Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 532

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 532
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 or loses creditworthiness. It includes counterparty risk, country risk and sovereign risk and generates the most exposure and capital consumption.

2.2 Credit risk management

We take a holistic view of the credit risk cycle, including the transaction, the customer and the portfolio to identify, analyse and make decisions about credit risk.

Credit risk identification facilitates active and effective portfolio management. We classify external and internal risk in each business to adopt any corrective or mitigating measures through:

1 Planning Strategic commercial plans (SCPs) are a risk management and control tool the business and risk areas prepare for different credit portfolios. It helps us determine business targets, risk policies, infrastructure, to have a holistic view of the portfolios, and draw up actions plans aligned with our risk appetite statement.

2 Risk assessment and credit rating Risk approval depends on the applicant’s ability to repay the debt, for which we review their regular sources of income, including funds and net cash flows from any businesses. The credit quality assessment models are based on the credit rating engines for each of our segments.

3 Scenario analysis Scenario analyses determine potential risks in credit portfolios; give us a better understanding of their performance under various macroeconomic and environmental conditions; and enable us to bring forward and employ management strategies to avoid future deviations from set targets.

4 Monitoring Our holistic, regular monitoring of every customer enables us to track credit quality, spot risk trends early and check business performance against original plans, which are key to credit risk management.

5 Mitigation techniques We approve risk according to a borrower’s ability to make due payment, regardless of any additional collateral or personal guarantees we may require. We always consider guarantees or collateral as a reinforcement measure to mitigate a loss if the borrower defaults on their payment obligation.

6 Collections and recoveries The Collections & Recoveries area draws up a strategy based on local economic conditions, business models and other recovery-related particulars. For effective and efficient recoveries management, the area segments customers based on certain aspects and the use of new digital channels.

| For more details on the credit cycle, see the'Credit risk management'sectionin Note 54 to the consolidated financial statement. |

Annual report 2024 512

| Contents |     | Business model and strategy |     | Sustainability statement |     | Corporate governance |     | Economic and financial review |     | Riskmanagementandcompliance |

2.3 Key metrics

During 2024, increasing geopolitical tensions, different electoral processes, uncertainty associated with the pace of inflation decline, the cut in interest rates by central banks in some geographies, as