Banco Santander Mexico, S.A.

Good morning, everybody. To Banco Santander's conference call to discuss our financial results for the first half of 2023. Just as a reminder, both the results report and presentation we will be following today are available to you on our website. I am joined here today by our CEO, Mr. Héctor Grissi, and our CFO, Mr. José García Cantera. Following their presentations, we will open the floor for any and all questions you may have in the Q&A session. If you would like to ask a question, please press star five on your phone. With this, I will hand over to Mr. Grissi. Hector, the floor is yours.

Thank you, Begoña. Good morning, everyone, and thank you for joining us. Let me share what we will focus on today. First, I'll talk about our half-one results on the context of how we are progressing with the strategy we outlined our investor day. Jose will then review our financial performance in greater detail, and then I'll conclude with a few closing remarks. Despite the challenges the financial system experienced at the beginning of the year, Q2 was another strong quarter for Santander, demonstrating the strength and resilience of our strategy and unique business model, even in times of market volatility. We delivered a record profit of €2.7 billion, an increase of 14% compared with Q2 in 2022, thus plus 17% in costs and euros. In the first half of 2023, profit was $5.2 billion, up 7%, supported by robust customer revenue growth. Revenue increased double digits year-on-year, supported by all regions and global businesses. Global and network businesses are contributing around 40% of total group revenue. Our numbers of customers grew by 9 million year-on-year, taking the total to 164 million. And loans increased by 1% and deposits by 5%. The group continues progressing towards a simpler and more integrated model through one transformation. the program that is accelerating our structural model change to drive efficiency improvement and growth in profitability. As a result, our efficiency ratio improved 1.3 percentage points year-on-year to 44.2 percent, and our net operating income grew double digits. Our return on tangible equity, ROTE, rose 80 basis points year-on-year to 14.5, while our earnings per shares improved 13% year-on-year, supported by greater profit and share buybacks. At the same time, our strong balance sheet with solid and sound capital ratio, liquidity at comfortable levels, and robust credit quality contributed to solid profitable growth, value creation, and shareholder remuneration. These results allow us to deliver value creation in terms of TNAP plus EPS year-on-year of 11%, of which represents an increase of more than $6 billion in the first six months of the year. Moving on to the income statement, firstly, remember that as we usually do, we are presenting growth rates both in current euros and constant euros. This quarter, there was no material difference between them. As I have just mentioned, profit increase in the first half supported by, first of all, a strong line performance with all the regions and global businesses growing. Cost in line with our expectations, growing 1% point below the rate of inflation. double-digit growth in net operating income to approximately $16 billion, which demonstrates the strength of our results, and low-loss provisions normalizing land with our expectations. These trends resulted in our highest quarterly profit on record, 4% higher than on Q1, even after the following impacts net of taxes recorded in Q2. The SRF contribution of more than $200 million An additional Swiss mortgage provisions in Poland of 140 million and one-offs in Brazil of 137 million. Jose will go into more detail on all of these points later on. This was a great first half that makes us confident that we will deliver our 2023 targets. Good business dynamics are translating into double-digit revenue growth. Our efficiency ratio improved as a result of good cost control and revenue trends. Our cost of risk remains contained in line with our target of keeping it below 1.2 percent at year end. CET1 was 12.2 after profitably growing our businesses organically. and at a comfortable levels allowing us to accrue funds to meet our shareholders' remuneration targets of a 50% payout. Our ROTE also grew year-on-year to 14.5% on track to reach our target at what would already be close to 15% if we don't analyze extraordinary banking tax on revenue earned in Spain. As we announced at our investor day, we have entered into a new phase of value creation that will help us grow TNAP per share plus DPS at the double digits during or through the cycle. I'd like to spend a couple of minutes updating you on the progress of our transformation plan now that we are six months down the road from our investor day. We are transforming the bank in the right way because we are structurally changing our model to improve both cost and revenue. We are making great progress in the implementation of One Transformation, creating a common operating model and technology for our retail business across our entire footprint to better serve our customers and to improve efficiency and to increase the size and profitability of our customer base. We are delivering across the three pillars of One Transformation. In simplification, we already have reduced 5% our number of products, nearly 400 fewer products in 2023. We are progressing in our digital self-service model, increasing the availability of products and services in our digital channels, and reducing the use of our contact center by 17%, just alone in the first quarter of 2023, compared with the same period last year. We are digitalizing the onboarding process end-to-end in Mexico. This initial pilot has resulted in a 36% growth in digital accounts per month compared to those in 2022. And we have already captured around $70 million in savings so far in the U.S. from transformation and simplification initiatives. As you can see on the slide, the initial efficiencies for one transformation and the impact of our good sprint management in a context of higher interest rates, which our CFO will cover later in depth, have already contributed 85 basis points in efficiency improvements. Our global and network business keep continuing contributing to the group's profitability and have already delivered another 43 basis points. Multi-Latinas and multi-Europeans, our initiatives to better serve our multinational corporates and SMEs through regional coverage model are growing at a very high rate, with revenue increasing by more than 70% year-to-date. In asset management, we have progressed to enter the alternative business, starting to serve upper market and institutional segment, and has reached more than 2 billion commitments already. In payments, we have deployed GetNet in Portugal and Argentina in the first half, and we expect to launch in the latest in Chile in the second half. In auto, we're increasing managing OEMs and retail relationships globally, expanding our partnerships in Europe to LATAM and the U.S. We have recently onboarded new partners in the U.S., leveraged the existing agreements in Europe, which are expected to materialize in around 4 billion of new business per year. We have also deployed a new parent regional leasing platform in two markets, and more countries will be added throughout 2023 and 2024. Finally, our global technology capabilities have already resulted in 36 basis points improvement in the efficiency ratio. Our global approach to technology has allowed us to capture $80 million in savings this year, mainly driven by, one, efficiencies from the recent development and deployment of Gravity in three countries, which has contributed with $31 million in savings in the first half, and new global agreements with vendors, which represent around $40 million in cost reduction year-to-date. The actions that we are beginning to carry out as a part of one transformation, which we are expanding across the group, are starting to be reflected on cost and on operational efficiencies. As you can see on the slide, simplification has already driven significant improvements in our cost and revenue proactive customer ratios. The solid progress we are making with the process digitalization and automation to capture efficiencies enables us to spend less time on operations in branches and turn the branch network into a powerful sales and advisory channel. Portugal has already taken out most of the operational activities from the branches, freeing up branch employees so that they can spend more time supporting customers and commercial activities. We're extrapolating this to other of our ranks. In only six months, through one transformation, we have already reduced the number of operational FTEs per million customers by 3%. We are already deploying global tech platforms to improve customer experience, leverage economies of scale, and extend best practices. Open Digital Services, as we call it, ODS, our cutting-edge front-end platform, allows us to deliver a best-in-class, omnichannel experience to our customers, at the same time that Gravity, our award-winning core back-end platform, drives significant efficiencies versus mainframe technology. We have integrated both in the U.S., so we will operate it on an end-to-end cloud-based retail technology stack, core and omnichannel, which is already tested and will result in significant improvements in service quality and customer experience. Our global and network businesses continue to contribute to this new phase of value creation. In CIB, we continue growing strongly after record performance in 2022 beating the market. Our global presence has allowed us to grow at 24% year-on-year, well above the average of annual growth target of 10% for the period 2022-2025. because, first of all, we can provide a one-stop shop service to our clients across all geographies, thereby capturing cross-border flows, and because we bring CIB products and services to our wealth, retail, and commercial clients across the group, and vice versa. As a result, revenue related to these two concepts, which we call network revenue, grew 27% year-on-year to $2 billion. Wealth management and insurance grew 25% year-on-year, well above our target, and this has been boosted by the benefits obtained from the Santander Network effect. A fundamental part of our value proposition in private banking is our unique combination of local presence and global reach. Our customers can move and transact easily from one country to another, and that's the reason why customers have $50 billion in assets under management booked abroad, 10% higher than one year ago. Our payments business is also growing very strongly. Two years ago, we began to move our payments business onto scale global platforms. And as of today, our payments hub platform already manages a significant part of all payments in the Eurozone, and we are progressing in another key countries such as Brazil, Mexico, and the UK. We are in the process of expanding our Cards platform across the group, delivering real-time digital processing capabilities to our banks, accelerating our business growth, as well as generating operational synergies of around 100 million per year during the next two years alone. First delivery of the platform will be live in Brazil by the second half of 2023. In auto, we continue to prioritize profitability over market share growth in a context of rising interest rates. Our transformation plan, which is making us much more efficient and increasing contribution of our global and network businesses, is helping us reach our 2025 profitability targets across all regions and businesses. As I mentioned earlier, the Group's ROTE rose 80 basis points year-on-year to 14.5%. and would be around 50% if we didn't analyze the extraordinary banking tax in Spain, which is in line with the group's targets for 2023 and 2025. Jose will now go in more detail to the group's first half performance. Please, Jose.

Thank you, Hector, and good morning, everyone.