Grupo Financiero Santander México Reports Second Quarter 2016 Loan Portfolio Up 14.7% YoY and Net Income of Ps.3,708 Million

MEXICO CITY, July 27, 2016 /PRNewswire/ -- Grupo Financiero Santander México, S.A.B. de C.V., (NYSE: BSMX; BMV:  SANMEX), ("Santander México"), one of the leading financial groups in Mexico, today announced financial results for the three-month and six-month periods ending June 30, 2016.

Santander México reported net income for 2Q16 of Ps.3,708 million, representing a YoY and QoQ increases of 14.5% and 4.8%, respectively. For 6M16, net income amounted to Ps.7,247 million, reflecting a 12.3% increase from 6M15.

Héctor Grisi, Grupo Financiero Santander México's Executive President and CEO, commented, "We delivered another solid set of results this quarter, demonstrating the initial success of initiatives we are executing to achieve our goal of becoming our customers' primary bank, and Mexico's leader in profitable growth."

"To achieve this, we are implementing a comprehensive transformation of our organization based on three strategic pillars. First, we seek to establish a client-centric model that puts the customer at the center of all we do, offering a unique customer journey. This will allow us to attract new high-potential customers, retain existing clients through transactional products and become their primary bank. For instance, we are establishing a comprehensive payroll program that will become one of the main drivers of customer attraction and loyalty. This key initiative, Santander Plus, was launched in May, an innovative program focused on customer attraction, transactionality, loyalty and digitalization. The value proposition offered through the Santander-Aeroméxico co-branded credit card is also performing above expectations, allowing us to add new clients and successfully cross-sell products to this new customer base. We are also working towards consolidating our leading positions in key markets, mainly in SMEs and the middle-market, while in corporate and investment banking our objective is to become a top 3 player."

"Our strategy requires the digitalization of our business to achieve our goals. In this regard, our second pillar involves the upgrade of our technological platforms and infrastructure to offer customers innovative and quality services that satisfy their dynamic demands. The third pillar is a sharper focus on profitability and efficiency, by having a more balanced bank with a higher share of consumer loans and lower cost deposits. This is underpinned by efficient capital allocation, strong risk management, an efficient overhead structure and productive investments."

"Overall, we grew our loan book 15% year-on-year, driven by a 17% rise in commercial loans while retail loans expanded 12%, supported by healthy consumer demand and our sharper focus on payroll loans. Importantly, this was achieved while remaining vigilant around our risk profile, with commercial customers more cautious against a backdrop of interest rate rises and global volatility. This was accompanied by YoY improvements across all asset quality indicators. Deposits also continued to expand – up 13% year-on-year supported by retail demand deposits, and we aim to further reduce our cost of funding via robust demand deposit growth. Our heightened emphasis on return on risk-weighted assets and efficiency, together with our commercial initiatives have resulted in a 14.5% YoY increase in net income despite a higher effective tax rate."

"We re-affirm our commitment to delivering on our growth initiatives for our corporate, commercial and retail customers, while benefiting from a renewed prioritization of sustainable, profitable growth. I look forward to sharing our progress in these areas with you, as we continue to execute our plan."

2Q16 EARNINGS CALL DIAL-IN INFORMATION

ABOUT GRUPO FINANCIERO SANTANDER MÉXICO, S.A.B. DE C.V. (NYSE: BSMX; BMV: SANMEX)
Grupo Financiero Santander México, S.A.B. de C.V. (Santander México), one of Mexico's leading financial services holding companies, provides a wide range of financial and related services, including retail and commercial banking, securities brokerage, financial advisory and other related investment activities. Santander México offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of June 30, 2016, Santander México had total assets of Ps.1,264 billion under Mexican Banking GAAP and more than 12 million customers. Headquartered in Mexico City, the Company operates 1,079 branches and 310 offices nationwide and has a total of 17,074 employees.

LEGAL DISCLAIMER
Grupo Financiero Santander México cautions that this report may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements may be found in various places throughout this report and include, without limitation, statements regarding our intent, belief, targets or current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion of our distribution network; our focus on strategic businesses; our compound annual growth rate; our risk, efficiency and profitability targets; financing plans; competition; impact of regulation; exposure to market risks including interest rate risk, foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk; projected capital expenditures; capitalization requirements and level of reserves; liquidity; trends affecting the economy generally; and trends affecting our financial condition and our results of operations. 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: changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de Mexico); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes; competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of allowances for loans and other losses; increased default by borrowers; technological changes; changes in consumer spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations; and certain other factors indicated in our  annual report20F. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could adversely affect our business and financial performance.

Note: The information contained in this report is not audited. Nevertheless, the consolidated accounts are prepared on the basis of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in nominal terms. Historical figures are not adjusted for inflation.

SOURCE Grupo Financiero Santander Mexico, S.A.B. de C.V.