Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 838

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 838
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 % |
| 100 bp               |     |                     | 22.5 | % |            |  7.4 | % |

With regards to the determination of classification in stage 2, the quantitative criteria applied by Santander UK are based on identifying whether any increase in PD for the expected life of the transaction is greater than both an absolute and a relative threshold (the PD used in that assessment are adjusted to the transaction's remaining term and also annualised in order to facilitate that the thresholds defined cover the whole range of the transactions maturity dates). The relative threshold established is common to all portfolios and a transaction is considered to exceed this threshold when the PD for the entire life of the transaction increases by 100% with respect to the PD at the time of initial recognition. The absolute threshold, on the other hand, is different for each portfolio depending on the characteristics of the transactions, ranging between 340bps and 30bps. In addition, for each portfolio, a series of specific qualitative criteria is defined to indicate that the exposure has experienced a significant increase in credit risk, regardless of the evolution of its PD since the time of initial recognition. Santander UK, among other criteria, considers that an operation presents a significant increase in credit risk when it presents irregular positions for more than 30days. It also has implemented early warning indicator system for classifying operations in stage 2. These criteria depend on the risk management practices of each portfolio.

Annual report 2024 798

| Contents |     | Auditor's report |     | Consolidated financial statements |     | Notes to the consolidated financial statements |     | Appendix |

3.2. Spain Portfolio overview Santander España’s credit risk totalled EUR 285,883million ( 25%% of Grupo Santander’s total). It is appropriately diversified among products and customer segments. The credit portfolio’s NPL ratio was 2.68%, 38bps lower th an in December 2023 . This decrease was based on the good performance of the portfolio driven by the management of single names and portfolio sales. The NPL cover age ratio remained at 53% (+ 4p.p. year-on-year). The cost of risk decreased to 0.50% (- 12bps vs. December 2023) mainly due to SMEs and Corporates, only partially offset by the portfolio of individuals. The Spanish economy will slightly moderate its growth rate, but that it will continue to maintain a dynamic pace well above the Eurozone average, since the Spanish economy has been