Banco Santander, S.A. (NYSE:SAN) Q1 2023 Earnings Call Transcript

Jose Garcia-Cantera: So 2% compared with 3% pre-pandemic, all right? So as we were saying, it will gradually normalize, but it is actually performing a little bit better this year, and it will not reach pre-pandemic levels because of the change in the mix that Hector was referring to. But this year, we would expect it to be around 2%.

Hector Grisi: Okay. And in terms of Brazil, it’s exactly, Alvaro, as Jose just explained you, rates in Brazil at around 13.75%, okay? Inflation is actually just below 7%. What Jose was explaining you if the rates continue to be that way, there might be the possibility that some of the big corporates or medium-sized corporates start to suffer, okay? We don’t see that individual portfolio would suffer because it’s shorter term is managing a different well and is a little bit inelastic to the rates, both the corporate portfolio in the mid corporates, mainly and SMEs could suffer because of that.

Jose Garcia-Cantera: But at the same time, individuals is improving. And you can see that actually in the first quarter cost of risk isolated at 4.4% because we are growing in high-quality retail loans and the old vintages are maturing very, very quickly. So even with that possible, and we don’t know, but it might have a possible deterioration in the cost of risk in the corporate sector, we would still expect to be in line with the guideline that we gave at Investor Day for a flat cost of risk year-on-year, excluding one-offs. And no, the answer is no, we don’t expect any significant one-offs for the rest of the year.

Begona Morenes: Thank you, and thank you, Alvaro, for your questions. Can we have the last question, please?

Operator: Next question from Fernando Gil de Santivañes from Bestinver Securities. Please go ahead.

Fernando Gil de Santivañes: Hi, thank you very much for taking my question. Just a quick one on liquidity and LCR ratios. How do you see the year-end LCR ratios at a group level, Spain, Portugal and the U.S. base? And can you please remind us of the TLTRO maturities that the bank has. Thank you very much.

Jose Garcia-Cantera: So no, the LCRs. Very difficult to predict around, but 130 to 140 in every unit at least. For the group, it might be a bit higher than that because of the liquidity of the Corporate Center, but when we look at specific units, 130 or above. TLTRO, we have €25 billion left. So we have repaid €65 billion. This €25 billion will mature gradually until 2024. The €25 billion, €4 billion in Santander Spain, €18 billion in Santander Consumer Finance and €3 billion in Portugal.

Begona Morenes: Thank you, and thank you, Fernando, for your questions. Thank you all for your attendance. Santander’s Investor Relations team is at your disposal for any and all questions that you may have.

Jose Garcia-Cantera: Thank you, everybody.