Banco Comercial Portugues

Investor Presentation • Sep 23, 2015

Marcos Martínez Gavica

Country Head Mexico

Banco Santander (México) S.A. ("Santander México) and Banco Santander, S.A. ("Santander") both caution that this presentation contains forward-looking statements. These forwardlooking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the "SEC") could adversely affect our business and financial performance. 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 on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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 the 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.

Note: Statements as to historical performance, share price or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.

Note: The businesses included in each of the geographical segments and the accounting principles under which their results are presented by Grupo Santander may differ from the business included in the public subsidiaries in such geographies and the accounting principles applied locally. Accordingly, the results of operations and trends shown by Grupo Santander for its geographical segments may differ materially from those disclosed locally by such subsidiaries.

Agenda

The evolution of Mexican macroeconomic fundamentals indicate a solid and growing economy

(1) Central Bank reference interest rate (closing) Source: EIU; CEFP; Banxico, INEGI & Santander estimates

The Mexican banking industry is solid and has high growth potential, with five key factors that will continue to drive its expansion

• Second largest in LATAM's
• Underpenetrated market (23% loan to GDP in Mexico vs. 47% LATAM average1)
• 10% CAGR loans and deposits volumes (2007-2014)
• Stable regulatory environment
• Healthy liquidity and risk position with NPLs constant at ~3% for the past 5 years

A solid banking industry… … where 5 key factors will drive further growth

Low and increasing bank penetration

Credit opportunities for Micro and SMEs

Growth opportunity in retail and commercial banking

Source: World Bank: Bank Regulation and Supervision Survey, CNBV, Press clippings, ABM, INEGI, World Bank Enterprise survey 2010, McKinsey MSME financing Model, McKinsey Global Institute analysis (1) Considers Brazil, Chile, Colombia, Mexico and Peru

Agenda

Santander has a leading franchise in Mexico …

Santander Mexico	Ranking	Market Shares	Infrastructure Ranking
• €60.7bn in assets		14%	1,114 branches1 •
• €28.4bn in loans		12% 12% 11% 10% 9% 9% 8%	• 16,768 employee
• €27.5bn in deposits		s e e x m e a o m e t c o n r e c s o n	• 5,756 ATMs
• €6.2bn in equity		p. I m e f s s p. I s e e o e e O e y b c s h m o s t n n O c pl e fi t I s n u t o p o a ol m e e r x r r N N V G B P E E	• 6.7MM active customers

(1) Complemented by cash desks (ventanillas), and Santander Select branches (including Centros Select, Espacios Select and box branches) as of 1H'15 Source: CNBV and Santander Mexico as of 1H´15

… with a diversified portfolio focused on high income individuals, SMEs and middle market segments

Santander has achieved a leading market position across its key strategic segments while growing profits above its peers since the financial crisis…

… and maintaining a strong and healthy profile

Agenda

Santander Mexico aims to be the market leader in profitability and growth through a focus on innovation and operational transformation

Strengthen position in the retail segment…

(1) 2018(e)/1H'15

…with initiatives targeting all the relevant levers of growth

Increase penetration to high-potential customers

• Insurance and personal loans to high-income mortgage customers

• Develop risk/value based pricing and leverage alternative channels

• Educational loans and credit cards to university students
• Focus on direct debit
• Guarantees to overcome existing mistrust in providers

• Agreements with national service suppliers

Special products (Bundles / open-market)

Comprehensive payroll plan

Targeted value

propositions

• Focus on high-income and low rotation companies

• New product with cash-backs and special benefits

• Employee: tailored offers by segment, close contact and effective on-boarding
• Employer: better infrastructure and process support
• Develop attractive financial and non-financial offers for specific clusters • Strategic alliances (e.g., Telefonica, Spotify)

Consolidate leading positions in key markets…

(1) Among the 6th largest banks in Mexico, in loans

… leveraging Santander's position and experience

• Create exclusive commercial offer for SMEs II (focus on fee income)
• Direct payment to suppliers
• Collaboration agreements (Amex, Telefonica)
• Sector-specific packages (Agro, Comex)
• Leverage on Santander's competitive advantages
• Strong relationships and track record
• Combine global network and local presence
• Focus on Santander financed home-developments
• Simplify the credit substitution process
• Re-launch liquidity credit initiatives

To successfully achieve these goals, Santander Mexico needs to execute a deep operating model transformation

Technology and infrastructure Talent, quality and processes Brand / Marketing

Upgrade to state-of-the-art technology

• Infrastructure (multi-function ATM network)
• Channels (online/mobile)
• CRM (segment/big data)

Improve satisfaction and customer experience

• Corporate culture
• Personnel retention, training and career plan
• Customer service
• Operating processes

Position Santander as the 'Top of mind' bank

• Marketing and brand awareness strategy
• Commercial actions (high-visibility product promotions)

Prudent risk management and focus on efficiency

Agenda

2018 Mexico targets	1H'15	2018
People	Great Place to Work bank ranking1	Top 9	Top 5
	Commercial Team Turnover	14.7%	~12%
Customers	Total loyal customers (MM)	1.3	1.7
	Digital customers (MM)	0.8	1.8
	Customer satisfaction	Top 4	Top 3
	Growth in business volumes	>Mkt	>Mkt
	Fee income CAGR	2%(2)	10%(3)
Shareholders	FL CET1	12.5%	>10%
	RoTE	13.4%	>16%
	C/I ratio	42.4%	<37%
	NPL ratio	3.8%	<3.5%
Communities	Number of scholarships 2016-2018 (k)

Note: Group criteria except FL CET1 (1) Out of 42 companies in the financial sector (2) 1H'14-1H'15 (3) 2015-2018

Transparent performance metric for 2016

Key metric	1H'15	2016	Improvement	Comment
Digital Customers (k)	752	1,040	+38%	• We will improve on-boarding processes to new channels, implement a new multichannel on-boarding strategy and add new functionality to our digital platform
Retail Payrolls (k)	2,970	3,319	+12%	• Improve on-boarding process to guarantee contactablility and focus on client needs • Reduction in processing time of loan applications and approval • Plan to reduce attrition
Credit Card Accounts (k)	2,593	2,900	+12%	• Supported by new clients attraction plan and the increase in engagement efforts
SMEs Loan Portfolio (MXN MM)	60,000	75,000	+25%	• Development of new SME II segment (from 50 to 200 million pesos of annual sales)

Key takeaways

Mexico has high potential for growth in a strong and healthy financial system

Santander Mexico is well positioned to take advantage of this potential to become the market leader in profitability and growth…

…by strengthening our position in the retail segment and consolidating our leadership position in key markets through…

…an operational transformation focused on quality and technological innovation