bank and the Corporate Centre recorded in Q2'21. Excluding this impact, underlying attributable profit rose 8% (excluding the exchange rate impact), with the following performance by line in constant euros:


Net operating income
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
CHART-0038320321774093A33.JPG

•Total income was 2% lower quarter-on-quarter, dampened by the aforementioned SRF contribution and reduced gains on financial transactions, which were exceptionally high in Q1'21. Net interest income and net fee income grew 3% and 2%, respectively, maintaining their recovery paths despite an environment where interest rates remained low and economic activity, although recovering, continued to be constrained by the pandemic.
•Continued rigorous expense management. However, the upturn in inflation (especially in North America and South America), 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.
•Loan-loss provisions continued to fall (-13%). Of note were the releases in the UK and the US from the improved economic forecast.
•Other gains (losses) and provisions recorded an -EUR 110 million charge related to CHF mortgages in Poland and Digital Consumer Bank.


Underlying attributable profit to the parent*
EUR million
LEYENDACONSTANTESA14A.GIF
constant euros
CHART-0A6AA910396740E4969.JPG
(*) Excluding net capital gains and provisions.




12
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January - June 2021

Business model




Balance sheet
Grupo Santander. Condensed balance sheet
EUR million
Change
Assets Jun-21 Jun-20 Absolute % Dec-20
Cash, cash balances at central banks and other demand deposits 183,091  138,266  44,825  32.4  153,839 
Financial assets held for trading 102,792  124,145  (21,353) (17.2) 114,945 
   Debt securities 34,114  32,062  2,052  6.4  37,894 
   Equity instruments 13,545  7,782  5,763  74.1  9,615 
   Loans and advances to customers 265  289  (24) (8.3) 296 
   Loans and advances to central banks and credit institutions —  6  (6) (100.0) 3 
   Derivatives 54,868  84,006  (29,138) (34.7) 67,137 
Financial assets designated at fair value through profit or loss 61,324  97,270  (35,946) (37.0) 53,203 
   Loans and advances to customers 25,353  35,421  (10,068) (28.4) 24,673 
   Loans and advances to central banks and credit institutions 28,791  54,815  (26,024) (47.5) 21,617 
   Other (debt securities an equity instruments) 7,180  7,034  146  2.1  6,913 
Financial assets at fair value through other comprehensive income 114,505  122,560  (8,055) (6.6) 120,953 
   Debt securities 103,549  112,041  (8,492) (7.6) 108,903 
   Equity instruments 2,751  2,228  523  23.5  2,783 
   Loans and advances to customers 8,205  8,291  (86) (1.0) 9,267 
   Loans and advances to central banks and credit institutions —  —  —  —  — 
Financial assets measured at amortised cost 1,003,417  976,298  27,119  2.8  958,378 
   Debt securities 29,038  27,167  1,871  6.9  26,078 
   Loans and advances to customers 920,695  890,795  29,900  3.4  881,963 
   Loans and advances to central banks and credit institutions 53,684  58,336  (4,652) (8.0) 50,337 
Investments in subsidiaries, joint ventures and associates 7,562  8,668  (1,106) (12.8) 7,622 
Tangible assets 32,678  33,271  (593) (1.8) 32,735 
Intangible assets 16,454  15,946  508  3.2  15,908 
    Goodwill 12,854  12,595  259  2.1  12,471 
    Other intangible assets 3,600  3,351  249  7.4  3,437 
Other assets 46,813  56,457  (9,644) (17.1) 50,667 
Total assets 1,568,636  1,572,881  (4,245) (0.3) 1,508,250 
Liabilities and shareholders' equity
Financial liabilities held for trading 68,982  97,700  (28,718) (29.4) 81,167 
   Customer deposits —  —  —  —  — 
   Debt securities issued —  —  —  —  — 
   Deposits by central banks and credit institutions —  —  —  —  — 
   Derivatives 52,440  84,202  (31,762) (37.7) 64,469 
   Other 16,542  13,498  3,044  22.6  16,698 
Financial liabilities designated at fair value through profit or loss 54,131  59,619  (5,488) (9.2) 48,038 
   Customer deposits 38,005  36,346  1,659  4.6  34,343 
   Debt securities issued 5,491  4,386  1,105  25.2  4,440 
   Deposits by central banks and credit institutions 10,635  18,887  (8,252) (43.7) 9,255 
   Other —  —  —  —  — 
Financial liabilities measured at amortized cost 1,310,433  1,283,581  26,852  2.1  1,248,188 
   Customer deposits 856,122  810,486  45,636  5.6  814,967 
   Debt securities issued 237,739  254,398  (16,659) (6.5) 230,829 
   Deposits by central banks and credit institutions 182,770  189,214  (6,444) (3.4) 175,424 
   Other 33,802  29,483  4,319  14.6  26,968 
Liabilities under insurance contracts 1,014  2,246  (1,232) (54.9) 910 
Provisions 10,400  11,948  (1,548) (13.0) 10,852 
Other liabilities 27,931  25,928  2,003  7.7  27,773 
Total liabilities 1,472,891  1,481,022  (8,131) (0.5) 1,416,928 
Shareholders' equity 117,552  112,899  4,653  4.1  114,620 
   Capital stock 8,670  8,309  361  4.3  8,670 
   Reserves 105,207  117,050  (11,843) (10.1) 114,721 
   Attributable profit to the Group 3,675  (10,798) 14,473  —  (8,771)
   Less: dividends —  (1,662) 1,662  (100.0) — 
Other comprehensive income (32,181) (30,637) (1,544) 5.0  (33,144)
Minority interests 10,374  9,597  777  8.1  9,846 
Total equity 95,745  91,859  3,886  4.2  91,322 
Total liabilities and equity 1,568,636  1,572,881  (4,245) (0.3) 1,508,250 
January - June 2021
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13

Business model




Balance sheet
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 system Strong increase in customer funds benefiting from the higher propensity to save derived from the health crisis
940
p 1% QoQ
p 2% YoY
1,037
p 2% QoQ
p 7% YoY
billion billion
 è By segment (YoY change):
 è By product (YoY change):
Growth backed by individuals and large corporates Of note were demand deposits (which account for 66% of customer funds) and mutual funds
Individuals SMEs and corporates CIB and institutions Demand Time Mutual funds
+3% -3% +1% +9% -11% +18%
(*) Changes in constant euros
è Loans and advances to customers
Loans and advances to customers stood at EUR 954,518 million, rising 2% both quarter-on-quarter and year-on-year.
The Group uses gross loans and advances to customers excluding reverse repos (EUR 939,559 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 second quarter, gross loans and advances to customers excluding reverse repos and without the exchange rate impact, increased 1%, as follows:
•Balances in Europe rose 1%. By market, Portugal and Spain increased 1%, 'Other Europe' +6% and the rest had no material change.
•North America grew 3% driven by the US, as Mexico remained flat.
•In South America, 2% growth with all markets increasing, notably Brazil (+3%) and Argentina (+9%).
•Digital Consumer Bank (DCB) recorded no material change, with widespread falls across the main consumer finance units, except the Nordics and France.
Compared to June 2020, gross loans and advances to customers (excluding reverse repos and the FX impact) grew 2%, as follows:
•In Europe, 1% growth with all markets increasing except Spain (-2%), dampened by SMEs and large corporates. Rises were recorded in Portugal (+5%), driven by SMEs and mortgages, the UK (+1%), driven by residential mortgage activity and the government programmes for corporate customers, and Poland, which increased slightly. "Other Europe" rose 16%, mainly SCIB.
•In North America, Mexico fell 4% as corporate loans began to normalize following the uptick at the beginning of the pandemic and the lower card activity during lockdown. The US fell 2% affected by Puerto Rico and Bluestem portfolio disposals (+1% excluding their impacts). The region as a whole recorded a 3% decrease (flat excluding the aforementioned disposals).
•Growth in South America was 10%, with broad-based increases across countries except Chile (-2% due to corporates and CIB). Argentina up 36% driven by SMEs and cards, Brazil +15% with positive performance in all segments and Uruguay rose 9%.
•Digital Consumer Bank remained broadly stable. Openbank surged 39%, albeit compared to more modest figures.
Gross loans and advances to customers excluding reverse repos maintained a balanced structure: individuals (62%), SMEs and corporates (23%) 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. June 2021
CHART-A8EF701375B64323B86.JPG
+3  %
*
Jun-21 / Jun-20
CHART-152680999D3C4A3EB2D.JPG
(*) In constant EUR: +2%

14
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January - June 2021
è Customer funds
Customer deposits amounted to EUR 894,127 million in June 2021, increasing 1% quarter-on-quarter and 6% 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 1,037,068 million.
•In the quarter, customer funds increased 2%, with the following performance, excluding exchange rate impacts:
–By product, demand deposits rose 3% and mutual funds 5%, whilst time deposits decreased 3%.
–By primary segment, customer funds increased 1% in Europe, driven by Spain, the UK and Portugal. North America rose 2% driven by the US, and South America increased 5% with widespread growth across markets. Digital Consumer Bank rose 4%.
•Compared to June 2020, customer funds were up 7%, excluding the exchange rate impact:
–By product, deposits excluding repos rose 4%. Demand deposits (+9%) increased in all markets, and time deposits fell 11%, with broad-based declines except Brazil and Argentina. Mutual funds surged 18% underpinned by net inflows and markets recovery.
–By country, customer funds rose in all regions and their respective units. Of note were the increases in Argentina (+47%), Uruguay (+14%), and Poland and Chile (both +10%), and more moderate growth in Brazil (+8%), the US, Spain and Portugal (+6% each), the UK (+5%) and Mexico (+2%).
–Positive performance also in DCB, which rose 12%. Openbank increased 26%.
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 half of 2021, the Group issued:
•Medium- and long-term senior debt amounting to EUR 7,771 million and EUR 74 million covered bonds placed in the market.
•There were EUR 10,110 million of securitizations placed in the market.
•In order to strengthen the Group’s situation, issuances to meet the TLAC requirement amounting to EUR 9,160 million (EUR 7,581 million of senior non-preferred; EUR 1,579 million of senior preferred).
•Maturities of medium- and long-term debt of EUR 13,508 million.
The net loan-to-deposit ratio was 107% (110% in June 2020). The ratio of deposits plus medium- and long-term funding to the Group’s loans was 116%, 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 first half of the year, Moody's confirmed its outlook, while Fitch and Standard & Poor's upgraded its outlook 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. June 2021
CHART-00869181E9BE47018FD.JPG
+8  %
*
+20  %
+6  %
•Total
•Mutual funds
•Deposits
exc. repos
Jun-21 / Jun-20
CHART-245095680AB34063A2E.JPG

(*) In constant EUR: +7%
January - June 2021
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15






Solvency ratios
SOLVENCY RATIOS
Executive summary
Phased-in capital ratio* Phased-in CET1 ratio*
The phased-in CET1 ratio exceeded our 11%-12% target range, resulting in a management buffer of 325 bps In the quarter, strong organic generation after absorbing growth in RWAs and shareholder remuneration charges
CAPITALGRAFICOENGA.JPG
Organic generation   +7 bps
(after -18 bps accrual for potential shareholder remuneration
and -5 bps from increased RWAs)
TNAV per share
TNAV per share was EUR 3.98, 4% higher quarter-on-quarter and +6% year-on-year
At the end of the quarter, the total phased-in capital ratio stood at 15.82% and the CET1 ratio (phased-in) at 12.11%. 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 325 bps, compared to the pre-covid-19 buffer of 189 bps.
In the quarter, continued strong organic capital generation of 7 bps due to profit earned. This figure includes a negative impact of 5 bps for the increase in RWAs driven by higher volumes, and an impact of -18 bps for potential shareholder remuneration, equivalent to 50% of this quarter's underlying profit. This figure follows the indications of the consolidating supervisor to consider the maximum within the pay-out target range (40%-50%) of underlying profit**.
In addition, regulatory and model-related impacts were recorded in the quarter for -24 bps, of which -9 bps correspond to TRIM (targeted review of internal models) low defaults and -11 bps to SA-CCR (standardized approach counterparty credit risk).
Lastly, the performance of markets and others was virtually static in the quarter.
Had the IFRS 9 transitional arrangement not been applied, the total impact on the CET1 ratio was -41 bps, leading to a fully-loaded CET1 ratio of 11.70%.
The phased-in leverage ratio stood at 5.2%, and the fully-loaded at 5.0%.
Eligible capital. June 2021
EUR million
Phased-in* Fully-loaded
CET1 70,864  68,510 
Basic capital 79,973  77,307 
Eligible capital 92,539  90,260 
Risk-weighted assets 584,999  585,379 
CET1 capital ratio 12.11  11.70 
T1 capital ratio 13.67  13.21 
Total capital ratio 15.82  15.42 

Phased-in CET1 ratio performance*
%
CET1ESCALERAENG.JPG
Note: as indicated by the consolidating supervisor, a 50% pay-out of underlying attributable profit, the maximum within the target range (40%-50%), has been assumed for the calculation of the capital ratios in 2021. Previously, 40% cash pay-out was considered.
(*) 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. Without it, the fully-loaded ratio was 11.70%. Additionally, the Tier 1 and total phased-in capital ratios include the transitory treatment according to chapter 2, title 1, part 10 of the CRR.
(**) Subject to the board and, if applicable, the general shareholders' meeting adopting the pertinent resolutions regarding shareholder remuneration and dividend payment policy.
16
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January - June 2021
RISK MANAGEMENT
Executive summary
Credit risk Market risk
Credit quality indicators continued the trend of the first quarter
Our market risk profile remained low with stable VaR levels in a context of improved economic recovery expectations
Cost of credit2
NPL ratio Coverage ratio
0.94% 3.22% 73% Q2'21 Average
VaR
EUR 9.1 million
q32 bps vs H1'20
q 4 bps vs H1'20
p1 pp vs H1'20
Structural and liquidity risk Operational risk
Robust and diversified liquidity buffer, with ratios well above regulatory limits
Level of losses in relative terms by Basel categories were lower than in the previous quarter
LCR 164% q 12 pp vs H1'20
u Credit risk management
The Group’s NPL ratio stood at 3.22% in the second quarter, showing an increase of 2 bps compared to the previous quarter and a 4 bps decrease year-on-year. This was mainly due to the positive performance of North America (-10 bps vs. Q1’21), somewhat mitigated by the increases in Europe and South America.
Credit impaired loans amounted to EUR 33,266 million, a 2% increase compared to the previous quarter, while our loan book grew by 1%.
Regarding loan-loss provisions, they amounted to EUR 1,761 million (13% less than the previous quarter in constant euros).
As of June 2021, loan-loss provisions amounted to EUR 3,753 million, 42% lower than H1'20 in constant euros, favoured by
additional reserves built in 2020 to cover the expected credit losses arising from the effects of the pandemic.
The Group's cost of credit stood at 0.94%, a 14 bps decrease compared to the previous quarter (supported by the good performance of the portfolio) and -32 bps year-on-year.
Total loan-loss reserves in the second quarter stood at EUR 24,239 million, in line with the previous quarter, with the total coverage of credit impaired loans at 73%.
A significant part of our portfolios in Spain and the UK have 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 (%)
H1'21 Chg (%)
/ H1'20 		H1'21 Chg (bps)
/ H1'20 		H1'21 Chg (bps)
/ H1'20 		H1'21 Chg (pp)
/ H1'20
Europe 1,202  (28.4) 0.49  8  3.30  (10) 48.4  1.8 
Spain 941  —  1.00  32  6.22  (33) 46.0  2.7 
United Kingdom (68) —  0.09  (13) 1.30  20  37.4  (5.4)
Portugal 69  (33.5) 0.41  11  3.71  (72) 73.0  12.1 
Poland 113  (36.6) 0.88  (9) 4.58  1  72.4  3.4 
North America 588  (73.2) 1.67  (154) 2.28  56  152.3  (54.2)
USA 156  (90.5) 1.34  (196) 2.00  51  185.7  (67.4)
Mexico 432  (21.2) 2.74  (21) 3.10  60  90.6  (24.3)
South America 1,492  (27.8) 2.51  (98) 4.36  (37) 98.1  5.2 
Brazil 1,222  (22.4) 3.51  (116) 4.55  (52) 112.3  2.1 
Chile 182  (49.0) 1.07  (39) 4.57  (42) 63.9  9.1 
Argentina 48  (47.4) 3.94  (173) 3.34  19  167.6  2.0 
Digital Consumer Bank 308  (42.2) 0.64  (10) 2.18  (14) 111.9  3.9 
TOTAL GROUP 3,753  (42.1) 0.94  (32) 3.22  (4) 72.9  0.8 
(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
January - June 2021
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17
Regarding moratoria programmes, as part of the customer support measures implemented by the Group to tackle the effects of covid-19, 92% of total moratoria have already expired by the second quarter, showing a payment performance aligned with expectations, with 5% in stage 3.
The current outstanding moratoria totalled EUR 8.7 billion, (mainly in Spain and Portugal), of which c. EUR 7.5 billion will expire by the end of the third quarter.
Regarding IFRS 9 stages evolution:
•Stage 1 exposures increased by 2.1% vs. the previous quarter, mainly due to new loan originations in SCIB and Brazil.
•Exposure in stage 2 remained stable in the quarter after the increase recorded last year, mostly driven by the macroeconomic deterioration caused by the pandemic.
•Stage 3 exposures slightly increased in the quarter.
Coverage ratio by stage
EUR billion
Exposure1
Coverage
Jun-21 Mar-21 Jun-20 Jun-21 Mar-21 Jun-20
Stage 1 904 885 878 0.5  % 0.5  % 0.6  %
Stage 2 70 70 61 8.2  % 8.1  % 7.7  %
Stage 3 33 32 33 42.2  % 42.5  % 41.1  %
(1) Exposure subject to impairment. Additionally, in June 2021 there are EUR 26 billion in loans and advances to customers not subject to impairment recorded at mark to market with changes through P&L (EUR 27 billion in March 2021 and EUR 36 in June 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 (%)
Q2'21 QoQ YoY
Balance at beginning of period 32,473  2.2  (0.8)
   Net additions 2,561  2.6  (8.7)
   Increase in scope of consolidation —  —  — 
   Exchange rate differences and other 351  (20.9) — 
   Write-offs (2,119) (5.1) (12.2)
Balance at period-end 33,266  2.4  1.5 
Loan-loss allowances 24,239  0.9  2.6 
   For impaired assets 14,030  1.64  4.25 
   For other assets 10,209  (0.21) 0.31 


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 second quarter, VaR fluctuated around an average value of EUR 9.1 million, very stable, with markets focused on the economic recovery despite some issues adding volatility such as latest inflation pressures or cryptos among others, closing Q2’21 at EUR 9.2 million. These figures remain low compared to the size of the Group’s balance sheet and activity.
It should be also mentioned that there are other positions classified for accounting purposes as trading (total VaR of EUR 9.4 million at the end of June 2021).

Trading portfolios (1). VaR by geographic region
EUR million
2021 2020
Second quarter Average Latest Average
Total 9.1  9.2  15.4 
Europe 7.9  9.6  14.9 
North America 2.4  5.8  8.8 
South America 6.0  6.1  5.8 
(1) Activity performance in Santander Corporate & Investment Banking markets.


Trading portfolios (1). VaR by market factor
EUR million
Second quarter Min. Avg. Max. Last
VaR total 6.9  9.1  12.6  9.2 
Diversification effect (8.1) (12.6) (18.8) (15.4)
Interest rate VaR 6.0  9.1  15.3  8.6 
Equity VaR 2.3  3.1  4.6  3.7 
FX VaR 2.0  4.1  7.3  5.5 
Credit spreads VaR 3.0  3.8  5.3  5.0 
Commodities VaR 0.9  1.6  2.6  2.0 
(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

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Trading portfolios1. VaR performance

EUR million
CHART-562D63ECDFE44FEB97B.JPG (1) Corporate & Investment Banking performance in financial markets.

u Structural and liquidity risk
•Regarding the structural exchange rate risk, it is driven mainly 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, hedging of the core capital ratio for foreign exchange rate risk was kept close to 100%.
•In terms of structural interest rate risk, inflation rises continued leading to prospects of Central Banks slowing down stimulus measures earlier than expected, coupled with some political instability in Latin America, adding volatility to markets, although no material issues were detected and risk levels remained at comfortable levels.
•Regarding liquidity risk during the second 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 second quarter of 2021, as the Group´s headquarters and subsidiaries have fully adapted to the new environment. The following aspects were closely monitored during this period:
–Fraud and cyber risk threats across the financial industry, and reinforcement of the control environment (i.e. patching, browsing control, data protection controls, etc.), as well as heightened monitoring as a preventive measure.
–Third party risk exposure, maintaining a close oversight on critical providers, with focus on business continuity capabilities, compliance with service level agreements and operational resilience requirements.
–People risk, due to our employees return to offices and/or work from home situations. Measures have been implemented to ensure a suitable and safe working environment across the Group's subsidiaries.
–Evolution of operational risks linked to the existing portfolios resulting from government and internal aid programmes.
–Regulatory compliance, due to the increasing regulatory requirements 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 risk exposures and anticipate actions in order to reduce their impact.
•In terms of the second quarter performance, level of losses in relative terms by Basel categories were lower than in the previous quarter.

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19
GENERAL BACKGROUND
Grupo Santander ran its business in the second quarter of 2021 in an environment marked by significant progress in vaccination and mobility, the continuation of economic policies to support recovery (although Brazil and Mexico raised interest rates), higher commodity prices and expansive financial conditions. This general tone had exceptions in some Latin American economies, where control of the pandemic is progressing slowly. Nevertheless, higher inflation in many economies and fears over some variants of the virus when herd immunity has not yet been achieved have caused some volatility in the markets.
Country
GDP Change1
Economic performance
EUROZONA.JPG
Eurozone
-1.3%
Growth is accelerating thanks to the reopening of economic activity following progress in vaccination and despite the fact that the irruption of the Delta variant of covid-19 is generating concern. The unemployment rate fell to 7.9% in May. Inflation has risen since the beginning of the year (1.9% in June from 0.9% in January) due to one-off factors, although the recovery in demand may exert some upward pressure in the coming months.
SPAIN.GIF
Spain
-4.2%
Q2'21 data shows a remarkable recovery. Jobs are being created and business and consumer confidence are improving, which will boost domestic demand. Inflation (2.7% in June) picked up due to the impact of energy prices, but core inflation stood close to 0%, reflecting that the economy remained at low activity levels, which is expected to improve.
UK2.GIF
United Kingdom
-6.1%
The resurgence of covid-19 cases arising from the Delta variant delayed the lift of most remaining restrictions until July. However, the latest indicators, including the lower unemployment rate (4.8% in April), point to an acceleration of recovery that we expect to bring the economy to pre-pandemic levels by year-end. Inflation in June (2.5%) reflected both the fast pace of recovery and the low level of comparison base effects. The Bank of England maintained the official rate at 0.1% and the Quantitative Easing target.
PORTUGAL.GIF
Portugal
-5.3%
The downward trend in covid-19 cases allowed the economy to almost fully reopen in Q2'21 and led to a recovery in consumption and investment and an improvement in the labour market (the unemployment rate was 7.2% in May). Inflation stood at 0.5% in June. Portugal's public finances (deficit of 6.9% of GDP in April) reflected the extension of lockdown measures in Q1'21.
POLAND.GIF
Poland
-0.9%
After the third covid-19 wave in Q1'21, economic indicators turned more positive: industry, construction and trade continued to expand, with a solid labour market (unemployment rate at 4%), and prices also rose (inflation of 4.4% in June). In this environment, the central bank continued to prioritize recovery over controlling inflation (0.1% interest rate).
USA.GIF
United States
+0.4%
Improved health situation and fiscal impulses accelerated GDP growth to 6.4% quarter-on-quarter annualized in Q1'21. Inflation rose sharply to 5.3% in June, explained by supply chain problems, the jump in prices for services and comparison base effects. The Fed is holding monetary policy steady, but has started to review its outlook and to talk about 'when to start talking about tapering'.
MEXICO.GIF
Mexico
-3.6%
Economic growth picked up in recent months after a weak start to the year due to the resurgence of covid-19 and global intermediate goods supply problems. This increase was driven by the reopening of activities in the tertiary sector and exports. Inflation rebounded (5.9% in June), prompting the central bank to raise Mexico's official rate to 4.25% (4.0% in Q1'21).
BRAZIL.GIF
Brazil
+1.0%
GDP growth surprised on the upside in Q1'21 (+2.3% quarter-on-quarter), which caused growth expectations to be revised upwards, reflecting a better response of companies to the pandemic and a faster recovery of the services sector after its reopening. Inflation continued to pick up (8.3% in June) and the central bank raised Brazil's official rate by 150 bps in Q2'21 to 4.25% and indicated it will continue to raise rates.
CHILE.GIF
Chile +0.3%
GDP growth in Q1'21 combined with progress in vaccination, better adaption of companies to the pandemic and additional fiscal stimulus implemented this year led to an upward revision of growth expectations for the year. Inflation ticked up (3.8% in June) and the central bank raised Chile's official rate by 25 bps to 0.75% in July, after remaining unchanged in Q2'21.
ARGENTINA.GIF
Argentina +2.5%
After surprising on the upside in Q1'21, economic growth showed some contraction in Q2'21, due to the tighter restrictions to tackle the second covid-19 wave. However, prospects for economic recovery remain unchanged. Inflation remained high (monthly 3.2% in June). Authorities reached an agreement with the Paris Club on the payment of this year's debt maturity, while the renegotiation of the IMF programme continues.
(1) Year-on-year change Q1'21
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January - June 2021

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 (GTS): 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.






January - June 2021
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21
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.
22
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January - June 2021
January-June 2021
Main items of the underlying income statement
EUR million
Primary segments Net interest
income 		Net fee
income 		Total
income 		Net operating
income 		Profit
before tax 		Underlying
attributable
profit to
the parent
Europe 5,396  2,157  8,091  3,947  2,150  1,426 
     Spain 2,034  1,204  3,478  1,759  542  390 
     United Kingdom 2,100  238  2,322  1,023  997  693 
     Portugal 384  210  730  441  347  239 
     Poland 490  253  774  453  141  54 
     Other 387  253  787  272  122  49 
North America 4,015  861  5,487  3,145  2,545  1,628 
     US 2,663  432  3,737  2,206  2,050  1,291 
     Mexico 1,352  414  1,743  991  548  387 
     Other 0  14  7  (52) (53) (50)
South America 5,334  1,770  7,311  4,793  3,113  1,645 
     Brazil 3,700  1,330  5,203  3,701  2,354  1,180 
     Chile 1,009  190  1,252  771  592  321 
     Argentina 440  161  563  214  100  108 
     Other 186  88  293  108  67  35 
Digital Consumer Bank 2,130  395  2,606  1,392  1,008  569 
Corporate Centre (679) (13) (800) (960) (1,188) (1,062)
TOTAL GROUP 16,196  5,169  22,695  12,318  7,628  4,205 
Secondary segments
Retail Banking 15,238  3,462  19,347  10,942  6,565  3,790 
Corporate & Investment Banking 1,460  900  2,938  1,870  1,808  1,197 
Wealth Management & Insurance 179  612  1,021  574  561  406 
PagoNxt (2) 209  189  (108) (118) (127)
Corporate Centre (679) (13) (800) (960) (1,188) (1,062)
TOTAL GROUP 16,196  5,169  22,695  12,318  7,628  4,205 

Underlying attributable profit to the parent distribution*
H1'21


CHART-E8289405F17F45D988D.JPG
(*) As a % of operating areas. Excluding the Corporate Centre.


Underlying attributable profit to the parent. H1'21
EUR million. % change YoY in constant euros
Europe
UK.GIF
ES.GIF
PT.GIF
PL.GIF
North
America
US.GIF
MX.GIF
South
America
BR.GIF
CL.GIF
AR.GIF
Digital Consumer Bank DCB
Global businesses
SCIB.GIF
WMI.GIF
PAGONXT.GIF
CHART-96E0A77ECA7A4FF7B5F.JPG
+871  %
+56  %
+50  %
-24  %
+569  %
-2  %
+44  %
+70  %
+42  %
+11  %
+45  %
+8  %
n.a.
January - June 2021
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23
January-June 2020
Main items of the underlying income statement
EUR million
Primary segments Net interest
income 		Net fee
income 		Total
income 		Net operating
income 		Profit
before tax 		Underlying
attributable
profit to
the parent
Europe 4,708  2,071  7,115  2,902  799  529 
     Spain 1,856  1,178  3,350  1,509  350  251 
     United Kingdom 1,616  284  1,898  580  103  71 
     Portugal 399  191  668  372  230  160 
     Poland 547  220  742  428  167  73 
     Other 289  198  458  13  (52) (26)
North America 4,339  869  5,651  3,299  878  616 
     US 2,891  465  3,730  2,144  305  211 
     Mexico 1,448  396  1,912  1,156  578  406 
     Other 0  9  10  (2) (4) (1)
South America 5,671  1,856  7,864  5,091  2,460  1,382 
     Brazil 4,083  1,483  5,788  3,949  1,881  995 
     Chile 873  166  1,137  678  331  183 
     Argentina 502  132  628  289  125  109 
     Other 213  74  311  175  123  95 
Digital Consumer Bank 2,142  356  2,505  1,357  889  507 
Corporate Centre (658) (15) (617) (784) (1,186) (1,125)
TOTAL GROUP 16,202  5,136  22,518  11,865  3,841  1,908 
Secondary segments
Retail Banking 15,276  3,595  19,242  10,418  3,105  1,733 
Corporate & Investment Banking 1,382  807  2,706  1,679  1,392  928 
Wealth Management & Insurance 202  578  1,012  563  548  400 
PagoNxt 0  171  176  (12) (18) (28)
Corporate Centre (658) (15) (617) (784) (1,186) (1,125)
TOTAL GROUP 16,202  5,136  22,518  11,865  3,841  1,908 
24
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January - June 2021

EUROPA.GIF
EUROPE Underlying attributable profit
EUR 1,426 mn
Executive summary (changes in constant euros)
→ We are accelerating our business transformation in One Santander 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.
→ The increase in revenue (+14%), combined with the continued cost reduction (-1%) and lower provisions (-28%), led to an underlying attributable profit of EUR 1,426 million (+172% year-on-year).
→ Volume growth in the last 12 months in almost all markets: loans grew 1% (notably the UK, Portugal and CIB) and customer funds rose 6%, with positive trends since the beginning of the year.
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 for the medium-term1 and make progress in the long-term transformation through our action plan, defined around three main blocks:
•Grow our business by better serving our customers, focusing on capital efficient opportunities, which includes 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 on the quarter were:
•Spain: we established a new management committee in April, with priorities on strengthening our customer base through customer satisfaction and the simplification of our offering to

Loyal customers. June 2021
Thousands. % loyal / active customers
37  % / active customers 36  % 31% 49% 55%
VINCULADOSEUROPA_ENG.JPG
CLIENTESPAISESA01.JPG
10,179
achieve profitable growth, and managing credit risk in the current market environment. We continued to improve our digital services, for which we have been recognized as Best Bank in Digital Services and Most Innovative Retail Banking app in Spain in 2021 by Global Banking & Finance Review.
•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 helped to deliver strong profit growth, backed by our transformation programme.
•Portugal: we progressed on our transformation programme to streamline the bank and accelerate our digital agenda, leveraging OneApp. Our aim is to be simpler, more nimble and closer to customers, in a challenging environment still marked by some lockdown measures. As a result, we were named Best Bank in Portugal in 2021 by Global Finance, which highlights our ability to meet our customers’ needs in challenging environments. We also made a headway in streamlining our operating model.





Digital customers. June 2021
Thousands. YoY % change
+6  % YoY +4  % +5% +13% +8%
DIGITALESEUROPA_ENG.JPG
CLIENTESDIGITALESA01.JPG

15,686

1.Medium term goals for underlying RoTE do not represent guidance. The actual underlying RoTE may vary materially in the medium term.
January - June 2021
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25
•Poland: we successfully continued to progress in our business and strategic transformation to become a simpler, faster, more effective and more costumer centric organization. Our recent achievements include: top 3 position in NPS among Polish banks, reaching two million active mobile customers, launching of several new fully digital processes (new account openings, life and health insurances and home insurances). We also made headways with our local restructuring plans.
Business performance
Loans and advances to customers rose 2%. In gross terms and excluding reverse repurchase agreements and the exchange rate impact, loans were 1% higher. Growth was recorded in the UK, mainly driven by the mortgage business. Corporate activity slowed down, as a result of government aid programmes and lower demand in the past months.
Customer deposits increased 5% year-on-year in euros. Excluding repurchase agreements and at constant exchange rates, deposits grew 3% and mutual funds +22%. As a result, customer funds were 6% higher, with rises in all countries.
Results
Underlying attributable profit in the first half was EUR 1,426 million, 2.7 times higher than the same period of 2020, which was affected by the covid-19 crisis. Growth was also recorded in constant euros, with the following detail:
•Higher total income (14%) spurred by a very positive start of the year in the SCIB business, strong margin management in the UK in a highly competitive environment, together with the positive impact of the TLTRO in Spain and Portugal.
•Costs were down 1% as a result of the ongoing optimization plans in all countries, aligned with our savings targets for the region.
•Loan-loss provisions dropped 28% compared to the first half of 2020, which was strongly affected by covid-19 related provisions.

Business performance. June 2021
EUR billion and YoY % change in constant euros
EUROPA.GIF
562  +1%
EUROPA.GIF
683  +6%
CREDITOSEUROPAA.JPG
RECURSOSEUROPAA.JPG
Gross loans and advances to customers excl. reverse repos Customer deposits excl.
repos + mutual funds
By country:
•Spain: underlying attributable profit in the first half surged 56% year-on-year, predominantly driven by the strong cost reduction. Total income rose 4% driven by the effective NII and net fee income management, and the positive impact of the TLTRO.
•United Kingdom: underlying attributable profit in the first half was virtually nine times higher year-on-year at EUR 693 million, reflecting the benefits from lower provisioning requirements and higher NII (lower cost of deposits and increased mortgage volumes).
•Portugal: first half underlying attributable profit was 50% higher than previous year, driven by ALCO portfolio sales and lower costs and provisions.
•Poland: interest rates cuts negatively impacted net interest income year-on-year, which were matched by the positive performance in net fee income and loan-loss provisions. However, underlying attributable profit fell 24% due to higher (non-deductible) provisions related to customer claims regarding CHF-indexed and based loans.
•Other Europe: SCIB had an excellent first half across the region. Revenue increased 77% versus the previous year, on the back of strong markets results. Costs rose 18% year-on-year driven by new projects and initiatives related to business development.
In the quarter, underlying attributable profit fell 28% in constant euros, primarily due to the contribution to the SRF recorded in the second quarter (approximately EUR 370 million), the aforementioned CHF mortgage loans related provisions and lower gains on financial transactions compared to an excellent first quarter. Conversely, net interest income and net fee income continued their upward trend, rising 3% and 1%, respectively.

Europe. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 3,942  -5 -5 8,091  +14 +14
Expenses -2,072  0 0 -4,144  -2 -1
Net operating income 1,870  -10 -10 3,947  +36 +37
LLPs -606  +2 +2 -1,202  -29 -28
PBT 919  -25 -26 2,150  +169 +172
Underlying attrib. profit 599  -28 -28 1,426  +170 +172
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ES.GIF
Spain Underlying attributable profit
EUR 390 mn
Commercial activity and business performance
In individuals, positive commercial dynamism accelerated in the second quarter, notably residential mortgages, exceeding the highest level reached in the past 3 years, and consumer lending, recovering to pre-covid levels. There was also significant growth in protection insurance.
We continued to lead the Aqmetrix ranking as best online banking and best app for individuals and SMEs, and launched new products for young customers, financing up to 95% loan-to-value (LTV) ratio.
Regarding the self-employed, SMEs and corporates, of note was the quarterly increase in working capital (+9%) while the slowdown in the demand for loans continued, mainly due to the extension of grace periods in ICO funding and a latent environment of uncertainty regarding the post-covid-19 recovery.
We continued to grow in transactional products, with double-digit growth in credit and debit cards turnover (+18% year-on-year) and transfer volumes (+20%).
Loans and advances to customers dropped 2% year-on-year, as well as in gross terms and excluding reverse repos. In the quarter, 1% growth driven by individuals.
Customer deposits increased 2% compared to the same period of 2020 (similar performance excluding repos). Mutual funds were 20% higher, driven by sustained net positive inflows in the last 14 months.
Results
Underlying attributable profit in the first half amounted to EUR 390 million, 56% higher year-on-year. By line:
•Total income increased 4%, driven by 10% growth in net interest income (margin management and TLTRO), and a 2% increase in net fee income, positively affected by reduced economic activity in Q2'20.
•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%.
•In loan-loss provisions, we continued to strengthen our balance sheet due to uncertainty regarding post-covid-19 recovery and we remained focused on proactive risk management. The NPL ratio fell to 6.22% despite the challenging economic environment.
Compared to the first quarter, profit dropped 39% affected by the contribution to the SRF. Excluding this impact, total income increased 1% and net operating income +4%.
Spain. Underlying income statement
EUR million and % change
Q2'21 / Q1'21 H1'21 / H1'20
Revenue 1,693  -5 3,478  4
Expenses -852  -2 -1,719  -7
Net operating income 842  -8 1,759  17
LLPs -492  +10 -941  0
PBT 202  -40 542  55
Underlying attrib. profit 147  -39 390  56
UK.GIF
United Kingdom Underlying attributable profit
EUR 693 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. Digital customers increased 5% and digital transactions increased 19% year-on-year.
Our strategic transformation programme continues. In Q1’21 we announced the proposed closure of 111 branches, reflecting the continued shift by customers towards online and mobile banking. We also confirmed 40% reduction in head office space.
Loans and advances to customers increased 5% compared to June 2020. Gross loans excluding reverse repos and exchange rate impact grew 1%, driven by residential mortgage activity and the government programmes for corporate customers, offset by reductions in our Corporate and CIB businesses.
Customer deposits increased 9% year-on-year. Customer funds excluding repos and exchange rate impact were 5% greater, continuing to reflect strong growth in Retail Banking and corporate deposits driven by customer spending patterns during the covid-19 pandemic.
Results
Underlying attributable profit in the first six months of 2021 of EUR 693 million, up 878% year-on-year and +871% in constant euros as follows:
•Total income was up 21%, with increased net interest income driven by management actions to reprice deposits (1I2I3 Current Account), as well as higher customer balances. This increase was partly offset by the impact of regulatory changes to overdrafts that took effect in April 2020.
•Costs reduced 2%, continuing to reflect efficiency savings from our transformation programme. As a result, efficiency ratio improved significantly (-13.5 pp) reaching 56.0%.
•Loan-loss provisions releases of EUR 68 million in H1’21 after the EUR 86 million release in Q2'21, reflecting the absence of significant underlying charges and an improved economic forecast. The cost of credit remained low at 9 bps and the NPL ratio was 1.30%.
Against Q1'21, underlying attributable profit increased 34% in constant euros. The increase was driven by higher net interest income (deposit repricing), lower costs and loan-loss provisions release.
United Kingdom. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 1,211  +9 +8 2,322  +22 +21
Expenses -648  -1 -2 -1,299  -1 -2
Net operating income 563  +23 +21 1,023  +76 +75
LLPs 86  — — 68  — —
PBT 587  +43 +42 997  +865 +858
Underlying attrib. profit 399  +36 +34 693  +878 +871
January - June 2021
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27
PT.GIF
Portugal Underlying attributable profit
EUR 239 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:
•Business activity and volumes picked up, reflecting the lifting of lockdown measures and the rebound of the economy.
•Strong increase in digital adoption (web and mobile). The number of digital customers increased 13% year-on-year and digital sales were higher and now account for 59% of the total.
•New customer acquisition through the cuenta Santander, which combines a wide range of services provided under a single fee and also allows, through marginal cost, to include Mundo 123 benefits, which continued to be a key loyalty driver.
•The end of private moratoria (for individuals) in March had no impact on credit quality.
Loans and advances to customers increased 5% year-on-year, as well as in gross terms and excluding reverse repos, backed by the positive dynamics of new mortgage and SME loans.
Customer deposits rose 4% (as well as excluding repos). Overall, customer funds recorded sustained and balanced growth (+6%), with a continued focus on migrating to mutual funds (+37%), amid the low interest rate environment.
Results
Underlying attributable profit in the first half was 50% higher year-on-year at EUR 239 million, driven by:
•Customer revenue increased 1%: growth in net fee income mitigated low interest rates. Total income rose 9% driven by gains on financial transactions (higher ALCO portfolio sales).
•Costs dropped 2% driven by the ongoing transformation process. All these resulted in a significant efficiency improvement to 39.6% (-5 pp).
•Loan-loss provisions declined 34%. The cost of credit was 41 bps, the NPL ratio fell to 3.71% and coverage ratio was higher.
Compared to the previous quarter, underlying attributable profit decreased strongly, adversely impacted by lower gains on financial transactions, as customer revenue was 4% higher and costs and provisions maintained a favourable trend.
Portugal. Underlying income statement
EUR million and % change
Q2'21 / Q1'21 H1'21 / H1'20
Revenue 303  -29 730  9
Expenses -143  -2 -289  -2
Net operating income 160  -43 441  19
LLPs -35  0 -69  -34
PBT 114  -51 347  51
Underlying attrib. profit 78  -51 239  50
PL.GIF
Poland Underlying attributable profit
EUR 54 mn
Commercial activity and business performance
Retail and SME banking activity improved, induced by the easing of lockdown measures. Positive performance was recorded in the main business lines: mortgages, leasing, mutual funds, cards and brokerage services.
Regarding BCB (Business Corporate Banking), business dynamics picked up year-on-year. In addition, we are strengthening our business position in the public sector. In CIB, we maintained our leading position in the local market, participating in relevant transactions such as the initial public offering of Pepco Group, the largest on the Warsaw Stock Exchange in H1'21.
We are also making headway with our Responsible Banking commitments by participating in green energy projects, such as the financing of a wind farm for PLN 550 million.
We introduced new products and services in the first half of the year to improve access to credit for customers with a good risk profile.
Loans and advances to customers decreased 1% year-on-year. Excluding reverse repurchase agreements and the exchange rate impact, gross loans and advances to customers were up 1%. By segment, individuals rose 1%, SMEs were 6% higher and CIB +1%. Corporates and institutions fell 2%.
Customer deposits grew 5% year-on-year. Excluding repurchase agreements and at constant exchange rates, growth was 7% boosted by SMEs and BCB. We continued to actively manage deposits to optimize the cost of funding.
Results
Underlying attributable profit in the first half amounted to EUR 54 million, down 26% year-on-year, -24% in constant euros, impacted by the charge regarding Swiss franc mortgages, as net operating income after loan-loss provisions rose 43%, as follows:
•Total income rose 7%: lower net interest income (-8%), impacted by interest rate cuts, was offset by net fee income (+18%, boosted by increased transactionality, cards and securities services), the lower contribution to the BFG and greater dividends.
•Costs rose 5% mainly due to higher personnel expenses.
•Loan-loss provisions plummeted 37% due to lower charges in the SME and individual segments.
In the quarter, profit increased 63% in constant euros, propelled by total income (dividends in Q2'21 and the contribution to the BFG in Q1'21), lower provisions and reduced tax burden, which more than offset the charges regarding CHF mortgage loans.


Poland. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 417  17 +17 774  +4 +7
Expenses -163  +3 +3 -321  +2 +5
Net operating income 254  +28 +28 453  +6 +9
LLPs -45  -33 -34 -113  -38 -37
PBT 83  +43 +42 141  -16 -13
Underlying attrib. profit 34  +64 +63 54  -26 -24
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January - June 2021
NORTEAMERICA.GIF
NORTH AMERICA Underlying attributable profit
EUR 1,628 mn
Executive summary (changes in constant euros)
→ In North America, the Group's strategy is to accelerate growth in the US, while synergies between countries further increased, enhancing the regional approach and implementing local priorities, leveraging each country's best practices and global digital platforms
→ Sharp increase in customer funds boosted by higher deposits in SBNA and mutual funds. Loans and advances to customers fell dampened by the negative economic impact from the pandemic and the Puerto Rico and Bluestem portfolio disposals.
→ Underlying attributable profit surged 178% year-on-year, driven largely by lower provisions in the region, coupled with higher revenue in the US.
Strategy
In line with our strategy to deploy capital in the most profitable businesses:
•On 15 July 2021, Banco Santander announced that Santander Holdings USA, Inc. ('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 (c.EUR 500 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), with a -9 bp impact on Group capital at closing. The transaction is expected to close by the end of Q1'22, subject to regulatory approvals and customary closing conditions.
•On 2 July 2021, SHUSA announced a proposal to acquire all outstanding shares of common stock of Santander Consumer USA it does not already own. SHUSA currently owns approximately 80% of SC USA's outstanding shares, and, if the transaction is completed, SC USA would become a wholly owned subsidiary of SHUSA.
•On 26 March 2021, the Group announced its intention to repurchase the outstanding shares of Santander México that it does not own (8.3%). On 8 June, the Group announced a change in the expected structure so that it intends to formulate, instead of a mandatory delisting tender offer, a voluntary tender offer.
As for our regional strategy, synergies across countries increased further as we continued to run joint initiatives that included:
•Further development of the USMX trade corridor. SCIB and Commercial Banking continued to work to deepen relationships with existing customers, which was reflected in corridor revenue growth (SCIB: +21%; Commercial Banking: +8%).
Loyal customers. June 2021
Thousands. % loyal / active customers
38  % / active customers 24% 40%
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CLIENTESPAISESA01.JPG
4,089

•Boost customer attraction and retention through loyalty strategies (such as initiatives to attract payrolls) and broadening our tailored service and product proposition (such as the commission-free remittance service from Santander US branches to any bank in Mexico). At the same time, we are working on the development of payment alternatives for the USMX trade corridor, such as Pago FX, and we are leveraging our global digital platform PagoNxt.
•Improve customer interaction with new 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 plan at Santander Bank (SBNA), as well as SC USA's experience in the auto business.
•Continue to reduce duplications in the operating model, platform and architecture, leveraging our existing capabilities to optimize expenses and increase profitability in the region.
To this end, we are consolidating the intra-regional IT function: 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. June 2021
Thousands. YoY % change1
+10  % YoY +3% +11%
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CLIENTESDIGITALESA01.JPG

6,303
(1) Excluding Puerto Rico disposal impact
January - June 2021
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29
In addition, in terms of their local priorities:
United States
After the covid-19 crisis, Santander US has continued to support its customers, employees and communities while pursuing its strategic priorities.
Santander US remains focused on customer experience and growing core customers and deposits through commercial, branch and digital transformation initiatives. It continues to leverage its deposit base to support its CRE and CIB businesses and strengthen its auto finance partnership.
The auto business is ideally positioned to benefit from the renewed demand for used vehicles through rigorous risk-adjusted originations via its 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 such as the increase in the number of full function ATMs to 1,444 as well as the instalment of queue management systems and dividing screens that allow for organized mobility and distribution of customers in the branches, in addition to increasing the security and privacy of customers and employees. In addition, we reached a commercial alliance with Farmacias del Ahorro, adding more than 1,500 establishments to the more than 27,000 service points of our banking correspondents throughout the country.
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. Moreover, we continued with the consolidation of the Hipoteca Online platform, with more than 96% of transactions processed through digital channels in the quarter.
Digital customer attraction leveraged our strategic alliances with Contpaqi and Getnet. Of note was the launch of Getnet's G Store, the first offer in Mexico and in the Group provided by an acquiring business.

Business performance. June 2021
EUR billion and YoY % change in constant euros1
NORTEAMERICA.GIF
126  0%
NORTEAMERICA.GIF
130  +8%
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RECURSOSNORTEAMERICA.JPG
Gross loans and advances to customers excl. reverse repos Customer deposits excl.
repos + mutual funds
(1) Excluding Puerto Rico and Bluestem portfolio disposal impact
This initiative is aimed at supporting the digitalization of SMEs by providing them with an online store, built by experts, that includes all e-commerce processes.
Lastly, in line with our goal of enhancing customer experience, we partnered with Samsung and MasterCard to launch Members Wallet, an app that provides a unique digital ecosystem integrating services such as financing, payments, and balance and transaction enquiries; and a debit card, Samsung Members, backed by MasterCard and Santander, which will offer exclusive benefits for Samsung customers in Mexico.
Business performance
Loans and advances to customers decreased 5% year-on-year. Gross loans and advances to customers excluding reverse repos and the exchange rate impact fell 3%, affected by the negative economic impact arising from covid-19 and Puerto Rico and Bluestem portfolio disposals. Loan demand in the US normalized following the uptick from the pandemic. Excluding disposals impact, loans remained flat.
Customer deposits were up 1%. Excluding repurchase agreements and the exchange rate impact, they were also 1% higher. Solid year-on-year growth in customer funds (+5% in constant euros) mainly driven by deposit growth in the US and the positive performance in mutual funds in both countries. Excluding disposals impact, deposits increased 5%.
Results
In the first six months of 2021, underlying attributable profit was 164% higher year-on-year at EUR 1,628 million (31% of the Group’s total operating areas). Excluding the exchange rate impact, growth was 178%, as follows:
•Total income increased 4%. Net interest income dropped 1% dampened by lower interest rates, mainly in Mexico, together with the contraction in lending. These declines were matched by higher income from leasing and net fee income (+5%).
•Costs rose 7%, primarily due to inflation and investments in digitalization, and the efficiency ratio improved to 42.7%. Previously adopted reduction measures will have a positive impact in H2'21, which will make funds available for new digital and business initiatives.
•Loan-loss provisions plummeted by 73%. The cost of credit improved to 1.67% (2.34% in March 2021), the NPL ratio stood at 2.28% and coverage was 152%.
Compared to the previous quarter, underlying attributable profit increased 10% in constant euros, primarily due to lower provisions.
North America. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 2,719  -2 -2 5,487  -3 +4
Expenses -1,194  +4 +3 -2,343  0 +7
Net operating income 1,525  -6 -6 3,145  -5 +2
LLPs -195  -50 -51 -588  -75 -73
PBT 1,338  +11 +11 2,545  +190 205
Underlying attrib. profit 854  +10 +10 1,628  +164 +178
30
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January - June 2021
US.GIF
United States Underlying attributable profit
EUR 1,291 mn
Commercial activity and business performance
Santander US remains focused on supporting its customers and advancing its strategic initiatives, increasingly centred on consumer and fee-based accretive 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 29% versus the H1'20 as Santander US continues to leverage its strong deposit base to support originations across the full credit spectrum.
Net loans and advances to customers dropped 9% year-on-year. Excluding reverse repos and the exchange rate impact, gross loans decreased 2% as lending growth in auto did not fully offset tepid corporate demand and Puerto Rico and Bluestem portfolio disposal impacts. Excluding the disposals impact, loans increased 1%.
Customer deposits were 2% higher year-on-year. Customer funds (excluding repos and the FX impact) continued to exhibit strong performance growing 6% boosted by retail and corporate deposits. Excluding disposals impact, customer funds increased 11%.
Results
Underlying attributable profit in the first half of 2021 was EUR 1,291 million (6x H1'20 profit), supported by the strong year-on-year increase in net operating income in constant euros (+13%; +23% excluding the impact of the disposals) and another quarter of significantly improved cost of credit. By line:
•Total income up 10%. Despite rate and volume pressures, net interest margin grew 1% during the period driven by focused pricing actions. Despite the negative impact from the disposals, net fee income rose 2% benefiting from capital markets and wealth management activity. Other operating income improved 117%, primarily due to outstanding auto leasing results.
•Expenses increased 6% because of higher activity and investments to execute strategic initiatives. Despite higher expenses, strong revenue growth improved efficiency ratio to 41.0% (-153 bps).
•Loan-loss provisions decreased 91%, largely driven by a substantial decrease in net charge offs, coupled with lower reserve builds as the improved macroeconomic outlook, customer loan relief and strong used car prices led to strong credit performance.
Q2’21 underlying attributable profit was 9% higher in constant euros sequentially, due to better performance on leases and the release of provisions as the macro expectations and portfolio credit metrics continue to improve.
United States. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 1,835  -3 -3 3,737  0 +10
Expenses -783  +5 +5 -1,531  -3 +6
Net operating income 1,052  -9 -9 2,206  +3 +13
LLPs 9  — — -156  -91 -91
PBT 1,076  +10 +11 2,050  +573 +636
Underlying attrib. profit 674  +9 +9 1,291  +512 +569
MX.GIF
Mexico Underlying attributable profit
EUR 387 mn
Commercial activity and business performance
Loans and advances to customers increased 7% compared to H1'20. Gross loans and advances to customers, excluding reverse repurchase agreements and the exchange rate impact, were down 4%, given the reduction in corporate loans (-13%), somewhat offset by the 10% increase in individual loans, where we are the bank gaining the most market share. Credit card use continued to be lower than 2020, although there seems to be a positive shift in trend. Mortgages increased strongly (+15%).
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- and insurance-free mortgage. We are also the only 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.
All these measures enabled us to be named Best Mortgage Banking Brand in 2021 by Global Brands Magazine.
Customer deposits rose 1%. Excluding repurchase agreements and the exchange rate impact, they were 1% lower, weighed down by corporates following the uptick at the beginning of the pandemic, offsetting the sharp growth recorded in demand deposits from individuals (+9%). Mutual funds were up 12%.
Results
Underlying attributable profit in the first half of 2021 of EUR 387 million, 5% lower year-on-year. In constant euros, profit dropped 2%. By line:
•Total income was 6% 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 8% mainly from transactional fees.
•Operating expenses increased 2% in nominal terms, mainly driven by technology costs and the increase in amortizations. In real terms, costs fell 2%.
•Loan-loss provisions dropped 21% due to higher covid-19 related charges in H1'20.
Against the previous quarter, underlying attributable profit increased 11% in constant euros propelled by the upturn in net interest income, disciplined cost control and lower provisions.
Mexico. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 878  +2 0 1,743  -9 -6
Expenses -379  +2 0 -752  -1 +2
Net operating income 499  +1 0 991  -14 -12
LLPs -204  -10 -12 -432  -23 -21
PBT 289  +11 +10 548  -5 -2
Underlying attrib. profit 205  +13 +11 387  -5 -2
January - June 2021
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31
SUDAMERICA.GIF
SOUTH AMERICA Underlying attributable profit
EUR 1,645 mn
Executive summary (changes in constant euros)
→ We continued with our strategy to strengthen connectivity across regions and enable the export of positive experiences across units, capturing new business opportunities.
→ We remain focused on delivering profitable growth, improving customer experience and loyalty, together with cost and risk control.
→ 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 offering.
→ Underlying attributable profit increased 41% year-on-year backed by positive customer revenue performance and lower provisions.

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, 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, Brasil exported its new and used vehicle financing platform to other countries; Cockpit, a platform to streamline management of car dealerships, is being rolled out in Argentina and Peru; Santander Chile increased car insurance sales; in Colombia we made progress in strategic alliances; and, in Uruguay, we launched other vehicle financing channels through Creditel, one of our consumer finance entities.
•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 the successful model of Brazil, where regulatory approvals are already in place for the spin-off of Getnet. In Chile, we recorded positive results in the quarter, and we are expanding our proposition for individuals in Argentina.
Loyal customers. June 2021
Thousands. % loyal / active customers
29  % / active customers 25% 41% 51% 23%
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9,612
•We continued to make headway in the development of joint initiatives between SCIB and corporates to deepen relationships with multinational clients, with the aim of improving customer service, increasing loyalty and expanding customer attraction in all countries, with a particular focus on strengthening ties between Brazil, Colombia and Peru.
•We continue to boost our digital transformation to improve service quality, with the optimization of our channels and processes, and expanding our product and service offerings. As a result of the implemented measures, loyal and digital customers were 24% and 20% higher, respectively, compared to the previous year.
•We continued to promote inclusive and sustainable businesses in the region, such as Prospera, our micro-credit programme, which operates in Brazil and Uruguay and was launched in Colombia in the second quarter. We also issued green loans in Brazil and Chile.
The main initiatives by country were:
•Brazil: we once again recorded high profitability in the quarter as a result of strong commercial dynamics, with record growth in new customer attraction. We maintained the strong growth pace of new mortgage loans to individuals, we hit record card sales and recorded significant revenue growth in Getnet. In auto, we maintained our market share leadership in individuals (25% as of May 2021).
Digital customers. June 2021
Thousands. YoY % change
+20  % YoY +21% +39% +6% +22%
DIGITALESSA_ENG.JPG
CLIENTESDIGITALESA01.JPG

22,670
32
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January - June 2021
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. Santander Life and Superdigital recorded strong growth in customer acquisition, making progress in our objectives of promoting banking penetration, positive lending behaviour and improving transactionality. The introduction of Getnet delivered better than expected results.
•Argentina: we continued to improve our customer care model through digital transformation. We opened the first agribusiness branch in the country, progressed on building an open financial services platform and boosted Santander Consumer's business for vehicle and consumer goods financing. In addition, Getnet continued to progress and began to offer services to individuals.
•Uruguay: the consolidation of our business model enabled us to attract customers and gain market share in key businesses, while we made progress in our technological transformation and the update of our channels and processes. We set up Soy Santander, a new customer loyalty offering for individuals, and we ranked first in the GPTW ranking.
•Peru: we continued to progress on the digitalization of our services and internal processes. 70% of transactions are processed digitally though our office banking platform, along with initiatives such as the digital onboarding of customers and the purchase of a digital platform for consumer and used vehicle financing.
•Colombia: we conducted structuring transactions and placement of infrastructure-related securities and made progress in joint initiatives between SCIB and corporates. We continued to focus on gaining profitable market share in consumer finance and we rolled out Prospera in the country.


Business performance. June 2021
EUR billion and YoY % change in constant euros
SUDAMERICA.GIF
130  +10%
SUDAMERICA.GIF
168  +10%
CREDITOSSUDAMERICA.JPG
RECURSOSSUDAMERICA.JPG
Gross loans and advances to customers excl. reverse repos Customer deposits excl.
repos + mutual funds
Business performance
Loans and advances to customers were 12% higher year-on-year. Gross loans and advances to customers (excluding reverse repos and the exchange rate impact) increased 10% year-on-year, with rises in all country units except Chile.
Customer deposits grew 11% year-on-year. Excluding repurchase agreements and the FX impact, they rose 12% boosted by the strong performance of demand deposits (+26%). Mutual funds rose 7%.
Results
Underlying attributable profit in the first half of the year amounted to EUR 1,645 million, up 19% year-on-year. Excluding the exchange rate impact, it was 41% higher, as follows:
•Total income increased 10% underpinned by net interest income (+11%) and net fee income (+14%).
•Costs rose below total income growth, largely due to 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 82 bps year-on-year to 34.4% enabling net operating income to increase 11%.
•Loan-loss provisions dropped by 28% driven by covid-19 related provisions recorded in 2020. In credit quality, the NPL ratio fell to 4.36%, coverage increased to 98% and the cost of credit improved to 2.51%.
By country, overall double-digit growth (except Uruguay) in underlying attributable profit in constant euros, 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 first quarter, underlying attributable profit rose 10% in constant euros, benefiting from positive customer revenue performance in the main country units which broadly offset greater costs and the increase in provisions in Brazil.
South America. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 3,772  +7 +5 7,311  -7 +10
Expenses -1,299  +7 +6 -2,518  -9 +7
Net operating income 2,473  +7 +4 4,793  -6 +11
LLPs -809  +18 +15 -1,492  -39 -28
PBT 1,609  +7 +4 3,113  +27 +49
Underlying attrib. profit 871  +13 +10 1,645  +19 +41

January - June 2021
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BR.GIF
Brazil Underlying attributable profit
EUR 1,180 mn
Commercial activity and business performance
We continued to make headway with our commercial strategy:
•In auto, where we are leaders in the individual segment, we launched Auto Negócio, a 100% online platform for buying and selling vehicles without business intermediaries.
•In cards, customer acquisition soared 93% year-on-year to a new record high, with significant growth in income from both credit and debit cards.
•In mortgages, new lending to individuals surged 174% year-on-year, and home equity rose 24%, through Usecasa.
•Within the ESG sphere, we were named best bank in this area and we are the leader in solar energy finance. In microcredit, we reached 600,000 active customers.
These initiatives led to a 26% increase in loyal customers and an 21% increase in digital ones.
Regarding our digital transformation, GENTE, our artificial intelligence platform, has assisted more than 9.8 million customers.
As for volumes, loans and advances to customers grew 20% year-on-year. In gross terms, excluding reverse repos and the exchange rate impact, they rose 15%. We saw positive performances across segments, particularly in individuals and SMEs.
Customer deposits increased 11% with respect June 2020. Excluding repos and the exchange rate impact, growth was also 11%, driven by the increase in demand and time deposits (+12% and +11%, respectively). Mutual funds were 3% higher.
Results
First six months underlying attributable profit amounted to EUR 1,180 million (+19% year-on-year). Excluding the exchange rate impact, profit was 44% higher. Of note:
•Total income rose 9% benefiting from the positive performance of net interest income (+10%, supported by larger volumes) and net fee income (insurance and capital markets).
•Costs fell 1%, which enabled net operating income to rise 14% and the efficiency ratio to improve by 2.9 pp year-on-year to 28.9%.
•Net loan-loss provisions dropped 22%, due to higher provisions recorded in 2020 related to the pandemic. Cost of credit improved to 3.51%, the NPL ratio to 4.55% and coverage remained high at 112%.
In the quarter, underlying attributable profit was 6% higher in constant euros, backed by customer revenue, which offset the fall in gains on financial transactions (markets), higher costs affected by inflation and the increase in activity and higher provisions.

Brazil. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 2,682  6 +3 5,203  -10 +9
Expenses -779  +8 +4 -1,502  -18 -1
Net operating income 1,902  +6 +2 3,701  -6 +14
LLPs -674  +23 +19 -1,222  -36 -22
PBT 1,200  +4 0 2,354  +25 +52
Underlying attrib. profit 619  +10 +6 1,180  +19 +44
CL.GIF
Chile Underlying attributable profit
EUR 321 mn
Commercial activity and business performance
We remained focused on increasing new customer attraction and loyalty, and offering attractive returns:
•Getnet's success enabled us to finish installing the 20,000 PoS planned for the whole year in May, and other 8,000 in June. More than half were purchased by businesses that did not use this payment method before, and 65% of the total were sold digitally.
•Santander Life continues to revolutionize the market with its proposition and digital onboarding, reaching more than 729,000 customers.
•Superdigital reached a record high in account openings and has more than 182,000 customers.
•All these measures led to a year-on-year increase in loyal (+13%) and digital customers (+39%), and we ended the quarter with the best NPS in the country.
In volumes, loans and advances to customers grew 5% year-on-year. Excluding reverse repurchase agreements and the exchange rate impact, gross loans and advances to customers decreased 2%, as growth in SMEs and mortgages did not offset the fall in corporates and CIB.
Customer deposits rose 17% year-on-year, up 10% excluding repurchase agreements and the exchange rate impact. We continued to improve the funding mix, as demand deposits rose 42% while time deposits were 19% lower. Mutual funds increased 12%.
Results
Underlying attributable profit in the first half of 2021 amounted to EUR 321 million, 75% higher year-on-year. Excluding the exchange rate impact, growth was 70%, as follows:
•Total income increased 7% driven by the 12% jump in net interest income (margin management and inflation) and the 11% increase in net fee income, propelled by transactional and insurance fees.
•Costs rose less than 2% through efficient cost management. The efficiency ratio improved to 38.4% (-1.9 pp year-on-year).
•Loan-loss provisions were 49% lower due to covid-19 related charges in 2020. Cost of credit improved to 1.07% and the NPL ratio to 4.57%.
In the quarter, profit grew 9% in constant euros mainly from the increase in net interest income and gains on financial transactions, and lower provisions.

Chile. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 637  4 +3 1,252  +10 +7
Expenses -245  +4 +3 -481  +5 +2
Net operating income 392  +4 +3 771  +14 +10
LLPs -82  -19 -20 -182  -47 -49
PBT 315  +14 +13 592  +79 +74
Underlying attrib. profit 169  +11 +9 321  +75 +70
34
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January - June 2021
AR.GIF
Argentina Underlying attributable profit
EUR 108 mn
Commercial activity and business performance
We remained focused on the transactional business and customer service through initiatives in innovation, an enhanced customer care model, and the digital transformation of processes and products. This was reflected in the increase in customers and digital sales.
In the quarter, we opened the first agribusiness branch in the country, with a new customer care model for customers in agricultural areas.
In addition, we continued to progress on the development of our open financial services platform:
•We enhanced Getnet's value proposition, reaching 35,000 active merchants since its launch in October 2020.
•Santander Consumer focused primarily on used vehicles while seeking to expand our ecosystem with new alliances for the consumer segment.
•MODO, the payment solution that promotes digital payments and financial inclusion, reached more than one million customers.
In volumes, loans and advances to customers fell 6% year-on-year. Excluding reverse repurchase agreements and the exchange rate impact, gross loans and advances to customers rose 36% year-on-year, driven by SME loans and cards. Dollar balances declined in the currency of origin.
Customer deposits decreased 4% compared to June 2020. Excluding repurchase agreements and the exchange rate impact, deposits rose 37% spurred on by both demand and time deposits. Mutual funds were 97% higher. The excess liquidity is placed in central bank notes.
Results
Underlying attributable profit in the first six months was EUR 108 million, 1% lower year-on-year. At constant exchange rates, profit was 42% higher. By line:
•Total income grew 28%, underpinned by net interest income, net fee income and higher gains on financial transactions, which allowed us to absorb the negative impact from the inflation adjustment.
•Costs increased 48%, affected by inflation and the salary agreement. Net operating income rose 6%.
•Loan-loss provisions fell 47% following additional covid-19 related provisions build in 2020. The cost of credit improved to 3.94%, the NPL ratio was 3.34% and coverage rose to 168%.
In the quarter, profit was 50% higher in constant euros, underscored by the increase in customer revenue, which offset higher costs and provisions.
Argentina. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 301  15 +26 563  -10 +28
Expenses -179  +5 +15 -349  +3 +48
Net operating income 122  +33 +45 214  -26 +6
LLPs -35  +148 +166 -48  -63 -47
PBT 57  +30 +42 100  -20 +14
Underlying attrib. profit 62  +38 +50 108  -1 +42
Other South America
UY.GIF
PE.GIF
CO.GIF
Uruguay
Gross loans and advances to customers, excluding reverse repurchase agreements and the exchange rate impact, were up 9%. Customer deposits rose 14% at constant exchange rates.
Underlying attributable profit in the first half of EUR 51 million, down 26% year-on-year. Excluding the exchange rate impact, it was 14% lower, as follows:
•Total income dropped 9% mainly driven by the fall in net interest income (significant drop in interest rates) and lower gains on financial transactions. Positive net fee income performance (+15%).
•Costs grew 7%, at a slower pace than inflation.
•Loan-loss provisions decreased 45%, the cost of credit improved to 1.66% and coverage was 110%.
Compared to the previous quarter, underlying attributable profit declined 4% in constant euros dampened by lower total income.
Peru
Gross loans and advances to customers excluding reverse repos and the exchange rate impact rose 16% year-on-year and customer deposits, at constant exchange rates, were 2% higher.
In the first half of 2021 underlying attributable profit amounted to EUR 26 million, 8% higher year-on-year. Excluding the exchange rate impact, growth was 29%, as follows:
•Total income rose 43%, mainly led by customer revenue. Costs rose at a slower pace than income, improving the efficiency ratio to 28.2%.
•Loan-loss provisions rose due to preventive impairments. The NPL ratio was 0.80% and coverage stood a 193%.
Colombia
Gross loans and advances to customers excluding reverse repos were 2% higher year-on-year in constant euros. Customer deposits rose 11% at constant exchange rates.
In the first half of 2021, underlying attributable profit of EUR 12 million, 24% higher than the first half of 2020. Excluding the exchange rate impact, profit increased 34% due to:
•Total income grew 29% (driven by net interest income and net fee income), outpacing the rise in costs.
•Loan-loss provisions were higher but good credit quality was maintained: the NPL ratio was 0.43%, cost of credit of 0.71% and coverage remained high (261%).

Other South America. Underlying income statement
EUR million and % change
Net operating income Underlying attrib. profit
/ H1'20 / H1'20
H1'21 % excl. FX H1'21 % excl. FX
Uruguay 84  -31 -20 51  -26 -14
Peru 52  +25 +49 26  +8 +29
Colombia 24  +31 +42 12  +24 +34
January - June 2021
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35
DCB DIGITAL CONSUMER BANK Underlying attributable profit
EUR 569 mn
Executive summary (changes in constant euros)
→ New lending in H1’21 well above H1'20 (+20% year-on-year), despite the strong impact of covid-19 lockdowns arising from the health crisis in early 2021. We expect a strong H2'21 as soon as restrictions are lifted.
→ Ongoing execution of the strategic operations defined in 2020, aimed at generating efficiencies in terms of cost reduction and conversion of single product creditors into full customer to enhance profitability.
→ Underlying attributable profit was EUR 569 million, improving 11% year-on-year, favoured by revenue growth (+4% YoY). which led to a 2% increase in net operating income. Underlying RoTE rose to 12%, and RoRWA was 2.0% in SCF.

Strategy
Digital Consumer Bank is the leading consumer finance bank in Europe, created through the combination of Santander Consumer Finance (SCF) and Openbank's strengths: combining the scale and leadership of SCF in Europe, and Openbank’s digital capabilities. The aim is to generate synergies for both businesses:
•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.
•SCF is Europe's consumer finance leader, present in 18 countries (16 in Europe including the recent launch in Greece, China and Canada). SCF works through more than 130,000 associated points of sale (mainly auto dealers and retail merchants) through its growing number of agreements with OEMs and retail distribution groups.

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


•Openbank is the largest full-service digital bank in Europe. It offers current accounts, cards, loans, mortgages, an 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.
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. We also generated almost 1 million new contracts to customers in H1’21 and had an EUR 89 billion loan book at the end of June.
•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 2 million new contracts in H1’21 and had a loan book of EUR 19 billion in June.
•Retail: improve digital capabilities to increase customer loyalty among our 1.6 million customer base, boosting digital banking activity, which currently has EUR 33.2 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 the technology and data capabilities of Openbank’s Digital ODS platform, with a Digital Banking apps (APIs) and a SaaS (Software as a Service) model.
–Redefinition of our distribution model and increased process automatization.
36
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January - June 2021
Thanks to all these initiatives, we have great potential for the enhancement of the Digital Consumer Bank 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 H1’21, new lending increased 20% year-on-year, absorbing the impacts of heavy lockdowns in some countries where Digital Consumer Bank operates at the beginning of the year.
In Q1'21, restrictions affected the activity in Central Europe, especially in Germany, the Netherlands and Austria. In Q2’21, demand showed strong signs of recovery with a positive performance notably in Germany and the Nordics, where new lending grew 25% and 18%, respectively, compared with Q1'21. We expect a strong second half of the year as soon as restrictions are lifted, as a result of vaccination processes in our footprint.
Of note in H1’21 was the progress made on the following initiatives: the enhancement of our pan-European leasing proposition through several projects: the deployment of the new consumer finance solution (for mobile and modem devices) via the more than 2,500 retail points of sale in Italy, thanks to the creation of TIMFIN joint venture; and the ongoing set-up of the new Western Hub operating structure as we transition from banking licenses to branches in order to improve efficiency.
In addition, in order to compensate lost revenue during covid-19 lockdowns in early 2021, several measures were carried out, including expense reductions and income initiatives in pricing and cost of funding.



Activity
June 2021. EUR billion and % change in constant euros
0%
QoQ +4%
QoQ
116
0% 56 +12%
YoY YoY
Gross loans and advances to customers excl. reverse repos Customer deposits excl. repos + mutual funds

The stock of loans and advances to customers was EUR 113 billion (+1% year-on-year). Excluding reverse repos, gross loans and advances to customers remained flat vs. H1'20 excluding the exchange rate effect, despite the strong impact from covid-19 isolation measures in the majority of markets where Digital Consumer Bank operates.
Results
Underlying attributable profit in the first half was EUR 569 million, 12% higher year-on-year in euros. Excluding the exchange rate impact, +11%. By line:
•Total income increased 4% compared to H1'20. Net interest income was 1% lower than last year and net fee income increased 11% boosted by new lending.
•Costs increased 5% due to increase in perimeter (Sixt, TIMFIN) and new digital investments. Excluding both impacts, costs down -0,4% year-on-year. The efficiency ratio stood at 46.6%, leading to a net operating income improvement of 2% year-on-year.
•Strong reduction in loan-loss provisions (-42%) driven by the impact of covid-19 provisioning in H1’20. Positive credit quality performance, with a cost of credit of 0.64% and an NPL ratio of 2.18%.
•By country, the largest contribution to underlying attributable profit came from Germany (EUR 180 million), the Nordic countries (EUR 108 million), the UK (130 million), France (EUR 70 million) and Italy (EUR 65 million).
Compared to the previous quarter, underlying attributable profit decreased 5% in constant euros mainly due to the contribution to the SRF and the charge related to CHF mortgages, since customer revenue increased (net interest income: +1%; and fee income: +9%) and loan-loss provisions reduced by 15%. Excluding both impacts, underlying profit rose at double-digit rates.
Digital Consumer Bank. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 1,302  0 0 2,606  +4 +4
Expenses -613  +2 +2 -1,214  +6 +5
Net operating income 689  -2 -2 1,392  +3 +2
LLPs -142  -14 -15 -308  -42 -42
PBT 502  -1 -1 1,008  +13 +13
Underlying attrib. profit 278  -5 -5 569  +12 +11
January - June 2021
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37
CENTROCORPORATIVO.GIF
Corporate Centre Underlying attributable profit
EUR -1,062 mn
Executive summary
→ In the health crisis, 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, always following health authorities' recommendations, maintaining a high level of flexibility to meet individual 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 decreased 6% compared to the first half of 2020, mainly due to lower costs and the decrease in other results and provisions.

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 21,408 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 half underlying attributable loss of EUR 1,062 million, 6% lower than in H1'20 (-EUR 1,125 million):
•Net interest income was negatively impacted by the increase in the liquidity buffer and lower gains on financial transactions, dampened by positive foreign currency hedging results in 2020.
•On the other hand, the favourable trend in operating expenses continued, improving 4% compared to H1'20, driven by ongoing streamlining and simplification measures.
•The net loan-loss provisions line increased due to a charge of EUR 150 million in Q1'21 (EUR 105 million net of tax) given the lack of visibility as to the timing and pace of the economic recovery.
•Lastly, other income and provisions improved due to one-off provisions recorded in H1'20 for certain stakes whose value was affected by the crisis.
Corporate centre. Underlying income statement
EUR million
Q2'21 Q1'21 Chg. H1'21 H1'20 Chg.
Total income -430  -370  +16% -800  -617  +30%
Net operating income -511  -449  +14% -960  -784  +22%
PBT -553  -635  -13% -1,188  -1,186  0%
Underlying attrib. profit -535  -527  +2% -1,062  -1,125  -6%



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January - June 2021

ICONOSAN.GIF
Retail Banking Underlying attributable profit
EUR 3,790 mn
Executive summary
Results. (H1'21 vs. H1'20). % 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 credit Loans and advances to customers rose 1% and customer funds increased 7% year-on-year
Total income Costs Provisions Loans and advances to customers Customer funds
+8% +1% -44% 794
p 1% YoY
768
p 7% YoY
Customers
CLIENTESCOMERCIALENGA.JPG
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.
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, being one of the leaders of the digitalization process in the banking sector, and meet our customers' needs, allowed us to exceed 150 million customers.
The number of loyal customers increased 12% year-on-year, with growth in both individuals (+12%) and corporates (+15%). Digital customers rose 14% year-on-year, a 5 million increase compared to the previous year, while transactions through digital channels grew 38% year-on-year and digital sales accounted for 52% of total transactions.

Results
Underlying attributable profit in the first half of 2021 was EUR 3,790 million, 119% higher than in the first half of 2020. In constant euros, profit increased 135%. By line:
•Total income grew 8% driven by positive net interest income and net fee income performance.
•Costs rose at a slower pace than total income, which enabled the efficiency ratio to improve 2.4 pp to 43.4%.
•Loan-loss provisions plummeted by 44%, as the previous year was strongly affected by covid-19 related provisions.
Retail banking. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 9,811  +3 +2 19,347  +1 +8
Expenses -4,247  +2 +2 -8,404  -5 +1
Net operating income 5,564  +3 +2 10,942  +5 +14
LLPs -1,726  -3 -5 -3,509  -48 -44
PBT 3,375  +6 +4 6,565  +111 +128
Underlying attrib. profit 1,954  +6 +5 3,790  +119 +135
January - June 2021
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39
SCIB.GIF
Santander Corporate & Investment Banking Underlying attributable profit
EUR 1,197 mn
Executive summary
Results (H1'21 vs H1'20). % change in constant euros
Our strategic pillars
Strong profit and profitability improvement backed by total income growth across businesses and countries
SCIBPILARESENG.JPG
Total income Underlying profit RoRWA
+18% +45% 2.51%
Revenue growth by business and region* Other highlights in the quarter
SCIBINGRESOSENG.JPG
EUROPA.GIF
+33%
TOP3CIBA.JPG
Creation of the Digital Solutions Group
(DSG) team
Leading positions in the rankings of different products
NORTEAMERICA.GIF
-14% Structured finance Debt capital
markets (DCM) 		Equity capital markets (ECM)
SUDAMERICA.GIF
+16%
CIBEQUIPO-1.GIF
MUNDO.GIF
EUROPA.GIF
SUDAMERICA.GIF
ES.GIF
MX.GIF
CL.GIF
ES.GIF
PL.GIF
MX.GIF
Green Global
(*) EUR million and % change in constant euros
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 numerous transactions in different sectors and markets. Of note in the second quarter of 2021 was the announced collaboration between SCIB and Tesco to create a sustainable Supply Chain Finance programme. This programme will be directly linked to sustainability commitments, and will involve more than 175 Tesco suppliers, who will receive a discount if they meet the set targets.
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 launch of the European Investment Bank's (EIB) first ever digital bond on the Public Ethereum Network using blockchain technology. This project was selected by Banque de France as part of its Central Bank Digital Currency sphere.



Another key transaction in the quarter was advising Verkor, a French startup that manufactures batteries for electric vehicles, on the setup of a strategic alliance with Renault Group. Through this partnership, Renault Group and Verkor will develop and manufacture new high-performance battery cells, with the aim of building the most digital, sustainable and efficient Gigafactory in Europe, in order to address the challenges of digitalization, decarbonization and reindustrialization of Europe's automotive sector.
SCIBTESCOA.JPG SCIBDCMA.JPG

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 fourth 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.

40
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January - June 2021
In the first half, SCIB received numerous awards in several categories, including the Global Trade Review (GTR), Risk.net, Global Finance and PFI awards.
PREMIOSCIBH1_ENGA.JPG
Results
Underlying attributable profit in S1'21 amounted to EUR 1,197 million, 29% more than in the same period of 2020.
Excluding the exchange rate impact, profit was 45% higher and total income rose 18% to EUR 2,938 million, backed by higher gains on financial transactions and net fee income, driven by strong growth in markets and the positive performance of the Banking businesses (GDF and GTB).
Revenue performance by business was as follows (in constant euros):
•Markets: significant revenue growth (+28% vs H1'20) underscored by market volatility and the higher volume of client business, which we continued to support with the structuring of hedging products.
Of note was the sales activity in Spain, the rest of Continental Europe, the UK, Asia, Brazil and Argentina, as well as trading in Brazil, Spain, the UK and Chile.
•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 first half, particularly indirect financing (distribution to other banks and institutional investors). As a result, total income was 14% higher year-on-year.
We expanded our sustainable financing proposition through green and sustainability-linked loans and bonds, becoming a global leader both in financing and advising on renewable energy operations. Of note was the sharp rise recorded in debt capital markets (DCM), leveraging the positive performance of the Latin American and US markets. Santander continued to be a global benchmark in structured finance, ranking first in Latin America and top 3 in Europe.
•GTB (Global Transactional banking): income from customer balance management continued its negative trend, hampered by low interest rates in our core geographic areas. However, trade finance volumes increased 16% year-on-year spurred on by Trade and Working Capital Solutions and Export & Agency Finance.
Transactional volumes in collections and payments (Cash Management) continued to bounce back benefiting from the gradual recovery of corporate activity, but still remain below pre-covid-19 levels.
•CF (Corporate Finance): total income was up 26% versus H1'20 driven by positive ECM (Equity Capital Markets) performance in Europe and Brazil.
In Brazil, Santander acted as global coordinator in the follow-ons of Lojas Renner (BRL 4 billion), BTG Pactual (BRL 3 billion) and Sequoia Logistica (BRL 894 million), as well as joint bookrunner for DASA's initial public offering (BRL 3.3 billion). In Spain, we continued to consolidate our leadership position in the IPO and capital increase market, acting as global coordinator in the IPO of Arteche, as financial advisor in the listing of Línea Directa and as bookrunner in the capital increase of Cellnex. Finally, we were also involved in the most relevant IPO of 2021 in Poland, Pepco (EUR 1 billion).
In M&A (Mergers & Acquisitions), Santander acted as sole financial advisor to Telefónica on the sale of 60% of FiberCo in Chile to KKR, and Vivo in the sale of 50% of FiberCo in Brazil to CDPQ. In addition, we advised the Canadian company Northland Power on its first investment in Spain, for the purchase of a renewable assets portfolio for EUR 1,061 million.
Santander also acted as advisor to Platinum Equity in the acquisition of the Spanish environmental services group Urbaser by China Tianying Inc.
Operating expenses increased 9% compared to the first half of 2020 due to investments in products and franchises under development. However, efficiency improved year-on-year and remained a benchmark in the sector (36.4%).
Sharp slump in loan-loss provisions compared to H1'20, 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 dropped 30% in constant euros, affected by reduced income from the SRF contribution and lower market volatility, together with the normalization of business dynamics after an exceptionally high Q1'21.




SCIB. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 1,283  -22 -23 2,938  +9 +18
Expenses -543  +3 +3 -1,069  +4 +9
Net operating income 740  -34 -35 1,870  +11 +23
LLPs -21  -55 -54 -68  -72 -72
PBT 750  -29 -30 1,808  +30 +47
Underlying attrib. profit 494  -30 -30 1,197  +29 +45



January - June 2021
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41
WMI.GIF
Wealth Management & Insurance Underlying attributable profit
EUR 406 mn
Executive summary
Results (H1'21 vs. H1'20). % change in constant euros
Growth drivers H1'21
Solid performance across our three businesses
PRIVATEBANKING.GIF
SAM.GIF
INSURANCE.GIF
Total fee income generated Total contribution to profit Assets under management RoRWA Net new money Net sales Gross written premiums
+10% +9% +12% 6.96% EUR 5.1 bn EUR 4.1 bn +12%
vs H1'20
Total contribution to profit by business Other highlights in the quarter
Constant EUR million (incl. fee income ceded to the Group)
Close of
Indosuez
Wealth
Management
acquisition
WMIEEUU.JPG
   ESG AuM
> EUR 8 bn
WMINETZERO1A.JPG
New agreement with Allianz in Poland in our insurance business
WMIINSURANCEPOLANDA.JPG
WMICONTRIBUCION_ENG2A.JPG
WMIPREMIOS.JPG

Commercial activity
Within our journey to become the best responsible wealth manager in Europe and Latin America, in H1'21 we made progress in the following areas:
•In Private Baking, we continued to enhance our value proposition in all geographic areas, especially in advisory services, and to boost investment services through platforms, particularly in our international private banking business.
The integration of Indosuez Wealth Management in Miami was successfully completed, adding USD 4.3 billion under management to our platform.
One of our main priorities is to offer clients value-added solutions that meet their specific investment needs. In this regard, of note was Future Wealth, a joint initiative with SAM consisting of a range of thematic products regarding innovation and disruptive technologies, that since its launch in November, reached more than EUR 4 billion. On the other hand, the range of alternative open-architecture products reached EUR 1.4 billion in sales. As regards the ESG investment range, through both SAM and third-party products, assets under management amounted to close to EUR 1.8 billion.
The total volume of shared business across our markets stood at EUR 8.3 billion, 27% more than in the same period of 2020, mainly driven by operations in Mexico, Brazil, the UK, Portugal and Switzerland, reflecting the success of our global platform, which was joined by Uruguay this year.
Collaboration volumes
Constant EUR million
8,260
u +27%
/ Jun 20

•In Santander Asset Management we continued to improve and complete our local and global product offering. 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.
We continued to strengthen our alternative product offering with several launches aimed at our institutional clients, such as: the Trade Finance Real Economy Fund, in collaboration with SCIB, and the Signal Santander European Hospitality Opportunities fund, together with Signal Capital partners, which helps to raise funds for hotel chains to mitigate the impacts from covid-19.
Also of note was the positive performance of our multi-asset and quantitative solutions (GMAS) investment strategy, which continued to grow strongly in the Santander GO range (reaching nearly EUR 3.5 billion) and the performance of our platform in Luxembourg, which stood at EUR 10.5 billion.
The Future Wealth fund amounted to EUR 950 million since its launch, attracting customers mainly in Spain, International Private Banking, Chile and Portugal. We made further headway in our ESG strategy, offering over 20 ESG products globally, and assets under management exceeded EUR 7.5 billion.
As for operational and technological transformation, this year we fully implemented the Aladdin platform in all our countries.
•In Insurance, we maintained a positive growth pace with premiums increasing 12% 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 recorded in Brazil (+30%), Spain (+22%) and Argentina (+63%).
Also noteworthy was the new agreement with Allianz for our insurance business in Poland (subject to regulatory approval and other customary conditions for this type of operation), through
42
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January - June 2021
which we expect to strengthen our position in this market. It is also worth highlighting the relevance of the agreement between Santander Spain and Aegon to create Santander Assurance Solutions, a specialized unit to support our commercial teams in coaching, value proposition and assisted selling, among others. In Spain we also launched a joint cyber risk coverage with Mapfre aimed at SMEs.
Regarding our digital strategy, we increased strongly the number of insurance policies distributed through our digital channels (+64%), which now account for 14% of the total sales volume.
Business performance
Total assets under management amounted to EUR 395 billion, 12% higher year-on-year, driven by the gradual recovery of activity since the most affected months by the health crisis in the first half of 2020.

Business performance: SAM and Private Banking
Constant EUR million
Total Assets Under Management
Funds and investment *
SAM
Private Banking
Custody of customer funds
Customer deposits
Customer loans
CHART-8C375086CD954C85AAC.JPG
/ Mar-21 / Jun-20
+5  % +12  %
+5  % +12  %
+3  % +9  %
+9  % +20  %
+5  % +20  %
+2  % +1  %
+10  % +19  %
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 15% year-on-year to EUR 247 billion, induced by market improvement and the continued strong commercial activity. Net new money amounted to EUR 5.1 billion (2.1% of total volume), and of note were the EUR 3.1 billion reached in funds.
Net profit in the first half was EUR 212 million, up 10% compared to the same period of 2020, primarily backed by growth in net fee income (15%).
•In SAM, total assets under management increased 9% compared to June 2020 to EUR 193 billion. Cumulative net sales YTD remained in record figures at EUR 4.1 billion as of June (2.1% of the total), mainly in Spain, Mexico, Luxembourg and Poland.
Total contribution to the Group's profit (including ceded fee income) was EUR 250 million, 2% higher year-on-year, mainly due to greater volumes and recovery of margins, which remained under some pressure.
•In Insurance, the volume of gross written premiums in the first half amounted to EUR 4.3 billion (+12% year-on-year), despite lower loan activity derived from the crisis. Net fee income grew 12% with 17% growth in non-credit related protection business.
Total contribution to profit (including ceded fee income) increased 11% year-on-year to EUR 622 million.
Results
Underlying attributable profit was EUR 406 million in the first half of 2021, up 2% year-on-year. Excluding the exchange rate impact, profit was 8% higher:
•Total income increased 6% mainly driven by the higher volume of assets under management, net fee income, and greater insurance protection activity, notably non-credit related business.
•Total fee income generated, including fees ceded to the branch network amounted to EUR 1,634 million (+10% year-on-year) and represented 32% of the Group's total.
Total fee income generated
EUR million
1,634
u +10% 32%
vs H1'20 / total Group
•Operating expenses were 4% higher than in H1'20, 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 1,084 million in the first half, 9% higher than in H1'20.
Compared to the previous quarter, underlying attributable profit rose 6% in constant euros, primarily driven by the positive performance in total income.

Total contribution to profit
EUR million and % change in constant euros
Q2'21 H1'21
IMAGE99A.JPG
558
IMAGE99A.JPG
1,084
+6  % / Q1'21 +9  % / H1'20


WM&I. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 519  +3 +3 1,021  +1 +6
Expenses -227  +3 +2 -447  0 +4
Net operating income 293  +4 +4 574  +2 +8
LLPs -3  -50 -50 -8  -31 -29
PBT 288  +6 +5 561  +2 +8
Underlying attrib. profit 210  +7 +6 406  +2 +8
January - June 2021
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43
PAGONXT.GIF
Underlying attributable profit
EUR -127 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
PAGONXTSOLUCIONES.JPG
SME customers in LatAm and Europe Active
merchants 		Total Payments Volume
> 4 million
1,160 k +24% YoY
EUR 49.4 bn +53% YoY*
Trade Solutions Consumer Solutions
For SMEs & Corporates who operate internationally and want state-of-the-art digital solutions Delivering engaging payment solutions for individuals in emerging and developed markets
SME customers
who operate internationally 		Active customers
Superdigital in Brazil 		Transaction volumes
220,000 +18% YoY +18% YoY*
(*) % change in constant EUR
Strategy
PagoNxt comprises three businesses which provide simple and accessible digital payments solutions to drive loyalty across consumers and corporate customers. The company continued to invest significantly in the development of its global technology platforms which will be shared across multiple markets, bringing new business opportunities as well as generating efficiencies to development costs, reducing time to market, and giving customers seamless access to integrated financial services.

Digitalization of customers' payments and accessibility to our services are at the core of PagoNxt 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 in Europe, North America and South America, 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 150 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.

The roll-out of PagoNxt platforms by country continues to progress, as the three businesses expand their footprint.

Merchant solutions

PagoNxt Merchant solutions, through its global franchise Getnet, is already one of the top 3 acquirers in Latin America. Our global strategy leverages Getnet capabilities to enable very efficient processing of in-store and e-commerce payments and provides best-in-class value added services, not only for Santander customers but also in the open market.
Additionally, we continue to develop our capabilities across our technological hubs in Porto Alegre, Munich, Chennai and Dubai.


This quarter Getnet delivered a solid performance across all business units. Despite pandemic challenges and pressure on margins, we grew the number of active merchants and total payment volumes over pre-pandemic levels.

LOGOGETNET.JPG

The expansion of our global franchise and product offerings continued during the quarter: Getnet Chile launched its commercial activity, and Mexico progressed in its merchant migration plan to the global platform.

In Europe, our former domestic acquiring business in Spain has evolved to Getnet Europe and will be providing European customers with integrated offerings before year-end. Getnet Europe will open an initial branch in Munich.

Merchant solutions
Active merchants Total Payments Volume
Thousands EUR billion
1,160 
933 +24% 49.4 
+53%
32.3
Jun-20 Jun-21 H1'20 H1'21
44
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January - June 2021
Trade solutions
PagoNxt Trade delivers digital, simple and integrated trade, international payments and FX solutions for companies and businesses of all sizes, supporting them in their international expansion.
Santander is an experienced player in trade services, with a strong customer base of 220,000 companies trading internationally, and 3.4 million international payments processed in 2020.
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 accessing seamlessly to the 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 June 2021, platform adoption grew steadily in eight countries including Brazil, Mexico, Spain, the UK, Chile, Portugal, Colombia and Poland, through, for example One Trade View, our international treasury solution to manage multi-country cash positions.
ONETRADE_COMPANYXPOSITIVOX.JPG
Consumer solutions
PagoNxt Consumer is focused on creating compelling payment experiences, which ensure we become embedded in consumers' financial lives.
Superdigital´s purpose is to provide economic inclusion and serve underbanked customers in Latin America. In Q2 we continued to develop our new cloud native, multi-country, multi-currency and multi-language global platform, and to evolve our strategy and product portfolio, testing new products.
In addition, we strengthened our leadership team in the quarter. We expect to roll-out the new global platform in Argentina, Peru and Colombia in a following phase. Also, active customers in Brazil increased 18% year-on-year, in line with transaction volumes (18% year-on-year).

SUPERDIGITAL.JPG


PagoNxt evolution in 2021
In 2021, PagoNxt continues to expand its product offering and global platforms, leveraging the Group's scale and reaching out to new customers. The main priorities by business are:
•In Merchant solutions, Getnet will focus on enhancing our global acquiring platform, leveraging the Wirecard assets acquisition, and also on expanding the platform to additional countries in LatAm and Europe.
•In Trade solutions, the priorities are connecting the OneTrade platform to additional Santander customers 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.
•In Consumer solutions, Superdigital will continue to promote financial inclusion, focusing on rolling out the global multi-country platform in all Santander countries in LatAm, and will also launch additional banking services in the platform. We will continue to test new alternative payment models that enable us to offer unique solutions to our clients.

Results
In the first half of 2021, underlying attributable profit decreased year-on-year to -EUR 127 million (-EUR 28 million in H1'20).
This fall was driven by higher costs from 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 23% year-on-year, boosted by the strong jump in net fee income (+39% at constant exchange rates). This performance was backed by the recovery of activity in Q2'21, with volumes exceeding pre-pandemic levels, mainly in Merchant Solutions (increase in the number of transactions, merchants and turnover).


PagoNxt. Underlying income statement
EUR million and % change
/ Q1'21 / H1'20
Q2'21 % excl. FX H1'21 % excl. FX
Revenue 123  +84 +80 189  +8 +23
Expenses -162  +20 +19 -298  +59 +73
Net operating income -40  -42 -42 -108  +797 +471
LLPs -2  -2 -5 -5  -33 -19
PBT -45  -37 -37 -118  +557 +375
Underlying attrib. profit -56  -23 -22 -127  +358 +303
January - June 2021
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45
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 have made progress in 2020 and continue to do so during 2021. We achieved carbon neutrality in our own operations in 2020 and, in addition, met four of our 2021 commitments a year ahead of schedule.
In the first half of 2021, we also reached the target of 60% of electricity used from renewable energy sources 6 months ahead of schedule.
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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
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 indexes 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).

46
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January - June 2021
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First half highlights
☑ Santander became a founding member of the Net Zero Banking Alliance and Santander Asset Management was the first asset manager in Spain to join the Net Zero Asset Managers initiative.
☑ Santander issued its third green bond and brought in EUR 1,000 million to finance wind power and solar power projects.
☑ We were named by Great Place to Work as one of the four best places to work for women in Argentina and Uruguay, and as one of Brazil's 10 best companies to work for LGBTQI+ employees. In addition, Santander Bank Polska joined Diversity IN Check, prepared by Responsible Business Forum, which recognizes the bank for managing diversity and creating an inclusive work environment.
☑ Tuiio was recognized by Pacto Mundial de México as an initiative to end poverty in the country.
☑ Santander Universidades will award 125,000 scholarships on top of its initial pledge for 2019-2021. As a result, it will have granted 325,000 endowments in the last three years.

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 41.7 billion in green finance1 (of which EUR 8 billion in H1'21), making progress towards our commitment to reach EUR 120 billion by 2025.
♣ Santander participated in a new mandate for the Principality of Andorra in its first sustainable bond. In Mexico, we advised Coppel, one of the country's largest retail companies, on the issuance of its first sustainable loan, and was the sole ESG advisor on the first green bond issue by a beverage company in the Mexican market.
♣ SCIB acted in Portugal as joint financial advisor in the first green bond issue of Redes Energéticas Nacionais; in Spain, SCIB led the long-term refinancing of Torresol Energy, including the formalization of the first derivative with ESG impact in the country, and participated in the execution of sustainable operations with different local autonomous communities for a total of EUR 1 billion.
ICONOINCLUSION.JPG
Social
Ü Santander and the European Investment Bank signed two agreements under the Pan-European Guarantee Fund (EGF) to provide an additional EUR 2 billion to support Spanish and European companies affected by the pandemic.
Ü Thanks to Santander Finance for All, Santander's response to support financial inclusion and empowerment, we have empowered 6 million people1, of which 1.2 million through our microfinance initiatives: Prospera in Brazil, Prosperá in Uruguay and TUIIO in Mexico. In addition, Santander in Colombia launched Prospera, our microfinance programme aimed at small entrepreneurs without access to formal banking and help develop their businesses in these countries.
Ü We continued to invest in the communities where we operate. Santander Universidades launched the Santander X Global Challenge | Helping People Prosper to identify startups and scaleups with innovative solutions to support SMEs in their digital transition, as well as Santander Skills | Innovation in Teaching scholarships together with Laspau (affiliated with Harvard University) aimed at university teachers. We also awarded the six best sustainable startups in the Santander X Environmental Challenge with EUR 20,000, mentoring and advisory services. These awards consist of two categories: a) Be Sustainable: for solutions that encourage green finance and investment; b) Be Mindful: for projects that help raise awareness of the importance of reducing the environmental footprint.

We also continue to be part of several sustainability indices, providing non-financial information to markets, investors and ESG analysts.
LOGOSBANCARESPONDABLE21.JPG

1) Aggregated data 2019-H1'21. Unaudited H1'21 monitoring data.
January - June 2021
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47
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
GOBIERNOCORPOTATIA01.JPG

à    Changes in the board
On 27 April, the board of directors appointed Mr Javier Illescas (head of corporate legal), Ms Julia Bayón (head of business legal) and Mr Adolfo Díaz-Ambrona (general secretary of Santander España) as vice secretaries of the board and its committees to assist the secretary in the performance of his duties, replacing Mr Óscar García Maceiras, who had stepped down in his position in March 2021.
à    Changes in the composition of the board committees
As of 1 April, Ms Belén Romana García was appointed as chairman of the risk supervision, regulation and compliance committee, replacing Mr Álvaro Cardoso de Souza, who left the committee.
As of 1 May, Mrs Pamela Walkden was appointed as member of the risk supervision, regulation and compliance committee.
à    Changes in the organizational structure of the Group's Senior Management
On 28 April, to further advance in the development of One Santander in the Europe region, the appointment of Mr António Simões as CEO of Santander Spain was announced, while retaining his responsibilities as regional head of Europe, and succeeding Mr Rami Aboukhair, who was appointed as Global Head of Cards and Digital Solutions, a new function to develop cards business.
As of 7 May, Ms Lindsey Argalas ceased as Head of Santander Digital and left the Group.
à    Amendments to the Bylaws
On 15 June, once they were authorized by the ECB, the amendments to the Bylaws approved by the ordinary general shareholders' meeting on 26 March 2021 (articles 18, 20, 27, 34 and a new article 34 bis) were registered in the Mercantile Registry of Cantabria, with the following purposes:
i.to give the board of directors the power to issue non-convertible debentures;
ii.to give the board of directors the power to decide on the application of compensation systems consisting of delivery of shares or rights thereto, as well as any other compensation system referenced to the value of the shares when the beneficiaries of such compensation systems are not directors of Banco Santander;
iii.to give greater flexibility to process the proxies granted and votes cast from a distance by the shareholders at the general meeting, without prejudice to the board of directors being able to reduce the advance period required for receipt thereof by the Bank prior to the date on which the general meeting is scheduled to be held, giving it the same publicity as is given to the announcement of the call to meeting; and
iv.to authorize the board of directors, when so provided by applicable legal provisions, to call shareholders’ meetings to be held by remote means only, without the physical attendance of the shareholders or their representatives.
à    Amendments of the Rules and regulations of general shareholders' meeting
Likewise, on 15 June the amendments of the Rules and regulations of the general shareholders’ meeting approved by the general meeting on 26 March 2021 (articles 2, 8, 20 and 26) were registered in the Mercantile Registry of Cantabria and submitted to the National Securities Market Commission, in order to coordinate the text of the Rules and Regulations with the amendments to the Bylaws approved by the general shareholders’ meeting, as well as to introduce technical precision in the regulation of mechanisms for granting representation and issuing remote voting and some additional technical improvements.
à    Amendments of the Rules and regulations of the board
On 27 April, the board of directors approved the amendment of articles 13 and 15 of the Rules and regulations of the board to provide for the existence of more than one vice secretary. The public deed was registered in the Mercantile Registry of Cantabria on 23 June 2021 and submitted to the National Securities Market Commission.
48
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January - June 2021
SANTANDER SHARE
The cash dividend of EUR 0.0275 per share against 2020 results was paid in May, the maximum allowed in accordance with the limits set by the European Central Bank recommendation of 15 December 2020.
This dividend was paid under the resolution for the distribution of share premium approved at the Bank’s general shareholders meeting on 27 October 2020.
àShare 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 is experiencing a strong recovery as progress with vaccinations led to the reopening of economic activities as well as mobility.
The second quarter was marked by upward revisions to economic forecasts, as well as increasing inflation, which raised expectations of interest rate hikes and concerns about an earlier than expected reduction in Federal Reserve (Fed) stimulus. However, the Fed reaffirmed its determination to give time for the labour market to recover and not rush to raise interest rates too quickly due to inflation fears, despite the fact that some members are already starting to talk about tapering. The European Central Bank, for its part, stated that it will maintain its current pace of purchases until it considers the health crisis to be over.
European and US banks benefited from the possibility that the ECB would lift the dividend payout restriction soon, thanks to the solid recovery of the eurozone, the good results of the US banks stress tests, with capital levels "well above" the regulatory minimum, and S&P's upward revision of a significant part of European banks' outlooks.
The main global equity markets ended the first half of the year with significant gains despite the cuts in recent days due to uncertainty over the increase in covid-19 cases. Thus, the banking sector recorded an overall better performance, the DJ Stoxx Banks rose 23.8% while the MSCI World Banks rose 19.5%, compared to the Ibex 35 9.3% increase and the DJ Stoxx 50 13.0% growth. Santander also recorded a better performance and a rise of 26.9%.

Share price
ACCION4.JPG
ACCIN3A01.JPG
START 31/12/2020
END 30/06/2021
€2.538 €3.220
ACCIONMAX.JPG
ACCIONMIN.JPG
Maximum 03/06/2021
Minimum 28/01/2021
€3.509 €2.375





Comparative share performance
CHART-30A0DF5CE10B420E9EA.JPG

January - June 2021
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49
àMarket capitalization and trading
As at 30 June 2021, Santander was the second largest bank in the Eurozone by market capitalization and the 30th in the world among financial entities (EUR 55,828 million).
The share’s weighting in the DJ Stoxx Banks index was 7.7% and 14.0% in the DJ Euro Stoxx Banks. In the domestic market, its weight in the Ibex 35 as at end-June was 11.5%.
A total of 6,861 million shares were traded in the first half for an effective value of EUR 20,529 million and a liquidity ratio of 40%.
The daily trading volume was 54.4 million shares with an effective value of EUR 163 million.

àShareholder base
The total number of Santander shareholders at 30 June 2021 was 3,879,232, of which 3,590,629 were European (75.18% of the capital stock) and 277,192 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 39.60% and institutional shareholders account for 59.35%.



Share capital distribution by geographic area
June 2021
The Americas Europe Other
23.17% 75.18% 1.65%
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GLOBO-EUROPA2.GIF
2nd
Bank in the Eurozone by market capitalization
EUR 55,828 million

The Santander share
June 2021
Shares and trading data
Shares (number) 17,340,641,302 
Average daily turnover (number of shares) 54,449,270 
Share liquidity (%) 40
(Number of shares traded during the year / number of shares)
Stock market indicators
Price / Tangible book value (X) 0.81
Free float (%) 99.80




Share capital distribution by type of shareholder
June 2021
CHART-A65B8A3F2F65403E9F5.JPG
Institutions
59.35%
Board *
1.05%
Retail
39.60%
(*) Shares owned or represented by directors.

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January - June 2021



2021 A P P E N D I X
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January - June 2021
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51

Net fee income. Consolidated
EUR million
Q2'21 Q1'21 Change (%) H1'21 H1'20 Change (%)
Fees from services 1,429  1,414  1.1 2,843  2,921  (2.7)
Wealth management and marketing of customer funds 931  852  9.3 1,783  1,708  4.4
Securities and custody 261  282  (7.4) 543  507  7.1
Net fee income 2,621  2,548  2.9 5,169  5,136  0.6


Underlying operating expenses. Consolidated
EUR million
Q2'21 Q1'21 Change (%) H1'21 H1'20 Change (%)
Staff costs 2,750  2,688  2.3 5,438  5,467  (0.5)
Other general administrative expenses 1,811  1,747  3.7 3,558  3,767  (5.5)
   Information technology 553  495  11.7 1,048  1,021  2.6
   Communications 102  97  5.2 199  246  (19.1)
   Advertising 115  118  (2.5) 233  259  (10.0)
   Buildings and premises 168  164  2.4 332  384  (13.5)
   Printed and office material 23  19  21.1 42  54  (22.2)
   Taxes (other than tax on profits) 124  140  (11.4) 264  252  4.8
   Other expenses 726  714  1.7 1,440  1,551  (7.2)
Administrative expenses 4,561  4,435  2.8 8,996  9,234  (2.6)
Depreciation and amortization 698  683  2.2 1,381  1,419  (2.7)
Operating expenses 5,259  5,118  2.8 10,377  10,653  (2.6)

Operating means. Consolidated
Employees Branches
Jun-21 Jun-20 Change Jun-21 Jun-20 Change
Europe 64,306  70,848  (6,542) 3,401  4,902  (1,501)
     Spain 23,689  27,261  (3,572) 1,947  3,222  (1,275)
     United Kingdom 20,870  23,249  (2,379) 553  615  (62)
     Portugal 6,049  6,506  (457) 418  525  (107)
     Poland 9,932  10,968  (1,036) 471  529  (58)
     Other 3,766  2,864  902  12  11  1 
North America 41,670  38,377  3,293  1,920  2,043  (123)
     US 15,610  17,299  (1,689) 544  614  (70)
     Mexico 25,543  20,817  4,726  1,376  1,429  (53)
     Other 517  261  256  —  —  — 
South America 67,198  67,913  (715) 4,438  4,494  (56)
     Brazil 45,115  44,951  164  3,590  3,585  5 
     Chile 10,628  11,405  (777) 332  367  (35)
     Argentina 8,814  9,244  (430) 408  438  (30)
     Other 2,641  2,313  328  108  104  4 
Digital Consumer Bank 15,834  15,373  461  314  408  (94)
Corporate Centre 1,743  1,773  (30)
Total Group 190,751  194,284  (3,533) 10,073  11,847  (1,774)

Underlying net loan-loss provisions. Consolidated
EUR million
Q2'21 Q1'21 Change (%) H1'21 H1'20 Change (%)
Non-performing loans 2,054  2,299  (10.7) 4,353  7,577  (42.5)
Country-risk —  (1) (100.0) (1) (7) (85.7)
Recovery of written-off assets (293) (306) (4.2) (599) (543) 10.3
Net loan-loss provisions 1,761  1,992  (11.6) 3,753  7,027  (46.6)
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Loans and advances to customers. Consolidated
EUR million
Change
Jun-21 Jun-20 Absolute % Dec-20
Commercial bills 42,529  30,354  12,175  40.1 37,459 
Secured loans 522,412  508,292  14,120  2.8 503,014 
Other term loans 275,974  275,779  195  0.1 269,143 
Finance leases 38,054  35,401  2,653  7.5 36,251 
Receivable on demand 9,995  10,194  (199) (2.0) 7,903 
Credit cards receivable 18,459  17,341  1,118  6.4 19,507 
Impaired assets 32,136  31,737  399  1.3 30,815 
Gross loans and advances to customers (excl. reverse repos) 939,559  909,098  30,461  3.4 904,092 
Reverse repos 38,536  48,681  (10,145) (20.8) 35,702 
Gross loans and advances to customers 978,095  957,779  20,316  2.1 939,794 
Loan-loss allowances 23,577  22,983  594  2.6 23,595 
Loans and advances to customers 954,518  934,796  19,722  2.1 916,199 


Total funds. Consolidated
EUR million
Change
Jun-21 Jun-20 Absolute % Dec-20
Demand deposits 685,086  618,832  66,254  10.7 642,897 
Time deposits 169,491  187,518  (18,027) (9.6) 171,939 
Mutual funds 182,491  152,040  30,451  20.0 164,802 
Customer funds 1,037,068  958,390  78,678  8.2 979,638 
Pension funds 15,858  15,086  772  5.1 15,577 
Managed portfolios 29,493  26,038  3,455  13.3 26,438 
Repos 39,550  40,482  (932) (2.3) 34,474 
Total funds 1,121,969  1,039,996  81,973  7.9 1,056,127 


Eligible capital (phased in) 1. Consolidated
EUR million
Change
Jun-21 Jun-20 Absolute % Dec-20
Capital stock and reserves 115,678  125,322  (9,644) (7.7) 125,449 
Attributable profit 3,675  (10,798) 14,474  — (8,771)
Dividends (2,102) —  (2,102) — (478)
Other retained earnings (34,048) (33,167) (881) 2.7 (35,345)
Minority interests 6,347  6,639  (292) (4.4) 6,669 
Goodwill and intangible assets (15,823) (16,952) 1,128  (6.7) (15,711)
Other deductions (2,862) (3,851) 989  (25.7) (2,415)
Core CET1 70,864  67,192  3,672  5.5 69,399 
Preferred shares and other eligible T1 9,109  9,284  (175) (1.9) 9,102 
Tier 1 79,973  76,476  3,497  4.6 78,501 
Generic funds and eligible T2 instruments 12,567  11,361  1,206  10.6 12,514 
Eligible capital 92,539  87,837  4,703  5.4 91,015 
Risk-weighted assets 584,999  567,446  17,553  3.1 562,580 
CET1 capital ratio 12.11 11.84 0.27 12.34
T1 capital ratio 13.67 13.48 0.19 13.95
Total capital ratio 15.82 15.48 0.34 16.18
(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.
January - June 2021
IMAGE6.JPG
53
EUROPE
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 2,751  4.0  3.5  5,396  14.6  14.8 
Net fee income 1,086  1.3  1.1  2,157  4.2  4.6 
Gains (losses) on financial transactions (1)
84  (78.0) (77.7) 468  27.3  29.0 
Other operating income 21  (56.5) (57.6) 71  —  — 
Total income 3,942  (5.0) (5.3) 8,091  13.7  14.0 
Administrative expenses and amortizations (2,072) —  (0.5) (4,144) (1.7) (1.5)
Net operating income 1,870  (10.0) (10.2) 3,947  36.0  36.6 
Net loan-loss provisions (606) 1.8  1.7  (1,202) (28.5) (28.4)
Other gains (losses) and provisions (344) 37.2  38.7  (595) 41.3  42.3 
Profit before tax 919  (25.3) (25.8) 2,150  169.1  171.6 
Tax on profit (303) (24.7) (25.6) (705) 198.2  200.6 
Profit from continuing operations 616  (25.6) (25.9) 1,445  156.9  159.4 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 616  (25.6) (25.9) 1,445  156.9  159.4 
Non-controlling interests (17) 586.1  720.1  (20) (41.1) (39.5)
Underlying attributable profit to the parent 599  (27.5) (27.8) 1,426  169.6  171.9 
Balance sheet
Loans and advances to customers 584,804  0.5  0.7  584,804  1.9  (0.5)
Cash, central banks and credit institutions 243,814  0.1  0.3  243,814  (1.8) (2.8)
Debt instruments 77,472  1.3  1.0  77,472  (10.4) (11.2)
Other financial assets 49,395  3.4  3.4  49,395  (8.9) (9.0)
Other asset accounts 32,651  (3.7) (3.6) 32,651  (19.0) (20.0)
Total assets 988,136  0.5  0.6  988,136  (1.5) (3.2)
Customer deposits 599,463  0.4  0.6  599,463  5.0  2.7 
Central banks and credit institutions 197,256  3.5  3.7  197,256  (7.7) (7.9)
Marketable debt securities 79,019  (10.3) (9.9) 79,019  (14.4) (17.5)
Other financial liabilities 54,859  8.5  8.6  54,859  (21.6) (21.8)
Other liabilities accounts 11,966  (8.0) (8.1) 11,966  (9.9) (11.6)
Total liabilities 942,563  0.4  0.5  942,563  (1.8) (3.5)
Total equity 45,573  2.3  2.3  45,573  5.5  3.8 
Memorandum items:
Gross loans and advances to customers (2)
562,209  0.7  0.9  562,209  3.6  1.3 
Customer funds 681,433  1.0  1.1  681,433  7.6  5.7 
Customer deposits (3)
578,759  0.5  0.7  578,759  5.3  3.1 
 Mutual funds 102,675  3.8  3.7  102,675  23.0  22.5 
Ratios (%), operating means and customers
Underlying RoTE 5.96  (2.56) 7.24  4.53 
Efficiency ratio 52.6  2.6  51.2  (8.0)
NPL ratio 3.30  0.04  3.30  (0.10)
Total coverage ratio 48.36  (1.6) 48.4  1.8 
Number of employees 64,306  (4.3) 64,306  (9.2)
Number of branches 3,401  (17.2) 3,401  (30.6)
Number of loyal customers (thousands) 10,179  1.1  10,179  3.5 
Number of digital customers (thousands) 15,686  0.4  15,686  6.3 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
54
IMAGE6.JPG
January - June 2021
Spain
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % H1'21 %
Net interest income 1,015  (0.5) 2,034  9.6 
Net fee income 617  5.0  1,204  2.2 
Gains (losses) on financial transactions (1)
123  (6.9) 256  (37.1)
Other operating income (62) —  (16) (82.0)
Total income 1,693  (5.1) 3,478  3.8 
Administrative expenses and amortizations (852) (1.8) (1,719) (6.6)
Net operating income 842  (8.3) 1,759  16.6 
Net loan-loss provisions (492) 9.6  (941) — 
Other gains (losses) and provisions (147) 14.0  (276) 26.3 
Profit before tax 202  (40.4) 542  55.1 
Tax on profit (55) (43.3) (152) 53.3 
Profit from continuing operations 147  (39.3) 390  55.8 
Net profit from discontinued operations —  —  —  — 
Consolidated profit 147  (39.3) 390  55.8 
Non-controlling interests —  36.2  —  34.2 
Underlying attributable profit to the parent 147  (39.2) 390  55.8 
Balance sheet
Loans and advances to customers 192,716  0.9  192,716  (2.4)
Cash, central banks and credit institutions 128,622  4.2  128,622  18.7 
Debt instruments 18,864  1.7  18,864  (24.8)
Other financial assets 2,496  2.8  2,496  50.3 
Other asset accounts 17,595  (12.0) 17,595  (24.2)
Total assets 360,293  1.4  360,293  1.3 
Customer deposits 253,301  1.6  253,301  2.1 
Central banks and credit institutions 50,243  (2.5) 50,243  7.0 
Marketable debt securities 26,660  (2.0) 26,660  (2.6)
Other financial liabilities 10,793  47.3  10,793  (12.7)
Other liabilities accounts 3,848  (18.0) 3,848  (25.4)
Total liabilities 344,845  1.4  344,845  1.5 
Total equity 15,448  0.1  15,448  (2.6)
Memorandum items:
Gross loans and advances to customers (2)
199,041  0.8  199,041  (2.3)
Customer funds 329,525  2.2  329,525  5.7 
    Customer deposits (3)
253,301  1.6  253,301  2.1 
    Mutual funds 76,224  4.3  76,224  19.5 
Ratios (%), operating means and customers
Underlying RoTE 3.93  (2.57) 5.21  1.97 
Efficiency ratio 50.3  1.7  49.4  (5.5)
NPL ratio 6.22  0.04  6.22  (0.33)
Total coverage ratio 46.0  (1.2) 46.0  2.7 
Number of employees 23,689  (7.0) 23,689  (13.1)
Number of branches 1,947  (25.2) 1,947  (39.6)
Number of loyal customers (thousands) 2,758  2.3  2,758  8.5 
Number of digital customers (thousands) 5,302  0.2  5,302  4.1 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
55
United Kingdom
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 1,100  9.9  8.5  2,100  30.0  29.0 
Net fee income 117  (2.4) (3.7) 238  (16.3) (16.9)
Gains (losses) on financial transactions (1)
(4) (67.8) (68.7) (16) 668.6  663.0 
Other operating income (2) —  —  1  220.3  217.9 
Total income 1,211  9.0  7.6  2,322  22.4  21.5 
Administrative expenses and amortizations (648) (0.7) (2.0) (1,299) (1.4) (2.1)
Net operating income 563  22.6  21.2  1,023  76.3  75.0 
Net loan-loss provisions 86  —  —  68  —  — 
Other gains (losses) and provisions (63) 101.9  99.9  (94) 22.8  21.9 
Profit before tax 587  43.1  41.5  997  865.0  858.0 
Tax on profit (188) 61.4  59.7  (304) 837.3  830.5 
Profit from continuing operations 399  35.9  34.3  693  877.7  870.5 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 399  35.9  34.3  693  877.7  870.5 
Non-controlling interests —  —  —  —  (100.0) (100.0)
Underlying attributable profit to the parent 399  35.9  34.3  693  877.7  870.5 
Balance sheet
Loans and advances to customers 261,139  (0.3) 0.5  261,139  4.9  (1.0)
Cash, central banks and credit institutions 62,751  (5.1) (4.3) 62,751  31.1  23.7 
Debt instruments 8,292  (10.2) (9.5) 8,292  (51.2) (54.0)
Other financial assets 913  14.7  15.6  913  (37.9) (41.4)
Other asset accounts 7,517  10.8  11.6  7,517  (21.4) (25.8)
Total assets 340,612  (1.2) (0.5) 340,612  4.8  (1.1)
Customer deposits 243,617  0.9  1.7  243,617  8.6  2.5 
Central banks and credit institutions 30,603  5.6  6.4  30,603  48.0  39.6 
Marketable debt securities 44,507  (15.4) (14.8) 44,507  (23.7) (28.0)
Other financial liabilities 2,691  (14.7) (14.1) 2,691  (5.8) (11.1)
Other liabilities accounts 3,696  (1.0) (0.2) 3,696  (17.7) (22.4)
Total liabilities 325,114  (1.5) (0.7) 325,114  4.7  (1.2)
Total equity 15,498  4.3  5.1  15,498  8.3  2.2 
Memorandum items:
Gross loans and advances to customers (2)
242,616  (0.7) 0.1  242,616  7.2  1.2 
Customer funds 235,803  0.1  0.9  235,803  11.1  4.9 
    Customer deposits (3)
227,212  —  0.8  227,212  11.0  4.7 
    Mutual funds 8,591  2.9  3.7  8,591  16.2  9.6 
Ratios (%), operating means and customers
Underlying RoTE 12.09  2.87  10.65  9.59 
Efficiency ratio 53.5  (5.2) 56.0  (13.5)
NPL ratio 1.30  (0.05) 1.30  0.20 
Total coverage ratio 37.4  (3.1) 37.4  (5.4)
Number of employees 20,870  (3.3) 20,870  (10.2)
Number of branches 553  (2.0) 553  (10.1)
Number of loyal customers (thousands) 4,420  0.2  4,420  (1.4)
Number of digital customers (thousands) 6,396  0.1  6,396  5.3 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
56
IMAGE6.JPG
January - June 2021
Portugal
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % H1'21 %
Net interest income 192  (0.5) 384  (3.8)
Net fee income 110  11.5  210  9.7 
Gains (losses) on financial transactions (1)
6  (96.2) 153  68.5 
Other operating income (5) (58.1) (17) 24.2 
Total income 303  (29.1) 730  9.3 
Administrative expenses and amortizations (143) (2.0) (289) (2.4)
Net operating income 160  (43.2) 441  18.6 
Net loan-loss provisions (35) 0.4  (69) (33.5)
Other gains (losses) and provisions (11) (13.4) (24) (34.5)
Profit before tax 114  (51.3) 347  50.8 
Tax on profit (35) (51.2) (108) 53.4 
Profit from continuing operations 78  (51.4) 239  49.6 
Net profit from discontinued operations —  —  —  — 
Consolidated profit 78  (51.4) 239  49.6 
Non-controlling interests —  29.0  —  29.2 
Underlying attributable profit to the parent 78  (51.4) 239  49.7 
Balance sheet
Loans and advances to customers 38,785  1.4  38,785  4.6 
Cash, central banks and credit institutions 8,725  14.4  8,725  (0.5)
Debt instruments 9,026  (3.2) 9,026  (23.4)
Other financial assets 1,453  (0.8) 1,453  (5.0)
Other asset accounts 1,382  (7.1) 1,382  (16.7)
Total assets 59,371  2.1  59,371  (2.4)
Customer deposits 41,452  3.4  41,452  3.5 
Central banks and credit institutions 9,490  (1.1) 9,490  (18.1)
Marketable debt securities 2,483  (0.7) 2,483  (24.0)
Other financial liabilities 219  3.4  219  (14.6)
Other liabilities accounts 1,693  (4.3) 1,693  (5.1)
Total liabilities 55,336  2.2  55,336  (2.8)
Total equity 4,035  0.8  4,035  3.7 
Memorandum items:
Gross loans and advances to customers (2)
39,850  1.5  39,850  4.6 
Customer funds 45,392  3.9  45,392  5.8 
    Customer deposits (3)
41,452  3.4  41,452  3.5 
    Mutual funds 3,940  9.3  3,940  36.6 
Ratios (%), operating means and customers
Underlying RoTE 7.87  (8.07) 11.92  3.40 
Efficiency ratio 47.2  13.1  39.6  (4.7)
NPL ratio 3.71  (0.13) 3.71  (0.72)
Total coverage ratio 73.0  3.8  73.0  12.1 
Number of employees 6,049  (3.1) 6,049  (7.0)
Number of branches 418  (4.6) 418  (20.4)
Number of loyal customers (thousands) 834  2.2  834  6.5 
Number of digital customers (thousands) 981  1.1  981  13.3 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
57
Poland
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 250  4.1  3.7  490  (10.5) (7.9)
Net fee income 126  (0.2) (0.6) 253  15.1  18.4 
Gains (losses) on financial transactions (1)
21  5.1  4.8  41  39.2  43.2 
Other operating income 20  —  —  (10) (81.6) (81.0)
Total income 417  17.0  16.7  774  4.3  7.3 
Administrative expenses and amortizations (163) 3.3  2.9  (321) 2.1  5.1 
Net operating income 254  28.0  27.6  453  5.9  8.9 
Net loan-loss provisions (45) (33.3) (33.6) (113) (38.3) (36.6)
Other gains (losses) and provisions (126) 73.8  73.3  (198) 159.6  167.1 
Profit before tax 83  42.7  42.2  141  (15.7) (13.2)
Tax on profit (34) 4.1  3.7  (67) 8.8  11.9 
Profit from continuing operations 49  91.8  91.3  75  (29.7) (27.7)
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 49  91.8  91.3  75  (29.7) (27.7)
Non-controlling interests (15) 206.5  205.7  (20) (38.0) (36.2)
Underlying attributable profit to the parent 34  63.8  63.3  54  (26.0) (23.9)
Balance sheet
Loans and advances to customers 28,891  2.5  (0.1) 28,891  (1.0) 0.7 
Cash, central banks and credit institutions 1,889  (49.1) (50.4) 1,889  (37.1) (36.1)
Debt instruments 15,171  7.4  4.7  15,171  25.1  27.2 
Other financial assets 778  (21.7) (23.7) 778  52.1  54.7 
Other asset accounts 1,287  (2.5) (4.9) 1,287  (5.8) (4.2)
Total assets 48,016  (0.7) (3.2) 48,016  3.9  5.7 
Customer deposits 36,015  (0.7) (3.2) 36,015  4.9  6.7 
Central banks and credit institutions 2,276  (12.3) (14.5) 2,276  (21.4) (20.1)
Marketable debt securities 2,464  6.4  3.8  2,464  19.8  21.8 
Other financial liabilities 844  (8.9) (11.2) 844  24.2  26.3 
Other liabilities accounts 1,240  5.1  2.5  1,240  4.9  6.7 
Total liabilities 42,839  (1.0) (3.5) 42,839  4.2  5.9 
Total equity 5,177  2.2  (0.3) 5,177  2.2  3.9 
Memorandum items:
Gross loans and advances to customers (2)
29,884  2.2  (0.3) 29,884  (0.9) 0.8 
Customer funds 40,764  0.3  (2.2) 40,764  8.3  10.2 
    Customer deposits (3)
36,015  (0.7) (3.2) 36,015  5.0  6.8 
    Mutual funds 4,749  8.2  5.6  4,749  43.0  45.5 
Ratios (%), operating means and customers
Underlying RoTE 4.10  1.56  3.33  (1.30)
Efficiency ratio 39.1  (5.2) 41.5  (0.9)
NPL ratio 4.58  (0.24) 4.58  0.01 
Total coverage ratio 72.4  2.2  72.4  3.4 
Number of employees 9,932  (3.6) 9,932  (9.4)
Number of branches 471  (3.9) 471  (11.0)
Number of loyal customers (thousands) 2,166  0.8  2,166  6.9 
Number of digital customers (thousands) 2,850  1.3  2,850  8.1 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
58
IMAGE6.JPG
January - June 2021
Other Europe
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 195  1.4  1.7  387  33.9  36.4 
Net fee income 115  (17.0) (17.3) 253  27.9  30.9 
Gains (losses) on financial transactions (1)
(62) —  —  34  —  — 
Other operating income 70  62.3  59.7  113  (11.8) (12.7)
Total income 318  (32.3) (32.1) 787  71.9  76.7 
Administrative expenses and amortizations (267) 7.2  6.5  (515) 15.8  17.9 
Net operating income 51  (76.8) (76.0) 272  —  — 
Net loan-loss provisions (121) 367.6  361.4  (146) 184.5  182.9 
Other gains (losses) and provisions 2  —  —  (3) (76.2) (73.0)
Profit before tax (67) —  —  122  —  — 
Tax on profit 9  —  —  (74) —  — 
Profit from continuing operations (58) —  —  48  —  — 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit (58) —  —  48  —  — 
Non-controlling interests (2) —  —  1  —  — 
Underlying attributable profit to the parent (60) —  —  49  —  — 
Balance sheet
Loans and advances to customers 63,273  1.1  1.3  63,273  3.1  4.1 
Cash, central banks and credit institutions 41,828  (2.1) (1.9) 41,828  (47.8) (47.7)
Debt instruments 26,119  3.5  3.6  26,119  27.6  27.8 
Other financial assets 43,755  4.0  4.0  43,755  (10.8) (10.7)
Other asset accounts 4,870  13.4  13.7  4,870  7.5  9.2 
Total assets 179,845  1.7  1.8  179,845  (16.6) (16.2)
Customer deposits 25,078  (15.8) (15.7) 25,078  4.1  4.6 
Central banks and credit institutions 104,644  6.9  7.0  104,644  (20.5) (20.1)
Marketable debt securities 2,905  (15.3) (15.3) 2,905  132.4  132.4 
Other financial liabilities 40,313  3.6  3.6  40,313  (25.1) (25.1)
Other liabilities accounts 1,489  (9.3) (9.3) 1,489  123.5  123.9 
Total liabilities 174,429  1.6  1.7  174,429  (17.5) (17.2)
Total equity 5,416  4.2  4.5  5,416  33.7  35.8 
Memorandum items:
Gross loans and advances to customers (2)
50,818  5.5  5.7  50,818  14.4  15.8 
Customer funds 29,949  (7.7) (7.7) 29,949  5.0  5.5 
Customer deposits (3)
20,779  (9.4) (9.3) 20,779  (7.4) (6.9)
    Mutual funds 9,170  (3.7) (3.7) 9,170  50.7  50.7 
Resources
Number of employees 3,766  5.0  3,766  31.5 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
59
NORTH AMERICA
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 2,010  0.3  (0.2) 4,015  (7.5) (0.8)
Net fee income 410  (9.2) (9.8) 861  (1.0) 5.3 
Gains (losses) on financial transactions (1)
32  (67.5) (67.8) 130  (36.9) (33.2)
Other operating income 267  24.4  24.8  482  103.4  124.8 
Total income 2,719  (1.8) (2.2) 5,487  (2.9) 4.0 
Administrative expenses and amortizations (1,194) 3.9  3.5  (2,343) (0.4) 6.7 
Net operating income 1,525  (5.8) (6.3) 3,145  (4.7) 2.1 
Net loan-loss provisions (195) (50.4) (51.1) (588) (75.2) (73.2)
Other gains (losses) and provisions 8  —  —  (12) (76.8) (75.1)
Profit before tax 1,338  10.9  10.6  2,545  189.7  204.6 
Tax on profit (324) 9.3  9.0  (621) 260.3  275.9 
Profit from continuing operations 1,014  11.4  11.1  1,924  172.4  187.0 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 1,014  11.4  11.1  1,924  172.4  187.0 
Non-controlling interests (159) 16.6  16.5  (296) 227.1  250.1 
Underlying attributable profit to the parent 854  10.5  10.2  1,628  164.4  177.9 
Balance sheet
Loans and advances to customers 126,360  3.0  3.3  126,360  (5.2) (3.7)
Cash, central banks and credit institutions 37,075  18.0  18.2  37,075  19.6  18.8 
Debt instruments 35,512  (8.2) (8.8) 35,512  (5.0) (8.2)
Other financial assets 10,863  (10.0) (10.8) 10,863  (46.4) (49.1)
Other asset accounts 20,952  (3.6) (3.1) 20,952  (5.0) (2.1)
Total assets 230,762  1.8  1.9  230,762  (5.4) (5.3)
Customer deposits 115,106  (4.1) (4.0) 115,106  1.4  1.8 
Central banks and credit institutions 30,638  33.5  32.7  30,638  (13.7) (14.6)
Marketable debt securities 38,288  0.3  0.8  38,288  (11.4) (9.1)
Other financial liabilities 14,205  3.2  2.2  14,205  (33.7) (37.1)
Other liabilities accounts 6,014  2.3  2.2  6,014  (8.8) (9.7)
Total liabilities 204,250  1.7  1.8  204,250  (7.2) (7.3)
Total equity 26,512  2.9  3.3  26,512  11.3  12.9 
Memorandum items:
Gross loans and advances to customers (2)
125,635  2.3  2.6  125,635  (4.2) (2.7)
Customer funds 130,087  2.2  2.4  130,087  4.2  4.7 
Customer deposits (3)
105,171  0.6  0.8  105,171  0.4  1.4 
    Mutual funds 24,916  9.8  9.5  24,916  24.1  21.5 
Ratios (%), operating means and customers
Underlying RoTE 14.83  0.52  14.64  8.81 
Efficiency ratio 43.9  2.4  42.7  1.1 
NPL ratio 2.28  (0.10) 2.28  0.56 
Total coverage ratio 152.3  (1.1) 152.3  (54.2)
Number of employees 41,670  4.9  41,670  8.6 
Number of branches 1,920  (1.4) 1,920  (6.0)
Number of loyal customers (thousands) 4,089  1.4  4,089  11.1 
Number of digital customers (thousands) 6,303  (0.1) 6,303  9.6 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
60
IMAGE6.JPG
January - June 2021
United States
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 1,326  (0.8) (0.7) 2,663  (7.9) 0.8 
Net fee income 191  (20.5) (20.4) 432  (7.0) 1.7 
Gains (losses) on financial transactions (1)
20  (71.2) (71.2) 90  (6.4) 2.4 
Other operating income 298  17.3  17.4  551  98.4  117.0 
Total income 1,835  (3.5) (3.4) 3,737  0.2  9.6 
Administrative expenses and amortizations (783) 4.8  4.9  (1,531) (3.4) 5.7 
Net operating income 1,052  (8.8) (8.7) 2,206  2.9  12.5 
Net loan-loss provisions 9  —  —  (156) (91.3) (90.5)
Other gains (losses) and provisions 15  —  —  —  —  — 
Profit before tax 1,076  10.5  10.6  2,050  572.8  635.9 
Tax on profit (259) 10.2  10.3  (493) —  — 
Profit from continuing operations 817  10.6  10.7  1,556  478.3  532.5 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 817  10.6  10.7  1,556  478.3  532.5 
Non-controlling interests (143) 16.9  17.0  (266) 356.4  399.2 
Underlying attributable profit to the parent 674  9.4  9.5  1,291  511.9  569.3 
Balance sheet
Loans and advances to customers 93,724  2.1  3.2  93,724  (8.8) (3.9)
Cash, central banks and credit institutions 25,444  19.9  21.2  25,444  32.4  39.5 
Debt instruments 15,922  5.1  6.1  15,922  (0.5) 4.8 
Other financial assets 3,576  (0.2) 0.8  3,576  (44.8) (41.8)
Other asset accounts 17,257  (3.4) (2.4) 17,257  (8.0) (3.0)
Total assets 155,923  4.2  5.3  155,923  (4.5) 0.7 
Customer deposits 79,384  (5.1) (4.1) 79,384  1.9  7.3 
Central banks and credit institutions 17,363  102.3  104.3  17,363  (17.3) (12.8)
Marketable debt securities 32,123  1.8  2.9  32,123  (10.6) (5.8)
Other financial liabilities 3,898  5.9  7.0  3,898  (40.8) (37.6)
Other liabilities accounts 3,880  11.7  12.8  3,880  (1.3) 4.0 
Total liabilities 136,648  4.4  5.4  136,648  (6.0) (0.9)
Total equity 19,275  3.2  4.3  19,275  8.2  14.0 
Memorandum items:
Gross loans and advances to customers (2)
93,519  2.3 3.3 93,519  (7.2) (2.3)
Customer funds 87,206  2.0 3.0 87,206  0.6 6.0
    Customer deposits (3)
74,058  (0.1) 1.0 74,058  (2.8) 2.4
    Mutual funds 13,148  15.3 16.5 13,148  25.2 31.9
Ratios (%), operating means and customers
Underlying RoTE 16.18  0.62  15.89  13.22 
Efficiency ratio 42.7  3.4  41.0  (1.5)
NPL ratio 2.00  (0.11) 2.00  0.51 
Total coverage ratio 185.7  2.5  185.7  (67.4)
Number of employees 15,610  (2.4) 15,610  (9.8)
Number of branches 544  (4.7) 544  (11.4)
Number of loyal customers (thousands) 378  (0.7) 378  2.6 
Number of digital customers (thousands) 1,026  (1.8) 1,026  (2.5)
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
61
Mexico
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 684  2.5  0.9  1,352  (6.7) (3.9)
Net fee income 210  3.3  1.7  414  4.7  7.9 
Gains (losses) on financial transactions (1)
12  (58.0) (59.1) 40  (63.9) (62.9)
Other operating income (28) (17.8) (19.3) (63) 48.6  53.0 
Total income 878  1.6  (0.1) 1,743  (8.8) (6.1)
Administrative expenses and amortizations (379) 1.7  —  (752) (0.5) 2.5 
Net operating income 499  1.5  (0.2) 991  (14.3) (11.7)
Net loan-loss provisions (204) (10.3) (11.8) (432) (23.5) (21.2)
Other gains (losses) and provisions (6) 20.4  18.6  (11) (19.1) (16.6)
Profit before tax 289  11.5  9.7  548  (5.2) (2.4)
Tax on profit (68) 7.5  5.8  (130) (6.8) (3.9)
Profit from continuing operations 221  12.7  11.0  417  (4.7) (1.8)
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 221  12.7  11.0  417  (4.7) (1.8)
Non-controlling interests (16) 13.1  11.4  (31) (5.6) (2.8)
Underlying attributable profit to the parent 205  12.7  11.0  387  (4.6) (1.8)
Balance sheet
Loans and advances to customers 32,618  5.5  3.8  32,618  6.7  (3.1)
Cash, central banks and credit institutions 11,418  14.4  12.5  11,418  (2.5) (11.4)
Debt instruments 19,590  (16.8) (18.1) 19,590  (8.3) (16.7)
Other financial assets 7,285  (14.2) (15.6) 7,285  (46.9) (51.8)
Other asset accounts 3,429  (5.2) (6.7) 3,429  10.8  0.7 
Total assets 74,340  (2.9) (4.5) 74,340  (7.6) (16.1)
Customer deposits 35,712  (2.0) (3.6) 35,712  0.5  (8.6)
Central banks and credit institutions 13,258  (7.6) (9.1) 13,258  (8.6) (16.9)
Marketable debt securities 6,165  (7.3) (8.8) 6,165  (15.6) (23.3)
Other financial liabilities 10,260  2.0  0.4  10,260  (30.7) (37.1)
Other liabilities accounts 2,111  (11.6) (13.1) 2,111  (20.3) (27.6)
Total liabilities 67,507  (3.4) (5.0) 67,507  (9.7) (18.0)
Total equity 6,834  2.8  1.1  6,834  20.0  9.1 
Memorandum items:
Gross loans and advances to customers (2)
32,097  2.1  0.4  32,097  5.8  (3.8)
Customer funds 42,870  2.7  1.0  42,870  12.6  2.3 
    Customer deposits (3)
31,103  2.1  0.4  31,103  9.1  (0.9)
    Mutual funds 11,767  4.3  2.6  11,767  23.0  11.7 
Ratios (%), operating means and customers
Underlying RoTE 13.92  1.19  13.32  (2.14)
Efficiency ratio 43.2  —  43.1  3.6 
NPL ratio 3.10  (0.10) 3.10  0.60 
Total coverage ratio 90.6  (5.0) 90.6  (24.3)
Number of employees 25,543  9.7  25,543  22.7 
Number of branches 1,376  —  1,376  (3.7)
Number of loyal customers (thousands) 3,712  1.7  3,712  12.0 
Number of digital customers (thousands) 5,120  0.2  5,120  11.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
62
IMAGE6.JPG
January - June 2021
Other North America
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income —  55.6  55.6  —  (44.5) (44.5)
Net fee income 8  17.6  17.6  14  61.6  61.6 
Gains (losses) on financial transactions (1)
—  —  —  —  —  — 
Other operating income (2) (48.7) (48.7) (7) —  — 
Total income 5  156.4  156.4  7  (24.3) (24.3)
Administrative expenses and amortizations (32) 12.8  12.8  (59) 397.8  397.8 
Net operating income (26) 1.2  1.2  (52) —  — 
Net loan-loss provisions —  (99.4) (99.4) —  (71.9) (71.9)
Other gains (losses) and provisions —  224.9  224.9  (1) (65.5) (65.5)
Profit before tax (27) 2.4  2.4  (53) —  — 
Tax on profit 2  119.7  119.7  3  (10.8) (10.8)
Profit from continuing operations (25) (1.6) (1.6) (50) —  — 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit (25) (1.6) (1.6) (50) —  — 
Non-controlling interests —  (62.1) (62.1) —  70.4  70.4 
Underlying attributable profit to the parent (25) (1.1) (1.1) (50) —  — 
Balance sheet
Loans and advances to customers 18  14.2  14.2  18  111.6  111.6 
Cash, central banks and credit institutions 214  (2.8) (2.8) 214  228.2  228.2 
Debt instruments —  —  —  —  (100.0) (100.0)
Other financial assets 1  8.4  8.4  1  (98.1) (98.1)
Other asset accounts 266  4.1  4.1  266  27.7  27.7 
Total assets 499  1.4  1.4  499  39.5  39.5 
Customer deposits 10  (12.6) (12.6) 10  (8.8) (8.8)
Central banks and credit institutions 16  259.9  259.9  16  34.4  34.4 
Marketable debt securities —  —  —  —  —  — 
Other financial liabilities 46  69.1  69.1  46  133.2  133.2 
Other liabilities accounts 23  33.6  33.6  23  43.4  43.4 
Total liabilities 95  57.3  57.3  95  61.6  61.6 
Total equity 404  (6.5) (6.5) 404  35.1  35.1 
Memorandum items:
Gross loans and advances to customers (2)
19  10.6  10.6  19  116.4  116.4 
Customer funds 10  (12.6) (12.6) 10  (8.8) (8.8)
    Customer deposits (3)
10  (12.6) (12.6) 10  (8.8) (8.8)
    Mutual funds —  —  —  —  —  — 
Resources
Number of employees 517  13.4  517  98.1 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
63
SOUTH AMERICA
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 2,760  7.2  5.3  5,334  (5.9) 11.1 
Net fee income 928  10.2  8.2  1,770  (4.7) 13.9 
Gains (losses) on financial transactions (1)
177  (13.6) (14.2) 383  (11.1) 2.3 
Other operating income (92) 11.4  16.6  (175) 87.0  135.3 
Total income 3,772  6.6  4.6  7,311  (7.0) 9.8 
Administrative expenses and amortizations (1,299) 6.6  5.7  (2,518) (9.2) 7.3 
Net operating income 2,473  6.6  4.1  4,793  (5.8) 11.2 
Net loan-loss provisions (809) 18.4  15.4  (1,492) (38.7) (27.8)
Other gains (losses) and provisions (55) (58.1) (58.2) (188) (4.0) 18.8 
Profit before tax 1,609  6.9  4.3  3,113  26.5  49.3 
Tax on profit (595) (0.7) (3.8) (1,194) 35.1  61.2 
Profit from continuing operations 1,014  12.0  9.7  1,919  21.7  42.7 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 1,014  12.0  9.7  1,919  21.7  42.7 
Non-controlling interests (143) 7.9  5.6  (275) 41.2  54.6 
Underlying attributable profit to the parent 871  12.7  10.4  1,645  19.0  40.9 
Balance sheet
Loans and advances to customers 124,784  8.0  2.5  124,784  12.4  9.6 
Cash, central banks and credit institutions 50,441  14.5  6.6  50,441  13.2  11.9 
Debt instruments 49,949  3.9  (3.9) 49,949  10.4  8.4 
Other financial assets 12,455  (13.5) (16.5) 12,455  (40.0) (43.2)
Other asset accounts 16,244  8.2  1.0  16,244  (3.3) (5.6)
Total assets 253,874  7.1  0.7  253,874  6.5  4.0 
Customer deposits 124,500  11.6  5.3  124,500  10.6  9.1 
Central banks and credit institutions 44,735  (1.9) (8.2) 44,735  5.5  2.6 
Marketable debt securities 22,965  9.5  4.0  22,965  (4.2) (8.6)
Other financial liabilities 31,731  0.7  (6.1) 31,731  (1.5) (5.6)
Other liabilities accounts 9,148  21.7  13.7  9,148  11.2  8.7 
Total liabilities 233,080  7.3  0.9  233,080  6.2  3.7 
Total equity 20,794  4.6  (1.5) 20,794  9.9  7.7 
Memorandum items:
Gross loans and advances to customers (2)
130,052  7.9  2.4  130,052  12.4  9.5 
Customer funds 168,336  12.0  5.3  168,336  12.3  10.4 
    Customer deposits (3)
115,589  12.1  6.2  115,589  13.3  12.2 
    Mutual funds 52,747  11.7  3.3  52,747  10.0  6.7 
Ratios (%), operating means and customers
Underlying RoTE 21.12  1.79  20.29  3.88 
Efficiency ratio 34.4  —  34.4  (0.8)
NPL ratio 4.36  0.06  4.36  (0.37)
Total coverage ratio 98.1  (0.3) 98.1  5.2 
Number of employees 67,198  2.3  67,198  (1.1)
Number of branches 4,438  (0.1) 4,438  (1.2)
Number of loyal customers (thousands) 9,612  6.2  9,612  23.8 
Number of digital customers (thousands) 22,670  4.8  22,670  20.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
64
IMAGE6.JPG
January - June 2021
Brazil
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 1,919  7.8  4.1  3,700  (9.4) 9.8 
Net fee income 698  10.5  6.7  1,330  (10.3) 8.7 
Gains (losses) on financial transactions (1)
78  (38.2) (41.1) 205  (21.2) (4.5)
Other operating income (14) (20.5) (23.7) (32) (17.9) (0.4)
Total income 2,682  6.4  2.7  5,203  (10.1) 9.0 
Administrative expenses and amortizations (779) 7.9  4.2  (1,502) (18.3) (1.0)
Net operating income 1,902  5.8  2.1  3,701  (6.3) 13.6 
Net loan-loss provisions (674) 22.8  18.8  (1,222) (36.0) (22.4)
Other gains (losses) and provisions (28) (70.5) (72.8) (124) (21.6) (4.9)
Profit before tax 1,200  4.0  0.4  2,354  25.1  51.7 
Tax on profit (516) (2.6) (6.1) (1,046) 34.6  63.2 
Profit from continuing operations 684  9.6  5.8  1,308  18.4  43.6 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 684  9.6  5.8  1,308  18.4  43.6 
Non-controlling interests (65) 3.9  0.3  (128) 16.7  41.5 
Underlying attributable profit to the parent 619  10.2  6.5  1,180  18.6  43.8 
Balance sheet
Loans and advances to customers 73,684  15.2  3.3  73,684  19.7  15.4 
Cash, central banks and credit institutions 32,634  5.0  (5.9) 32,634  9.5  5.6 
Debt instruments 37,664  4.2  (6.6) 37,664  5.6  1.9 
Other financial assets 5,958  (1.7) (11.9) 5,958  (17.1) (20.1)
Other asset accounts 11,728  14.4  2.5  11,728  (1.8) (5.3)
Total assets 161,670  9.6  (1.8) 161,670  10.6  6.6 
Customer deposits 76,611  14.7  2.8  76,611  10.7  6.7 
Central banks and credit institutions 28,827  (4.6) (14.5) 28,827  9.3  5.4 
Marketable debt securities 13,558  17.8  5.5  13,558  (4.6) (8.0)
Other financial liabilities 22,434  3.2  (7.5) 22,434  24.9  20.4 
Other liabilities accounts 6,643  31.6  17.9  6,643  5.7  2.0 
Total liabilities 148,072  9.4  (1.9) 148,072  10.5  6.5 
Total equity 13,597  11.8  0.2  13,597  12.1  8.1 
Memorandum items:
Gross loans and advances to customers (2)
77,341  15.1  3.2  77,341  19.2  15.0 
Customer funds 109,299  15.9  3.8  109,299  12.0  8.0 
    Customer deposits (3)
67,735  16.0  3.9  67,735  15.3  11.2 
    Mutual funds 41,563  15.6  3.6  41,563  7.0  3.1 
Ratios (%), operating means and customers
Underlying RoTE 22.73  1.30  22.12  5.00 
Efficiency ratio 29.1  0.4  28.9  (2.9)
NPL ratio 4.55  0.13  4.55  (0.52)
Total coverage ratio 112.3  (4.2) 112.3  2.1 
Number of employees 45,115  4.0  45,115  0.4 
Number of branches 3,590  —  3,590  0.1 
Number of loyal customers (thousands) 7,146  8.6  7,146  26.0 
Number of digital customers (thousands) 17,466  5.2  17,466  20.5 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
IMAGE6.JPG
65
Chile
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 511  2.9  1.8  1,009  15.6  12.1 
Net fee income 96  0.9  (0.1) 190  14.5  11.0 
Gains (losses) on financial transactions (1)
48  49.4  48.1  81  (23.3) (25.6)
Other operating income (18) 79.6  78.2  (28) 281.4  269.9 
Total income 637  3.8  2.7  1,252  10.1  6.8 
Administrative expenses and amortizations (245) 4.0  3.0  (481) 5.0  1.8 
Net operating income 392  3.6  2.6  771  13.6  10.2 
Net loan-loss provisions (82) (18.6) (19.5) (182) (47.5) (49.0)
Other gains (losses) and provisions 5  —  —  3  —  — 
Profit before tax 315  13.8  12.8  592  78.9  73.5 
Tax on profit (70) 26.2  25.1  (125) 96.3  90.3 
Profit from continuing operations 246  10.8  9.7  467  74.8  69.5 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 246  10.8  9.7  467  74.8  69.5 
Non-controlling interests (77) 11.2  10.2  (146) 73.6  68.4 
Underlying attributable profit to the parent 169  10.6  9.5  321  75.3  70.0 
Balance sheet
Loans and advances to customers 39,922  (2.1) 0.2  39,922  5.0  (1.8)
Cash, central banks and credit institutions 11,748  87.5  91.9  11,748  34.9  26.1 
Debt instruments 8,315  (6.2) (4.0) 8,315  39.6  30.5 
Other financial assets 6,293  (22.9) (21.1) 6,293  (52.7) (55.8)
Other asset accounts 2,883  (7.1) (5.0) 2,883  (12.9) (18.6)
Total assets 69,162  3.0  5.4  69,162  (0.2) (6.7)
Customer deposits 33,316  9.5  12.0  33,316  16.8  9.2 
Central banks and credit institutions 11,664  2.6  4.9  11,664  (1.3) (7.7)
Marketable debt securities 9,083  (2.1) 0.2  9,083  (5.3) (11.5)
Other financial liabilities 8,513  (5.2) (3.0) 8,513  (36.9) (41.0)
Other liabilities accounts 1,871  4.0  6.4  1,871  46.6  37.1 
Total liabilities 64,447  4.2  6.6  64,447  (0.4) (6.9)
Total equity 4,714  (10.8) (8.7) 4,714  2.6  (4.0)
Memorandum items:
Gross loans and advances to customers (2)
41,125  (2.2) 0.1  41,125  5.1  (1.7)
Customer funds 42,312  6.8  9.3  42,312  17.8  10.2 
    Customer deposits (3)
33,281  9.5  12.1  33,281  17.2  9.6 
    Mutual funds 9,031  (2.3) —  9,031  20.0  12.2 
Ratios (%), operating means and customers
Underlying RoTE 19.91  2.69  18.63  7.39 
Efficiency ratio 38.5  0.1  38.4  (1.9)
NPL ratio 4.57  (0.18) 4.57  (0.42)
Total coverage ratio 63.9  0.4  63.9  9.1 
Number of employees 10,628  (1.3) 10,628  (6.8)
Number of branches 332  (0.9) 332  (9.5)
Number of loyal customers (thousands) 778  (0.3) 778  12.7 
Number of digital customers (thousands) 1,867  8.4  1,867  39.4 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
66
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January - June 2021
Argentina
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 235  15.4  26.5  440  (12.5) 25.3 
Net fee income 87  18.5  29.6  161  22.3  75.1 
Gains (losses) on financial transactions (1)
34  5.5  16.0  66  99.8  186.1 
Other operating income (56) 17.0  28.1  (103) 163.1  276.7 
Total income 301  14.8  25.8  563  (10.3) 28.5 
Administrative expenses and amortizations (179) 4.8  15.3  (349) 3.1  47.6 
Net operating income 122  33.3  45.2  214  (26.0) 6.0 
Net loan-loss provisions (35) 148.4  166.2  (48) (63.3) (47.4)
Other gains (losses) and provisions (31) (9.1) 0.7  (65) 107.1  196.5 
Profit before tax 57  29.7  41.5  100  (20.1) 14.3 
Tax on profit 6  225.8  247.6  8  —  — 
Profit from continuing operations 63  38.0  50.2  108  (1.2) 41.5 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 63  38.0  50.2  108  (1.2) 41.5 
Non-controlling interests —  48.2  60.9  (1) (5.1) 35.8 
Underlying attributable profit to the parent 62  37.9  50.1  108  (1.1) 41.5 
Balance sheet
Loans and advances to customers 4,457  3.4  8.7  4,457  (5.6) 35.2 
Cash, central banks and credit institutions 3,207  (12.1) (7.5) 3,207  7.4  53.8 
Debt instruments 2,188  35.8  42.8  2,188  (17.7) 17.8 
Other financial assets 77  18.8  24.8  77  12.9  61.7 
Other asset accounts 835  1.1  6.2  835  (0.6) 42.4 
Total assets 10,765  2.9  8.2  10,765  (4.5) 36.7 
Customer deposits 7,787  3.6  8.9  7,787  (4.3) 37.1 
Central banks and credit institutions 824  0.3  5.4  824  (21.0) 13.1 
Marketable debt securities 63  (4.9) —  63  (16.5) 19.5 
Other financial liabilities 675  (3.1) 1.9  675  3.6  48.4 
Other liabilities accounts 313  (3.3) 1.7  313  (14.1) 23.0 
Total liabilities 9,663  2.5  7.8  9,663  (5.9) 34.7 
Total equity 1,102  6.7  12.2  1,102  9.6  56.9 
Memorandum items:
Gross loans and advances to customers (2)
4,713  3.7  9.0  4,713  (5.2) 35.8 
Customer funds 9,896  4.2  9.5  9,896  2.3  46.5 
    Customer deposits (3)
7,787  3.6  8.9  7,787  (4.3) 37.1 
    Mutual funds 2,109  6.5  12.0  2,109  37.4  96.7 
Ratios (%), operating means and customers
Underlying RoTE 27.01  6.58  23.95  (4.81)
Efficiency ratio 59.4  (5.6) 62.0  8.1 
NPL ratio 3.34  1.02  3.34  0.19 
Total coverage ratio 167.6  (64.7) 167.6  2.0 
Number of employees 8,814  (2.8) 8,814  (4.7)
Number of branches 408  —  408  (6.8)
Number of loyal customers (thousands) 1,568  (0.3) 1,568  20.4 
Number of digital customers (thousands) 2,716  1.0  2,716  6.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
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67
Other South America
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 93  0.5  3.0  186  (12.4) 1.3 
Net fee income 46  12.1  14.4  88  18.0  32.8 
Gains (losses) on financial transactions (1)
17  21.1  24.7  31  (2.5) 11.7 
Other operating income (5) (38.2) (37.6) (12) 53.8  69.8 
Total income 152  8.0  10.7  293  (5.8) 8.3 
Administrative expenses and amortizations (96) 6.7  8.5  (185) 35.7  53.5 
Net operating income 57  10.1  14.6  108  (38.2) (28.1)
Net loan-loss provisions (19) (8.1) (5.5) (39) (17.6) (5.0)
Other gains (losses) and provisions (1) (22.4) (21.1) (2) (61.4) (57.9)
Profit before tax 37  23.5  29.5  67  (45.3) (36.0)
Tax on profit (16) (3.0) (0.1) (32) 15.3  35.1 
Profit from continuing operations 21  54.7  65.4  35  (63.0) (56.7)
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 21  54.7  65.4  35  (63.0) (56.7)
Non-controlling interests —  (54.6) (54.2) —  106.7  106.7 
Underlying attributable profit to the parent 21  53.0  63.4  35  (62.8) (56.4)
Balance sheet
Loans and advances to customers 6,720  2.3  4.1  6,720  0.7  11.0 
Cash, central banks and credit institutions 2,852  (6.7) (6.0) 2,852  (6.7) 2.8 
Debt instruments 1,782  23.8  24.3  1,782  84.2  101.1 
Other financial assets 127  5.6  7.9  127  (31.0) (27.9)
Other asset accounts 797  (3.7) (3.0) 797  12.9  17.0 
Total assets 12,278  2.2  3.5  12,278  6.0  16.1 
Customer deposits 6,786  (0.7) (0.3) 6,786  0.9  10.9 
Central banks and credit institutions 3,420  6.4  9.7  3,420  8.0  18.5 
Marketable debt securities 261  128.9  137.1  261  168.7  208.0 
Other financial liabilities 109  6.3  7.6  109  11.8  21.4 
Other liabilities accounts 322  (7.6) (6.6) 322  4.5  14.6 
Total liabilities 10,898  2.7  4.0  10,898  4.8  15.2 
Total equity 1,380  (1.2) (0.6) 1,380  16.0  24.1 
Memorandum items:
Gross loans and advances to customers (2)
6,874  2.4  4.2  6,874  1.0  11.4 
Customer funds 6,829  (0.7) (0.2) 6,829  0.9  11.0 
    Customer deposits (3)
6,786  (0.7) (0.3) 6,786  0.9  10.9 
    Mutual funds 43  5.4  4.7  43  13.7  24.2 
Resources
Number of employees 2,641  7.0  2,641  14.2 
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
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January - June 2021
DIGITAL CONSUMER BANK
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 1,075  1.8  1.4  2,130  (0.5) (1.1)
Net fee income 206  9.5  9.4  395  11.0  11.0 
Gains (losses) on financial transactions (1)
1  (88.9) (89.5) 9  —  — 
Other operating income 20  (60.3) (60.7) 71  330.8  325.4 
Total income 1,302  (0.1) (0.5) 2,606  4.0  3.5 
Administrative expenses and amortizations (613) 2.2  1.9  (1,214) 5.7  5.3 
Net operating income 689  (2.1) (2.5) 1,392  2.6  2.0 
Net loan-loss provisions (142) (14.4) (14.7) (308) (41.9) (42.2)
Other gains (losses) and provisions (45) 44.3  43.6  (76) —  — 
Profit before tax 502  (0.9) (1.3) 1,008  13.4  12.6 
Tax on profit (131) (2.8) (3.1) (265) 12.2  11.6 
Profit from continuing operations 371  (0.2) (0.6) 742  13.8  12.9 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 371  (0.2) (0.6) 742  13.8  12.9 
Non-controlling interests (93) 16.7  16.6  (173) 19.0  19.1 
Underlying attributable profit to the parent 278  (4.8) (5.3) 569  12.3  11.1 
Balance sheet
Loans and advances to customers 112,738  (0.1) 0.1  112,738  1.4  0.1 
Cash, central banks and credit institutions 28,445  3.3  3.6  28,445  45.4  44.2 
Debt instruments 5,738  (3.5) (3.6) 5,738  25.7  25.2 
Other financial assets 41  6.5  6.7  41  14.1  12.6 
Other asset accounts 6,481  1.6  1.7  6,481  23.6  21.7 
Total assets 153,443  0.5  0.7  153,443  9.1  7.8 
Customer deposits 54,041  1.3  1.5  54,041  9.7  8.7 
Central banks and credit institutions 47,980  0.8  1.0  47,980  27.3  25.0 
Marketable debt securities 33,740  0.1  0.3  33,740  (6.9) (7.7)
Other financial liabilities 1,455  (5.5) (5.4) 1,455  (13.2) (14.1)
Other liabilities accounts 4,208  7.1  7.2  4,208  11.1  10.4 
Total liabilities 141,424  1.0  1.1  141,424  9.9  8.6 
Total equity 12,019  (4.8) (4.5) 12,019  0.9  (0.6)
Memorandum items:
Gross loans and advances to customers (2)
115,526  (0.1) 0.1  115,526  1.3  0.1 
Customer funds 56,190  3.9  4.1  56,190  12.8  11.8 
    Customer deposits (3)
54,041  1.3  1.5  54,041  9.7  8.7 
    Mutual funds 2,149  175.8  175.8  2,149  300.7  300.7 
Ratios (%), operating means and customers
Underlying RoTE 12.09  0.1  12.04  1.50 
Efficiency ratio 47.1  1.1  46.6  0.8 
NPL ratio 2.18  (0.1) 2.18  (0.14)
Total coverage ratio 111.9  0.4  111.9  3.9 
Number of employees 15,834  —  15,834  3.0 
Number of branches 314  (2.2) 314  (23.0)
Number of total customers (thousands) 19,421  0.8  19,421  (4.3)
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.
January - June 2021
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69
CORPORATE CENTRE
Q
EUR million
Underlying income statement Q2'21 Q1'21 % H1'21 H1'20 %
Net interest income (355) (324) 9.7  (679) (658) 3.2 
Net fee income (8) (5) 65.2  (13) (15) (12.2)
Gains (losses) on financial transactions (1)
(52) (44) 17.1  (96) 78  — 
Other operating income (15) 3  —  (12) (22) (47.0)
Total income (430) (370) 16.4  (800) (617) 29.6 
Administrative expenses and amortizations (81) (79) 1.9  (160) (166) (4.1)
Net operating income (511) (449) 13.9  (960) (784) 22.4 
Net loan-loss provisions (9) (154) (94.3) (163) (11) — 
Other gains (losses) and provisions (33) (33) 2.1  (66) (391) (83.2)
Profit before tax (553) (635) (13.0) (1,188) (1,186) 0.2 
Tax on profit 19  108  (82.4) 127  61  108.9 
Profit from continuing operations (534) (527) 1.3  (1,061) (1,125) (5.7)
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit (534) (527) 1.3  (1,061) (1,125) (5.7)
Non-controlling interests (1) —  —  (1) (1) 108.1 
Underlying attributable profit to the parent (535) (527) 1.7  (1,062) (1,125) (5.6)
Balance sheet
Loans and advances to customers 5,832  6,632  (12.1) 5,832  5,205  12.1 
Cash, central banks and credit institutions 71,908  89,695  (19.8) 71,908  48,530  48.2 
Debt instruments 1,605  1,450  10.7  1,605  1,340  19.7 
Other financial assets 2,016  2,005  0.6  2,016  2,058  (2.0)
Other asset accounts 118,374  119,024  (0.5) 118,374  115,303  2.7 
Total assets 199,736  218,806  (8.7) 199,736  172,436  15.8 
Customer deposits 1,017  974  4.4  1,017  770  32.1 
Central banks and credit institutions 38,914  62,440  (37.7) 38,914  19,119  103.5 
Marketable debt securities 69,217  64,354  7.6  69,217  63,010  9.9 
Other financial liabilities 534  1,085  (50.8) 534  1,901  (71.9)
Other liabilities accounts 8,009  8,106  (1.2) 8,009  8,225  (2.6)
Total liabilities 117,691  136,959  (14.1) 117,691  93,024  26.5 
Total equity 82,044  81,847  0.2  82,044  79,412  3.3 
Memorandum items:
Gross loans and advances to customers (2)
6,138  6,972  (12.0) 6,138  5,367  14.4 
Customer funds 1,021  992  3.0  1,021  786  29.9 
    Customer deposits (3)
1,017  974  4.4  1,017  770  32.1 
    Mutual funds 4  18  (75.5) 4  17  (73.8)
Resources
Number of employees 1,743  1,737  0.3  1,743  1,773  (1.7)
(1) Includes exchange differences.
(2) Excluding reverse repos.
(3) Excluding repos.

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January - June 2021
RETAIL BANKING
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 7,766  3.9  3.0  15,238  (0.3) 7.0 
Net fee income 1,753  2.6  1.6  3,462  (3.7) 4.1 
Gains (losses) on financial transactions (1)
171  (30.5) (29.6) 418  (22.9) (22.7)
Other operating income 121  11.2  7.6  230  —  — 
Total income 9,811  2.9  1.9  19,347  0.5  7.9 
Administrative expenses and amortizations (4,247) 2.1  1.6  (8,404) (4.8) 1.0 
Net operating income 5,564  3.4  2.2  10,942  5.0  13.8 
Net loan-loss provisions (1,726) (3.2) (4.5) (3,509) (48.0) (43.5)
Other gains (losses) and provisions (463) 14.2  15.0  (868) 54.5  67.9 
Profit before tax 3,375  5.8  4.4  6,565  111.5  127.9 
Tax on profit (1,057) 1.0  (1.2) (2,105) 112.6  134.6 
Profit from continuing operations 2,318  8.2  7.1  4,461  110.9  124.9 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 2,318  8.2  7.1  4,461  110.9  124.9 
Non-controlling interests (364) 18.6  18.1  (670) 75.5  82.4 
Underlying attributable profit to the parent 1,954  6.4  5.3  3,790  118.8  134.6 
(1) Includes exchange differences.

CORPORATE & INVESTMENT BANKING
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 739  2.6  2.4  1,460  5.6  14.0 
Net fee income 434  (6.9) (7.4) 900  11.5  18.4 
Gains (losses) on financial transactions (1)
101  (75.5) (75.9) 512  24.9  49.6 
Other operating income 9  (84.6) (84.5) 66  (38.1) (39.6)
Total income 1,283  (22.5) (22.8) 2,938  8.6  17.9 
Administrative expenses and amortizations (543) 3.3  3.0  (1,069) 4.0  9.5 
Net operating income 740  (34.5) (34.9) 1,870  11.3  23.3 
Net loan-loss provisions (21) (54.7) (54.3) (68) (72.2) (72.0)
Other gains (losses) and provisions 31  —  —  6  —  — 
Profit before tax 750  (29.1) (29.6) 1,808  29.9  46.6 
Tax on profit (215) (32.3) (33.0) (534) 33.8  52.7 
Profit from continuing operations 534  (27.8) (28.1) 1,274  28.3  44.2 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 534  (27.8) (28.1) 1,274  28.3  44.2 
Non-controlling interests (41) 12.2  9.5  (77) 18.8  35.3 
Underlying attributable profit to the parent 494  (29.8) (30.1) 1,197  29.0  44.8 
(1) Includes exchange differences.

January - June 2021
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71
WEALTH MANAGEMENT & INSURANCE
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income 91  3.3  2.8  179  (11.2) (4.7)
Net fee income 316  6.3  6.0  612  6.0  10.6 
Gains (losses) on financial transactions (1)
23  (36.1) (36.4) 59  42.4  55.2 
Other operating income 89  11.0  10.4  170  (10.6) (6.5)
Total income 519  3.5  3.1  1,021  0.9  6.2 
Administrative expenses and amortizations (227) 2.8  2.4  (447) (0.4) 4.4 
Net operating income 293  4.0  3.6  574  1.9  7.6 
Net loan-loss provisions (3) (50.0) (50.0) (8) (30.8) (29.0)
Other gains (losses) and provisions (1) (52.9) (53.7) (5) 51.7  45.9 
Profit before tax 288  5.7  5.3  561  2.4  8.2 
Tax on profit (70) 4.4  4.0  (137) 5.7  10.6 
Profit from continuing operations 218  6.2  5.8  424  1.3  7.4 
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit 218  6.2  5.8  424  1.3  7.4 
Non-controlling interests (9) (4.1) (5.8) (18) (4.3) 3.1 
Underlying attributable profit to the parent 210  6.7  6.3  406  1.6  7.6 
(1) Includes exchange differences.




PAGONXT
Q
EUR million
/ Q1'21 / H1'20
Underlying income statement Q2'21 % % excl. FX H1'21 % % excl. FX
Net interest income (1) 46.7 41.8 (2) 281.8 562.5
Net fee income 127  56.3 53.6 209  21.6 39.2
Gains (losses) on financial transactions (1)
—  — — 1  (66.2) (49.3)
Other operating income (3) (79.5) (79.6) (18) —  — 
Total income 123  83.7 80.1 189  7.9 23.4
Administrative expenses and amortizations (162) 19.8 18.7 (298) 58.8 72.7
Net operating income (40) (42.2) (41.9) (108) 796.5 471.1
Net loan-loss provisions (2) (1.5) (4.9) (5) (32.5) (19.0)
Other gains (losses) and provisions (3) 114.7  114.5  (5) —  — 
Profit before tax (45) (37.4) (37.2) (118) 557.2 375.1
Tax on profit (10) — — (10) (6.8) 33.7
Profit from continuing operations (56) (22.9) (22.7) (128) 352.3 298.9
Net profit from discontinued operations —  —  —  —  —  — 
Consolidated profit (56) (22.9) (22.7) (128) 352.3 298.9
Non-controlling interests —  (79.6) (79.3) 1  16.5 16.6
Underlying attributable profit to the parent (56) (22.5) (22.4) (127) 357.9 303.0
(1) Includes exchange differences.
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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-June 2021
Underlying results Adjustments Statutory results
Net interest income 16,196  —  16,196 
Net fee income 5,169  —  5,169 
Gains (losses) on financial transactions (1)
894  —  894 
Other operating income 436  —  436 
Total income 22,695  —  22,695 
Administrative expenses and amortizations (10,377) —  (10,377)
Net operating income 12,318  —  12,318 
Net loan-loss provisions (3,753) —  (3,753)
Other gains (losses) and provisions (937) (714) (1,651)
Profit before tax 7,628  (714) 6,914 
Tax on profit (2,658) 184  (2,474)
Profit from continuing operations 4,970  (530) 4,440 
Net profit from discontinued operations —  —  — 
Consolidated profit 4,970  (530) 4,440 
Non-controlling interests (765) —  (765)
Attributable profit to the parent 4,205  (530) 3,675 
(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.
January - June 2021
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73
Reconciliation of underlying results to statutory results
EUR million
January-June 2020
Underlying results Adjustments Statutory results
Net interest income 16,202  —  16,202 
Net fee income 5,136  —  5,136 
Gains (losses) on financial transactions (1)
1,073  —  1,073 
Other operating income 107  (250) (143)
Total income 22,518  (250) 22,268 
Administrative expenses and amortizations (10,653) (54) (10,707)
Net operating income 11,865  (304) 11,561 
Net loan-loss provisions (7,027) —  (7,027)
Other gains (losses) and provisions (997) (9,947) (10,944)
Profit before tax 3,841  (10,251) (6,410)
Tax on profit (1,468) (2,460) (3,928)
Profit from continuing operations 2,373  (12,711) (10,338)
Net profit from discontinued operations —  —  — 
Consolidated profit 2,373  (12,711) (10,338)
Non-controlling interests (465) 5  (460)
Attributable profit to the parent 1,908  (12,706) (10,798)
(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.



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January - June 2021
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.

Ratio Formula Relevance of the metric
RoE Attributable profit to the parent This 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 parent This 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 RoTE Underlying attributable profit to the parent This 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
RoA Consolidated profit This 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 RoA Underlying consolidated profit This 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
RoRWA Consolidated profit The 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 RoRWA Underlying consolidated profit This 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 + amortisations.
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Profitability and efficiency (1) (2) (3) (4)
Q2'21 Q1'21 H1'21 H1'20
RoE 9.91  % 9.80  % 9.53  % -9.28  %
Attributable profit to the parent 8,268 8,022 7,880 -8,890
Average stockholders' equity (excluding minority interests) 83,429 81,858 82,669 95,803
Underlying RoE 9.91  % 10.44  % 10.17  % 3.98  %
Attributable profit to the parent 8,268 8,022 7,880 -8,890
(-) Net capital gains and provisions — -530 -530 -12,706
Underlying attributable profit to the parent 8,268 8,552 8,410 3,816
Average stockholders' equity (excluding minority interests) 83,429 81,858 82,669 95,803
RoTE 12.29  % 12.16  % 11.82  % 1.73  %
Attributable profit to the parent 8,268 8,022 7,880 -8,890
(+) Goodwill impairment — — — -10,100
Attributable profit to the parent (excluding goodwill impairment) 8,268 8,022 7,880 1,210
Average stockholders' equity (excluding minority interests) 83,429 81,858 82,669 95,803
(-) Average intangible assets 16,131 15,892 16,015 25,712
Average stockholders' equity (excl. minority interests) - intangible assets 67,298 65,965 66,654 70,091
Underlying RoTE 12.29  % 12.96  % 12.62  % 5.44  %
Attributable profit to the parent 8,268 8,022 7,880 -8,890
(-) Net capital gains and provisions — -530 -530 -12,706
Underlying attributable profit to the parent 8,268 8,552 8,410 3,816
Average stockholders' equity (excl. minority interests) - intangible assets 67,298 65,965 66,654 70,091
RoA 0.64  % 0.62  % 0.61  % -0.51  %
Consolidated profit 9,924 9,426 9,410 -7,965
Average total assets 1,557,364 1,526,899 1,539,167 1,548,851
Underlying RoA 0.64  % 0.65  % 0.65  % 0.31  %
Consolidated profit 9,924 9,426 9,410 -7,965
(-) Net capital gains and provisions — -530 -530 -12,711
Underlying consolidated profit 9,924 9,956 9,940 4,746
Average total assets 1,557,364 1,526,899 1,539,167 1,548,851
RoRWA 1.74  % 1.67  % 1.66  % -1.34  %
Consolidated profit 9,924 9,426 9,410 -7,965
Average risk weighted assets 570,828 563,776 567,231 595,166
Underlying RoRWA 1.74  % 1.77  % 1.75  % 0.80  %
Consolidated profit 9,924 9,426 9,410 -7,965
(-) Net capital gains and provisions — -530 -530 -12,711
Underlying consolidated profit 9,924 9,956 9,940 4,746
Average risk weighted assets 570,828 563,776 567,231 595,166
Efficiency ratio 46.5  % 44.9  % 45.7  % 47.3  %
   Underlying operating expenses 5,259 5,118 10,377 10,653
      Operating expenses 5,259 5,118 10,377 10,707
      Net capital gains and provisions impact in operating expenses — — — -54
   Underlying total income 11,305 11,390 22,695 22,518
      Total income 11,305 11,390 22,695 22,268
      Net capital gains and provisions impact in total income — — — 250
(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 March to June in Q2 and December to March in Q1) and 7 months in the case of annual figures (from December to June).
(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).

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Efficiency ratio
H1'21 H1'20
%    Total income    Operating expenses %    Total income    Operating expenses
Europe 51.2  8,091  4,144  59.2  7,115  4,213 
   Spain 49.4  3,478  1,719  54.9  3,350  1,841 
   United Kingdom 56.0  2,322  1,299  69.4  1,898  1,317 
   Portugal 39.6  730  289  44.3  668  296 
   Poland 41.5  774  321  42.4  742  315 
North America 42.7  5,487  2,343  41.6  5,651  2,353 
   US 41.0  3,737  1,531  42.5  3,730  1,585 
   Mexico 43.1  1,743  752  39.5  1,912  756 
South America 34.4  7,311  2,518  35.3  7,864  2,773 
   Brazil 28.9  5,203  1,502  31.8  5,788  1,839 
   Chile 38.4  1,252  481  40.3  1,137  458 
   Argentina 62.0  563  349  54.0  628  339 
Digital Consumer Bank 46.6  2,606  1,214  45.8  2,505  1,148 





Underlying RoTE
H1'21 H1'20
%    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
Europe 7.24  2,851  39,394  2.70  1,058  39,125 
   Spain 5.21  780  14,979  3.24  501  15,484 
   United Kingdom 10.65  1,387  13,024  1.06  142  13,442 
   Portugal 11.92  478  4,011  8.52  319  3,751 
   Poland 3.33  108  3,260  4.63  147  3,168 
North America 14.64  3,255  22,229  5.83  1,231  21,118 
   US 15.89  2,581  16,241  2.68  422  15,763 
   Mexico 13.32  774  5,809  15.46  811  5,247 
South America 20.29  3,289  16,213  16.40  2,764  16,851 
   Brazil 22.12  2,361  10,672  17.12  1,990  11,625 
   Chile 18.63  642  3,448  11.23  366  3,261 
   Argentina 23.95  215  899  28.76  218  758 
Digital Consumer Bank 12.04  1,138  9,451  10.54  1,014  9,615 






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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.
Ratio Formula Relevance of the metric
NPL ratio
(Non-performing loans)
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted The 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 ratio Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted The 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 credit Allowances for loan-loss provisions over the last 12 months This 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) Jun-21 Mar-21 Jun-21 Jun-20
NPL ratio 3.22  % 3.20  % 3.22  % 3.26  %
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted 33,266 32,473 33,266 32,782
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 impaired 31,705 31,139 31,705 31,115
POCI exposure (Purchased or Originated Credit Impaired) that is currently impaired 431 459 431 622
Customer guarantees and customer commitments granted classified in stage 3 1,122 866 1,122 1,029
Doubtful exposure of loans and advances to customers at fair value through profit or loss 8 9 8 16
Total risk 1,032,084 1,014,552 1,032,084 1,006,796
Impaired and non-impaired gross loans and advances to customers 978,096 963,163 978,096 957,778
Impaired and non-impaired customer guarantees and customer commitments granted 53,988 51,389 53,988 49,018


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Credit risk (II) Jun-21 Mar-21 Jun-21 Jun-20
Total coverage ratio 73  % 74  % 73  % 72  %
Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted 24,239 24,034 24,239 23,635
Total allowances to cover impairment losses on loans and advances to customers measured at amortised cost and designated at fair value through OCI 23,577 23,404 23,577 22,973
Total allowances to cover impairment losses on customer guarantees and customer commitments granted 662 630 662 662
Credit impaired loans and advances to customers, customer guarantees and customer commitments granted 33,266 32,473 33,266 32,782
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 impaired 31,705 31,139 31,705 31,115
POCI exposure (Purchased or Originated Credit Impaired) that is currently impaired 431 459 431 622
Customer guarantees and customer commitments granted classified in stage 3 1,122 866 1,122 1,029
Doubtful exposure of loans and advances to customers at fair value through profit or loss 8 9 8 16
Cost of credit 0.94  % 1.08  % 0.94  % 1.26  %
Underlying allowances for loan-loss provisions over the last 12 months 8,899 10,257 8,899 12,035
Average loans and advances to customers over the last 12 months 948,351 949,230 948,351 953,470




NPL ratio
H1'21 H1'20
% 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
Europe 3.30 20,804  629,681  3.41 21,058  618,379 
   Spain 6.22 13,742  220,929  6.55 14,729  224,902 
   United Kingdom 1.30 3,424  263,318  1.10 2,767  251,376 
   Portugal 3.71 1,539  41,517  4.43 1,762  39,751 
   Poland 4.58 1,496  32,675  4.57 1,489  32,602 
North America 2.28 3,149  137,802  1.73 2,487  143,833 
   US 2.00 2,043  102,175  1.49 1,648  110,324 
   Mexico 3.10 1,106  35,627  2.50 839  33,500 
South America 4.36 6,215  142,500  4.74 5,964  125,946 
   Brazil 4.55 3,920  86,157  5.07 3,647  71,915 
   Chile 4.57 1,985  43,472  4.99 2,056  41,228 
   Argentina 3.34 158  4,728  3.15 157  4,995 
Digital Consumer Bank 2.18 2,521  115,838  2.31 2,645  114,266 


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Total coverage ratio
H1'21 H1'20
% Total allowances to cover impairment losses on loans and advances to customers, customer guarantees and customer commitments granted Credit 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 granted Credit impaired loans and advances to customers, customer guarantees and customer commitments granted
Europe 48.4 10,061  20,804  46.5 9,797  21,058 
   Spain 46.0 6,323  13,742  43.3 6,382  14,729 
   United Kingdom 37.4 1,280  3,424  42.8 1,184  2,767 
   Portugal 73.0 1,123  1,539  60.9 1,072  1,762 
   Poland 72.4 1,084  1,496  69.0 1,028  1,489 
North America 152.3 4,796  3,149  206.5 5,135  2,487 
   US 185.7 3,794  2,043  253.1 4,171  1,648 
   Mexico 90.6 1,002  1,106  114.9 963  839 
South America 98.1 6,098  6,215  93.0 5,544  5,964 
   Brazil 112.3 4,403  3,920  110.2 4,020  3,647 
   Chile 63.9 1,268  1,985  54.7 1,126  2,056 
   Argentina 167.6 265  158  165.7 261  157 
Digital Consumer Bank 111.9 2,820  2,521  108.0 2,856  2,645 



Cost of credit
H1'21 H1'20
% Underlying allowances for loan-loss provisions over the last 12 months Average loans and advances to customers over the last 12 months % Underlying allowances for loan-loss provisions over the last 12 months Average loans and advances to customers over the last 12 months
Europe 0.49 2,865  581,334  0.41 2,364  570,284 
   Spain 1.00 2,000  199,237  0.68 1,327  195,377 
   United Kingdom 0.09 208  243,289  0.22 557  256,161 
   Portugal 0.41 158  39,035  0.30 109  36,869 
   Poland 0.88 259  29,529  0.96 294  30,463 
North America 1.67 2,136  127,577  3.21 4,427  137,819 
   US 1.34 1,289  96,047  3.30 3,418  103,580 
   Mexico 2.74 847  30,929  2.95 1,009  34,254 
South America 2.51 2,981  118,697  3.49 4,365  125,015 
   Brazil 3.51 2,331  66,377  4.67 3,474  74,417 
   Chile 1.07 430  40,092  1.46 582  39,773 
   Argentina 3.94 142  3,614  5.67 225  3,958 
Digital Consumer Bank 0.64 735  114,798  0.74 844  114,330 
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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.

Ratio Formula Relevance 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 customers This 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 repos In 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 repos In 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 customers Metric to assess Wealth Management & Insurance's total contribution to Grupo Santander profit.
(1) Tangible book value = Stockholders' equity - intangible assets


Others Jun-21 Mar-21 Jun-21 Jun-20
TNAV (tangible book value) per share (2)
3.98 3.84 3.98 3.83
   Tangible book value 68,917 66,476 68,917 66,316
   Number of shares excl. treasury stock (million) (2)
17,306 17,311 17,306 17,315
Price / Tangible book value per share (X) 0.81 0.75 0.81 0.54
   Share price (euros) (2)
3.220 2.897 3.220 2.084
   TNAV (tangible book value) per share (2)
3.98 3.84 3.98 3.83
Loan-to-deposit ratio 107  % 106  % 107  % 110  %
   Net loans and advances to customers 954,518 939,760 954,518 934,796
   Customer deposits 894,127 882,854 894,127 846,832
Q2'21 Q1'21 H1'21 H1'20
PAT + After tax fees paid to SAN (in WM&I) (Constant EUR million) 558.42 525.25 1,083.67 995.80
   Profit after tax 218 206 424 395
   Net fee income net of tax 340 319 660 601
(2) June 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 half 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 June 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)
H1'21 H1'20 Jun-21 Mar-21 Jun-20
US dollar 1.205  1.102  1.186  1.174  1.126 
Pound sterling 0.868  0.874  0.858  0.852  0.910 
Brazilian real 6.480  5.345  5.941  6.629  6.161 
Mexican peso 24.316  23.604  23.587  23.981  25.959 
Chilean peso 868.037  895.071  863.161  843.574  922.992 
Argentine peso 110.020  70.957  113.539  108.004  79.304 
Polish zloty 4.537  4.409  4.519  4.634  4.444 
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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
•CONSOLIDATED BALANCE SHEET
•CONSOLIDATED INCOME STATEMENT
NOTE:    The following financial information for the first six 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
ASSETS Jun-21 Dec-20 Jun-20
Cash, cash balances at central banks and other deposits on demand 183,091  153,839  138,266 
Financial assets held for trading 102,792  114,945  124,145 
Non-trading financial assets mandatorily at fair value through profit or loss 4,838  4,486  5,902 
Financial assets designated at fair value through profit or loss 56,486  48,717  91,368 
Financial assets at fair value through other comprehensive income 114,505  120,953  122,560 
Financial assets at amortized cost 1,003,417  958,378  976,298 
Hedging derivatives 5,430  8,325  11,999 
Changes in the fair value of hedged items in portfolio hedges of interest risk 1,434  1,980  2,387 
Investments 7,562  7,622  8,668 
Joint ventures entities 1,620  1,492  1,249 
Associated entities 5,942  6,130  7,419 
Assets under insurance or reinsurance contracts 276  261  307 
Tangible assets 32,678  32,735  33,271 
Property, plant and equipment 31,712  31,772  32,335 
For own-use 12,921  13,213  13,527 
Leased out under an operating lease 18,791  18,559  18,808 
Investment property 966  963  936 
Of which : Leased out under an operating lease 863  793  799 
Intangible assets 16,454  15,908  15,946 
Goodwill 12,854  12,471  12,595 
Other intangible assets 3,600  3,437  3,351 
Tax assets 24,707  24,586  26,218 
Current tax assets 4,956  5,340  5,639 
Deferred tax assets 19,751  19,246  20,579 
Other assets 9,889  11,070  10,627 
Insurance contracts linked to pensions 162  174  186 
Inventories 5  5  6 
Other 9,722  10,891  10,435 
Non-current assets held for sale 5,077  4,445  4,919 
TOTAL ASSETS 1,568,636  1,508,250  1,572,881 
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Interim condensed consolidated balance sheet
EUR million
LIABILITIES Jun-21 Dec-20 Jun-20
Financial liabilities held for trading 68,982  81,167  97,700 
Financial liabilities designated at fair value through profit or loss 54,131  48,038  59,619 
Financial liabilities at amortized cost 1,310,433  1,248,188  1,283,581 
Hedging derivatives 6,573  6,869  6,583 
Changes in the fair value of hedged items in portfolio hedges of interest rate risk 427  286  255 
Liabilities under insurance or reinsurance contracts 1,014  910  2,246 
Provisions 10,400  10,852  11,948 
Pensions and other post-retirement obligations 3,454  3,976  5,516 
Other long term employee benefits 1,407  1,751  1,196 
Taxes and other legal contingencies 2,169  2,200  2,341 
Contingent liabilities and commitments 661  700  666 
Other provisions 2,709  2,225  2,229 
Tax liabilities 9,154  8,282  8,844 
Current tax liabilities 2,711  2,349  2,521 
Deferred tax liabilities 6,443  5,933  6,323 
Other liabilities 11,777  12,336  10,246 
Liabilities associated with non-current assets held for sale —  —  — 
TOTAL LIABILITIES 1,472,891  1,416,928  1,481,022 
EQUITY
Shareholders' equity 117,552  114,620  112,899 
Capital 8,670  8,670  8,309 
Called up paid capital 8,670  8,670  8,309 
Unpaid capital which has been called up —  —  — 
Share premium 47,979  52,013  52,446 
Equity instruments issued other than capital 641  627  611 
Equity component of the compound financial instrument —  —  — 
Other equity instruments issued 641  627  611 
Other equity 165  163  172 
Accumulated retained earnings 60,280  65,583  67,594 
Revaluation reserves —  —  — 
Other reserves (3,762) (3,596) (3,708)
(-) Own shares (96) (69) (65)
Profit attributable to shareholders of the parent 3,675  (8,771) (10,798)
(-) Interim dividends —  —  (1,662)
Other comprehensive income (loss) (32,181) (33,144) (30,637)
Items not reclassified to profit or loss (4,962) (5,328) (5,010)
Items that may be reclassified to profit or loss (27,219) (27,816) (25,627)
Non-controlling interest 10,374  9,846  9,597 
Other comprehensive income (1,817) (1,800) (1,697)
Other items 12,191  11,646  11,294 
TOTAL EQUITY 95,745  91,322  91,859 
TOTAL LIABILITIES AND EQUITY 1,568,636  1,508,250  1,572,881 
MEMORANDUM ITEMS: OFF BALANCE SHEET AMOUNTS
Loan commitments granted 247,154  241,230  228,767 
Financial guarantees granted 12,121  12,377  12,166 
Other commitments granted 81,277  64,538  78,654 




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Interim condensed consolidated income statement
EUR million
H1'21 H1'20
Interest income 21,933  24,499 
   Financial assets at fair value through other comprehensive income 1,292  1,973 
   Financial assets at amortized cost 19,149  21,255 
   Other interest income 1,492  1,271 
Interest expense (5,737) (8,297)
Interest income/ (charges) 16,196  16,202 
Dividend income 309  265 
Income from companies accounted for using the equity method 163  (135)
Commission income 6,676  6,716 
Commission expense (1,507) (1,580)
Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net 344  688 
   Financial assets at amortized cost 77  (27)
   Other financial assets and liabilities 267  715 
Gain or losses on financial assets and liabilities held for trading, net 347  1,848 
   Reclassification of financial assets at fair value through other comprehensive income —  — 
   Reclassification of financial assets from amortized cost —  — 
   Other gains (losses) 347  1,848 
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value
 through profit or loss 		10  27 
   Reclassification of financial assets at fair value through other comprehensive income —  — 
   Reclassification of financial assets from amortized cost —  — 
   Other gains (losses) 10  27 
Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net 221  (129)
Gain or losses from hedge accounting, net 57  (26)
Exchange differences, net (85) (1,335)
Other operating income 1,167  765 
Other operating expenses (1,289) (1,122)
Income from assets under insurance and reinsurance contracts 769  715 
Expenses from liabilities under insurance and reinsurance contracts (683) (631)
Total income 22,695  22,268 
Administrative expenses (8,996) (9,288)
   Staff costs (5,438) (5,470)
   Other general and administrative expenses (3,558) (3,818)
Depreciation and amortization (1,381) (1,419)
Provisions or reversal of provisions, net (1,490) (614)
Impairment or reversal of impairment of financial assets not measured at fair value
 through profit or loss and net gains and losses from changes 		(3,804) (7,030)
   Financial assets at fair value through other comprehensive income (19) (3)
   Financial assets at amortized cost (3,785) (7,027)
Impairment of investments in subsidiaries, joint ventures and associates, net —  — 
Impairment on non-financial assets, net (130) (10,241)
   Tangible assets (125) (93)
   Intangible assets (3) (10,146)
   Others (2) (2)
Gain or losses on non financial assets and investments, net 52  27 
Negative goodwill recognized in results —  6 
Gains or losses on non-current assets held for sale not classified as discontinued operations (32) (119)
Operating profit/(loss) before tax 6,914  (6,410)
Tax expense or income from continuing operations (2,474) (3,928)
Profit/(loss) for the period from continuing operations 4,440  (10,338)
Profit/( loss) after tax from discontinued operations —  — 
Profit/(loss) for the period 4,440  (10,338)
Profit attributable to non-controlling interests 765  460 
Profit/(loss) attributable to the parent 3,675  (10,798)
Earnings/(losses) per share
Basic 0.20  (0.64)
Diluted 0.20  (0.64)
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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
•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 on 26 February 2021, as well as the section “Alternative performance measures” of the annex to this Banco Santander, S.A. (“Santander”) Q2 2021 Financial Report, published as Inside Information on 28 July 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 appropriate in the circumstances and not in reliance on the information contained in this report. No investment activity should be
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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:    28 July 2021 By: /s/ José García Cantera
Name: José García Cantera
Title: Chief Financial Officer