Banco Santander, S.A. (NYSE:SAN) Q4 2023 Earnings Call Transcript

Banco Santander, S.A. (NYSE:SAN) Q4 2023 Earnings Call Transcript January 31, 2024

Banco Santander, S.A. misses on earnings expectations. Reported EPS is $0.17 EPS, expectations were $0.18. SAN isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Begona Morenes: Good morning, everybody, and welcome to Banco Santander’s Conference Call to Discuss our Financial Results for the Fourth Quarter 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 Executive Chair, Ms. Ana Botin; our CEO, Mr. Hector Grisi; and our CFO, Mr. Jose Garcia-Cantera. Following their presentations, we will open the floor for any and all questions that you may have in the Q&A session. With this, I will hand over to Ms. Botin. Ana, the floor is yours.

Ana Botin: Good morning, everybody, and thank you, Begonia. It’s great pleasure to be with you all and thank you for joining. As a reminder, we have recently announced, a last step towards one Santander. We finished the creation of the five global businesses, which we began a few years ago. I would come back to this in more detail in a moment, but I would like to note that any reference to these global businesses today relate to the new business definitions that were communicated last December. So, the focus today will be, first, main highlights of our results and update on our strategy. Hector will then review our financial performance in greater detail and then I’ll conclude with a few closing remark remarks on our guidance for ’24.

So, the high level messages we’re presenting record results, €11.1 billion. We have delivered again on all our financial targets. Our customer focus and scale are driving consistent, sustainable profitable growth. In ’23, we added 5 million customers and our revenue increased double-digit. And we did this as we continue, and I something we’ve reiterated year-after-year. We are investing for the future, and we are also making excellent progress towards a more simple and more integrated model. This is the driver to the improvement in efficiency year after year, 173 basis points. And it’s also the driver to increase our profitability this year to about 15% as we committed. We have also in ’23 strengthened our balance sheet, growing deposits, sound asset quality, again, below our guidance, and increasing our gross organic capital generation.

So, in a summary, backed by strong profit growth with less shares following the buybacks, our earnings per share grew 21%, our TNAV and cash DPS by 15%. And once approved by shareholders, we expect our dividend per share to be near 50% higher than last year. So, just briefly, to the income statement, again, you can see the successful execution of our strategy and a strong top line performance. And what’s really important is that across all our global businesses, this is the case. Our net interest income rose 12%, 16% in constant euros in a context of higher rates and with a special good performance in our retail and commercial banking business in Europe and Mexico. Net fee income was also higher. In this case, the network effects are the driver and the two global divisions of global businesses, the corporate bank and payments driving higher fees.

Very important, the sustainability and the low volatility of our results across the cycle, I want special focus on the high quality of our revenue, where net interest income and fees are more than 95% of total income and drove the vast majority of Santander’s total revenue growth. We’re growing costs less than revenues, so positive operating leverage, including investment in our transformation where we’re already seeing results. We achieved record net operating income of 32 billion that’s the second highest among our global peers, again, showing our continuing focus on operational performance. And finally, the strength of our model is again evident in our cost of risk, where we finish at 1.18 again better than our guidance, and therefore, delivering on all the targets as I just mentioned.

So what this means in terms of capital generation and the double-digit shareholder value creation that resulted from the results. We’re ending the year, at the same level as September with a CET1 ratio at 12.3%, and that is after accruing 20 basis points for the buyback, which means that actually would have been at 50 basis points on a like for like compared to last year. We delivered 15% growth in shareholder value creation. Again, this represents an increase of more than 10 billion in the year and already mentioned, 50% increase in cash DPS against ’23 results once we get shareholders’ approval in March. The reduction in the number of shares through our share buybacks also, of course, helped, and a higher payout, which we increased from 40 to 50 this year.

We continue to believe that at these prices, share buybacks are one of the most effective ways for us to generate shareholder value. Since ’21, we have repurchased 9% of our outstanding shares, and buybacks currently deliver on a return on investment of close to 18% for our shareholders. So, let me just spend a few minutes looking at the consistency in the delivery of our plans and our targets. Step-by-step, we’re making our business model stronger. We continue to deliver sustained earnings growth year-after-year, low volatility, high predictability, while we increase capital and shareholder remuneration. The record results in ’23 means a 10% CAGR in profit since 2013, increasing profitability to 15.1 from below 10, again, improvements each and every year with the exception of COVID.

And at the same time, we have steadily grown our capital. Please remember that when I took over, we had a CET1 ratio of 8.3, so we have a lot more capital and delivering much better results. I also want to point you to a couple of numbers, which is over the past nine years, we’ve generated approximately 26 billion of capital, which we’ve used to build up CET1 to 12.3 and that is on top of the 27 billion paid to shareholders over this time period. Very importantly, today’s shareholder remuneration is five times that of 2014 and has grown again every year except for the COVID, crisis where dividends we’re halted in light of the ECB’s recommendations. As we think about value creation, this is our framework. We presented this one year ago in our new medium term plan.

This is a new phase of value creation, where we are having a very strong first year as you’ve seen in today’s results. We’re on track to achieve all the targets and very importantly, compounding our equity through increased profits, which will result in increasing shareholder remuneration as we deliver this growth and profitability down the road. I would like now to spend a few minutes on the completion of this journey towards the five global businesses with retail and consumer DCB, which, of course, is the majority of Santander. And this is the reason we are confident we will continue to deliver medium term targets and beyond the customer focus, diversification, huge strength at times like this, and because we are doubling down on a very unique Santander strength, which very few can replicate, which is our local leadership and our global scale and network.

We are the only bank in the world that has such a global and in market scale at the same time, 165 million customers globally with a market share over 10% in most of our core markets and operating at scale in every one of them. The strength and potential of Santander’s scale network, again, are already evident in the numbers for this year. We can serve more customers, capture new revenue streams, that some of our competitors cannot. And it is precisely this network effect, which is helping us to grow cross border flows and you see this already in the very substantial growth in global businesses like the corporate bank, and we are increasingly seeing that also in payments and others. But very important, this scale allows us to invest together once across the group to operate more efficiently and to deliver better customer experience.

So it’s a win-win combination, both in revenues and efficiency. And you’re going to see much more of this in the years ahead, because this combines a very strong starting point with a strong franchise, and in parallel, the deployment of our global platforms, which include proprietary technology. Again, this is incredibly differential for Santander, these are the most of our peers. And we are ultimately aiming to be the most profitable retail and commercial and consumer bank in every market where we operate. We’re already top three in terms of profitability in 8 of our 10 markets, but we have a lot more upside. I’m not going to go over this slide, but it’s really a summary just to remind us where we are. It’s a last step. We took steps in the last few years in many of our global divisions.

But now in the retail bank and in the consumer bank/DCB, we have taken a very important strategic step. We’re operating in this way already during 2023. We’re pulling investments. We’re reducing cost in a structural way. And I want to emphasize in a structural way. We are already implementing this common business model and investing more efficiently and again, improving customer experience and driving sustainable and profitable growth. So, just briefly, the five divisions. The retail commercial bank, which I will refer to as retail. Our vision, we said it a year ago is becoming a digital bank with branches. This means three very important steps. First, simplifying our product offering in making it digitally available with a branch network and our people serving us very powerful sales and value added advisory channel.

In 2023, we reduced our products by 16% globally, and 56% of our products are already fully available through digital channels. But very importantly, in the second half of the year, we did most of this. So, there is an acceleration in this transformation which Hector is driving. Second step, really important, a common operating model across our banks, which allows automation at a much higher level, freeing up time to talk to customers and focus on value added services. Again, dedication of resources and this is a metric we’ll continue to track. Noncommercial activities, dropped 1.5% in the second half of ’23. Again, a trend that is accelerating, and you’ll see more good news of this in the next few years. And the third incredibly strategic step is our global tech platform.

This is being rolled out in retail commercial. This is not a PowerPoint. This is happening. We are leveraging Gravity, which is our award winning backend where we partnered with Google and ODS, which is a cloud based front-end, which is built by us, operating in Openbank and tested and working Openbank as a reminder, is the largest native digital bank in Europe in ’23 by size of deposits. All our retailer and consumers, and not just retail, but our consumer bank, DCB, all will be convergent to this common retail global front tech, starting in ’24 with the U.S. This is going to allow us to both drive customer growth, but also better efficiency and therefore profitability, in a sustainable way. So, our consumer bank, this is digital consumer bank.

The goal here is to become the partner of choice for our customers and, again, deliver superior profitability. Three main points here is in auto and consumer lending. We’re offering best-in-class solutions for our both commercial customers and consumers. We are benchmarking very much the same as in retail against the best players, whether they’re banks or digital players. We want to be number one, fastest credit approval, fastest on-boarding, more convenient, etcetera. The second point is we are and we’ve done this already for a couple of years managing our OEM relationships and our retail relationships globally. This is, again, a very important advantage. This means, for example, we can integrate the large digital e-commerce players just once.

And, of course, that is something which is not available to many, and expanding our partnerships in Europe to LatAm and the U.S. And third and really important, we’re planning to grow our business and improve efficiency and profitability by deploying these common platforms. And there are several. There’s Openbank, of course, leasing. There’s buy now, pay later, which we have built our own buy now, pay later. It’s already up and running in Europe, and this common front end with OEMs and dealers. Again, we deployed a new pan-regional leasing platform in ’23 and very important, in the U.S, our own Openbank ODS Gravity platform is already technically up and running. We expect to launch in the U.S. in the second half of ’24, a fully digital offering nationwide, and then in ’25 to have all our U.S. customers including our current retail customers on that same platform.

Again, this is a big driver already behind our numbers, improving our efficiency, overall, but specific in the U.S., I would be an even bigger driver down the road. In our corporate bank, we’re building and have been on this task as a global platform for at least five, six years. We are leveraging our strengths, our competitive advantages to ensure we can deepen relationships and have more profitable customer relationship across our markets, whilst maintaining the same risk profile. And we will continue to pursue the same strategy, focusing on customers. More than 80% of our revenues are coming from customer revenues and with a very close coordination between the global local teams, this is working really well. We’re now having strategic dialogues with customers that we’re mostly lending customers, and that is something which is happening from day one with some of the new teams in the U.S. But there’s also a very important opportunity to leverage the 9 million existing group corporate and SME customers with these products and of course, this will grow collaboration revenues.

This will deepen our relationships, will drive profitable growth, growing fees and support our capital light model. I want to also point out some of the numbers on the slide where our Corporate Investment Bank business is already growing faster than the balance sheet, and you can see here how total revenues to RWAs is improving to 6.7%. And last but not least, this is a very predictable, sustainable, and low volatility business, delivering consistent profitable growth for the last five, six years, a very different path from other players. So, again, the goal is to really make our global centers of expertise stronger. We’ve done that in London, and we’re now doing that in the U.S. to make sure we can leverage our network, Accelerate process automation.

We will increase asset rotation, and, this all in all will drive efficiency and profitability improvements. In our wealth business, we are aiming again to leverage our strengths. Our global model is aiming to capture growth by leveraging, in the case of private banking, our strong presence in Miami, one of the top Latin American private bankers. So we’ll expand, on that basis, in the U.S., in our asset manager, again, leveraging to the strengths we have in verticals such as renewables, infrastructure, the SMEs. Again, this is something we’ve already been doing the last few years. And in insurance, focusing on verticals where we still have upside and growth opportunities like health savings, also SMEs, in general, again, the same principles as for other Global division simplification, in the case, for example, of our investment products and building together.

I want to end by saying the same as for corporate bank that private banking is leveraging this network where we have different businesses working together. And this is again a very, very unique strength that drives profitability. Last but not least, payments. In our payments business, it’s a large and growing and profitable industry. We have a unique position. We are on both sides of the value chain. We will use this to become a global leader in payments, supported by a current franchise of 165 million customers and 100 million active payment card customers. We’re driving customer growth by offering a bundle proposition. As of today, this is also allowing us to grow in the open market because our products are competitive with the best. We have 16% of revenue coming from the open market, and we expect this to continue to grow significantly in ’24 and beyond.

We are leveraging, again, as in the other divisions, and optimizing our use of CapEx to meet customer needs in our acquiring platform, Getnet, which is already number 3 in LatAm. It’s adapting to customers’ payment ecosystems. We’re also deploying our global cards platform starting with Brazil, which, again, will drive significant opportunities for all the countries as we roll this out. I want to just point to one specific number in PagoNxt, where activity increased 15% to reach 16%, sorry, 36 billion of total transactions. And very importantly, one of the key we gave you in Investor Day, which is EBITDA margin, which last year was 9%, 10%, has risen to 22% this year. Sorry, 25%, almost 25% in ’23 already. So, we are focused on growth. You’ll see the numbers, but we’re also focusing on profitability, and we’ve done a big improvement, achieve a big improvement this year.

A view of a large corporate office building, illuminated at night to show its power and reach.A view of a large corporate office building, illuminated at night to show its power and reach.

A view of a large corporate office building, illuminated at night to show its power and reach.

So, let me just give you a specific example with the U.S. of how these global platforms are being rolled out in different countries. I mentioned it already briefly, but very important, the first technical integration of our proprietary tech for consumer, which combines the ODS, i.e. the Openbank front-end without Gravity backend will be launched in the U.S. in ’24. This is a fully digital savings account. We’ll start with that. In a year from now, in the first quarter of ’25, we’ll complement this with the transactional offering. And really important, this provides a scalable platform to strategically continue growing our business, including, improving profitability. And this is already showing in some of the numbers. One of the key metrics we look at is a retail deposit cost to serve as this has a very important effect on profitability where we can originate more assets, but we also need the funding side.

I want to just remind that we are not and we do not want to be a universal bank in U.S. As you can see in the screen, we’re not a full retail commercial bank as we’re in Mexico or Spain or some of the big U.S. banks. We’re a consumer bank with a limited commercial, multifamily business. We are targeting to grow in segments where we have local scale, such as consumer or commercial again or we can leverage the contribution of the group, such as the CIB or wealth. Now with the platform on the retail side, we will be much more efficient, and Hector will share some of these big numbers. You saw them at Investor Day. We are ahead of our plan in terms of, improving efficiency on the retail and deposit gathering side. And just as a closing remark, between 2019 and ’22 Santander U.S. distributed to our shareholders more than 8.3 billion in dividends.

So, we are confident to reach our profitability targets of 15% in the medium-term, in our medium-term plan. So, let me just finish by summing up. I’m not going to go through the slide, but I want to give you a sense of these five global businesses underweight in the Santander model. Just to reiterate the importance of retail and consumer, this is 70% of our revenues. This is where we have the most upside, and we already are delivering on some of these platforms. I’m not going to go through the others, but I just want to say that this model has already delivered improving profitability and growth, a 169 improvement in our RoTE in ’23. Again, by moving to these five global businesses will unlock the full potential of our business model. It’s all now going to be about execution, and Hector and I and all the teams are very focused on that.

So, again, we aim to become, as I said, the most profitable bank in each one of our markets. So Hector, we now take you through the performance in ’23.

Hector Grisi: Thank you, Ana. Good morning to everyone. Moving on to the income statement, remember that as we always do, we present growth rates both in current and constant euros. As Ana already mentioned, we achieved a record profit last year with double-digit revenue and net operating income growth. But we also have a very solid quarter with profit growing 1% in euros even after seasonal effects in Q4 from the deposit warranty fund contribution in Spain and the bank levy in the UK, which represent around 210 million post tax. On the line trends remain strong as profit excluding the decisional factors will have grown about 8% in the quarter. Differences between growth in euros and cost in euros became more evident in the quarter as the devaluation of the Argentine peso in December introduced some distortions across the P&L.

Remember that the full impact of the devaluation across the whole year is entirely recorded in Q4. Excluding Argentina, profit would have grown 7% in the quarter in current euros, and there is no material impact from other currencies, so growth in constant and current euros is pretty much the same across all the lines. I will now take you through the main lines in the P&L in much more detail. Starting with the revenue, there was a strong growth driven in the custom revenue again this quarter, which made up more than 95% of total revenue and explained almost all the growth in the quarter. In the year, it was primarily supported by net interest income in the retail as we actively manage interest rates tailwinds in Europe and Mexico, and the positive fee performance of CIB and payments mainly in Latin America.

Moreover, we have delivered double-digit revenue growth across most of the businesses, especially those that benefit most from the network effects. Revenue and the corporate center improved by more than 1 billion due to higher liquidity buffer remuneration and the lower impact from the FX hedging. NII continue to be the main driver of our revenue growth. In ’23, it was 16% higher year-on-year in constant euros on the back of basically positive sensitivity to rising rates in Europe and Mexico and volume growth in the Americas. In terms of profitability, we improved net interest margin year-on-year and every quarter, even in Q4, if we exclude the distortion from the devaluation we had in Argentina. This is mainly explained by higher yields on assets as we actively manage credit spreads to make the most of the higher interest rate environment.

These gains from credit yields more than a weighted funding cost, thanks to our disciplined deposit remuneration leading to our robust margin expansion. Going forward, we expect lower rates to drive net interest income higher through our consumer businesses across the group and our retail business in South America while the positive impact from interest rates in Europe starts to moderate. This is a great example of the power of the diversification that we have. Turning to fees. In an environment of low fee growth in general, as a result of subdued loan demand and weak consumer activity, our net fee income grew 7% in constant euros compared to Q4 ’22 and 5% year-on-year. CIB and payments were double digits and compensated the other businesses that were more affected by lower activity or market volatility, which again demonstrates the value of diversification.

We saw a strong growth in CIB across regions and products while we strengthened our capabilities in the U.S. Total payments volume grew 22% year-on-year, backed mainly by Brazil, Europe, and Mexico. On the other hand, consumer fees were affected by regulatory changes and lower activity in the U.S. In ’24, we expect fees to grow supported by the increase in the number of customers and transactionalityas we implement our common platforms and reap the benefits from our new operating model becoming the principal bank for our customers. Our efficiency ratio is one of the best in the sector at 44.1%. Savings from one transformation initiatives are already offsetting our investments in technology and digitalization. Cost, as you have seen, remained flat in real terms in 2023 and driving the cost to serve, as Ana mentioned earlier.

This is reflected in efficiency gains of almost 2 percentage points in the year, led by Europe, which improved 5 percentage points driven by strong revenue growth and cost almost flat in real terms. In North America and DCB, cost increases slightly in real terms, reflecting the impact of investments to accelerate transformation and some perimeter effects. As mentioned, in Q4, efficiency ratio is always affected by the DGF charge. If you exclude it, efficiency is 43.7%, fairly in line with that of Q3 despite the higher impacts from transformation in the quarter. We expect that savings from one transformation will become more evident in ’24 and onwards, which, together with a positive revenue outlook, should result in further efficiency gains.

We are transforming the bank in the right way because we are structurally changing our model to improve both cost and revenue. The efficiencies we have captured from one transformation and the impact of our active spread management in a context of higher interest rates have already contributed 112 basis points in efficiency improvements. For example, in the U.S., we have already generated around €200 million in savings from transformation and simplification initiatives. Our global and network businesses continue to contribute to the group’s profitability and have delivered 28 basis points in efficiency gains in ’23 alone. Multi-Latins and Multi-Europeans are initiatives to better serve our multinational corporates and SMEs through our regional coverage model grew at very high rates, with revenue increasing 40% in 2023 alone.

Finally, our global technology capabilities have already generated 32 basis points in efficiencies so far. Our global approach to technology has allowed us to capture a 187 million savings this year, mainly driven by the deployment of Gravity, new global agreements with vendors and the implementation of new IT and ops shared services. Credit quality remained robust across all of our footprint and ended ’23 in line with our expectation supported by our prudent approach to risk, strong labor markets and resilience in used car prices, mainly in the U.S. The NPL ratio was stable and in line with expected levels. We met our cost of risk target ending ’23 below 1.2% despite the impact of single name cases and additional provisions in Poland related to the Swiss franc mortgages.

Spain continues to perform well, NPL improving 21 basis points and cost of risk is stable year-on-year, supported by the quality of the loan book and resilient economic conditions. Both metrics remained stable across the quarter. In other European units, the cost of risk is normalizing from very low levels, and we expect it to remain below or in line with through the cycle averages. Normalization continues in the U.S. and Mexico, in line with expectations. And group credit quality trends are confirmed in Brazil as NPL ratio improved for the fourth quarter in a row and underlying cost of risk evolution reflects the improving macro conditions. Going forward, we don’t foresee signs of significant credit quality deterioration in any subsidiary or at the group level.

As we have discussed in previous presentations, our credit portfolio is well diversified by segment, product and country. Moreover, our balance sheet is low risk. The portfolio is highly secured with quality collateral and has low average LTVs. In ’23, loans decreased 1% as higher rates reduced the credit demand and incentivized early repayments, which was especially evident in Europe. Positive dynamics continued in North America, South America, and ECB. Deposits continue to grow well, up 2% both year-on-year and in the quarter as deposits inflows more than offset savings used to prepare the mortgages. Growth in the year was mainly concentrated in time deposits as customers seek higher rates. Our deposit base is diversified and highly stable.

Using LCR criteria, around 75% of our deposits are transactional, which are a lot thicker, and high proportion of our deposits from individuals are covered by deposits warranty schemes. Mutual funds rose 13% with broad based growth across all countries except the U.S. following a year of instability in ’22. Closing with the capital, we maintained a CET1 ratio of 12.3% in Q4. That’s 0.2 percentage points, up if we exclude the impact from the new EBA guidelines related to the accrual of the share buybacks, driven by strong growth gross organic capital generation, sorry. We continue to deploy capital to the most profitable growth opportunities and this was reflected in a front book return on risk weighted assets of 2.7%. That’s up from 2.6% in 2022, equivalent to RoTE in excess of 15%, which will support profitability going forward.

Finally, we continue to enhance portfolio management and balance sheet mobilization, improving the percentage of RWAs with positive economic value added, progressing well towards our Investor Day target of 85% by year ’25. These principles of capital management will help us to continue build capital over the next few years, and we are confident that our CET1 ratio will remain above 12% even after taking into account the final implementation of Basel III in 2025. That’s all from my side, Ana. Thank you. Over to you.

Ana Botin: Thank you very much, Hector. So, let me just sum up very briefly so we can go to questions. So, three very simple points, ’23 was a very first strong year in our new face of value creation. By the way, the best is yet to come. We grew customers. We increased revenue and profits double-digit in all regions and businesses, basically. Second, a lot of this has been driven by the structural change in the model, by one transformation to one Santander. There was also, of course, an improved operating context, especially for our retail business and especially in Europe this year. And point number three, we have further strengthened our already very strong balance sheet, increasing our CET1 ratio and, very importantly, with very strong credit quality across our footprint and in line with our expectations.

Once again, all of this, of course, leading to the 15% growth in value creation and 21% increase in EPS, and the highest shareholder remuneration in our history in terms of both cash dividend plus share buybacks. So what this means, again, is we’ve delivered once again on all our ’23 targets. We’re on track to achieve the 2025 goals that we communicated last year, and very important, as Hector mentioned, you’re just seeing the initial results of our transformation in our ’23 results. You’re going to see much more coming in the next few years. I want to emphasize again that not only do we have solid foundations, but these foundations are already proving on our model that we can deliver sustainable, profitable growth, increased returns to our shareholders, leveraging our model.

I’m taking the last step we took this year in our retail and consumer business is absolutely critical to the confidence we have for the next couple of years because it depends on us. So, our guidance for ’24 is, ’24 will be an even better year for Santander. You can see here the numbers. We are confident that our customer focus, diversification will be differential this year vis-à-vis our peers. We have many engines, and all of the engines are going strong with different focuses in the regions, but all our global businesses going strong. We’ll continue to accelerate the implementation of our model in the retail and consumer, to deliver again on these targets. Just very briefly, if you go down, across the slide, we continue to see revenue growth mid single digit in ’24.

This will be supported by net interest income growth in our consumer businesses. You saw Hector’s presentation that this was the opposite this year. This year, the consumer top line will be much stronger than this year will be also driven in terms of regions in our retail business in South America and Mexico with higher growth than Europe. And very importantly, much higher fees in many of our global businesses than we saw this year, driven once again both by customer growth and by increased engagement with these customers. Again, the one transformation will be absolutely key and delivering this, supporting both our customer growth and our efficiency. In terms of cost of risk, we’ll be roughly flat against this year, on an underlying basis ahead of this year.

We had some one offs this year. We said last year and we continue to be in a prudent conservative risk appetite and this is still the case. There will be some normalization in our provisions in our consumer businesses based on our current economic forecast. And finally, we continue to be very positive overall in terms of revenue, but very importantly also on efficiency. You can see we are continuing to target positive operating jaws with flattish costs for next year leading to a cost income below 43% and a return on tangible equity of 16%. So, we’re now happy to take your questions. Again, thank you very much.

Begona Morenes: Thank you. Can we start the Q&A session and have the first question, which I believe is from Ignacio Ulargui?

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