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(1)

Mexico

2020

(2)

2

Important Information

Non-IFRS and alternative performance measures

This presentation 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 2019. 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 2019 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on 6 March 2020, as well as the section “Alternative performance measures” of the annex to the Banco Santander, S.A. (“Santander”) Q4 2020 Financial Report, published as Inside Information on 3 February 2021. These documents are available on Santander’s website (www.santander.com). Underlying measures, which are included in this presentation, 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

Santander advises that this presentation 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 presentation, 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 presentation, 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.

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3

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 presentation 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 presentation 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 presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation 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 presentation 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 presentation 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

Statement 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 presentation 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 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.

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4

Index

1

Financial

system

2

Strategy and

business

3

Results

4

Concluding

remarks

5

Appendix

(5)

5

System deposit growth still low double-digits while loan growth reflects a contraction

Total loans

(Constant EUR bn

1

)

221

236

231

225

217

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

YoY

(%)

4.3%

9.9%

5.9%

2.9%

-1.9%

Total deposits

(Constant EUR bn

1

)

217

235

239

238

240

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

YoY

(%)

4.4%

12.3%

12.6%

12.9%

10.8%

Decline in system loan volumes in most segments, except

mortgages and government

Consumer loans continued to contract, especially credit cards

and personal loans

System deposit growth remained solid

Low rate environment drove strong growth in demand

deposits (+17.1% YoY), likely reflecting heightened need for

liquidity among households and companies

(1) End period exchange rate as of Dec-20. Source: CNBV Banks as of December-20.

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6

Index

1

Financial

system

2

Strategy and

business

3

Results

4

Concluding

remarks

5

Appendix

(7)

7

Santander México: one of the leading financial groups in the country

KEY DATA 2020 YoY Var.

4

Customer loans

1

EUR 30.2 bn

Customer funds

2

EUR 40.6 bn

Underlying att. Profit

EUR 762 mn

Underlying RoTE

14.4%

-6.2 pp

Efficiency ratio

42.5%

+72 bps

Loans market share

3

13.4%

+32 bps

Deposits market share

3

13.3%

+4 bps

Loyal customers

3.6 mn

Digital customers

5.0 mn

Branches

1,373

Employees

22,246

+19.9%

-3.4%

+8.5%

-0.2%

+14.5%

+13.5%

-9.3%

STRATEGIC PRIORITIES

Improve customer experience by leveraging both the

new tools and methodologies as well as improving

operating processes

Maintain strong growth rates in loyal customers

(through initiatives to attract payrolls and collectives)

and digital customers (by promoting new platforms,

channels and customer care models, as well as our

new payment platforms)

Strengthen our corporate businesses to continue to be

the reference in the market in value-added products

Increase revenue through greater volumes and lower

cost of deposits

Enhance customer service quality across the Bank

(1) Gross loans excluding reverse repos. (2) Excluding repos.

(3) As at September 2020. (4) Constant euros.

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8

Strategy and business

Expanding loyal and digital customers further strengthening our retail franchise

Loyal customers (mn)

3.2

3.6

Dec-19

Dec-20

Loyal / Active: 39% (+6 pp YoY)

Digital customers (mn)

4.2

5.0

Dec-19

Dec-20

Digital sales / total

1

: 41% (+12 pp YoY)

13%

20%

(1) Full year data.

Improving onboarding processes to new channels and adding new functionalities to the

digital platform

Mobile customers up 23% YoY

Digital sales reached 48% of total sales in Q4’20

Maintain strong focus on increasing loyalty, while attracting new customers through

innovative products such as Hipoteca Plus

Loyal individuals: 14% YoY leveraging our large number of products

CRM platform for SMEs and an online onboarding process that enhances the customer

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9

Driving innovation and attracting customers

Auto finance

Auto financing through "Super Auto Santander“ together with commercial alliances with strategic partners enable further penetration of the auto loan market

>5% market share reached in Dec-20 vs. 1% in Dec-19

Mortgages

The only bank in Mexico to offer a tailored interest rate based on the customer’s profile

Strong performance of Hipoteca Plus, accounted for close to 67% of mortgage new lending as of December-20. Hipoteca Plus rewards new loyal customers who keep their payrolls and other financial products with one of the lowest rates in the market, 7.75%

Credit card customer attraction

First bank in Mexico to offer cards without numbers to its customers. This innovation is complemented by the digital card with dynamic CVX (Dynamic Security Code)

Distribution network

transformation

Shift to an omni-channel banking experience to attract and retain customers

Transformed 576 branches. New branch layout is more efficient, user friendly, promotes use of digital, self-services and P&L per branch

Digitalization

Upgrading online and mobile banking platforms to offer customers innovative and high quality services that satisfy their dynamic demands

New functionalities for our Supermóvil and Superwallet mobile apps including cardless cash withdrawal, payroll portability, activation of credit and debit cards quickly and safely, payments with rewards points, among others

• Fully digital onboarding for new payroll customers, reducing the time to open new accounts

Corporate & Investment Banking

Continuing to position our Corporate & Investment Banking business as one of the top three players in Mexico

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10

Strategy and business

Doing business in a responsible way

(1) 9M´20. (2) FY2019.

(3) H1´20: monitoring data, not audited.

(4) Issued on 15 October, UN’s “International Day of Rural Women”.

Continue embedding our culture in all stakeholders…

… supporting our customers in their transition to a low

carbon economy…

… and investing in the communities while

continuing to support higher education.

… promoting financial inclusion and empowerment…

104,212 people financially empowered

3

Tuiio:

101,655 microcredits granted in 2020

1

35,265 new customers in 2020

1

146,013 cumulative customers since 2017

Tuiio’s Medical Care product launched and Tuiio was also prized for being a good practice

initiative by Foretica

Financial Education:

15,846 people benefited with financial education in our financial education site

1

Women in senior leadership positions: 16%

1

95% of employees are proud to work for Santander

2

Ranking Súper Empresas (Top companies): 9

TH

place

2

o

Contact Centre listed as “Súper Espacios de Trabajo” ranking in

the top 10 companies with over 500 employees

o

Top 15 break friendly companies: Second place with more than

3,000 employees

Issuance of 1 Green Bond and 1 Sustainable Bond in 2020

Santander was ESG advisor for the first Gender Bond issued in Mexico

4

First sustainable equity investment fund in Mexico, the “SAM-ESG”

Reduction in national and international business travel by approximately 97%

39,004 people helped with community investment programmes

3

28,774 scholarships granted with MXN 42.1 million

1

Two Mexican entrepreneurs winners of the Santander X Tomorrow Challenge

MXN 49.7 million invested in covid-19 community programmes in alliance with

Zurich Santander

1

MXN 2.6 million invested in Tabasco Humanitarian Aid benefiting 36,000 people

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11

Stable loan portfolio YoY, with loan growth concentrated in mortgages, auto and

corporates & institutions

Total customer loans

(Constant EUR bn)

1

30.3

33.0

32.2

31.7

30.2

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Dec-20

Dec-19 YoY (%) QoQ (%)

Individuals

2

12.1

11.3

7.4

4.4

o/w Mortgages

6.9

5.9

16.6

5.2

o/w Consumer credit

2.4

2.3

4.8

4.0

o/w Cards

2.2

2.2

-4.2

0.9

SMEs

2.7

3.1

-14.3

-4.2

Corporates & Institutions

10.1

9.4

7.6

-3.7

CIB

5.3

6.3

-15.6

-16.9

Other

0.0

0.2

-96.5

-98.4

Total customer loans*

30.2

30.3

-0.2

-4.6

Group criteria

(1) Excludes reverse repos. End period exchange rate as at Dec-20. (2) Includes Private Banking.

(3) Government loans in local GAAP.

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12

Strategy and business

Customer fund increase was boosted by demand deposits from individuals, still

favoured due to low interest rates

Total customer funds

(Constant EUR bn)

1

35.4

40.5

40.5

40.2

40.6

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Dec-20

Dec-19 YoY (%) QoQ (%)

Demand

20.4

17.4

17.7

3.0

Time

9.5

8.4

13.4

-1.6

Total deposits

29.9

25.7

16.3

1.5

Mutual Funds

10.6

9.7

9.7

-0.4

Total customer funds

40.6

35.4

14.5

1.0

Group criteria

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13

1

Financial

system

2

Strategy and

business

3

Results

4

Concluding

remarks

5

Appendix

(14)

14

Results

NII evolution YoY underpinned by higher volumes

Net interest income

(Constant EUR mn)

1

714

718

686

710

711

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

NIM

2

4.42%

4.27%

3.31%

3.41%

3.47%

Official interest rate (TIIE)

3

7.86%

7.34%

5.94%

4.97%

4.51%

Yields and Costs

(%)

12.64%

12.25%

11.00%

10.74%

10.36%

3.68%

3.54%

3.21%

2.53%

2.03%

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Yield on loans

Cost of deposits

Differential

9.0 pp

8.7 pp

7.8 pp

8.2 pp

8.3 pp

(1) Average exchange rate as at 12M’20. (2) Group criteria.

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15

Net fee income growth mainly driven by transactional banking fees

Net fee income

(Constant EUR mn)

1

172

189

194

200

189

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

Transactional fees

433

391

10.8

-6.4

Payment methods

226

193

17.1

-8.5

Transfers, drafts, cheques

and other orders

75

74

1.7

-0.7

Account admin + Packs

plans

106

99

6.7

-2.8

Other transactional

26

24

4.6

-16.2

Investment and pension

funds

99

97

1.4

1.7

Insurance

213

202

5.7

5.1

Securitites and custody

services

32

34

-5.8

-19.9

Other

(5)

10

-

98.7

Total net fee income

772

734

5.2

-5.6

(16)

16

Results

Total income up YoY boosted by customer revenue and gains on financial transactions

Total income

(Constant EUR mn)

1

923

905

947

902

896

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

Net interest income

2,825

2,792

1.2

0.1

Net fee income

772

734

5.2

-5.6

Customer revenue

3,596

3,525

2.0

-1.2

Other

2

54

11

-

-53.1

Total income

3,651

3,536

3.2

-0.7

(1) Average exchange rate as at 12M’20.

(17)

17

Operating expenses growth mainly driven by the increase in amortizations and

technology investment

Operating expenses

(Constant EUR mn)

1

390

373

359

396

424

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

Operating Expenses

1,552

1,478

5.0

7.0

Branches (#)

1,373

1,422

-3.4

-4.0

Employees (#)

22,246

20,494

8.5

2.2

(18)

18

Results

Net operating income YoY performance boosted by revenue improvement

Net operating income

(Constant EUR mn)

1

(1) Average exchange rate as at 12M’20.

533

532

588

506

472

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

Total income

3,651

3,536

3.2

-0.7

Operating Expenses

(1,552)

(1,478)

5.0

7.0

Net operating income

2,098

2,058

2.0

-6.7

(19)

19

Loan-loss provisions jumped YoY due to covid-19 related charges and a one-off

provision recorded for a corporate customer

Net LLPs

(Constant EUR mn)

1

194

246

301

219

213

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

Net operating income

2,098

2,058

2.0

-6.7

Loan-loss provisions

(979)

(763)

28.3

-2.7

Net operating income after

provisions

1,119

1,295

-13.6

-9.8

NPL ratio

2.81%

2.19%

62 bps

48 bps

Cost of credit

1

3.03%

2.49%

54 bps

6 bps

Coverage ratio

121%

128%

-7.5 pp

-11.8 pp

(1) Average exchange rate as at 12M’20.

(2) Cost of credit based on 12-month loan-loss provisions divided by average customer loans.

(20)

20

Results

Underlying profit down YoY impacted by higher provisions and costs, though RoTE

remained high at 14%

Underlying Attributable Profit

(Constant EUR mn)

1

255

198

195

196

172

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

2020

2019

YoY (%)

QoQ (%)

PBT

1,082

1,290

-16.2

-15.2

Tax on profit

(259)

(277)

-6.5

-23.6

Consolidated profit

823

1,013

-18.8

-12.4

Minority interests

(61)

(173)

-64.9

-13.8

Underlying attributable

profit

762

840

-9.3

-12.3

Effective tax rate

24.0%

21.5%

2.5 pp

(21)

21

1

Financial

system

2

Strategy and

business

3

Results

4

Concluding

remarks

5

Appendix

(22)

22

Concluding remarks

Resilient performance during the worst economic period in recent history

Financial System

Contraction in system loan volumes in most segments, except mortgages and government

Consumer loans continued to contract, especially credit cards and personal loans

System deposit growth still low double-digits

Lower interest rates favour strong growth in demand deposits, likely reflecting heightened need for liquidity among

households and companies

Strategy

&

Business

Focus on asset quality under the challenging environment, while activating all protocols and specific measures

Continued focus on loyalty and digitalization to improve customer experience

Well positioned with strong capital and liquidity levels

Stable loan portfolio YoY, with loan growth concentrated in mortgages, auto and corporates and institutions. Customer

fund increase was boosted by demand deposits from individuals

Results

Total income up YoY driven by customer revenue and gains on financial transactions

Net operating income YoY performance boosted by revenue improvement

Loan-loss provisions jumped YoY due to covid-19 related charges and a one-off provision recorded for a corporate customer

Underlying profit down YoY impacted by higher provisions and costs, though RoTE remained high at 14%

(23)

23

1

Financial

system

2

Strategy and

business

3

Results

4

Concluding

remarks

5

Appendix

(24)

24

Appendix

Balance sheet

Constant EUR million

1

Variation

Dec-20

Dec-19

Amount

%

Loans and advances to customers

29,565

30,408

(843)

(2.8)

Cash, central banks and credit institutions

11,854

8,732

3,123

35.8

Debt instruments

24,315

14,821

9,494

64.1

Other financial assets

10,982

5,591

5,391

96.4

Other asset accounts

3,523

3,350

172

5.1

Total assets

80,239

62,902

17,336

27.6

Customer deposits

35,457

30,864

4,593

14.9

Central banks and credit institutions

16,977

11,997

4,981

41.5

Marketable debt securities

6,847

6,048

799

13.2

Other financial liabilities

11,830

6,614

5,216

78.9

Other liabilities accounts

2,628

1,862

766

41.1

Total liabilities

73,739

57,384

16,355

28.5

Total equity

6,500

5,518

982

17.8

Other managed customer funds

10,976

10,004

972

9.7

Mutual funds

10,646

9,707

939

9.7

Pension funds

89

85

5

5.7

Managed portfolios

241

212

28

13.3

(25)

25

Income statement

Constant EUR million

1

Variation

2020

2019

Amount

%

Net interest income

2,825

2,792

33

1.2

Net fee income

772

734

38

5.2

Gains (losses) on financial transactions

134

88

46

52.0

Other operating income

(79)

(77)

(3)

3.3

Total income

3,651

3,536

114

3.2

Operating expenses

(1,552)

(1,478)

(74)

5.0

Net operating income

2,098

2,058

40

2.0

Net loan-loss provisions

(979)

(763)

(216)

28.3

Other gains (losses) and provisions

(37)

(4)

(33)

733.4

Underlying profit before tax

1,082

1,290

(208)

(16.2)

Tax on profit

(259)

(277)

18

(6.5)

Underlying profit from continuing operations

823

1,013

(190)

(18.8)

Net profit from discontinued operations

Underlying consolidated profit

823

1,013

(190)

(18.8)

Non-controlling interests

(61)

(173)

112

(64.9)

Underlying attributable profit to the parent

762

840

(78)

(9.3)

(26)

26

Appendix

Quarterly income statement

(1) Average exchange rate as at 12M’20

Constant EUR million

1

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Net interest income

686

685

707

714

718

686

710

711

Net fee income

183

193

186

172

189

194

200

189

Gains (losses) on financial transactions

(3)

24

24

43

19

87

25

2

Other operating income

(25)

(20)

(26)

(6)

(22)

(19)

(33)

(6)

Total income

840

881

892

923

905

947

902

896

Operating expenses

(355)

(361)

(372)

(390)

(373)

(359)

(396)

(424)

Net operating income

485

521

520

533

532

588

506

472

Net loan-loss provisions

(173)

(199)

(198)

(194)

(246)

(301)

(219)

(213)

Other gains (losses) and provisions

(5)

(4)

(2)

7

(7)

(7)

(4)

(19)

Underlying profit before tax

307

317

320

346

280

280

282

240

Tax on profit

(69)

(70)

(66)

(72)

(66)

(69)

(70)

(54)

Underlying profit from continuing operations

238

247

253

274

213

211

212

186

Net profit from discontinued operations

Underlying consolidated profit

238

247

253

274

213

211

212

186

Non-controlling interests

(55)

(54)

(46)

(19)

(15)

(16)

(16)

(14)

(27)

Thank You.

Our purpose is to help people and

businesses prosper.

Our culture is based on believing

that everything we do should be:

References

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