Importantly, thanks to the hard work of our teams, these results have been delivered while we have continued to transform our business model. Better operational performance improved our cost to income ratio from 46.2% to 45.8%. We also focused on leveraging our Group’s scale: as an example, our global Santander Corporate and Investment (SCIB) business accounted for 14% of the Group revenues, of which 47% (€3.4 billion, up 33% year over year) would not have been realized without our global reach.

We maintained a low risk profile characterized by a conservative risk appetite, strong risk management capabilities, and stable and predictable credit exposures. The Group cost of risk remained in line with our 2022 guidance of 100 basis points, despite the growth in provisions, which mainly reflect macroeconomic factors and individual provisions in Brazil.

We have also strengthened our balance sheet and capital position year after year, including during COVID-19. In 2022, we generated 138 basis points of organic capital of which 45% (62 basis points) were paid out as shareholder remuneration; overall, we reported a CET1 of 12.04%, which is above our target. We have continued to be disciplined in our capital allocation, reaching our objective of having 80% of our Risk Weighted Assets yield a Return on Equity above the Cost of Equity, compared with 70% in 2021.

We maintained our policy of allocating half of our shareholder remuneration to share buybacks. At our current valuation levels, share buybacks are one of the most effective ways to generate shareholder value while preserving the capacity to invest in our business. Total shareholder remuneration in 2022 will amount to €3.8 billion, of which €1.9 billion is being distributed via buybacks and €1.9 billion being paid in cash dividends. The cash dividend per share will have increased by 18% over the previous year.

After January’s buyback, we bought back 5% of our outstanding shares since 2021. We delivered 6% growth in shareholder value creation (growth in the sum of tangible book value per share and dividend per share). Share buybacks at current prices remain accretive to tangible book value per share, a sharp contrast to historical remuneration policies based on scrip dividends, which were neutral for shareholders (the same value was divided among a larger number of shares).

Second, financial inclusion is another big opportunity: in Latam, where we have an extensive footprint on all major economies, more than a 100 million people still do not have a bank account. We are working to change that. In the years 2019-2022, we have financially empowered 11.8 million people – 3 years ahead of our 10 million target. Last year, we won Euromoney's Best Bank for Financial Inclusion award for the second year in a row; and we received similar recognition from The Banker.

Third, we continue to build on Santander’s success in supporting education, employment, and entrepreneurship. In 2022 Santander Universities awarded more than 266,000 scholarships and grants to students, professionals, entrepreneurs and SMEs; and allocated €100 million through partnerships with more than 1,300 universities.

Our contribution to the economies of the countries we operate also comes in the form of taxes. In 2022, our corporate tax amounted to €5.5 billion. In addition, we paid €4.2 billion in other taxes¹ and channeled €10.7 billion of our customers and providers taxes.

All our progress depends on our ability to attract and develop the right leaders and teams, and a culture of teamwork, transparency, and customer focus which we have fostered over many years. The results of our efforts are reflected both internally and externally. Santander employees are highly engaged, with a global eNPS (employee Net Promoter Score) of 54, in the top 10% of the Finance sector and 16 above the All Companies index. We have also made significant progress towards our 2025 Diversity, Equity and Inclusion (DE&I) commitments: for example, 29% of senior positions are now held by women, close to our 2025 target of 30%.

We continued to attract new talent to the Group, having grown in 2022 our total workforce by close to 8 thousand employees, a 4% year over year increase. We did not reduce the size of our teams in any of our markets.

To achieve this goal, we are bringing consumer and commercial customers onto a common operating and business model. This model is based on proven operating models such as the one in Santander Portugal, where we have freed up branch employees from operational activities and with the help of modern, proprietary technology assets within the Group.

For example, Openbank already serves more than two million customers through our digital bank in Spain, Germany, The Netherlands, Portugal and Argentina. The front-end (what the customer sees and uses) is our proprietary cloud-based platform. It is more efficient, with a higher level of automation that drives lower operating cost with an average of approximately 50 operational FTEs per 1 million customers. It runs 100% of its data real time in a single cloud-based data-lake. Most important of all, it offers a great customer experience. The back-end (the core banking systems) are being migrated to our new, proprietary “Gravity” platform, moving us from mainframe technologies to more modern cloud environments. Gravity has already been tested in 4 markets with a plan to transition our core systems to our private cloud over the next 2 years.

We are now implementing the new model for consumer and commercial customers in the US, Spain and Mexico.

In the US, this transformation will enable significant operating leverage as we grow our deposits while creating top quartile customer experience. We are reducing products from around 300 to less than 20; and eliminating or automating more than 80% of the branch activities that are costly and add little value. These changes will significantly improve the efficiency of our US bank by lowering Non-Interest Expense / cost to serve by approximately 20% by 2025.

In the US, we are targeting specific market segments where we have local scale and can leverage the Group´s network. We are not pursuing a "universal" banking model. Through our focused strategy, Santander US is positioned to deliver profitable growth for shareholders by leveraging the Group’s strengths and initiatives across four key business lines: Auto, SCIB, Wealth Management and Commercial Real Estate. In Auto, we continue to increase gradually the use of deposit funding while improving the overall portfolio credit quality and digitizing the customer´s buying experience. In SCIB, we are enhancing our capabilities – such as securitizations, distribution, self-clearing - and leveraging the Group’s competitive advantage in Trade and Green Finance. Combined, all these businesses will allow Santander US to deliver 15% return on deployed capital through the cycle.

Last, we will continue to lock ESG into the frontline of our business. Having met our target to financially empower 10 million by 2025 three years early, we are setting a new target in financial inclusion: to provide access and finance to an additional 5 million people by 2025. Meanwhile, we will continue to progress towards our target of raising and facilitating €120 billion in green finance by 2025.

In WM&I, we will remain focused on being a top operator in our businesses, maintaining our strong share in all relevant markets. Our goal is to grow revenues at double-digit, and our private banking network AuM by c.10% CAGR.

On Payments, we expect our global platform, PagoNxt, to be processing more than 47 billion transactions in 2025, growing faster than the market rate. By concentrating payment assets and talent in PagoNxt, we benefit from a more efficient investment model (by building once as opposed to many times in different markets). The deployment of value-added services (lending, e-sellers and marketplaces) will help us accelerate our commercial activity both through our banks and in the open market, which will result in revenues growing at 30%. PagoNxt will be profitable from this year, 2023.

Finally, in Auto we will continue to leverage our global OEM relationships to expand the business across the three regions.

The unquestionable value our network businesses adds to the Group will be reflected in their contribution to our fee income, which will grow significantly.

These businesses, combined with our One Transformation plans, will help improve our operating performance: our cost to income ratio will fall from 45.8% to c.42% in 2025.

We will continue to benefit from higher rates in 2023 thanks to our diversification (in terms of both business and geography), coupled with the structure and positioning of our balance sheet. In 2022, we saw the positive impact of monetary policy primarily in the UK and the US. In 2023, we expect this to be the case in Europe. Approximately half of the net interest income expansion we expect in 2023 will come from our interest rate sensitivity in Europe. The other half will derive from new customers and a deeper relationship with our customer base. Under current market estimates, the positive impact of higher rates should extend at least into 2024.

The conservative risk profile and diversification of our businesses result in a through-the-cycle cost of risk of c.1.0%. This ratio is expected to be higher in 2023 as the cost of risk normalizes in the consumer portfolios in the US and Brazil. However, it is expected to gradually revert to the mean in the next few years.

We are confident of achieving our main financial targets, net interest and fee income growth, cost to income and cost of risk, in the current macroeconomic backdrop. Therefore, our profitability will increase further in 2023, after an already extraordinary 2022. Looking at the next three years, I am confident that our Return on Tangible Equity will stay within the 15-17% range while our capital remains above 12%, even taking into account the final implementation of Basel 3 in January 2025.

As I have mentioned, we manage the bank to generate sustainable value for all our stakeholders. This means that, for shareholders, we aim to beat our cost of capital. Our aim is to deliver “through-the-cycle” double digits average annual growth in Tangible Net Asset Value per share (TNAVps) + dividends per share (DPS). We are confident that staying at a return on tangible equity of 15-17% will enable us to reach this target over the next three years, while our FL CET1 capital measure remains at 12% or higher.

To ensure we deliver on our plan and achieve these very demanding financial metrics, we have defined relevant key performance indicators (KPIs) focused on customer productivity, efficiency and the contribution of our network.