Banco Santander, S.A.

Good morning, everyone. Thanks for joining to this Banco Santander 2020 full-year earnings presentation. As every Q4 with full-year presentation, we have today our executive chairman and our team who will address with the CEO the performance of 2020 and the different regions and some of the countries review. Then the executive chairman will make a disclosure on the progress on the transformation and the next step that we will kick off from 2021 to conclude with medium-term outlook and key takeaways before jumping into the Q&A session. With no further delays, Anna, please.

So thank you, Sergio, and good morning, everybody. And I want to start by saying that I hope you and your close ones are safe and well. It's been a difficult year for everybody, and all of us have lost colleagues and friends, and so our thoughts are with everybody that has had that terrible experience. Without further ado, again, welcome to our 2020 presentation. We will cover the results for the year. We will give you our views for the medium term and cover some of the strategic priorities that we will be focusing on for the next few years. sorry, cost of credit at 128 and slightly better than the improved guidance that we gave last quarter. And finally, we have continued to generate very strong growth in organic capital, reached 1234 at the end of the year, which is above our target range. We, in November 2020, paid a dividend in new shares equivalent to $0.10 per share, and the board of directors' intention is to go back to the 40% to 50% as soon as we can. We are also proposing to our shareholders at the end of March a $0.275 per share in cash against 2020 results. Rosantonio will review in more detail the full year results, but just to point out again that we delivered a 5 billion underlying profit. That's after a 50% increase in provisions due to COVID, with very good cost control, as you can see, and net operating income in constant euros, as I mentioned, which is up year on year. Again, these underlying results and provisions represent a prudent approach to the COVID-related potential losses, which we have been guiding through the year. At the base of these strong underlying numbers is again our geographical and business diversification. It has shown its worth in previous crises, again in this one. We have delivered robust performance in the Americas. I want to point out that North America has been our best performing region. the best ordinary profit performance in 2020 with growth in loyal customers based on increased collaboration between Mexico and the U.S. Importantly, in the U.S., we delivered $1.2 billion net profit. That's a statutory attributable profit and a growth in the underlying profit for the year. Europe, we are very much focused on transforming the business. What we call One Europe is a new operating model. We are very confident this will lead us to results that will be increasingly positive. We are basing our growth in revenues and increase in productivity. And importantly, we have generated one billion net cost savings excluding perimeter in the last two years. And South America remains the growth engine for the group. We have delivered 19% ROTE, but very importantly, operating income increased 5% on a year-on-year basis in Brazil, and loyal customers and customer loans grew at 9% and 15%. And finally, we're also increasingly diversified by businesses. You can see here CIB, very strong numbers, wealth management, Also, our digital consumer bank, which is the pro forma merger of Santander Consumer Europe and Open Bank, which is already 16% of the total revenues. I mentioned at the beginning that COVID has been a challenge for all of us at the personal level. We have very clear that our priority throughout and continues to be our people. This is the best way that we can take care of our customers. We have supported 6 million of our customers with moratoria, lending a billion per day to SMEs and corporates. We have also supported our communities in a very important way with 100 million across the group in aid in different aspects and this is something which we are very keen because we know that that is at the base of our success for the future. We're also during 2020 very focused on further embedding ESG across the bank. It's something which is at the base again of our aim, and I define it as being a more responsible bank. We have continued supporting our customers, In a transition to green, this is something which we are absolutely very focused on. 32.6 billion in green financing, as you can see, since 2019, and going green ourselves. So in 2020, we were net zero in our own operations, and this is something we will continue going forward. We are promoting financial inclusion, especially in the Americas. We supported about 500 million credit to micro entrepreneurs and also supporting society through scholarships and our support for universities. Very importantly, we have continued to invest in our talent and also diversity. We are aiming to continue in this line. We're now close to 24% of women in leadership positions, a very diverse board in terms of nationalities, backgrounds, with 40% women on the group board. And again, at the base of all of our strategy is an increasingly strong culture, which we have defined as being simple, personal, and fair. So after this introduction, I will pass over to José Antonio to give you a summary of both the group and the businesses in 2020. José Antonio?

So excluding them, total income remains stable as the decrease in activity and lower interest rates were offset by higher volumes, the lower cost of deposits and good performance in global businesses. We accelerate our cost reduction and we expect to keep on track in this year. As the result, net operating income in a very difficult year grew 2% year-on-year in constant euros. Higher loan loss provisions due to the COVID crisis, with the cost of credit in line with our guidance to you during the year. All in all, underlying attributable profit reached the $5 billion I already mentioned. We had a very positive fourth quarter. We improved our business activity and customer revenue reached its highest figure in the last eight quarters. Finally, we recorded in the year 13.9 billion negative net capital gains and provisions. Following the 12.6 billion impairment we announced in June, the bank has recorded charges of 1.1 billion in the fourth quarter. These charges in the fourth quarter were mainly restructuring costs in Spain, but also in other countries in Europe due to the transformation process we are implementing to increase productivity and efficiency. In Europe, We expect total restructuring costs in 2020 and 2021 of around €1.5 billion, and we expect savings of €1 billion in 2021 and 2022. Going through the P&L, along the main lines of the P&L, Q4, customer revenue continues to consolidate its upward trend. Well, trending towards the pre-COVID levels. 4% growth in NII versus Q3, with the highest NII in the last two years, mainly driven by Spain, UK and South America. The income grew 3% primarily backed by South America. Costs were up. 4% in the quarter, partly affected by seasonality labor agreements in Argentina and Brazil, where they are the main drivers, and higher technology expenses, particularly in Mexico. As a result, net operating income decreased 3% quarter-on-quarter, but was 3% higher than in Q4 2019. Taking a more detailed look at the customer revenue, N&I increased from higher lending and deposit volumes with more than offset the interest rate impact and negative regulatory impact in Brazil, particularly in Brazil and Poland. Net fee income was affected by the COVID crisis. In this environment, our strategy remains focused on increasing customer loyalty and growth in higher value-added services and products. Very positive quarter for CIV and wealth management and insurance. Together, they represent 50% of the fee income of the bank. In cost, you see the trends. The figures speak for themselves. In Europe, 6% decrease. In North America, 2% down, mainly in the U.S., 5% down. In South America, cost increase 1%, excluding Argentina, due to the high inflation. We expect to continue to reduce in cost and improving our efficiency ratio in 2021. Going to the cost of credit, the cost of credit stood in line with our expectations and already mentioned the 128, increasing the year due to expected macro scenario. The increase largely reflects the AFRS 9 forward-looking view based on potential macroeconomic scenarios and collective and individual assessment to cover expected credit losses in these scenarios. However, The underlying trends in credit quality remained solid in 2020. NPL decreased 11 basis points. Coverage increased 8 percentage points. Loan loss reserves increased 4 billion to more than 24 billion. By stage, we increased stage 1, 22 billion, due to the increase in the loan book. Stage 2, 21 billion. And stage 3, remaining virtually flat. This classification speaks about the quality trends, the underlying quality trends in the loan book. When it comes to moratoria, at some point, we were very proactive in the moratoria. Some of them were offered by the bank to the customers. Some were mandatory by the different governments. At some point, we have 112 billion in moratoria. So the majority of this has expired and just 3% of the expired moratoria are classified as stage 3. 78% of the active moratoria that remain are secured, and 83% is concentrated in Europe, mainly in Portugal and in Spain. In Portugal, government mandated extension of all moratoria until September. In Spain, longer initial terms than other countries, almost 95% of the one you have in the screen, despite in the coming month, although yesterday the Spanish government took some actions to extend some moratoria for specific sectors and vulnerable When it comes to capital, the capital ratio reached 12.3% after increasing 36% in the quarter and 69 basis points in the year. The 104 basis points of organic generation partly offset by the impact of restructuring costs, corporate transactions and market performance. It also includes nine basis points related to an accrual of 2020 dividend payments based on the limit established by the ECB that allows a maximum payment of 2.75 cents per share. The fully loaded core equity tier one ratio was 1,189. Tangible net asset value was €3.79, virtually stable since September, although we took some restructuring cost charges as well. As you have seen in the P&L. Going through the regions and making some comments about the three regions and the main countries. With the creation of One Europe, we are accelerating our business transformation to achieve with two main goals. Achieve superior growth and having a more efficient operating model. Regarding commercial activity, loans grew 4%, boosted by SME and large corporates in Spain, mortgages in the UK and CAB. Portugal rose the loan book 8%. Deposits increased 6% and mutual funds 5%. This growth is remarkable in Europe. Moving to results, underlying attributable profit amounted to 2.7 billion in 2020, 45% less than in 2018, affected by higher loan loss provisions in all markets. So other points I want to mention is the cost decreases well ahead of our schedule, the way I commented before. The total income, net interest income, remained flat but improved in the later part of the year, partly driven by the recovery in commercial activity and consumer lending and improving the cost of funding. Before going into more detail into Santander, Spain and UK, I would like to highlight Santander Consumer Finance's positive performance in the year, clearly outperforming the market, showing high resilience in results and recovery in the second half of the year. In Q4, profit increased 14% compared with an already solid Q3. This is a business that clearly reflects the benefits of this education. And I will describe later our project in Digital and Consumer One in more detail. In Spain, we have been very active in supporting our customers, being very active with eco-funding, where we granted 31 billion. Since the state of the alarm was declared, we have granted 100 billion euros to self-employed people and corporates. We made further progress in enhancing customer experience. We are escalating in net promoter score in relation with our competitors. The volumes grew, loans grew 5% and customer funds 4%. In the income statement, the profit for the year was 517 million, 60% lower year on year. By line, the income fell basically due to the lower fee income in relation with the lockdowns we have had, and also the reduced income from real estate stakes and smaller alcohol portfolios. Conversely, net interest income grew 1%, driven by the positive performance in volumes, margin management, and the positive contribution for TLTROs. We had another positive year in costs, dropping 10%. Lastly, loan loss provisions doubled, driven by the expected potential losses in our macro scenario arising from the pandemic and several collective assessments in the most vulnerable sectors that say Our portfolio's credit quality remained solid. NPL decreased 71 basis points. Arrears remained at lower levels than pre-COVID, provided the different support programs in place. The arrears are 1.8 billion in December versus 3.7 billion in February. Coverage increased 6 percentage points. Loan loss reserves increased by 1 billion. And the different stages, stage one grew $16 billion, stage two $3 billion, and stage three a little bit less than $1 billion. Going into the UK, our transformation program is gaining traction and beginning to show results. Volumes increase year on year. Loans plus 3%, customer funds plus 8%. 2020 profit, as it cannot be other way, was heavily affected by COVID-19 and regulatory changes, particularly in relation with overdrafts, with one upset by better NII plus 2% and lower cost minus 6%. Profit fell year on year, but increased 18% quarter on quarter, continuing the recovery that began in Q3, thanks to the NII, the increased NII rate, due to increase in the NIM by 11 basis points in the quarter, due to lower funding costs and high from book margin. Cost improves 3%, minus 6% year-on-year. Loan loss provisions have started to normalize in the year, cost of raises relatively low, 28 basis points. Coverage increased by 11 percentage points. In constant euros, stage 2 increased by 6 billion and stage 3 plus 600 million euros. For 2021, we expect good operating performance based on lower funding costs and new business margins, improving productivity through our transformation program. In North America, it is the region that has delivered the best ordinary profit performance across the group in 2020. Group grew the volumes, loans plus 4%, and customer funds plus 19%. Profit decreased just 3%, despite the pandemic-related provisions driven by net operating income. Efficiency improved significantly. By country, Santander U.S. focused on preserving the strength of its balance sheet and its sustained improvement in profitability. Volume, loans grew 6%, and deposits grew 20%. Profit increased 4% year-on-year with resilient NII, cost reduction minus 5%, and lower minority interest in SCUSA. NPL ratio fell 16 basis points. We reinforced coverage, plus 50 percentage points to 210. In constant euros, stage 2 increased 3 billion and stage 3 remained flat. In Mexico, the loan book remained flat. It had a spike at the middle of the year and normalized afterward. Customer funds grew 14%, particularly strong growth in demand deposits from individuals that grew 24%. Regarding results, positive trends in revenue and net operating income cost 5% due to IT investments. NPL ratio increased 62 basis points and the coverage decreased 7 percentage points to 121%. In constant euros, stage 2 increased by 2 billion. Stage 2 remained basically flat, grew 200 million. South America, volumes gradually recovered during the second half of the year. Loans grew 15% year-on-year and customer funds 18%. Deposits, particularly strong growth in deposits, plus 30% in the region. The region was the main driver of the top line with high revenues in all countries. Net operating income rose 5% as a result of the positive revenue and improvement cost to income. Full year 2020 underlying attributable profit fell just 4% due to COVID-related provisions. NPL ratio fell 47 basis points on coverage increased 9 percentage points. By country, Brazil recorded an excellent year. I will explain later. In Chile, we ranked number one in MPS with a record growth in current accounts, plus 42%. Full year 2020, net operating income increased 4%, boosted by higher NII and cost control. Argentina, Uruguay, Peru, and Colombia achieved higher profits due to positive performance in revenue and efficiency improvement. Going to Brazil, Brazil's economy performed significantly better than expected. Santander has once again recorded an excellent year, both in terms of results and volumes, while we remain focused on capturing growth opportunities. Commercial activity in the second half of the year Pre-COVID-19 levels, boosting revenue growth in the year and achieving double-digit increases in volumes. Loans grew 19% and customer funds 16%. Full-year 2020 net operating income increased 3%, driven by resilient revenue and efficiency improvement. Higher volumes offset the significant margin pressures and lowered indoor rates. Higher provisions with net credit quality indicators at very controlled levels. NPL ratio fell 73 basis points, coverage increased by 13 percentage points. Underlying attributable profit decreased 5%, but return on tangible equity remained high at 19%. For 2021, we remain optimistic about Brazil, focus on increasing our customer base, maximizing revenues across our business and segments, and maintaining high profitability levels and volumes growth with a good asset quality, and continue to gain market share in the most important segments in the country. Taking a look to the global business, corporate investment banking had an excellent year. We continue to support our customers increasing our market share. Income grew 15%, profit was 23% higher than by 15% growth in the income I mentioned and 3% cost reduction. We grew double-digit in our core business, particularly in global markets and global debt financing. In Q4, profit declined as the improved performance in NIA and FIB was broadly offset by lower trading gains due to CBA and lower volatility than in the third quarter and higher provisions related with COVID-19 on specific names. Wealth management and insurance. Business performed well in the year. The assets under margin amounted to 370 billion, in line with December 2019 in constant euros. In the quarter, growth was 4%. Total income generated accounted for 31% of the group's total. Underlying attributable was up 2% thanks to 3% growth in revenues. In pre-banking, positive sales and business growth fees grew 9%. In Santander asset management, a strong volume rebound from the lows in May and further progress in our ESG strategy. Lastly, in insurance, underlying profit rose 18%. The main growth driver continues to be non-credit related business. And now I hand over to Anna to continue with the presentation.

So thank you so much, José Antonio. Allow me now to say, first of all, again, that I am really proud of the progress we have made since 2014. I am excited about the opportunities ahead. And I would like to start by saying again that our aim and values remain the same, as we've said for several years. They provide very strong foundations for the Santander of tomorrow. whilst allowing us to deliver today. Our aim is to be the best open financial services platform by acting responsibly and earning the lasting loyalty of all our stakeholders. Just a few minutes to show you how we have delivered results following this strategy for a number of years. Again, our teams and our approach to capital management and discipline have been key. If we look back to the last six years, 14 to 19, of course, 2020 was an outlier. We have double profits. If we look back to our performance for the last six years, 2020 was a clear outlier. I just want to remind ourselves that we have double profits, improved our underlying return on tangible equity by more than 400 basis points. In 11-8 in 2019, 12-34 today. Very importantly, and I think these numbers show the transformation of our model, Our capital base has grown by 29 billion, that's a 70% increase, with only a 13% increase in RWAs. Again, testament to a radical change in the model which will continue into the future, and that's what gives us confidence again for the next few years. If we look ahead, we will continue following the strategy which has served us well, allocating resources efficiently, focusing on the profitable growth, which makes us very different from many of our peers, and of course shareholder value creation. We will continue to grow our RORWA organically. Again, most of this growth will continue from our businesses in the Americas. In terms of segments, we'll continue to invest and expand on our fee-based and capitalized businesses, corporate investment banking, wealth management, and payments through PagoNext. And of course, the digital consumer bank, which is, as I will explain again in a few minutes, the pro forma merger of Santander Consumer and Open Bank. This should lead us to growth in earnings per share and tangible NAF per share, which in turn would underpin cash dividend growth, bringing us to the path of the 40 to 50 cash payout as soon as regulators allow us. To capture organic profitable growth, we will continue to invest in the higher return and capitalized geographies and businesses. We have made progress again in 2020 in accretive capital rebalancing, first by reweighting our capital to these more profitable geographies, mainly the Americas, to higher return and capitalized businesses, CIB, wealth management, insurance, and payments. We have been setting minimum profitability thresholds in all segments. Also, and very, very important, we have a lot of focus on faster asset rotation, and we have aligned top management remuneration with these profitability goals. As a result, in 2020, this is an important number in what has been, again, a difficult year. About 40% of our capital has delivered double-digit underlying return on tangible equity. So as we look to the Santander of tomorrow, we have three priorities for this profitable growth. There is no doubt that our industry is going to continue to be challenging even in a post-COVID world. Low interest rates, increasing competition. But we have very clear three strategic priorities to build on. our foundations, including the One Santander, a new operating model, second, PagoNext, and third, the Digital Consumer Bank. Again, think of this of further leveraging our scale and using technology to strengthen customers' loyalty, but also to access new fee-based revenue pools. I will go now through each one of these. So what do we mean when we say One Santander? What we're really saying is that we are aiming to create a much better bank for our customers to drive growth, to drive profitable growth. We have made huge progress the last few years. I just shared with you the numbers of these five, six years, which show that. But we want to accelerate this transformation. We created the regions. Now, with the One Santander, we are redefining, again, our operating model. We want to make sure that we can leverage 147 million customers and also based on clear principles. The first one is simplify. It's the key word here. Simplify our mass market value proposition. Redefine how we interact with our customers. and further leverage the capacity we have across Europe and then across the group to build together and create a common model to share processes and do this across markets. This is not just in the one Europe. We're doing that across the Americas. And this is what will allow us to reach top NPS, top three NPS in nine countries. Over 50% of total sales will be digital. And to further reduce our efficiency ratio, improve our efficiency ratio to about 40%. We will follow very clear milestones as we execute along these lines. three priorities. If I turn first to the One Europe, the One Europe goal is to go to 10% to 12% underlying return on tangible equity and an efficiency ratio of 45%. We will work across all regions, but especially in Europe, to leverage the payments platform, the Pagonex Global Solutions that I have referred to. In North America, continuing focus on collaboration between The two countries, we are seeing 30% increase in revenues in 2020 in areas like commercial banking and CIB, and targeting 11% to 13% return on tangible equity and 40% efficiency in the medium term. South America, we're expanding GetNet and SuperDigital to other countries. We did announce yesterday afternoon in Brazil the listing of GetNet Brazil. I will comment on that later. And our aim is to deliver an underlying return on tangible equity of 19 to 21 compared to the 18% for the region this year. And 35% efficiency. So allow me to turn to the second priority, which is PagoNext. PagoNext is a global payments company where we're bringing together different assets across the group. Initially, it's going to focus very much on two segments. First is the merchant acquiring, and second, the SMEs, but we'll also be looking to the consumer segment. Payments is not a new strategy. It's not a new priority. Payments has always been at the core of our loyalty strategy. And this is what allows us to earn the loyalty of our customers. Santander has the scale to become one of the top global payment platforms in the world. Merchant acquiring is a global revenue pool of 80 billion. It's a fast-growing market. especially on the e-commerce, globally growing at 11%. International trade, again, a global revenue pool of 350 billion, also growing globally. We already have significant scale in these businesses, so we have a very strong starting point. In merchant acquiring, for example, we have more than a million active merchants and business customers and 60 million active credit and debit. In trade, we will leverage our more than 4 million SME customers. This is probably one of the biggest in the banking world. And over 200,000 SMEs that are trading internationally. Think of Pagonext as the backbone, the technology backbone that will allow our banks, the one Santander, to leverage our scale. To really have 147 million customers in one place with common products, this is what Pagonext is aiming for. And to build those products that are essential to our customers, most important to our customers. It will allow us to grow faster, but very importantly, to deliver a better customer experience. The aim is that this will be a single autonomous company and will probably be one of the largest private fintech companies in the world. Again, we announced yesterday the listing during 2021 of GetNet Brazil, so you can have much better visibility about all these revenues that are high-growth revenues inside our business. So I already mentioned focus on merchant and trade solutions. I just want to point out here that this is not starting from scratch. And this is just two examples where we are building our own software, our own solutions. And this is Brazil and Spain where, as you can see here, market share growing from 12% to 15% in Brazil. in Spain from 12 to 17, growing at 40%, where we also bought back our acquiring stake from 11. So again, we believe we can build better solutions ourselves. We have the scale, and we have proven it works. We are now going to bring all of these together, and we will bring together GetNet Brazil with our GetNet global platform, with Wirecard, with SEMS, in a single company, for acquiring. Our vision on the trade side is to deliver fast and efficient trade finance, supply chain, and FX payments. Again, this is not starting from scratch. We've made significant investments and progress. We already have 300,000 customers onboarded into what is a global platform, and eBury is at the heart of this trade strategy. eBury has generated more than 100 million pounds in net revenues, 270,000 transactions. Even in a challenging environment, they have grown the number of transactions per customer and growing about 3% on the year. Another of the key assets for trade is the payments hub. Again, this is an internal development. It went live and became the main SEPA provider for eBury last quarter. In December 2020, our payments hub processed over €30 million in incoming payments. We've reached agreements to become the main payments engine for all our corporate banks in London, Paris, Milan, Frankfurt, Hong Kong, New York. It is already servicing third parties outside Santander. And finally, Mercury is the platform that has allowed us to finance 6.6 million, of which 60% of the trades were done digitally. Again, more than 7,000 customers have already been onboarded. And just an interesting fact is that in 2020, many of these imports were related to medical supplies. So the third priority, the way Santander is going to become an open financial services platform. How are we going to grow? And every time, and I'm sure I'll get a question from you in terms of are we going to do M&A? Well, we do not need to do banking M&A. We aim to grow in new markets through our digital consumer bank. This is the pro forma merger of Santander Consumer in Europe and OpenBank. OpenBank is the first European bank running fully on the cloud, approved end-to-end by the ECB, We are very confident that this is a strategy that will deliver great results. The reason for that is that OpenBank includes already very successful strategy in terms of cross-selling, but as you can see here, we are going to merge that with a very significant consumer operation. So Santander Consumer brings 55,000 merchant POS Open Bank, 1.2 million customers, 6 million new consumers per year in 15 markets in the case of Santander Consumer, and also the Santander Auto, where we're servicing 75,000 dealers and with a very high quality and growth franchise. We are aiming that the digital consumer bank will run on a digital banking API model, a SAS model, and this is crucial as it will allow us to fully leverage the data for both sides of the business and generate growth, but also fundamentally change the way we operate our consumer business. This would lead, and this is the ambition, to grow revenues and double PAT in the medium term, reaching 15% underlying return on tangible. This is something which will take a few years, but it's really a new paradigm. We will be using common apps, single streamlined operating model, simplified license. We have already started on this as we launched OpenBank in Germany, Holland, and Portugal. and a very different way of running the business. It will enable new auto consumer lending, but also new products to the consumer customers. I want to point out, and José Antonio gave some facts, Santander Consumer Finance in 2020, and this goes back to the diversification, delivered 3% revenue growth in a very challenging year, 12.5% underlying return on tangible in 2020. As I said, our ambition is now bigger. We aim for 39% efficiency and 15% underlying returns. We have painted this as a flywheel because I think this is the best way to picture how the combination of these two businesses is going to really power growth. It's a virtuous circle, and if you start what we have built over the years, our significant customer base at the top through 23,000 merchants. They offer consumer financing at checkout to customers. Merchants go from large to small across industries. Many started as an offline, but now are adding online capabilities. And of course, we have a very fast growth in online-only businesses. This generates about 4.5 million contracts. We actually already have 700,000 digital customers, and we're now expanding to other sectors such as telecom and education. These new digital customers are a target for other lending products, insurance. We believe there's significant growth opportunity for both our lending and our digital banking services. And of course, this gives us significant data at the point of the first transaction, which gives us very valuable insights into these customers' current and future financial needs. Then these new customers are candidates for other banking products through OpenBank. These are one-click sign-ups, even for a loan. One click. New current account customers, of course, generate new deposits. These are loyalty strategy, providing, in turn, low funding for lending. I mentioned already that our digital bank averages 4.5 products per customer. But let me say also that in 2020, we grew by more than 100% new customers year on year. Again, the API services in turn attract new merchants, in turn add new customers. Again, the flywheel spins, creating data depth and insights. And of course, revenue growth. So just to end, wanted to reiterate that based on the latest IMF OECD outlook, our goals are a cost-income ratio below 47% for 2021, cost of credit trending downwards from 128, 9% to 10% underlying return on tangible. For the medium term, mid-single-digit revenue growth in constant euros, best-in-class, and P.S., Again, this is the goal for the new operational model. And we want to reiterate the following goals that we communicated in 2019 of 13% to 15% underlying return on tangible equity, 11% to 12% CET1, and the board's intention to restore the payout of 40% to 50% on underlying. So in summary... We have delivered in 2020, again, strong underlying results that show the resiliency of our model. Diversification, again, has proved that it has value. It has delivered robust performance in the Americas, solid growth in our global businesses, providing balance against a more challenging environment in Europe, robust credit quality, deteriorating by just 28 basis points, thanks to active risk management. We have continued to build organic capital, reaching the 12-34% above our target. We have a strong capital position. We are comfortable with these current capital levels and buffers, and especially we are well-placed to continue allocating capital to the internal significant opportunities for profitable growth to create value. And we have a clear strategy going forward for 2021 that I just reviewed, which gives us a high degree of confidence that we will deliver on our medium-term goals. So thank you again very much, and we're now available for questions.

Yes, indeed. Thank you, Anna, José Antonio. Please, now we have time for Q&A, so go ahead. We can go ahead with the Q&A session.

Thank you very much. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press 01 on your telephone keypad. Thank you. The first question comes from Jeremy from Goldman Sachs. Please go ahead.

First of all, good morning from my side. I'm just going to ask two questions, please. The first one is on the return on tangible equity target and how that could translate into tangible book value per share growth. I guess we've seen Santander record, you know, considering the circumstances, high levels of underlying profitability, but the tangible book value per share went backwards and this year for reasons that we're all familiar with. I mean, what gives you the confidence that if you meet the targets that you've set yourself for this year, that they will translate into tangible book value per share growth as well? And then the second question I have is on the EBA stress tests. They've announced the underlying assumptions for these tests, and some of them seem to be very, very severe. I'm just forecasting a perpetual recession pretty much. And I was wondering, to what extent, if at all, do you expect the results of the tests to drive the supervisory decisions around capital return dividends, buybacks, et cetera? Thank you very much.

So thank you so much. So this year, tangible NAV, as you've seen and you said it, has been very affected by exchange rates. We're working very hard on continuing and accelerating the change in the model, which we have really done a lot of that in the last five, six years. At the end, it's about reallocating capital to profitable growth, first. Second, ensuring diversification. You know, U.S. has given us a very good return in dollars. We need to ensure a proper balance between higher volatility currencies and the more, let's say, stable currencies like the dollar and the euro. I say this, you know, maybe the pound also. So that is really the main way we're planning to improve the tangible NAV. Continuous capital reallocation to the higher growth and profitability, ensuring the balance and diversification through the cycle. If we look at the 13 to 15% medium term target, I can say first, it's based on revenue growth. So we are saying mid single digit revenue growth at the basis of that. If we look at the shorter term in terms of 21, we're looking to volume growth, based on volumes, especially in the Americas. We are looking at positive assets repricing. We're looking at delivering half of the $1 billion, so $500 million additional reduction in cost in Europe, and the cost of credit that trends downwards. So, again, really doing everything we've done this year, but just doing it a bit more and a bit better for 2021. And for the medium term, focusing on these three priorities. This year we have already seen, I think Antonio mentioned that, it's not just the corporate investment bank and wealth management which are now close to forty percent Again, these are higher, let's say, higher return on capital businesses, but acquiring and payment through PagoNext should also help us a lot on this change in the model. On the EBA stress test, yeah, there are some issues there that maybe Jose Antonio wants to comment. However, we feel that our capital buffers and our diversification, the fact that our pre-provision profit this year which is around 24 billion, we could double provisions of 2020 and still not eat into capital. The buffers we have even after that of 17, 18 billion euros, all of that gives us confidence that whatever happens with the stress test, I don't know if you want to give some details. There are some issues in the stress test that mean that we might be penalized, but I don't know how you want to comment on that.

Well, as you know, Jernik, in the stress test, we've been performing very well. We were top performers there. Our capital depletion was... lower than our conservation buffer, and we have P2G on top of this. So we expect to continue to perform well there, although the scenarios are more severe, and there are two issues that we've been raising over time that particularly affect emerging market exposure, like our case, that is the static balance sheet, that is probably as you know in emerging markets long books particularly are very short run and in one year you renew the whole balance sheet but it's what it is and the second one that is new somehow new is the provisions on the emerging markets are not allowed to depreciate with the depreciation of the currency well technically speaking is not very Very natural, but it is what it is. Having said that, we continue to expect, given our diversification and the resilience of our business model, and the stronger we have the stronger pre-provision profit in the industry, we continue to perform well and our capital depreciation will be among the lowest in the industry.

Yeah, if I may add just another for context, we have had in ten years probably two of the biggest global crises that have happened in decades. And just to understand the stability in our model, if we look at our performance in underlying profit in 2020, about 5 billion, that's more than double what we had at the low point in 2008, in 2013, in the 2008 crisis. Again, it shows that we've made a lot of progress, and, of course, this with 70% more capital than we had then. So, again, the stability in our earnings, diversification, and how we perform under stress, I think, is evident from what we have done in two global crises so far.

Thanks, Yannick. Next question, please.

Thank you. The next question comes from Ignacio Olardi from Exxon BNP Paribas. Please go ahead.

Hi. Good morning, everyone. Thanks for taking the questions. I just have two questions. One is on the fee strategy. I just wanted to get a bit of your thoughts on how do you see this sort of like new business additions on payment wealth management or investment banking pools? to be helping to make a bit more dynamic performance on fees. So, I mean, I do see a very clear tailwind from the bit of the unwinding of the 1-2-3 strategy in terms of funding costs, and that is being very visible in NII in the UK, and also in Spain. So, I mean, just wanted to get a bit of your thoughts on how do you see fees into the next couple of years, and, I mean, what is the relevance of the payments business on that process? And also... Second question is on the Brazilian business. And it has been a very good performance, much better than what we expected at the beginning of the year in this pandemic. I mean, which levers do you plan to take just to continue improving the contribution of the country to the group? Thanks.

So, you know, the growth in fees would continue to come from CIB, wealth management, of course. Also, retail is incredibly important, insurance. So the one Europe strategy, but also in the Americas, retail fees are also a big driver. It is clear that there's still uncertainty over the next few months, so we could have in the first half, not a great performance in fees. That's yet something which will depend a lot on the health situation. But what we have seen is that once, and we see that in the second half of the year, that once things open up a bit, the performance is much better. On the payments, you will see, again, with the listing of GetNet Brazil, just a flavor of what we can do in this space. The key thing here is that we already have performed incredibly well in acquiring in Brazil or Spain within a couple of years of having our own, let's say, payments factory. Once we extend this to other countries, You ask about the timing, that's always difficult, but I would say a few years. We've said medium term, you should see a very significant increase coming from these areas. Do you want to answer on Brazil? I mean, Brazil, I think it's every time Brazil or we have a crisis, there's always uncertainty as to the performance, but it actually has done a very good job. And again... Remember that Brazil has historically low rates, so we now have a bit steeper interest rate curve, which is also positive. And we are looking to growth in volumes and positive asset repricing for, I think I said that already, for 2021. and cost of risk trending downward in general in all our geographies, ones more than others, and there could be variations there. But I think that's really the picture for Brazil. And, of course, the lower rates mean that that helps customers, you know, for payments. And good performance, I think, as they exit moratoriums. Is that roughly...

Basically, we rely on volumes. We expect to be growing double-digit in Brazil, as we did in 2020. So this is probably the main lever. Margin is more stable than the ones we had in 2020. In 2020, remember that we had the regulatory impact of what they call their personal check, that is kind of overdraft that affected significantly the NIM and NII. And, well, at the end, the driver is market share gains and our capacity to keep growing the number of customers. You see the number of customers in the country have been booming in the last three, four, five years. So we are still there. And I already mentioned GetNet, but GetNet is an example. We can go to autofinance, where our market share is 25%. You can go to agribusiness, where we went from 2% market share to 9% market share. And we keep counting. In corporate world, our cost of risk went down. In CIV, we are market leader. So, well, the franchise has very good momentum, and we expect to continue this trend.

Thanks, Ignacio. Next question, please.

Thank you. The next question comes from Ignacio Cerezo from UBS. Please go ahead.

Yeah, hi. Good morning. Thank you for the presentation. Two questions from me. The first one, if you can clarify or give us some colors around regulatory headwinds on capital in 21 and 22. And the second question is on the U.S. business. Obviously, the cost of risk performance has been very positive in the year 2020. Again, much lower than could be anticipated probably at the beginning of the year. There's a new stimulus plan coming with probably the possibility of cash and checks actually being handed again to customers. Do we have to still expect an increase of provisions in SCUSA in particular, or do you think the level of provisions in 2020 is sustainable for the future? Thank you.

Let me answer the U.S., and then I'll pass over to you, Jose Antonio. So in terms of the U.S., we have been reviewing this in line with the peers that have presented results. We're very much aligned with our peers, regional and even the large banks. If we compare likes for likes in terms of portfolios, we believe we're being prudent provisioning. So, you know, I would expect that to continue into 2021. The stimulus is going to be obviously very important for this, and so there's really nothing there which should be out of line with the rest of our peers. Again, if you compare portfolios of the same type of segments, I mean, some of the larger banks have more CNI than we do, and that's why you've seen some reversals. That is not the case for us. And in terms of the consumer lender, again, we're in the range of our peers here. but it has performed very well. We believe that will continue to be the case into 2021. In terms of, do you want to answer the other question?

Yeah, in terms of capital, regulatory headwinds in 2020, we were, the impact of the different regulatory changes were around, likely above 40 basis points. In 2021, you mentioned, 2021 and 2022. In 2021, that I have more visibility, we still continue to see some impacts coming from basically all the trim, review of the models, low default portfolios, all these issues that probably will come. Difficult to say always when you face this, but we expect to be lower the impact than the one we had in 2020. uh what that i remember was slightly above 40 basis points and in 2022 what probably probably the trend is downwards clearly we expect when the dream goes and all the review of the models and all these things will capture a significant risk weighted as a reduction in some models that we are building

Thanks, Ignacio. Next question, please.

Thank you. The next question comes from Francisco Riquelme from Alandra. Please go ahead.

Yes, thank you for taking my questions. First one, I wonder if you can comment a bit more on the GetNet listing in Brazil, if you plan to offload more assets from PagoNext into this unit, and what are your ambitions with this listing if you plan to eventually monetize this asset or not. And second question is follow-up on the U.S. business. You mentioned operationally. I wonder if you can update strategically your views about the U.S. retail business. I have also seen that you have downloaded some restructuring expenses. You can also comment on this cost-cutting plans here. Thank you.

So... At the moment, we have just announced the listing of GetNet Brazil. This is not selling of shares. It's just a listing of GetNet Brazil. We are, as I explained on Pagonext, we'll be giving more information during the course of 2021. The goal is that Pagonext include... three types of businesses, but really mainly two. One is acquiring business, where we will be bringing together GetNet Brazil with GetNet Global Platform, and eventually Wirecard, which we closed just a few days ago, and SEMS. So that would be a global merchant acquirer eventually, but GetNet It's about a listing. In terms of the trade, it's also going to be part of PagoNext. So there we have Ebury, Mercury, the payments hub, and probably other products related to trade. So we have all of that in a global platform. We believe that is a very interesting business. It's a high-growth business in payments-related activities. In some cases, we're already giving service to third parties like in the payments hub. So that is really the goal with PagoNext and GetNet.

Well, the second question about the U.S. strategy, and I may take the cost cutting in the U.S. We're going to continue to... Naturally, to improve efficiency in the U.S., well, we have two angles there, yeah? Probably there is more efficiency gains to make in the bank while Scusa is growing, and probably the cost will go up. Overall, in the U.S., I will say the cost going forward will be quite flattish, yeah? in the whole U.S., but not specific restructuring costs in the way we are doing in Europe. No, this is not in our vision for 2020, in our plans for 2021.

In terms of the strategic view of the U.S., first is that the U.S. market is the best risk-return market probably in the world, aside from being large and a source of talent and innovation, institutional stability. There are strong and increasing connections not just to LATAM but to Europe. And what's very important is that both Santander Consumer and SB&A are working increasingly together. A lot of the origination in Santander Consumer is financed by SB&A. So we look at the U.S. as a country, not as pieces of a different business. This is not different, by the way, to what we do in Brazil or Europe. And again, this year... We have had some positive one-offs, but even in constant currency, we have had an increase in profit from the U.S., and the adjusted returns, once we adjust for excess capital, which will not be there forever, actually at even a bit above the cost of equity, depending how you see that, of 8.5%. So there are no plans to sell the business. And we're working, as in the One Europe, with increasing connectivity, not just in terms of working with customers across different Santander countries. Again, I think I mentioned in corporate investment bank and commercial, we are seeing 30% increases year on year, but also in building together. And so this is incredibly important. It was not an option a few years ago. Today, you can leverage the same way you can build, For Poland, UK, and Spain, you can build for Mexico, US, and eventually, why not Brazil or Europe? So this is really the very different approach to the management of the business, which is what we're calling the one Santander new operating model. So again, we are very focused on growing in a profitable way and building on the foundations of the last few years.

Thanks, Paco. Next question, please.

The next question comes from Carlos Cobo from Societe General. Please go ahead.

Hello. Thank you very much for the presentation and the extra detail on your vision for the future. Going a little bit back to the numbers of the quarter, could you touch on the regulatory impact for 2021 again? Sorry to insist that You said below the 40 basis points in 2020, the last guidance that I had was an impact of 10 to 15 basis points in 2021. Are you still comfortable with that, or is there some room for slightly higher impact just to fine-tune the model? And then two quick questions, more strategic. If payment is a global business, and that's how you present it, Why listing the Brazilian subsidiary? Just for me to understand why starting that, why not being more global in the listing? And the second question would be on COVID losses. Could you try to help us to gain a little bit more confidence on what's the vision for 2022? What's the scenario of defaults that you've covered for 2022? Because with all the regulatory forbearance and the support from the states rolling over the grace period from capital amortization and all the restructuring of credits, we don't really have any visibility. It doesn't feel like 2021 is the year to see the big increase in NPLs. So what's the scenario that you have for 2022 where we should assume further progress in the cost of risk reduction? What's the percentage of total, say, stage two loans you expect to default, and how much of that has been covered already? Thank you very much.

So I will take the strategic ones and then you can answer the capital and COVID. But in terms of the GetNet listing in Brazil, this is a first step. The reason for that is exactly what you said, The goal is to create a global platform which would be, let's say, parallel to the banks. So think about the one Santander, the banks as owning customer relationships. Think about Pagonex as a global platform for acquiring, which provides the backbone, let's say, product factory for payments. This is really how we think about it. And so this is just the first step to create that global acquiring platform, which would allow us to add value to not just do payments. Our vision is that payments will happen. We will not actually do payments, but they will be the cornerstone of value-added services. So again, it's not about a processing business. It's about a value-added services business to our customers. built, of course, eventually on the processing, but it's more than that. And to do that, we actually need to have it all together outside our listed banks, but also outside our non-listed banks. I hope that answers the question. We will be giving more information and adding to this during 2021 and a lot more a year from now. Again, these are assets we have been building individually for the last five years. We have shown they work, and now we want to make sure we take it to the next level. We have been, rightly so, challenged by investors, analysts, you guys. Why do you not work better across countries? Well, we have done that in CIB, in wealth management. We are now going to do that for mass market and SMEs. So think of Pagonext and our payments businesses as providing a global platform where we can truly leverage the 147 million customers that we have in retail, that we have in SMEs, 4 million of them that we have in merchants. And again, we'll provide further clarity, but this is really the vision. So I think the second question was again on the regulatory headwinds, I believe, for 2021 and COVID losses.

Yeah, the first one, 2021, well, I already elaborated on the regulatory capital impact in 2021 that we expect to be lower than the one in 2020. The main... impact comes from the trim and from the models. And, well, we expect like two stages there. The first stage is to go up and to have an impact in 2021. And the second stage, once we get more models approved, remember that we still have significant amount of our portfolio under the standard model. Some other models, our risk weighting is higher than our competitors. And at some point, we will converge with this in the medium term. So in the short run, the numbers I gave you, is lowering pattern in 2020. In the medium term, we expect some positives from this side. Probably to split this, I can talk to you in the small numbers and in more detail on this. On the COVID losses, if I understood you well, you are asking about 2022. Okay, so... We guide you in 2021 to... This is an area, naturally, this is an area of uncertainty, and everything is based on models. We still have the health crisis going on. What do we expect with a... As Anna mentioned before, we are working with kind of IMF scenario. So with this scenario, we expect this year, the cost of risk to go down from the 128 we had... ...and start the convergence towards the 1%. In 2022, I don't have any reason to think... ...if we were right in anticipating our scenarios... ...in the IFRS 9, forward-looking... ...we build 4 billion of capital provisions... ...that till now are in our balance sheet... ...that we expect this to cover the majority... ...if not all the losses that arise from this... Can we be wrong in the scenario? Maybe. You may be more negative or more positive. But we are relatively comfortable with this. And even in the quarter, we keep reviewing our scenarios, our portfolios, and building provisions accordingly with a conservative and prudent approach. And I do think from the 1.28, I will bet on reducing in 21 and reducing again in 20. So this will be my initial expectation.

Thank you Carlos. Next question please.

Thank you. The next question comes from Alvaro Serrano from Morgan Stanley. Please go ahead.

Hello. Good morning. I've got a couple of questions I guess on capital allocation. Hopefully the capital build journey is now over. When I think about going forward, it sounds like clearly the emphasis of growth is still America's, but it sounds like it would be a bit more balanced than previously. If I think about the bow on eggs, the digital, and the consumer bank initiatives, Obviously, getting there was a tremendous success because basically you returned back to your natural market share. With the activities like Wirecard in Germany and the push to become a global payments platform, how should we think about you achieving sort of growth outside your natural footprint? What gives you that confidence? And second, on OpenBank and ConsumerBank, You're aiming to double profits, I think it is, which is quite, I mean, it feels ambitious. Maybe you can talk us through which regions you expect to grow most. And again, some of it is outside your natural sort of footprint, like Germany, although you've got the consumer bank there clearly, but what are the growth sources regions there? And the second question also is more sector level is around Obviously, the inability to distribute is accumulating capital, not just for you, but across Europe. I would love to hear your thoughts. Do you think this is going to have long-lasting effects in terms of competition? Do you think it can trigger M&A and even cross-border M&A? In that sense, I've heard you loud and clear several times that you don't need to do M&A, but what What would it take for Santander to be open to cross-border M&A or M&A in general? What would you be looking for? Thank you.

So you have heard me say, and I will repeat loud and clear, we're not interested in cross-border M&A in Europe. We need further significant changes on the regulatory side for that to begin to be something we might look at. We are, and as you've seen in the last months, we are much more active on the digital and payment side. We believe that we already have enough customers, enough scale. There's a lot of talk about scale. You need scale. You know, we have a 47% cost income. We're guiding to even lower than that in the next few years because we do have scale. We are The number one bank, and I say number one bank across Europe and the Americas in terms of number of customers, this is the scale that matters. Second, our revenues with, you know, stable revenues in a year like 2020. I think that is remarkable. And so that is the scale we're aiming for. We have guided to single, sorry, mid-single-digit revenue growth for the medium term. Even in 2021, and again, there's lots of uncertainty in the first few months, and that could affect our revenues in the first few months, especially on fees. But we feel confident that after what we've done in 2020, that we have the scale to drive revenues, and we have the scale to drive with PagoNext, with the Digital Consumer Bank, to drive profitable growth. So again, not planning at cross-border M&A, but rather looking at additional digital opportunities. In terms of doubling the profit on the digital consumer bank, that is going to be driven a lot by revenues. You know, 18 million active customers in Santander Consumer Europe, 6 million new consumer customers every year. I encourage you to look at the flywheel. And again, any questions, please, very happy if you come back to us. But, you know, this is very important because we have the data, we have the customers, and now we have a go-to model, which I don't think any of our peers have, which is the open bank. So think of OpenBank as giving us the know-how to offer new banking products to customers that we don't need to invest to acquire because we're already acquiring them, by the way, profitably on the consumer side. This is crucially important. This is the virtuous circle that I described in the flywheel. And that's what gives us confidence that we can do that. Now, it's going to take a few years, so it's not going to be in 21 or 22. But three, four years down the road, what you're going to see is a change in the paradigm in terms of how we run our consumer business. and how that consumer business that is there, it's real, it's over a billion euros in profits, I believe, this year, in 2020. Lots of customers, and the open bank tech stack, which is modern, runs fully on the cloud, and it's not just about the customer experience, it's also about how we run the business in all the support functions. We can expand to Holland, we can expand to Germany, with very limited cost increases, actually, in all these support functions in a way that is very prudent and under control. So that's the reason we are, again, not putting a date on this, but you should be seeing in the next few years. And finally, on PagoNext, and the acquisitions. So, you know, it should all come together in, again, it will take a few years because there are several assets across Europe and the Americas. And the goal there, again, is to increase and the way we're looking to do that is by value-added services and payments by delivering, for example, for SMEs, a much better cross-border experience for SMEs that trade. SMEs that trade are the higher-growth SMEs. We have 200,000 of those. We are already testing, for example, with EBRI. We have a great partnership with EBRI. We're able to offer services we were not offering before and vice versa. We are helping EBRI, for example, to run the business in the way we run it in some areas, which is very important these days. So we think it's a win-win combination. And that's where we will be looking to integrate so we can grow faster.

Thank you. Next question, please.

Thank you. The next question comes from Tara Queen from KPW. Please go ahead.

Hi, good morning. Thanks for taking my questions. It's Tara from KPW. One question just on the capital targets and dividends. You generated capital this year and headed back towards your targets. Presumably even if we forecast a cash dividend you would still be looking to generate capital organically. Could you just say maybe how that would change or not your outlook for the level of capital you think you should be holding in the future? And then on the dividend you can just confirm that there won't be, that you're not planning any script dividends in the future, because obviously that has been one of the headwinds in the past to NAV per share growth. And on the business side of things, maybe just if you could give a quick comment on On the margin in two geographies, one in the U.K., which has seen quite a strong improvement in margin and NII over the last couple of quarters as you've changed the pricing policy on the 1-2-3 account. If you could just comment on where things go from here in the outlook for 2021 in the U.K. and on the U.S., including the consumer business, it looks like there's just been very ongoing weak margin NII performance from the banking business. Maybe if we just provided a little bit of color of what's going on there and what your outlook is. Thank you.

So on capital, our targets are to be between 11 and 12. There is We believe going forward we're going to have more capital flexibility as you've sort of hinted at. We are planning to go back to the 40 to 50 percent on an underlying profit distribution on an underlying basis as soon as we're allowed to do that. And the most important thing is that even in a difficult year, we have made further progress in what we call the transformation of the model. You know, it happens at an operating level, which is what's driving the financial transformation. The operational goal, the new operating model is actually building, for example, a common mobile app across Europe, just built once and used across different countries. On a financial level, it means that, you know, we grow our earnings whilst growing capital. but we grow less our balance sheet and lending in proportion to that growth. And again, that's what's going to allow us to generate more organic capital and better profitability. We are not, you know, the script is, I know we've gone back in 2020, to a script. And again, we need to keep a balance between institutional investors and also retail. And the script was the only way we could give some dividend, even though it was in shares, to our retail. The board and management intention, as we have said many times for the last six years, is to go to 100% cash. This is what we are intending for 2021. and we will get news on what is the recommendation from the ECB for European banks in Q4. We'll be accruing a cash dividend this year. Hopefully we can return that to shareholders sometime in Q4 or Q1 of next year. In terms of the business and how that's performing, I let José Antonio answer that, but I would say that both, you know, the more challenging region this year has been, without doubt, Europe, but UK and Spain, which have been the hardest hit from an economic point of view, and therefore we have our customers, and therefore we have also reflected that. But the last couple of quarters have been quite encouraging. There is a lot of uncertainty, but remember we've seen lockdowns in Spain being very, very... I'd say probably at the level of the more difficult ones right now. So we know what happens in a lockdown. We know what happens to activity, to the top line. And both the UK and Spain have shown on a quarter-on-quarter basis 5% to 6% increase in net interest income and doing much better also on fees. And the transformation of the UK is not just about revenues. And by the way, UK has done really well in terms of mortgage growth, growing £4.5 billion in mortgages and actually more or less the same on business loans. So again, volumes have done well, margins are improving, and very importantly, very, very strong performance in cost. Again, not just the UK, Spain year on year is reducing cost by 10%. I want to stress that our focus in both the UK and Spain is going to be growth in revenues, but of course through better experience for our customers. But the new operating model obviously is going to be also reducing our cost. We think of it as productivity, and I said I believe that our aim is to reduce $500 million of the $1 billion additional cost we announced in 2021. So in the U.S., You know, SB&A, as I said, is part of the U.S. business with consumer, and net interest income in 2021 has gone up by 4%. Total, SB&A has gone up by 2%, Santander consumer by 8%. in spite of the lower rates, doing well in net interest income. If you want to think about the retail side separate from the consumer side, even though increasingly they're working together, I would also say that for the last few years, we've been more concentrated on regulatory remediation controls, setting up the structural basis for growth. So you should start seeing a different behavior of our business in the next couple of years. Again, we are... very proud that in a year like this, the U.S. has been, I can say, our best performing country, at least in terms of the bottom line and growth and profits. Do you want to add anything on the business, UK? I think I covered that.

No, it's done.

Okay, so thank you.

And last question, please.

Thank you. The next question comes from Fernando Gil de Santimanez from Barclays. Please go ahead.

Hello, good morning. Thank you for taking my questions and thank you for the presentation. A quick question on Spain and AI and the trends. I mean, how much are you accruing on TOTRO and how much do you think this will affect going forward in 2021 and 2022? Thank you very much.

That is a question for José Antonio. So José Antonio is going to give it to our CEO. Thank you, José.

Thank you. And we have some others in the room, so maybe... Yeah, we currently have a total of around 75 billion in TLTRO. And obviously we believe that we can apply the new conditions... described recently, and that will mean an increase in 21 relative to 20 of around 300 million, of which 250 will come in Spain, more or less.

I think we have no more questions. We need to leave it here already. So thanks very much, everyone. Thanks, Anna, for Antonio. And obviously, the IEO team is at your disposal.

Yes. Sorry, it was a bit longer presentation. We usually get feedback more time for questions. We try to answer all the questions you've asked. That last one really was... It was quite something. I'm very happy to have Jose with us here. Thank you so much, everybody. And, you know, we're very proud of our results. Again, any further questions, Sergio, Jose are at your disposal. And stay healthy and safe. Thank you.

Thank you.