Banco Santander, S.A.

Good morning and welcome to Santander's first half 2025 results presentation. We are delighted to be joined by our CEO, Hector Grissy, and our CFO, Jose Garcia Cantera. We will start with the presentation and then come back for your questions. Hector, over to you.

Thanks, Raul. Good morning, everyone, and thank you for joining Santander results presentation. We will follow the usual structure. First, I will talk about our results with a special focus on the performance of our global businesses. Then Jose, our CFO, will give a deep dive on the financials. And I will conclude with some final remarks before opening up for Q&A. Before starting the presentation, let me remind everyone that we have announced an agreement to sell our business in Poland. Given that, until the deal is completed, we're still managing Poland as prior to the announcement. All figures in this presentation include Poland. We are approaching the end of our strategic cycle well ahead of our plan. Thanks to our disciplined capital allocation, which is further improving profitability, up to 16% post-81, with our C81 ratio at 13%, and 88% of our RWAs generating returns above our cost of equity. After our latest inorganic transaction, we decided to accelerate execution of our €10 billion share buybacks, and upgrade our share buyback target so we now expect to distribute at least €10 billion to our shareholders through share buybacks for 2025-2026 subject to regulatory approvals. Q2 was another record quarter, demonstrating the strength of our strategy and the resilience of our business model in a more challenging environment. Our quarterly profit hit a new record of 3.4 billion, making H125 the first half ever, driven by strong revenue growth across global businesses and our solid franchise of 176 million customers that continues to grow, having increased by more than 8 million year-on-year as we improve customer experience, leveraging our global platforms. We achieved this as we continue to invest for the future through one transformation, making excellent progress towards a simpler and more integrated model. This has helped us to improve our efficiency and increase our post-81 ROTE by almost one percentage point to 16%. Our balance sheet remains solid with a strong capital ratio, which ended the quarter at 13% at the top end of our 12 to 13 operating range. All this contributed to strong shareholder value creation, with TINA plus dividend per share growing 16%, despite the depreciation of some currencies across our footprint. Going into more detail on our income statement, our P&L remained very solid. We delivered strong top-line growth with revenue up 5% in constant euros, supported by NII, which increased 1%, or 4%, excluding Argentina, and also by new record fees, up near double digits supported by a significant customer growth and the network benefits we are capturing through our global businesses. Expenses grew below revenue, showcasing the positive effects from our transformation. We reiterate our target of lower costs in current euros in 2025. We are once again demonstrating the sustainability of our results with 5% growth in net operating income. Our prudent approach to risk is also evident in our robust credit quality trends, with a cost of risk that is consistently improving year on year. As a result, profit rose by double digits year on year. Lastly, This quarter we had positive and negative one-off charges that were not part of our ordinary business and are fully compensated in the net capital gains and provisions line. All in all, as we have shown over time, our results are sustainable and less volatile than Peter's, even in an increasingly challenging environment. We are ahead of plan in executing our transformation, which continues to boost our operational leverage, structurally improving both revenue and cost performances. Simplifying and automating processes and our active spread management have already contributed 243 basis points of efficiencies since we started. Our global businesses continue to drive the group's profitability and have delivered 104 basis points in efficiency gains. Our proprietary and global tech capabilities have generated 87 basis points in efficiency so far, surpassing the levels which we expected to reach by the end of 2025. As we said last quarter, there is still more upside over the medium term from our strategy, for both revenue and cost. Retail and consumer, which represent 70% of our revenue, have significant upside as we progress on the implementation of common platforms across all our global footprint. The rest of our revenue comes from wealth, CID and payments, which are more fee driven and will deliver additional efficiency improvements as we continue playing to our network strengths. All our global businesses deliver revenue growth while we improved groups profitability. Customer activity continues to drive revenue growth across all businesses, double-digit in wealth and payments, and also strongly in CIB. Profit also grew at double-digit rates in every business except consumer, which remained broadly stable year-on-year and improved significantly in the second quarter. In terms of profitability, we're already above the target we set for 25 in most of the cases, with an efficiency ratio that is improving at group level. The combination of our global businesses and our geographic footprint is a powerful example of how diversification works, putting us in a great position to navigate the challenges ahead. Higher than expected interest rates support some of our retail franchises, while other parts of our businesses, such as consumer and certain emerging markets, perform better with lower rates. Is this diversification that allows us to deliver recurring strong results, consistent profitable growth and value creation even under more challenging circumstances? Overall, the record first half performance, the execution of our strategy and our diversification keeps us on track to achieve our full year profitability targets. In retail, We are transforming the way we operate to become a digital bank with branches, combining cutting-edge technology with expertise and proximity of our teams. This combination is very powerful. It enables us to match the customer experience of digital-only competitors while offering personalized support and advisory through our branch network. Over the last year, we have gained almost 3 million AFTIC customers, increased 3% our deposits, and digital sales are up 16%. A key initiative is our new based AI global CRM, already being deployed across the group. In Spain, we completed the rollout of this CRM in the branch network during the quarter, boosting agent productivity by 23% in our assisted channels. On the cost side, automation is reducing operational complexity, allowing teams to focus more on customer interactions and value added activities and reducing manual activities to improve our cost to serve by 2% year on year. We are progressing in the rollout of our global platform. This quarter we achieved a major milestone. We completed the migration of gravity in Spain following last quarter launch in Chile. This wing goes closer to becoming the first major Western bank to operate fully in the cloud and has already resulted in tangible benefits. Respond times are 15% faster. Running costs have dropped over 65% in Spain. Deployment speed has improved from one month to just two days, and customers now enjoy a faster, more agile, and intuitive digital banking experience. Retail profits were strongly year-on-year, driven by solid revenue across most countries. Costs declined in real terms, while credit quality remained solid. In a more demanding environment, NAI grew 3% year-on-year, excluding Argentina, reflecting our focus on profitability and disciplined margin management. Fees rose 8%, supported by higher customer activity. As we said last quarter, by enhancing customer experience, reducing operational complexity, and fostering connectivity, we expect our transformation to continue driving customer growth and lowering costs in euros. In consumer, we continue to advance in our priority to become the preferred choice for our partners and customers. By delivering the best solutions and increasing our costs, Competitive advantage across our footprint. We are converging towards platforms. The recent launch of Open Bank in the US, Mexico, and Germany has proven highly successful, attracting 6 billion euros in incremental customer deposits. We're expanding and consolidating partnerships, offering global and best-in-class solutions integrated into our partners' processes. Xenia, our checkout lending platform, continues to gain traction. with more than 200,000 new customers onboarded in Q2. Consumer profit was relatively stable year on year in a context of lower car volumes in Europe, which began to show signs of recovery towards the end of Q2 and was supported by a solid cost of risk performance. Quarter on quarter, profit grew 16%. driven by strong net interest income and fees, as well as solid underlying LLP trends, mainly in the US, which was also benefited from some seasonality. Costs remain flat, reflecting the benefits of our transformation. Our focus is clear. We prioritize profitability over volume. We are currently originating at ROTES above 16%, well ahead of our back book. At the same time, we are lowering funding costs. Retail customer deposits grew 10% year-on-year and now represent 62% of total funding, up five points year-on-year. We are accelerating our transformation, which keeps bringing cost savings, and we actively manage capital to maximize returns, redeploying it from lower-return businesses to most profitable opportunities. As a result, we expect profit and NII to improve through the year as we continue to regenerate at attractive profitability levels, lower funding costs, and accelerate transformation. In CIB, we are building a world-class business to better serve our corporate and institutional clients across our footprint, while maintaining the same low-risk profile. Number one, we continue deepening our client relationships by expanding our advisory capabilities in the US, building on our areas of expertise to accelerate growth across the group. As a result, we are gaining market share and more relevant roles in investment banking. In the U.S., for example, we have won 30% more deals than last year, with better roles in a market where overall deal count has fallen by 11%. Number two, we're strengthening our position in our core markets, leveraging our centers of expertise. A good example of this is our record half in global markets, with revenue of 25% driven by, first of all, grind flows, the investment banks, investment, sorry, we've made, and the collaboration with global transactional banking and global banking. Third, collaboration with other businesses is also a key growth level. CIB provides FX solutions to retail, product development and structuring to wealth, and a full sheet of products, including capital markets and advisory, to commercial and auto. Even in a more challenging context in Q2, CIB delivered solid results with revenues up 9% year-on-year, leading to the highest H1 revenue on record, supported by a higher NII increase and fee growth across the business lines, and the exceptional performance of global markets in Q1. All this while we maintain one of the best efficiency ratios in the sector, and an ROTE above 20%, reflecting our focus on profitability and capital discipline. In wealth, we are building the best wealth and insurance manager in Europe and the Americas. Number one, in private banking, we remain focused on expanding our fee business and consolidating our global position through value-added solutions. This quarter, we launched Beyond Wealth, our new global family office service, and opened a dedicated service center for non-resident customers in Spain. Number two, in asset management, we strengthened our position in alternatives with the launch of the Real Estate Co-Living Opportunities Fund. And third, in insurance, which represents one of our most relevant growth opportunities, we're accelerating our strategy across two verticals. life and pensions, with new lines such as retirement in Spain and unit-linked products in Mexico, and property and casualty, expanding high-growth businesses such as Health and Autocompara. These efforts have supported a 6% year-on-year growth in gross return premiums. Fourth, promoting connectivity and collaboration with other businesses, mainly CIV and retail, is also a major growth driver for wealth. Collaboration fees increase close to double digits. In summary, all this supports strong growth and high profitability. Profit grows 24% driven by strong commercial activity and double-digit fee growth across businesses. Efficiency improved 1.5 percentage points year-on-year and rotates close to 70%, making wealth an extremely efficient and profitable business for the group. Finally, payments, where we hold a unique position on both sides of the value chain. In Merchant Acquiring, we are among the largest players in Latin America, Spain, and Portugal. We are focused on expanding our global platform with a single API to serve all our customers, and we have already integrated several partners in Mexico, Argentina, and Uruguay. As a result, GetNet total payments volume keeps growing strongly. which is helping us to consolidate our presence in core markets. Pagonex Payments is leveraging the best proprietary technology to deliver account-to-account payments processing, FX, fraud detection, and other value-added services. Volume processes by our payments hub were four times higher than the same period last year. In cards, where we are amongst the largest issuers globally, with 106 million active cards, we continue to expand the business, offering best-in-class products to our customers. This quarter, we have introduced PaySmarter in Spain, a new initiative designed to enhance the security, control and benefits of credit card usage, encouraging greater adoption among our customers. We also continue to expand our joint value proposition with GetNet, now available in Spain, Chile, and Portugal, and following the recent launch also in Argentina. Payments delivered a strong quarter, with double-digit revenue growth year-on-year, both in cards and Pagonex, and cost-under-control driving 47% profit growth. Finally, Pagonex EVDA margin improves to 29% backed by GetNet with one of the best ratios among our competitors. We expect revenue growth, cost efficiency, and capital optimization to continue driving profitability in the coming quarters. Our strong operational and financial performance is improving profitability and driving double-digit value creation for the ninth consecutive quarter. Post-81 Rote was 16%, up nearly one percentage point year-on-year, reflecting the high levels of the new business profitability. Earnings per share rose to more than $0.43, supported by strong profit generation and fewer shares following the buybacks. As a result, we continue to grow our value creation, which in terms of PNAP plus cash DPS increased 16%, reflecting our disciplined capital allocation and again, the impact of our share buybacks. Buybacks remain one of the most effective ways to generate shareholder value. Yesterday, the Board of Directors approved a new buyback program up to 1.7 billion euros against 25 results, which As the ECB has already granted the corresponding approval, will start to be executed tomorrow. Since 21, and including this last program we are announcing today, we will have repurchased around 15 to 16% of our outstanding shares. These programs have been executed at an average price of 3.9 euros per share, providing a return on investment of approximately 20% to our shareholders. I will leave you now with Jose, who will go into our financial performance in more detail.

Thank you, Hector, and good morning, everyone. I will go into more detail on the group's P&L and capital performance, but before I do that, let me make a couple of comments. First, this quarter we have recorded two one-offs, obviously not part of our ordinary business, of the same amount but opposite directions. A net capital gain of 231 million euros from the sale of our stake in Casseis, amount that we decided to use to strengthen the balance sheet in Brazil. Second, as we always do, we present growth rates in both current and constant euros. We have a difference of around 5 percentage points between them, again this quarter. mainly due to the depreciation of the Brazilian real and the Mexican peso towards the end of last year. As the CEO explained, we are yet again reporting record results this quarter for the fifth quarter in a row. Revenue grew 5% with a good performance in costs in line with our objective for 2025. Cost of risk remains stable in the quarter, supported by robust labor markets and prudent risk management. There are several positives and negatives in the other results line, but the concepts that explain most of the significant jump in this line year on year are the write-downs in PagoNext and the temporary levy on revenue earned in Spain, which were accounted for last year. Finally, on the right-hand side of the slide, you can see the upward trend in profit, which grew 4% this quarter, on the bank of understanding NII performance, which rose 2% quarter-on-quarter, cost control, and better loan loss provisions. Total revenue increased 5% to $31 billion, on track to meet the target for the year in a less favorable context than initially anticipated. This was underpinned by growth in number of customers and interactivity with us across all businesses. All our global businesses contributed to revenue growth, which was mainly supported by another record half in CIB, up 9% year-on-year, driven especially by global markets and our growth initiatives in the U.S. We had 14% revenue growth in wealth, with record assets under management and strong commercial trends. Payments was up 17%, with double-digit growth in NII and fees, both in Pago Next and Cards, which was fueled by higher activity levels. And we showed a strong performance in retail and consumer. In retail, particularly due to good NII and fee income in most countries, and in consumer, supported by net interest income growth, both in Europe and in the U.S. The group's NII increased 4% year-on-year, excluding Argentina. Almost 85% of the group's net interest income comes from retail and consumer. However, this quarter, most of our businesses contributed to the overall positive growth year-on-year, which was supported by our active asset and liability pricing management, most evident in consumer, both in Europe and in the U.S., with improving loan yields and a funding structure with a larger share of customer deposits. but also in retail, especially in UK, Chile and Mexico. Lower funding costs related to market activities in CIB and the measures that we have been taking in the last few quarters to adapt the sensitivity of our balance sheets to protect NII on the new cycle of interest rates. A good example of this is retail, where NII increased across most countries and remained fairly flat in Spain and Brazil in a less favorable context for interest rates. As you know, we have positive sensitivity to rates in Spain and negative in Brazil. Net interest income grew 2% quarter-on-quarter, primarily due to the performance of net interest margin, which improved in the quarter for the same reasons that I mentioned before, while it fell only 10 basis points year-on-year without Argentina. This performance is in line with our guidance of NII going slightly up in 2025 in constant euros, excluding Argentina, and slightly down in current euros, guidance that we reiterate. We generated another record half in net fee income, reflecting our transformation efforts to promote connectivity across the group, deploy high value-added products and services, and provide the best customer experience. Net fee income grew close to double digits, well above inflation and cost, on the bank of a strong activity in general, customer growth, and a mix that is more weighted towards value-added products and services. Retail showed good performance across our footprint with solid consumer growth. CIB grew 9% up from record levels last year. After an excellent first quarter, And this second quarter was supported by the good performance in GTV, and as we continue executing our growth initiatives, particularly in global banking in the U.S. We had a 20% increase in wealth, with a strong growth in all business lines, backed by record assets under management, and a greater share of fee businesses. We showed double-digit growth also in payments, both in PagoNext and Cards, supported by high activity levels as GetNet's total payments volume increased 15% and Cards' spending rose 9% year-on-year. As we detailed in the first quarter, this year consumer is affected by the impact of a new insurance regulation in Germany and also by lower card registrations in Europe. However, strong fee income growth in consumer U.S. came mainly from servicing fees on auto portfolios sold under our capital light strategy, which is helping to partially offset this impact. And our strategic focus on insurance is also delivering tangible progress in consumer across Europe and Latin, with rising penetration expected to translate into higher fee income generation as activity gains momentum. One transformation is key to understanding why we're improving our profitability in every single market, leveraging the connectivity of our global businesses, providing economies of scale and scope. As a result, we expect sustainable improvements in operational leverage as we further implement the structural changes to our model. These improvements are already very evident. as demonstrated by the evolution of our cost base in absolute terms, that translates into better efficiency levels, which are amongst the best in the industry. In retail and consumer, which are leading our transformation, costs remain well under control, down 1% in real terms, even after absorbing wage inflation in some of the countries, an upfront cost of rolling out global platforms. Retail and consumer represent 70% of our cost base, and we expect them to showcase the benefits of one transformation going forward. CIB, wealth, and payments are more fee-driven. Cost in these businesses grew 6%, however, showing positive operating jaws with a double-digit fee increase, as I just explained. We had a strong cost performance also in the quarter. which was affected by Argentina. Excluding Argentina, cost remains flat, even after our investments on transformation and initiatives for future growth. As a result, net operating income rose 5% from last year, and our efficiency ratio improved to 41.5%, the best in more than 15 years. As Hector said, we reiterate our guidance for lower absolute cost in current euros for 2025. The risk profile of our balance sheet remains low, with robust credit quality across the footprint on the back of strong labor markets and easing monetary policies in general. Loan loss provisions increased 6% year-on-year, reflecting a reforce to reduce NPLs and also some deterioration in Brazil in the context of higher interest rates and inflation. Excluding the provisions allocated to accelerating write-offs, the increase would have been just 3%. Credit quality continued to improve year on year as reflected both in the NPL and the cost of risk. The NPL ratio fell further and is now at 2.91%. Remember that much of our NPL portfolio has collateral, guarantees and other provisions that account for more than 80% of total exposure. Cost of risk improved seven basis points year-on-year and remained stable in the quarter at 1.14%, despite proactive management actions to lower NPLs, as I just explained. In retail, cost of risk improved across all our main countries and was also slightly down in the quarter with significant improvement in Mexico, compensating a weaker performance in Brazil. In consumer, cost of risk improved both year-on-year and quarter-on-quarter, with notable improvements in the U.S., where we are seeing a resilient customer behavior, stronger used car prices, and stable labor market. We anticipate a stable cost of risk going forward, as we do not foresee a deterioration in employment levels. Moving on to capital, as you know, we have been improving our capital productivity and accelerating our capital generation for some time. Our CET1 ratio increased to 13% and stands at the top of our 12% to 13% operating range. This quarter, we generated 54 basis points of capital from attributable profit and asset rotation initiatives more than offset organic risk-weighted asset growth. Since the asset rotation typically concentrates in the second half of the year, we would expect net organic capital generation to accelerate meaningfully in the next two quarters. This enabled us to accumulate capital after compensating capital distribution charges for shareholder remuneration M81s and absorbing other charges, including some regulatory headwinds, which this year will be lower than initially expected, as some of them have been postponed to 2026. As a result, we expect regulatory charges of around 20 basis points in the second half of 2025. These figures do not yet reflect the impact from our recent inorganic transactions in Poland and in the UK. We continue to deploy capital to the most profitable opportunities and leverage our global asset desks mobilization capabilities to maximize capital productivity. Our disciplined capital allocation delivered a new book return on risk-weighted assets of 2.8% in the quarter, equivalent to a return on tangible equity of 22%, well above that of our back book. We are selling credit risk at a ROA of approximately half of that figure. All these actions underpin our growing profitability and consistent capital generation. Accredited capital redeployment is a top priority for us. Recent organic transactions are a clear example of our consistent application of a strict capital hierarchy under which we prioritize organic profitable growth and ordinary distributions, while any bolt-on acquisition must be complementary to our strategy and deliver attractive financial results at least in line with those of any organic investments and exceed share buybacks. we announced the disposal of Santander Polska at three times our initial investment, which is expected to generate around 100 basis points of capital. As buybacks remain one of the most effective ways to generate risk-free shareholder value, we decided to use half of this excess capital to accelerate the execution of the share buybacks that we announced at the beginning of the year and improve our target to at least 10 billion euros for 2025 and 2026 earnings. We will deploy the remaining half excess capital into the acquisition of TSP at highly attractive returns while we enhance our strategic positioning. We are deploying capital at least at 20% return on investment capital. The bill will be EPS accretive from day one, and it will increase group EPS by around 4% by 2028. We are buying TSB at around five times earnings post synergies. At the same time, TSB will contribute to the group with a low risk profile. It will accelerate Santander UK's transformation, improve connectivity across the group, and increase our exposure to mature markets and hard currency. During 2026, we expect that organic capital generation will provide additional room to deploy capital in line with our capital hierarchy. That's all from my side. Hector, over to you. Thanks, Jose.

In conclusion, this is a great first half. We are well on track to achieve our 25 targets that we rate the rate. Good business dynamics supported a revenue increase backed by all our businesses with fees growing in high single digit at the same time that we reduced cost in Euro terms. Cost of risk improved year on year and is also in line with our target of around 1.15% at the end of the year. We grew the CET1 ratio again to 13%, so it now stands at the upper end of our operating range, as we profitably grew our business organically, accrued shareholder distributions, and absorbed some regulatory impacts and one-offs. And Naroti increased to 16%, on track to reach our target of circa 16.5% in 2025. Antena plus cash dividend pressure is growing at double digits. In summary, very positive first half, which we expect to consolidate in the second part of the year to achieve our targets, even in an environment of higher uncertainty than initially anticipated. We anticipate revenue to continue evolving along similar lines, with NIA growing slightly in constant euros, excluding Argentina, and fees increasing in line with the guidance we provided at the beginning of the year. Cost should improve during the rest of the year as we continue to capture the benefits of our transformation and we expect the cost of risk to remain stable, supported by resilient labor markets. The strength of our business model is clear. Our unique combination of customer focus, scale, and diversification with consistent execution of one transformation delivers profitable, predictable, and sustainable growth and creates long-term value for our shareholders, our customers, and our teams. Before we move to the Q&A session, I would like to announce our next Investor Day, where we will deep dive on our strategy and goals for the next three years, which will take place in London on the 25th of February of 26. Now, we will be happy to take your questions. Thank you.

Thanks, Hector and Jose. Let's move to the Q&A. Operator, could we have the first question, please?

If you wish to ask a question, please press the start button on your telephone. And our first question comes from the line of Francisco Riquel from Alhambra. Please go ahead.

Good morning. Thank you for the presentations. I have two questions. The first one is NII in the UK, which disappointed this Q2, particularly in deposit costs. And despite the structural hedge, if you can please comment on the Q2 dynamics and update your NII guidance for the UK going forward and how this could affect your recently revised ROG target for this unit after the DSV acquisition. And my second question is top-up provisions in Brazil. What is the problem here? What segments are the most affected? Despite the top-up provisions to accelerate the write-offs, the MPL ratio is approaching 7%, so you can please update on the outlook for MPLs and cost of risk in Brazil going forward. Thank you.

Thank you, Francisco. Okay, first of all, it's important to say that UK, as you know, is a work in progress, okay? I believe that one of the biggest opportunities of Santander is here. We have a big transformation underway here in the country and we're very focused on profitability. You have seen the deposit margin discipline that we have. We have delivered strong net operating income and also better fees and focus on becoming the number one bank for our customer. It's important to say also we have had some takeaways from the structure hedge that we have and Jose can give you in detail exactly what's going on there. Also, it's important to acknowledge that we have a cost savings for transformation of around 3.5% that is showing up in the numbers. And 25 is going to be slightly up in NII. Bottom line, spec is impacted by the transformation cost, first of all, the branch closure mainly that we have done there as the program that we actually announced the first quarter. Okay, and we believe also that the cost of risk is basically going to normalize level, so for around 8 to 10%. It is important to say that our commitment to the UK is reinforced by the TSB acquisition, okay, that will contribute in improving our ROTE from 11% in 24 to 16% expected in 28. Okay, also, for 25, we expect NII to be, as I said already, slightly up, driven by the focus on the margin management that we have. have already stayed, the structural hedge that we have. And what I said, I mean, cost should be down. I don't know, Jose, if you'd like to complement a little bit on the hedge.

In the first quarter, there was a normally high volume of mortgages ahead of the end of the stamp duty exception. And this was corrected in the second quarter. And we also had substantial early repayments. So when you look at margins, actually volumes margins, they are behaving very much in line with what we expected, excluding this one-off from early repayments. So average volumes for loans was down 3% in the first half relative to the first half of last year. But net interest, the yield on loans was up 28 basis points. Similarly, deposit volumes were down 4%, but cost of deposits was down 25 basis points. So the improvement in net interest margin, client net interest margin in the first half relative to the first half of last year was actually 53 basis points from 166 to 2.19. So very good net interest margin performance. from customers. And again, as Hector said, we reiterate the guidance that we gave for the whole year. Again, here, and let me reiterate, there is a strong seasonality or a very different behavior between the first quarter and the second quarter. And because we mostly have, we have a mortgage portfolio, we are more affected in relative terms than others for the early repayments.

Thank you, Francisco. In Brazil, okay, despite the challenging environment, we will make meeting returns in Brazil. That's basically around the same returns we did last year. As you have seen, fees are going up quarter on quarter despite the one-off that we had in insurance. One transformation is basically impacting and helping us out in many ways to manage much better the bank. Putting into perspective, Brazil is only 9% of our loan book, okay? So it's very important, and also diversification is helping out, and it's offset by the U.S. and Europe and the power that we have in terms of basically managing the books that we see fit. It's important to say we're operating for profitability, okay? We're changing the mix on the portfolio given the environment, and we're concentrated on secure lending for individuals. Example, what we're doing in auto, where we're the number one lender in the country, and payroll loans, which we believe are an opportunity given the current environment. Credit cards, for example, we are diminishing what we're doing there, and instead of placing and doing 400,000 cards per month, we come down to 250,000. trying to be only giving credit cards to our customers. It's important also to tell you that cost of risk, losses, didn't change relative to our expectations. So it's very important to say that. But given the macro environment, we wanted to be conservative and strengthen the balance sheet. That's why we took the game from Cassis to do that and to do the PMA. That's basically what it is, but nonetheless, we believe that we're going to be around the levels that we told you at the beginning in terms of cost of risk, basically, at levels at around five or below.

Next question, please, operator.

The next question from Ignacio Largi from BNP Paribas. Please go ahead.

Thanks very much for the presentation and for taking my questions. I have two questions, if I may. The first one is just looking to one transformation, and I'm sure that you will probably give us much more color on that in the CMD in February. Just wanted to get a bit of a sense of what would be the potential direction of travel of costs at a group level going forward, if you think that the trend of declining costs could be maintained going forward. The second thing is on capital. I mean, following Jose's comments in the call that the capital generation will be stronger, I mean, you give us a sense a bit of how much that growth improvement could be and whether there could be a scope for incremental distributions in full year 25 results beyond the 3.2 billion an ounce from the disposal of Santander Posca. Thank you.

Thank you, Ignacio. Okay, first of all, I will tell you that Costs remain under control, as you have seen on the first half. We're down 0.4 in Euros year-on-year, and we reiterate our guidance to deliver lower costs in coming Euros in 2025 versus 2024. H1 costs down in absolute terms and cost growth remaining below, and revenue growth in costs in Euros as we see. Short-term costs are higher as we invest. It's very important to understand what are we doing, okay? If I give you some particular examples, we're deploying Plard in Brazil, in Mexico, and in Chile. And at the same time, we still have Pampa, the old platform, basically running at the same time. So even with that, we're actually... being able to lower costs because we're controlling costs in all levels. So what this will tell you, this is a transitional year in that sense. And even with that, we're able to decrease costs given what we're doing. And it's not just that. We're already deploying platforms in every single place. For example, also the version 24 of our new app is being redeployed now in Brazil. And at the same time, we are basically shutting down what we had before and doing the same in every single country. I believe that one transformation is driving positive growth. The cost-to-income ratio improved to 41.5% in the first half of 2025, below the 42 target, and I believe we'll continue to do so. So we're very well under control on cost and basically working really hard to maintain it.

So in terms of capital, Nacho, organic capital generation, thinking about how much capital we are going to be generating from profits, it's going to remain at the same level, might be a little bit better in the second half. Rich weighted asset growth tends to be Lower in the second half because asset rotation initiatives tend to concentrate in the second half. So if you look at the first half, in the first quarter, we did around $2 billion in risk-weighted assets, $12 billion in the second quarter. We still are targeting between $40 to $45 billion. So most of the asset rotation initiatives tend to concentrate in the second half. Also, although we guided for around 60 basis points of regulatory charges this year, around 20 to 25 have been postponed to next year. So now we are looking at, let's say, around 40 basis points, so we still have 20 left. So with all of these, I think you have all the numbers to look at what the capital ratio could be by the end of 2020. the end of the year. And what we said and we reiterate is that excess capital above 13% subject to regulatory approvals and the Board of Directors will be distributed as shared buybacks. But again, subject to regulatory approvals and the Board of Directors.

Thanks, Nacho. Could we have the next question, please?

Next question from Andrea Filtri from Mediabanca. Please go ahead.

Good morning, and thank you for taking my questions. You're only 45 basis points away from your best case scenario on one transformation implementation. Does this mean that we have already seen the benefits of this transformation? Or could you go below 41% cost income in coming years? If so, what is the next stage? The second question is on consumer, which is representing a drag to group ROTE. Why is that? And when will we see this segment no longer dragging down group profitability? Thank you.

Thanks, Andrea. First of all, I think that you're going to have a lot of fun in the investor way because that's exactly what we'll be talking about in terms of one transformation. I really do believe that you're seeing the tip of the iceberg on what we're doing there, given that, as I explained to Ignacio, we're still basically running and deploying some of the platforms and running the old platforms at the same time. As I said, 25, 26 are transitional years. For example, Payments Hub, which is very powerful and already, as I told you, I mean, a lot of our payments are going through there, are still running in parallel lines because, for example, the regulator in Mexico has not allowed us to close down transfer. So I'm still basically running two platforms at the same time, the same with the credit card platform, the same in many of the different things that we're doing. And once basically these platforms are finished and deployed in all the countries, you're actually the commissioning the old ones, the commissioning teams of FTEs that are basically doing manual processes, et cetera. So remember that transformation also is simplification. If you have seen, for example, product catalog in the group on front is basically down more than 40%. And we'll continue to do so in the following years. And we'll continue to lower products and simplify what we do. The backend is a little bit more difficult, but once, I mean, we are in runoff with some of the portfolios, this actually will help us also in the operations side, because we will be able to commission a lot more than we do today. All in all, just to answer your question, no. I think we're going to be able to deliver much more than we have in front of us today. In terms of consumer, I don't know, Jose, if you'd like to come into that one.

No, I think I would separate three components in consumer. Consumer includes open bank that is doing very well. We already have $5 billion in deposits in the U.S. over $5 billion from 150,000 customers. So the strategy in the U.S. is working, and we will be adding more products over the next few quarters to be a full-fledged bank, digital bank in the U.S. with open bank. So that's going very well. It has around 20 billion euros in deposits and also capturing clients very well. So OpenBank is doing as expected and I would say going even faster than we expected in the U.S. Auto US. Auto US is doing very well. You can see that the cost of risk is a lot better than we expected. We see stability in NII. Obviously, as we do less EVs, we will see an expansion of NII. We have already seen that, but it will accelerate towards the end of the year and next year. And obviously the consequence is that we will have to, you know, pay more taxes. Tax rate is still below 10% in the U.S., but it will gradually normalize, again, starting in the third, fourth quarter, due to the impact of EVs. And next year, it should gradually increase. And the weakness, and you're right, is in consumer Europe. And this is due basically to the impact of rates. Although we have no sensitivity to rates in consumer Europe, this is a business that is very sensitive, highly sensitive to volumes. And the car registration in Europe are down in most countries. So we're suffering a little bit from volumes, but if you look at quarter on quarter, cost of risk is already normalizing. So we are very constructive in terms of the returns, the path to normalization of returns in consumer Europe quarter after quarter in the coming quarters. Lower rates will definitely help with volumes. We are seeing that already. And lower rates will help with cost of risk as well.

Thanks very much. Can we have the next question, please, operator?

Next question from Alvaro Serrano from Morgan Stanley. Please go ahead.

Hi, kind of two follow-up questions. You've made a 16% RRT in the first half. Obviously, the target for the full year is 16 and a half. It's a step up. Maybe you can talk us through sort of big picture what's going to drive that step up. And the follow-up, which I think might be part of the exchange is around consumer. and heard your comments around the medium-term outlook. I'm wondering that 10% return in consumer at the moment, how much is it dragged down by the launches of OpenBank in the different countries, both in Europe and the U.S.? I'm just wondering if there's a front book, back book dynamic there. And the second question, also a follow-up on Brazil. On the provision side, when do you expect the peak in provisions? Obviously, rates are still high for the time being, but expect to come down early next year or late this year. When would you expect provisions to peak? Because there's still a bit of room until you reach that 5% cost of the risk charge that you've guided for. Thank you.

Thank you, Alvaro. Okay, first of all, it's important to say that if you saw this second quarter, we're already at 16.2 in terms of routing, okay? It is important to assess that it's also due to the change of the model that we're doing, becoming number one bank to our customers, because one transformation is not just about cost. It's also about changing the model about how we manage clients. So, as you have seen, we have already increased tremendously the number of active customers, the amount of products that we sell to these customers, and that's why you see fees. For example, in retail, you see fees numbers basically going 8%. year-on-year. This is basically because we are selling much more products to our customers and penetrating that client base at the same time that we gather new customers. Okay, so we will continue towards that, and that's helping us basically to go not just depend on the NII, but also to get fees and commissions that are helping us in the bottom line. So it's very important to understand that, and we do believe that we're going to be able to tell you and to get to the routes that we indicated. in the guidance, all right? In terms of consumer, I think Jose gave you a pretty good explanation of what's going on there. It is important to say that also Meinheim in the U.S. has helped us quite a lot. It's very strong. It's up six points. I was looking at the numbers that I explained to you every quarter about delinquencies and also delinquencies above 90 days, we are repossessing no more than 65% of the cars. That's basically still far ahead, far away from the pre-COVID levels that we were around 90%. And we are looking at the different mix of the portfolio and how it's basically performing. And we see, as Jose told you, that the worst is behind us in terms of that, and also that volumes are getting much better in terms of the registrations that we see in Europe. So I see that all in all that is basically helping. Also, OpenBank is helping us to get better margins. As you've seen, we've already gathered really good results. amounting deposits on the U.S. It has been a huge success. More than 140,000 customers coming in, deposits about 5 billion, and that's basically helping us to manage that and to fund that operation. We have a little bit of cost, yes, because of the deployment on that, but that will be basically amortized over the next few years. It is important to say that OpenBank In the U.S., just to start with the deposit gathering, we're going to have a full-fledged commercial bank towards the next few months in terms of where we're implementing that. But, for example, in Germany or in Mexico, we have a full bank already operating there with very good – and I will not say in Mexico – with very good results. In terms of Brazil, what I could tell you about is we wanted, as I said, to be conservative, and that's why we basically did – the PMA, so we wanted to be conservative because we see what's going on in terms. It's important to understand the dynamics of the country. You have real rates. that are 9.5 points. That's probably in the OECD the largest real rates. We're talking about rates at 15% with inflation and 562 plus the spreads, etc. You can imagine that we have some SMEs and some mid-sized corporates that are suffering a little bit given those rates. I hope that with basically rates coming down, we will be able basically to drop the cost of risk in one sense, also get better margins because we see that if rates come down to the levels we expect in Brazil towards 12%, we're going to be about 20% rote. So in that sense, we believe that we're under control, that the board is over now, and that we understand exactly how the portfolio is performing.

If I may add very quickly on consumer, it's true that there is a, let's say, a game of production, right? So post-COVID, the profitability of post-COVID production was extremely high. then it was significantly lower. Now the post-COVID production is coming to an end, so the low production, the low profitability production of the years following COVID is gaining relative weight. But as we produce, the new production is actually significantly higher profitability. So in the next few quarters, as the all low profitability production matures, and we substitute that by the profitability, the production that we are producing today, which is significantly higher, we should also see much better returns in consumer. Also remember that consumer Europe has the Swiss franc mortgage provisions in there, which obviously is affecting results. But again, pre-tax profit in the U.S., auto U.S., is up 42% year on year. Pre-tax profit in Europe is flat. year on year. So, again, despite these negative trends, the business is performing well. So, truly, I mean, we are quite optimistic about the next three, four, five quarters to see a normalization of both cost of risk and profitability of the portfolio. No, in Brazil, when is going to normalize cost of risk? If you look at the three-month cost of risk, It was 4.5 every quarter last year. 4.5, 4.5, 4.5, 4.5. In the first two quarters of this year, it was 4.9. We guided for something like between 4.7 to 4.8. So we are slightly above what we expected. Obviously, rates at 15%. We didn't think they were going to get to that level. They're going to stay at that level probably until year-end. But more importantly, when you look at the NII in the context of significantly higher rates, we have been repositioning the balance sheet a lot for lower rates. So when we look into 2026, the market expects rates to go down 250 basis points. The balance sheet today would react to that extremely well. And we do not think cost of risk, as Hector said, on average will go above 5% this year. Again, the provisions we've taken using CASA's capital gains is a post-model adjustment because we want to be conservative. Rates at 15% ahead of elections next year. But again, BAU cost of risk is below 5% in the first half, and we think it will remain more or less at this level for the rest of the year.

Thanks very much. Can we have the next question, please?

Next question from Carlos Pesoto from CaixaBank. Please go ahead.

Yes, hi, good morning. A couple of questions from my side as well. one would actually be related with the room loss provisions at the corporate center so um you booked 98 million euros um there at this quarter the previous one has already booked 99 i believe that those were related with npl uh sales i was wondering if this is also the case this quarter uh and also what you could give us some clarity some visibility on uh what geographies those npl And also, should we expect this to become the normal quarterly run rate? of long-lost provisions at this unit for upcoming quarters. And then going back to Brazil, if you could give us some view on what you expect in terms of NII evolution over the coming quarters, considering that the risking of the portfolio you are mentioning affected the volumes are down as well. How will that play out in terms of the final print for NII? Thank you very much.

Okay, so provisions at the corporate center, as we explained and Hector explained during the call, these were taken to basically accelerate charge-offs to lower the NPL ratio, which is below 3%, to 91%. We do not think this is recurring. We should not expect this. to happen every quarter in the coming quarters. This was a, let's say, a decision to accelerate charges to bring the NPL below 3 percent. So do not expect the same level of provisions at the corporate center going forward. NII in Brazil. I just referred to how we've been repositioning the balance sheet for the rate environment that is going to come next year. So let's go a little bit in detail about the first half. Average balances for loans were up 5% year on year in the first half, and yield on loans was up 63 basis points. Deposits, and this is the key going forward, were up 8%. Demand deposits was up 6%. and time deposits was up 9%. Obviously, the deposits is where you see the sensitivity, and the yield of deposits was up 131 basis points. So net-net, we had a customer margin that contracted 68 basis points year-on-year, despite which NII was actually up year-on-year in Brazil, slightly up. So, we've been working a lot on improving not only the quality of the asset side, but the quality of the liability side. And there is what we think is where the gain is going to come in the coming quarters. Rates are at 15%. The market expects rates to go down 250 basis points, maybe to 12.5% by year end. So, in 2027, we should see rates at around 12% on average. And in our models, at 12% rates, the return on equity of the bank moves to 20%. So we are quite confident that if rates are on average to 12% in 2027, the return on equity in Brazil will exceed or be at or exceed 20%. And again, this is due to the work that we've been conducting in the last few quarters to improve the quality of the asset side, but mostly the quality of our funding structure and our deposits. Thanks very much, Jose.

Next question, please, operator.

Next question from Ignacio Cerezo from UBS. Please go ahead.

Yeah. Hi. Good morning. Thank you for taking my question. I've got one. I'm coming back summarizing a little bit, actually, some of the questions my colleagues have done. If I'm doing the numbers right, actually, your second half of the year on a group basis needs to be around 5%, 6% higher. and the first half in terms of net profits to get to the guidance. So if you tell us geographically, where is that growth going to come from, especially considering that, I mean, the currency, the headwinds seem to be compounding a little bit, actually, and you have seasonality in the U.S. And the second question is on the regulation. I mean, the 20 basis points you're postponing or shifting back into 26. If you have any color preliminary information basically on what is going to be the underlying regulation 26 over and about those 20 basis points.

Thank you. Okay, Ignacio. In terms of what you're basically asking in terms of where do we see basically the second half, I could tell you that first of all, I explained in detail already a lot of the details that we're doing in One Transformation, how we're focusing on basically becoming the number one bank to our customers, where do we see that? But it's very important to say that we have a really consistent track record of implementation in everything that we say, okay? So that makes us confident that we will achieve our targets, as I said. And based on the macro outlook for 2025, we expect first of all to reiterate our guidance of $62 billion in revenue for the year, despite the 5% headwind from FX translation that we have seen. On the first half, revenues are growing 5% year-on-year in cost and currency. was produced to growth and continue to the second half given by improving consumer revenue momentum. That's basically up mid-single digits. We see also continuous strong growth in payments and wealth and also CIB. Remember that CIB had a second tough Q2 due to the fact that markets were basically after liberation day for eight weeks basically completely off. So that basically is helping us out because we believe that that's not going to be the case on the second half. In retail, revenues up 1.6% in the first half. Flattened AI, but fees growing at 8%, what I said about one transformation, very important. We're doing much more business with our customers. We're penetrating the client base, and we expect that revenue basically to continue basically doing well. Maybe flatties for the full year, but we will continue to see growth in fees. At the country level, we expect Mexico growing revenue high single digit, the UK up low single digits, and offsetting low single digit declines that we see in Brazil and in Spain. All right? In consumer, we expect revenues to grow mid-single digits, both in the U.S. and Europe, driven by NII, which is also expected. to be up mid-single digits, okay? And in CIB, as I already explained, we continue to expect the growth to mid-single digits for the year. And if the market basically is strong, that also maybe is going to give us an extra tailwind. In wealth, revenues were up 14% in the first half, and we expect low double-digit growth for the full year. So that basically tells you 100% of what's going on there, no?

Just one final comment. Remember that the other results line in 2024 was abnormally high. You already saw a substantial improvement in the first half. So we would also expect a better second half relative to the year, to last year. So again, yeah, we are confident that we will meet our 16.5% return on tangible equity in the year, absolutely. Well, I think it's early days. I think these 2025 basis points is the SME model in Spain that we need to recalibrate. Other than that, we see very little else at this point. But again, we need to wait to see the calendar of inspections, et cetera, by the ECB, which will come later in the year. So I think for purposes of estimating capital, I would use more or less the same amount that we had this year. We'll see if we have a different guidance towards the end of the year. We'll communicate that. But today, I don't see anything different from what we saw in 2025.

Thanks very much. Could we have the next question, please, operator?

Next question from Chris Hallam from Goldman Sachs. Please go ahead.

Thank you for taking my questions. Hector, you talked earlier about the parts of the business in Brazil where you still feel confident versus where you're looking to pull back slightly in credit cards, I think. Is that a temporary phenomenon or should we assume that's the new normal? And how would that feed into the NII growth algorithm in terms of volume versus margin? And then on the top-up in Brazil, I guess, why now? Was there a specific sort of proximate cause within Q2 to trigger that, aside from obviously the availability of proceeds from cafes? And then second question, on the UK and the AXA headlines last week. So I understand you already have a provision in place here, but, you know, it would be prejudicial to disclose the amount. But I guess in broad terms, is there potential delta on that provision, i.e., whether it would need to be sized up or down material to the CET1 walk for 25 or 26? Thank you. Okay.

Thank you, Chris. Okay. It's not exactly a pullback. I mean, as we know, and I have explained basically in the past, we are very flexible in the way we manage our portfolios. And we manage the portfolios as we see fit, okay? So what we basically started looking in Brazil was that open market was starting to be pretty difficult to manage. So we decided basically to concentrate on our own customers. and to just give credit cards to them. So open market, we will go back when we see basically a much better market, even though labor Market is still strong in Brazil and the economy is doing much better than we have seen nonetheless I think it's important to be conservative at this point and move the portfolio when you have these high rates Basically to other more secure things that like I was telling you about auto and about payroll loans Which are what we call consignado, which is much better in terms of cost or risk at this point and They would basically, exactly as you were saying, this NAI volume versus margin because we have now basically investing in things that have less margin than we used to have when you basically have much more credit cards and non-secure personal loans. We will go back to them when we see basically the economy in a different way and we see rates starting to come down and a better macro scenario. But this is exactly what we do and we manage the portfolio. Look, very active. Our teams basically see pricing and they basically change the way we manage the portfolios on a weekly basis. And so it's important to say that that's the way we manage that. But this, as you were saying, is temporary. I do believe that when market basically clears up and we believe that it's a strong thing, we will get back into that and then margin could be a little better. And also, basically, as I explained to you, that when rates basically go to 12%, our returns and the way we basically have positioned the portfolio will give us a lot better margin and a much better position and much better returns, as you have seen. Okay, in terms of the AXA situation, regarding the UK's court decision in relation to the claim, we disagree with the outcome and we are seeking to appeal. We do not expect the net impact of the judgment to be material for Santander, given the provisions already made and the potentially elections available. It's important to say also that no customers have suffered a loss as a consequence of the claim brought by AXA or the judgment, and given this is an ongoing legal matter, we are not able to comment any further, unfortunately.

You asked specifically if the capital path is going to be affected by this. Look, our pre-provision profit is going to be 37, 38 billion this year, something like that, between 35 to 38 billion. This is immaterial, really. Why now Brazilian provisions? It's because the capital gain happened right now, and we think, you know, given the level of rates, given we have presidential elections next year, we think it, you know, we want it to be prudent. It's as simple as that. Thanks very much.

Can we have the next question, please, operator?

Next question from Cecilia Romero from Barclays. Please go ahead.

Thank you very much for taking my questions. I have two, one in Spain and another one on litigation. The first one in Spain, cost of risk is down quarter on quarter, but still running higher than peers. Given backdoor continue to be very supportive, how do you see a Spanish cost of risk developing through the rest of the year and what's your view on the medium-term trajectory? And in terms of Spanish NII, could you walk us through the expected dynamics in customer spreads for the remaining of the year? Given current trends with NII up quarter on quarter, do you now expect NII to perform better than the guidance of minus 5% fall issue earlier? And the one on litigation is from Mexico. Mexico anti-trust regulator has issued preliminary findings naming several banks in a potential case of fee fixing on deferred credit card payments. Can you comment on the status of this investigation and whether it could impact your expectation for fees in Mexico going forward? Thank you.

Okay. I will go to basically, thank you, Cecilia. First of all, on the litigation in Mexico, we cannot comment on this point. There is no basically information about it that we can tell you, so that one is as much as I can say. In terms of what we're doing, the Spain cost of risk, as you have seen, as you have said, is coming down, and we are actually performing very well. The Spanish economy and the labor market are quite strong, and we see that that will continue towards the end of the year. We don't see basically any changes whatsoever on that. On the other side, actually, we see the market coming very strong, and we see also good demand of credit on mortgages. We see credit cards going up, a little bit of consumer loans coming in, so nothing to report there. I think it's much better than we expected.

In terms of NII, if I remember correctly, we guided for NII down in Spain 6% to 7%. Obviously, NII is behaving better. So now we think it will do better than that, maybe down 4% to 5%. We are still building the ALCO portfolio. adding government bonds at well over 3%. We bought some algo portfolio in the second quarter. The asset hedges are coming to an end. We are not hedges the repricing of mortgages anymore at this level of rates. within rates are close or about to stabilize and we obviously put all the funding floating already. So the hedging is still some hedging coming from the ALCO portfolio, not a lot more though. So the improvement is coming from cost of deposits. Cost of deposits first had this year relative to last year is down 30 basis points. Now cost of deposits is 67 basis points relative to 98 last year. So extremely good deposit cost management, and that's what is going to drive the better NII performance we expect this year relative to the guidance we gave in the previous quarter.

We have the next question, please, operator.

Next question from Peter Smith from Autonomous. Please go ahead.

Yeah, good morning. Thank you for taking my questions. Just to follow up on Spain, the volume 6 repos were weaker year-on-year in Q2 and also compared to the trends that we've seen in Q1 and remain below the market. Now that you've improved the customer spread, At what sort of level of customer threat would you need to see volumes pick up again to continue on an NRI growth trajectory into 26 and 27? And then just to follow up on the provision on Brazil, I mean with rates expected to be lower, There's obviously going to be a volatility on the elections to be managed. But what would need to happen for the provision in Brazil to be released back into the P&L or to be used towards provisions in the future? What are the macro parameters that would need to improve? Thank you.

On your question on Brazil, it's important to tell you that we, as I said before, and Jose already explained, that we don't see expected losses to change. So we basically continue on the same trend over there.

In terms of what we see in terms of Spain, the increase in cost of risk in Brazil is not coming from individuals. Employment levels are very strong, the economy is doing very well. It's coming mostly from companies and the increase in Chapter 11 bankruptcies due to higher rates. So some of the higher leveraged companies are suffering because of the level of rates. So there is a limit to the deterioration in asset quality, obviously, because this only affects a very small portion of our balance sheets. So, again, it's with the strong levels of employment, the ones we have today, and with the expectation of lower rates, it's because we believe clearly cost of risk will go down next year. So these are the variables that really matter, but it's really important to mention that the increase in cost of risk is not retail, it's not individuals or SMEs, it's mostly mid-sized, large companies that are having problems with interest rates.

Let me give you a little bit of the dynamics of what's going on in the Spanish market. Given the recent events and everything, we're seeing an important drop in spreads and in margins because of tremendous competition in the market. And we are being very, very disciplined in order to manage and to concentrate on profitability. Okay? So it's important for you to understand that some of our competitors have decided to do mortgages, and I would say all the way down to 165. We don't think that... That's the right thing to do. We believe that the market basically is not profitable to do them at those levels, and we are being very disciplined in that. And the volumes that we're basically doing are at much better margins than those. So when are you going to see us back doing much more bigger volumes when the spreads basically go to the right level? Because we do believe that the market would basically change and react to that and be more intelligent or smart in the way we're managing the margins. So in that sense, we have all the firepower, but we're basically expecting that the market will basically be much better, and we're concentrating also on our big customers, and in-house customers and taking advantage of that. And also you can take a look at what we're doing in terms of fees and penetrating the customer base, what we're doing in credit cards. For example, volume in credit cards in Spain grew really strongly these past six months because we believe there is an opportunity in the consumer side, as I said. Even though also we see some of the SMEs basically coming back to the market, And we are basically fulfilling that volume demand and also CIB with a lot of interesting opportunities. And we're basically going back to the market in that sense. So I do believe that we could have much better volume, but we need a market that is smart and organized in order to be able to do that.

Thanks very much, Hector and Jose. This is the last question, so this brings our call to an end. I would like to thank everybody for joining us on what is a busy day. If you've got any follow-up questions, the whole Investor Relations team is available at your disposal through this week. Thanks very much, and have a good rest of the day.