Banco Santander S.A. — Investor Presentation 2016

Sep 30, 2016

José Antonio Álvarez

Group Chief Executive Officer

Banco Santander, S.A. ("Santander"), Santander UK Group Holdings ("Santander UK") and Banco Santander (Brasil) S.A. ("Santander Brasil") all caution that this presentation and other written or oral statements made from time to time by Santander, Santander UK and Santander Brasil contain forward-looking statements. These forward-looking 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, macro-economic, governmental, political and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; (5) transaction, commercial and operating factors; and (6) 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 and should be considered in evaluating any forward-looking statements contained herein. 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. These statements are only predictions and are not guarantees of future performance, results, actions or events. Santander, Santander UK and Santander Brasil do 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, Santander UK nor Santander Brasil. 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, Santander UK and Santander Brasil are not giving advice nor making any 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 our geographical segments and the accounting principles under which their results are presented here may differ from the businesses included in our public subsidiaries in such geographies and the accounting principles applied locally. Accordingly, the results of operations and trends shown for our geographical segments may differ materially from those disclosed locally by such subsidiaries.

Delivering in a challenging environment

Helping people and businesses prosper 3

We are on plan to deliver our 2016 commitments…

	2015	1H'2016	2016 commitments
Fee income1	3.0%	6.6%2	Increase
Cost to income ratio	47.6%	47.9%	Stable
Cost of risk	1.25%	1.19%	Improve
Underlying RoTE	11.0%	11.1%	Improve
TNAV / share (€)	4.07	4.13	Increase
Cash dividend / share (€cents)	15.8	17.23	Increase
FL CET1	10.05%	10.36%	10.45%

(1) Currency neutral (2) +7.7% including perimeter: PSA and Banco Internacional do Funchal (3) 2016(e), assuming an acceptance percentage of the scrip dividend equal to that in 2015

…within a sector facing 3 challenges

Mature markets profitability headwinds

• A low-economic growth
• Low and flat yield curve
• New regulatory environment

Structurally higher profitability in Emerging Markets

Need to redefine customer relationships

3 New entrants

• More demanding customers…
• ...who require a better service at a lower cost
• The industry needs to place the customer at the centre of the business model
• Banking disintermediation
• Shadow banking
• Digital players

Profitability headwinds in mature markets while structural higher profitability in emerging markets

Revenues	• Lower nominal growth
	• Lower interest rates for longer
	• Asset pricing pressure
	• Lower credit demand
Costs	• Higher regulatory / compliance costs
	• Tax increases
	• Digital transformation needs investments
Capital	• Upwards pressure due to regulation

1

RoTE below cost of capital (European banks)

Mature markets Emerging markets

• Cyclical adjustment (mostly) completed
• Stable political / regulatory environment
• Structural growth remains intact

• Nominal growth but maintaining positive jaws

• High capital levels required to finance growth

RoTE 15-20% with sustainable high growth "g"

Need to redesign customer's relationships: a commercial transformation is required 2

Customer's experience & loyalty become a must

Helping people and businesses prosper 7

3 New entrants compete in less capital intensive segments

Santander's strategy tackles these 3 sector's challenges

Challenges	Executing our strategy	Outcome
Mature markets 1 profitability headwinds	• Commercial transformation • Operational excellence • Capital optimisation • Digitalisation	Revenues RoTE Costs
Need to redesign 2 customer relationships	• Commercial transformation • Operational excellence • Processes re-engineering	More loyal and digital customers Customer experience
3 New entrants	• Commercial transformation • Digitalisation	Entry barrier Value for money service

Focus on execution: placing customers at the centre of our model

Helping people and businesses prosper 10

Clear strategy, focused on execution

Improve RoTE

Helping people and businesses prosper 11

^A Revenues: commercial transformation to improve revenue growth

Revenues: loyal customers growth consistent with our commercial transformation A 1H'15 1H'16 16(e) 17(e) 18(e) 13.1 14.4 15.0 17.0 10% 18.5 Loyal customers (MM) Portugal Brazil 130k customers On track to meet our targets 650k new accounts Spain 100k SME customers 1.1MM retail customers Mexico 174k credit cards in only 4 months Since the launch¹

(1) Spain: 1I2I3 current account from May'15 to Jun'16, 1I2I3 SME from Nov'15 to Jun'16. Brazil: ContaSuper from 2012 to Aug'16. Mexico: Aeromexico from Feb'16 to Aug'16. Portugal: Mundo1I2I3 from Mar'15 to Aug'16

^A Revenues: strong growth of digital banking customers

^A Revenues: continuous improvement on customer experience

Evolution in customer satisfaction rankings¹

A

Revenues: our commercial transformation delivers fee business growth and profitable market share gains

^B Costs: reducing the 'twin' costs of doing business

^B Costs: committed to deliver flat cost growth in real terms

One the most efficient international banks

Our principles

• Cost-growth below / around inflation
• Positive jaws
• IT investments financed by BAU savings
• Simplification of corporate centres
• Branch network optimisation

Initiatives to capture savings

Footprint optimisation and digital transformation

Fit-to-Grow program

• Headquarters optimisation

Organisational and IT optimisation

• Post merger integration (BANIF)
• Process reengineering

Santander to continue to lead on efficiency =

(1) BBVA, BNP Paribas, HSBC, Intesa Sanpaolo, Lloyds, Société Générale, UBS, UniCredit, Barclays, Bank of America, Wells Fargo, Citi, JP Morgan, Itau and ING. Source: Company data – Bloomberg

^B Costs: reducing the cost of risk across the cycle

Helping people and businesses prosper 19

^C Digitalisation creates a 'virtuous circle' on P&L dynamics

^D Capital: A disciplined approach to use our capital

Our strategy, business model and execution allow us to fund profitable growth, increase cash dividend per share and accumulate capital

Key priorities in our main markets: a profitable growth story

As mature markets profitability headwinds remain, long-term presence in Latam is a strong competitive advantage

Source: Eurostat, U.S. Census, Cepal, The Economist Intelligence Unit and IMF

Two differentiated markets and approaches to sustain profits and dividends growth

Underlying attributable profit (1H'16)

Spain and UK

Key priorities

• Recovery of profitability to c.13%
• Loyal and digital customer growth and market share gains
• Focus on fee businesses

• Operational excellence improvements

• We maintain our strategy

• Only scale challenger in the UK
• Customerloyalty and market share growth
• Cost management remains a priority
• Enhanced focus on risk management and protecting current RoTE

Brazil and Mexico

Key priorities

• Focus on revenue growth: improving risk adjusted margins and fee business
• Increasing market share: acquiring (GetNet), consumer, SMEs…
• Digital transformation
• Continued improvement in risk management and collections

• Grow our franchise to become #2 / #3 operator in most segments

• Improve retail customers franchise while maintaining our strengths
• Infrastructure and digitalisation
• Improve RoTE to c.17%

SCF and US

Key priorities

• Maintain high profitability and continue to gain market share
• Expand agreements with pan-European retailers
• Digitalise the business model

• Continue to be a mostly self-funded operation

• Enhance elements to meet regulatory requirements

• Improve customer experience and gain brand awareness
• Maintain leadership in Auto Finance
• Recover profitability: above CoE for SBNA and maintain high levels at SC USA

Portugal and Poland

Key priorities

• Leading RoTE and top RoRWA
• Focus on profitable market share gains (corporates / SMEs)
• Improve in customer loyalty and cost efficiency

• Active asset quality management: reducing NPL ratio to below 6%

• Maintain RoTE leadership

• Achieve above market growth in volumes and profits while growing our loyal customer base

• Continue digitalisation

• Monitoring regulatory cost and its impact on cost of risk

Chile and Argentina

Key priorities

• Keep high profitability, efficiency and capital discipline
• Maintain market leadership / continue to grow market share profitably
• Work on productivity gains to achieve consistently positive jaws

• At least top 3 in customer experience

• Establish Santander as the market leader in a normalising economy

• Focus on revenue / market share growth
• Maintain RoTE in a falling CoE environment

Looking forward and key takeaways 4

Helping people and businesses prosper 31

Santander is well placed to overcome current sector challenges due to its unique business model and commercial transformation and to continue to deliver profitable organic growth

Strong increase on loyal and digital banking customers while delivering operational excellence in a less capital intensive growth model

As we work to progressively improve mature markets profitability despite current headwinds, long-term presence in LatAm is a strong competitive advantage to offer quality and predictable shareholder value creation