Press Realease Emilio Botin’s speech

1. Press Release
Chairman’s speech at the 2012 results presentation
Botín: “We’re confident the cycle is about to change”
 “Profit before provisions in 2012 was EUR 23.559 billion, ranking Santander third in
the world and showing the Group's ability to generate profits once provisions and
write-downs return to normal.”
 “We allocated provisions of EUR 6.140 billion to cover exposure to real estate
assets, exceeding the requirements of the two Spanish government royal decrees.”
 “The timetable for financial reform is clear, the plans are the right ones and I am
fully confident that, in a few quarters, we will have a well-balanced financial system
that is more solvent, more efficient and the most solid in Europe.”
 “All countries have to meet the main challenge that Europe faces: growth.”
 “Banco Santander has the right strategy to create value for its shareholders,
customers and employees.”
Madrid, January 31, 2013 - Banco Santander Chairman Emilio Botín said the bank made
attributable net profit of EUR 2.205 billion in 2012, 59% less than the previous year. “These
profits were significantly affected by the extraordinarily high special provisions and write-
downs carried out in Spain. These amounted to EUR 6.140 billion and were only partially
offset by EUR 1.241 billion of extraordinary gains.”
Botín said, during the presentation of the bank’s 2012 earnings, that the results were “very
positive” and cited four reasons to be optimistic about the immediate future.
- Pre-provision profit was EUR 23.559 billion, which makes Banco Santander “third
in the world and shows the Group's ability to generate profits once provisions and
write-downs return to normal”, he said.
- The bank strengthened its balance sheet in three key areas: provisions,
increased capital and liquidity.
- Santander set in motion three major transactions that strengthened its
position in three main markets: The integration of Banesto and Banif into Banco
Santander in Spain, the IPO of the Mexican subsidiary and the merger between
Santander’s bank in Poland and Kredyt Bank.
Comunicación Externa.
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 1
comunicacionbancosantander@gruposantander.com

2. - Dividend: Banco Santander is going to continue to pay its 3.3 million shareholders
EUR 0.60 per share against 2012 results. Subject to shareholder approvaI, the
board of directors proposed a new Santander Dividendo Elección (scrip dividend)
program, of EUR 0.146 per share from May 1, the usual complementary dividend
date. Santander’s shares rose 3.9% in 2012, compared with a decrease in the Ibex
index. The total return for Banco Santander shareholders was 17.3%. Santander’s
shares rose 3.9% in 2012, compared to a decrease in the Ibex index. “The market
is recognising our provisions and values our ability to generate recurring profits.
We are the top bank in the eurozone by market capitalisation. I am convinced that
the market will continue to recognize how well the bank is run.”
Botín highlighted five basic principles that the Group has followed over the years: strength in
the balance sheet and liquidity, diversification and the subsidiaries model, the commercial
banking model, prudent risk management and cost efficiency.
Balance sheet strength and liquidity
“Provisions, capital and liquidity management were the Group’s priorities in 2012. Banco
Santander maintained its solid core capital, which increased from 10.02% at the close of 2011
to 10.33% under Basel II criteria. Our goal is always to keep core capital considerably in
excess of regulatory requirements,” Botín said. He noted that in 2012 the bank set aside
provisions of EUR 18.800 billion, 54% more than the previous year, and improved coverage of
non-performing loans by 11 points to 73%.
Botín highlighted the progress made in Spain. “We allocated EUR 6.140 billion in provisions
to cover exposure to problem real estate assets. This amount exceeded the requirements of
the two Spanish government royal decrees. We have reduced real estate exposure in Spain,
net of provisions, by EUR 12.400 billion, from EUR 24.900 billion to EUR 12.500 billion. This
adjustment substantially strengthened the balance sheet and was achieved through the sale
of 33,500 bank-owned properties, development projects and loan portfolios. Exposure to
real estate in Spain, net of provisions, represented 1.7% of the Group’s loan portfolio at
the end of the year.”
He mentioned the improvement in liquidity in 2012, when the Group's loan-to-deposit ratio fell
from 117% to 113%, driven by growth in deposits. He announced that Santander returned
EUR 24.000 billion of the funds it drew from the ECB’s liquidity operations. We had the funds
deposited at the European Central Bank, where they provided liquidity insurance.” He pointed
out Santander issued EUR 31.000 billion of debt in wholesale markets. “We have also taken
advantage of windows of opportunity in Spain by issuing another EUR 9.000 billion, and we
have a comfortable maturity structure.”
Diversification and the model of subsidiaries
Botín also stressed the importance of the bank’s geographic distribution, with a commercial
banking model with critical mass in its ten core markets and a balanced distribution of profits:
45% in mature markets and 55% in emerging markets. He explained that the bank’s
international structure is based on a model of subsidiaries that are autonomous in capital and
liquidity, some of them publicly listed. “Our goal is for all our major subsidiaries to be listed in
their home markets,” he added.
Comunicación Externa.
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 2
comunicacionbancosantander@gruposantander.com

3. He noted the successful placement of 24.9% of Santander México and the merger of
Santander’s Polish subsidiary with Kredyt Bank, which will create value for shareholders from
the first year. “Today, we are the third-largest bank in Poland by deposits, loans and number
of branches. We have more than 3.5 million customers,” he said.
Brazil contributes the most to Group results (EUR 2.212 billion, or 26% of the total). Brazil
has a sound, efficient financial system and strong institutions that for years have
demonstrated a commitment to the country's economic and social stability. “I am sure
the government will continue to make reforms to consolidate this progress. I have full
confidence in Brazil. It is and will continue to be the benchmark for Latin America and it looks
set to become one of the world's leading economies.”
The UK registered profit of EUR 1.175 billion, accounting for 13% of the Group’s total, he
said, adding that business has continued to be affected by the difficult economic and
regulatory environment. “Santander UK is the country’s most profitable retail bank and is
becoming a leader in the British market.” He highlighted its market share of 13% in
mortgages, 9.2% in deposits and 32% in remunerated current accounts and its strong growth
in the corporate segment. “In 2013, when the economic outlook for the United Kingdom is
better, our model's competitive advantages will become apparent.”
In Mexico, Santander is the number three bank and had a “magnificent” year, Botín said,
producing profit of EUR 1.015 billion, or 12% of the total. “We continue to invest in business
projects in Mexico and are going to open 200 branches in the next two years.”
In Spain, although the economic situation was very difficult, he said: “Banco Santander had a
very good year, sticking to the priorities that we had set out.” The Santander Group made
profit before provisions of EUR 5.016 billion and attributable profit of EUR 1.290 billion, or
15% of the total. “Deposits increased by EUR 22.000 billion and our market share grew by 2.2
points. These data reflect the confidence that Banco Santander generates.”
He also noted that, for the first time since the crisis began, the volume of properties
adjudicated or acquired in lieu of payment decreased, falling by 8%, and that the non-
performing loan ratio remained well below the average for the sector.
Botin gave a detailed explanation of the merger of Santander with Banesto and Banif and said
that, before the end of 2013, the Group's retail networks in Spain will be completely unified
under the Santander brand. He said the deal would be very positive for customers, employees
and shareholders.
“I am confident that the merger will strengthen our retail, corporate and private banking
businesses and will consolidate our leading position in Spain. Our goal is to gain market share
in loans and deposits. The strategy of having two branch networks in Spain and a separate
high-income private banking network made sense in the past, in a different economic setting.
Now, with the sector's deep restructuring resulting in fewer, larger banks, it makes
much more sense to operate with a sole brand as we are going to be able to compete
better.”
Comunicación Externa.
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 3
comunicacionbancosantander@gruposantander.com

4. Botín stressed Santander’s commitment to Spain and the initiatives it had taken, such as the
mortgage moratorium launched in the summer of 2011, which has benefited 21,000
customers. “Eviction is the last and worst option for everyone, for our customers and also for
the bank,” he said. He mentioned other initiatives to support the Spanish financial system's
stability, the economy and society, such as becoming a shareholder in SAREB, the payment
plan for suppliers of autonomous communities and local institutions, the bank’s participation in
the Social Housing Fund and the 5,000 grants to fund internships for students in SMEs in
2013.
Outlook for 2013
The Banco Santander Chairman focused the final part of his speech on the outlook for 2013,
“a year that has begun very positively in financial markets.” He added: “Very important
progress has been achieved in the economic and political arenas. The foundations are
being laid for a stronger and more integrated Europe and a more solid and competitive
Spain. I believe that we are entering a new phase and the recovery will be more visible
in 2014.”
In his opinion, the expectations generated after the European Council of June, 2012, will be
fulfilled by the end of this year. He recalled that the single eurozone supervisory mechanism,
led by the European Central Bank, will begin to operate in March, 2014 and that during 2013
progress will be made in preparing the bases for a banking union: a eurozone-wide resolution
mechanism and the deposit common guaranty fund. “This is important because it lays the
foundation for a truly European financial system with common regulations, it breaks the tie
between sovereign risk and bank risk, and it reinforces the monetary union's institutional
structure. In short, banking union will be a decisive advance for the European economy, for its
financial system, for access to corporate and household financing and for Spanish financial
institutions, which will be favoured by alignment in rules on competition, better credit ratings
and access to the capital markets.”
Botín spoke favorably of the Bank of Spain’s record on supervision. “After many years, our
experience at Banco Santander is that an intrusive supervisory system, with a large number
of inspectors who are permanently at our bank, has proved to be very effective and useful.”
He also praised “the crucial and determining role in managing the crisis” played by the
European Central Bank and its Governor, Mario Draghi, firstly through the three-year liquidity
injections and more recently with the commitment to intervene without limits to help a country
seeking European Union financial support.
On Spain, Botín spoke highly of the advances made in correcting imbalances and the reforms
undertaken by the government. “Labour reform has been deep and provides more flexibility to
companies and the economy as a whole; the public deficit has been reduced a great deal on
the structural side and the institutional framework is much more demanding, with better
incentives for discipline in medium-term public accounts. Also, banks have entered the final
phase of restructuring. They have faced with decisiveness the problems linked to real estate
exposure, associated with the system's overcapacity and fragmentation, generated by
insufficient transparency and poor corporate governance in part of the financial system, as
well as financing problems. The timetable for reform is clear, the plans are the right ones
and I am fully confident that, in a few quarters, we will have a well-balanced financial
system that is more solvent, more efficient and the most solid in Europe.
Comunicación Externa.
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 4
comunicacionbancosantander@gruposantander.com

5. He underlined the “enormous progress” made so far by the private sector. “On one hand, the
cost adjustments and increase in productivity of Spanish companies during the last four years
are unmatched in Europe. On the other hand, the improvement of external accounts, that
reflect the large advance in our competitiveness and the search for new markets. The growth
of exports is the best proof this process is working. There is much to do, but we have a
corporate fabric and human capital that are capable of shifting our economy into a new phase
of expansion.”
“The conviction that the euro will not break up, together with the reforms and the private
sector's effort in Spain, are translating into a clear improvement in the perception of the
country abroad. The performance of the markets during these first weeks of the year confirms
it: the risk premium continues to decrease. Foreigners are once again investing in Spain: they
are purchasing debt, money is entering the stock exchange and they are also investing in
companies and properties.”
“This positive development should not make us lower our guard. Economic recovery requires
a continued effort from all of us. We have to continue with reforms and focus on the public
debt. The financial system should complete its restructuring, keep an eye on liquidity and
improve profitability. Obviously, from now on all European countries have to meet the
main challenge we are facing: growth.”
Botín concluded that “Banco Santander is in a solid position to face the coming years and is
confident that it has the right strategy to continue creating value for its shareholders,
customers, employees and society at large in all countries where it is present. We are
optimistic about the future because, although 2013 will be tough for Spain, we are
confident that we are approaching a change of cycle. We are confident that we will see
a change for the better.”
Comunicación Externa.
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 5
comunicacionbancosantander@gruposantander.com