Thank you very much. Ladies and gentlemen, the Q&A session starts now. The first question comes from Jose Abad from Goldman Sachs. Please go ahead, sir.

Yeah. Hello. Good morning. I guess the first question, and I'm sure for this I think relates to Q4 and probably beyond. And if you could comment about how the Catalonia related pensions are actually impacting your business or the way you see your business evolving before year-end, so in Q4 and also into 2018 in the form of potential actual deposit inflows or inflows in your asset manager. The second question relates to the UK. Given that we are getting ourselves into a new rate hike cycle in the UK, could you please remind us about your rate sensitivity in the UK? Thank you very much. Bye-bye. José Antonio Álvarez Álvarez - Banco Santander SA: Okay. In relation with the question, in relation with the political situation in Spain, particularly in Catalonia. Well, probably this is too early to call. Yeah. So, what is for sure is the longer it takes to settle the situation, the higher the impacting in the overall economic activity. And being that the case, probably then will affect also our activity. It's probably too early to talk about changes in the forecast. The government produced some figures. So 30 basis points lower growth next year. There are independent analysts who think higher figure on this. Probably it's too early to say. Definitively, is not good and the longer it takes, probably the worse for the outlook for the business, not only in Catalonia, where our exposure, as you know, is relatively low. It's more to Spain, what the potential impact in overall Spain that may affect us more. In relation with the rates, José, do you want to elaborate in the UK? José Antonio Garcia Cantera - Banco Santander SA: Yeah. A 100 basis point increase, but this is a 100 basis point increase in – parallel upwards in the entire interest rate curve would bring in approximately £500 million of higher revenues. Sergio Gámez Martínez - Banco Santander: Thanks, Jose Abad. Next question please.

Thank you. The next question comes from Carlos Cobo from Société Générale. Please go ahead, sir. Carlos Cobo Catena - Société Générale SA (Spain): Hello. Thank you very much for the presentation. One quick question on MREL and something you explained in the strategy today. You said that MREL will be a higher requirement in terms of the proportion of risk-weighted assets, but the eligible funding or instruments will also be higher. Did you imply that the senior debt will be eligible for MREL? Is this your view, or guidance from regulators when you compare MREL with TLAC requirements? Thank you. And secondly, quickly, on Poland, we've seen a couple of big players in the market exploring consolidation. Clearly, as you said, the impact on the banking costs were higher. What's your view in Poland from a strategic perspective? Are you interested to consolidate all the competitors, or even to explore a disposal in this integrating market? Thank you. José Antonio Garcia Cantera - Banco Santander SA: In terms of MREL versus TLAC, the calculation of the requirements is different, and also the base on which to calculate the requirements is different. However, we don't have the final requirements in MREL. So we are just reacting to what has been mentioned in the markets and the different working papers that are being discussed in Europe. In these papers, we see a higher risk-weighted asset requirement than in TLAC, but also higher MREL liabilities. Part of that, higher liabilities, is senior debt, like you said, but it's also the wording of the debt instruments that are eligible, that also makes the difference. So it's a combination of type of instrument, but more importantly it's the wording of subordination of those instruments that is different in the two MREL and TLAC requirements. José Antonio Álvarez Álvarez - Banco Santander SA: Question in relation with Poland. First, Poland is for us one of our 10 core markets. Being that the case, the general policy applies to Poland in relation with consolidation. So, if we find opportunities at the right price that provide the right return for our shareholders with the rules that we established at (00:32:18) we will we look at it. On top of that, we said, myself and José, we said that we are pleased how the business is developing in the ground is through that. The taxation has been increased year after year in Poland, and we haven't been able to translate these good developments in the bank. The bank is progressing very well. It's very well advanced in the utilization, is managing the cost in an extremely effective way. So from the business type point of view, we are extremely pleased. It's through that restrictions from the regulatory side and supervisory side have reused the visibility at the bottom of the P&L. But we remain committed with Poland, and we expect good news going forward coming from Poland. Sergio Gámez Martínez - Banco Santander: Thanks, Carlos. Next question, please.

Thank you. The next question comes from Alvaro Serrano from Morgan Stanley. Please go ahead, sir. Alvaro Serrano - Morgan Stanley & Co. International Plc: Hi. Got two questions, one on Brazil and one on Banco Popular. On Brazil, obviously the NII is up very nicely in the quarter. I just wanted to understand if you can give us a bit more color – obviously, benefited from the reduction of rates, we had another 75 basis points cut. Is – going into next year, I realize you've guided for double-digit profit growth at the Analyst Day for next year. But margins, strictly margin-wise, if you look at the NII, are we going to see at some point, when rates stop going down, the NII actually fall sequentially? Are you going to be able to grow – if you can give us a sense of what kind of growth we could expect in 2018, and what are the offsets on loan growth versus potential margin tieration? And then on Popular, if I look at the Q3 standalone, as we model next year with the disposal of the Blackstone portfolio, how do you think that will affect – if you can give us at least some broad thoughts, how do you think that will affect the NII, the lower funding costs, because you've got the real estate now deconsolidated? And if there's going to be any significant deconsolidation of costs that will go to the vehicle, to the Blackstone vehicles? Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Okay. First question, Brazil NII, color going forward, what's going on there? So, well, what we had in the quarter, probably the main change compared with the previous quarter is we saw higher growth, particularly on the consumer side. It's true that…

Thank you. The next question comes from Sofie Peterzens from JPMorgan. Please go ahead.

Yeah. Hi. Yeah. Here is Sofie Peterzens from JPMorgan. Just going back to Brazil, I was wondering, your asset quality is improving there and coverage on NPLs is pretty strong just under 100%. How should we think about cost of risk going forward? It has now come down to 450 basis points. Where do you see it going in the next 12 to 24 months? And then my second question is also around asset quality. There was a paper out by the ECB a few weeks ago from the beginning of next year, all the unsecured NPL should be fully provisioned within two years and secured NPLs within seven years. How do you think about this and what impact should we expect if any on Santander? And then if you could just give a quick comment on mix figure, what the outlook is, how do you think about growth and cost of risk going forward. Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: So, first question, cost of credit in Brazil. Well, as I said, the macro outlook is improving. We expect a significant or a substantial reduction in the cost of risk, particularly in the corporate and global corporate banking business in Brazil. On the other side, the mix is shifting from corporate and ECB towards more consumer-oriented kind of businesses. So overall, although the environment we expect from the (00:41:44) is benign, probably you can expect a slight reduction. On a like-for-like, you're going to see a reduction. Overall, you're going to see a slight reduction because the mix, if I am right, the mix – the consumer side, is going to continue to be strong. And I don't see that evolution on the corporate side. So, probably, we're going to see a slight reduction but…

Thank you. The next question comes from Francisco Riquel from Alantra Equities. The floor is yours, sir.

Yes. Hello. Thank you. Wanted to ask about NII in Spain, if you can comment if you have made any changes in the loan portfolio during the quarter, and an update on the ALCO portfolio. When do you expect the loan deleverage to end? And if you can give any guidance on margins in Spain, what shall we expect before interest rates start to rise? Also, on the UK, NII excluding the one-off in the second quarter has gone up in the third quarter and it was expecting a decline, the SVR attrition, et cetera. So, if you can comment also margin dynamics in the UK before interest rates rise there. And sorry, just last technical question. In Corporate Centre almost no tax shield, if there is anything extraordinary here, thank you, on the tax rate in the Corporate Centre. José Antonio Álvarez Álvarez - Banco Santander SA: Okay. NII in Spain, I will elaborate on the commercial side. I will pass to José to elaborate on the ALCO portfolio. Well, overall, in Spain what we have is a pretty stable situation, yeah. So, after many quarters of margin compression on the front book, we got to a point in which – well, we are not seeing margin compression in the front book. What we continue to see naturally is the Euribor, one year Euribor getting lower and lower, and this affect the repricing of the portfolio. But in the new activity, we are not seeing a significant – we are not seeing a more margin compression. Do you want to elaborate on the portfolio? José Antonio Garcia Cantera - Banco Santander SA: No, no. There were no changes in the ALCO portfolio in the quarter. José Antonio Álvarez Álvarez - Banco Santander SA: Some in Popular. José Antonio Garcia…

Thank you. The next question comes from Ignacio Cerezo from UBS. The floor is yours, sir.

Ah, yeah. Hi. Good morning. Couple of questions on around Popular if you want. First one is if you can share with us in terms of the composition of the P&L versus the main announcement you made back in June, without broadly changing your (00:47:49) for your targets actually on the bank. But how was the P&L changing your mind in terms of, again, target versus the ones you announced back in June? And then around the Blackstone joint venture, if you can share with us actually a bit of a roadmap in terms of how quickly that company going to start hedging rating profits or if we're going to go into a situation where in the beginning, actually, it can be a lot making unit actually for you. Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Okay, the question about – so probably it's too early to have a – naturally, so a potential business plan for the joint venture we're going to have with Blackstone that we plan to incorporate in January, February next year. But probably is not in a stage of elaboration that we are in a position to share with you. And as you know, we're not going to match this company. But naturally, you can play with the numbers that a private equity normally does in these kind of deals. You are very familiar with these kind of numbers and apply to us the 49% and you have a proxy about the expectations. I don't have, at this stage, a number to share with you because it's responsibility of Blackstone to come with a business plan for this company. But naturally, we expect some profits coming from this. This is not going change, now, our outlook for the next three years for Banco Popular or Banco Popular-related business if you include the joint venture with the Blackstone. Sergio Gámez Martínez - Banco Santander: Thanks Ignacio. Next question, please.

Thank you very much. The next question comes from Benjie Creelan-Sandford from Jefferies. Go ahead, please, sir.

Yeah. Morning, everyone. First of all, maybe just to go back to Popular again. I mean, if we look at the underlying result in the quarter, it is already running quite far ahead of the 2018 target profit level that you gave in June. So, just wondering whether you had any further comments around your expectations there or what's surprising positively in the results to date? And then, a couple of quick questions around asset quality. If we look at the UK, the NPL ratio ticked up quarter-on-quarter very slightly, but I was just wondering whether you were seeing any meaningful change of trend there. And also, if we look at the consumer division in Continental Europe, there was an increase in loan-loss charge this quarter. I mean, again, that's still at very low levels, but I was just wondering whether you expect that to continue to tick up going forward or whether or not it's just a one-off in the quarter. Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Popular, we are not changing. As I said before, we are not changing our expectations for Popular and we confirm to you the numbers we gave to you after the acquisition. NPLs in UK was nothing new, wasn't a specific case coming from GCB. That is the main difference in the quarter. Nothing has changed in the main portfolios. And in relation with consumer finances through where you say the charges in the quarter were higher, but it is worth view that in second quarter we dispose. And probably we mentioned to you some nonperforming portfolios, and this makes the difference. We are not seeing, as of today, any change. The scenario, as I mentioned in, overall for the group, and specifically for consumer and finance, continue to be quite benign. Sergio Gámez Martínez - Banco Santander: Thank you. Next question, please.

Thank you. The next question comes from Ignacio Ulargui from Deutsche Bank. The floor is yours, sir.

Hi. Good morning, everyone. Just have two questions. One on the restructuring charges that we could expect for Popular whether this, you can confirm that you have done already most of them or we should expect any additional charges into fourth quarter. And the second one is just regarding consumer finance unit. What do we expect in terms of cost going forward after the restructuring charges you have done in Germany? Thanks. José Antonio Álvarez Álvarez - Banco Santander SA: Well, in Popular, we don't expect any restructuring charge, any further restructure charge this year. I mentioned to you that we're going to have round number €300 million net of taxes per year. 2017, 2018 and 2019 is our expectation. If we change, we will tell you. And other charges in the fourth quarter, the only thing that every year eventually may come in the fourth quarter is the assessment that we do of all the goodwill that we have in the subsidiaries that we perform this analysis in November. And if some comes, it go to the four quarters. It's the only thing that – but I do not expect any additional restructuring charge in the fourth quarter, that is your question. Germany, well, there's a reduction in costs here. Let's say, the payback we are estimating here, is slightly below two years. This will give you an indication of the reduction in cost that we expect there. Sergio Gámez Martínez - Banco Santander: Thanks, Ignacio. Next question.

Thank you. The next question comes from Carlos Peixoto from Caixabank BPI. Please go ahead. Carlos Peixoto - Banco Português de Investimento SA: Hello. Good morning. I was wondering if you could give us some further indications to begin with if you reiterate the impacts on IFRS 9 for the bank. Particularly in here with the impact on IFRS 9, I'm referring both to the impact that it will have on capital, for both capital and also on the provisioning side. And also on the U.S., if you could give us your views on your expectations for the evolution of NII into 2018 and also for cost of risk? Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Well, his question related with the run rate IFRS 9. IFRS 9, the original impact I told you, probably told you in the previous quarter, that for the group before Popular was in the region of 15 basis points. With Popular, probably we go to the region of 20 basis points is the one-off impact at the beginning of 2018. Afterwards, you asked us the impact afterwards. Well, this naturally, as you know, IFRS 9 relies on models. Depends on the macro outlook, that may change and add some volatility quarter on quarter. What kind of volatility? If this is more of downward, depends on the models and mainly on the macro outlook for the different business countries in which we operate. Sorry I cannot be more specific than that. This is basically the rule, and we will apply the rule. The other question was about U.S. NII and cost of risk. Those are closely related. In NII, I am gladly optimistic in the bank. And as we (00:55:21) we expect to grow both volumes. We are making significant progress in repricing deposits and loans, and I do expect this year to – we've been building capabilities in the corporate side, in the commercial – in what they call C&I and GCB, and I expect those capabilities to start to help to grow faster the NII. This is the bank. In relation with SCUSA, things are a little bit more complex as we have a business that is shifting from more subprime to more new prime and prime, due to the Chrysler deal. And probably what we are seeing, and probably you saw already in the last couple of quarters, is the yield in the loan book is falling as a result of higher FICOs, and the cost of risk I expect to fall accordingly with the quality of the front book that we are underwriting. So probably you're going to see a decrease in the NII, a decrease in the cost of retail. Net-net, we expect to be positive. Sergio Gámez Martínez - Banco Santander: Thank you, Carlos. Next question, please.

Thank you. The next question comes from Mario Capairo (00:56:38) from Fidentiis. Go ahead, please, sir.

Hello, good morning. And my first question is related to the real estate unit in Spain. José Antonio was mentioning that you expect a material reduction in the stock of foreclosed assets by the end of next year. I was wondering if you can give some color on when you expect this unit to reach breakeven, also considering that you are expecting some profits on the deal with Blackstone. And then my second question is on the coverage, NPL coverage in Spain, which is 58%. Are you considering, given the high coverage, a potential deal to dispose a large chunk of NPLs? Or otherwise, do you think that this coverage is too conservative, considering the average for the industry of around 50%? Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Okay, real estate unit. What I mentioned is the €5.9 billion net volume that we have in real estate related activities, I expect at the end of 2018 to be not material. This means that we expect to dispose this and to continue to manage this in a way that we reduce this to be nonmaterial and to reduce the cost on this side. This is our expectation. Naturally, as you know, we have a lot of exposure. Some of them are listed companies like Merlin. Some of these are already are independent, professionally managed by third parties in which we have a stake, let's test them after what they said that we continue to match, and we will see. I am fairly optimistic on, first, reducing the capital that we deploy there. Second, make some capital gains on the stakes going forward. Coverage in Spain, it's okay. I will say we are disposing basically our marks, taking into account the cost. We are making some gains there. But basically, those gains are enough to pay the costs. I remain – well, actually the coverage is the one, we think, that we should have, naturally. Sergio Gámez Martínez - Banco Santander: Thanks, Mario. Next question.

Thank you. The next question comes from Britta Schmidt from Autonomous Research. The floor is yours.

Yeah, hi there. I've got two questions, please. Going back to the Spanish balance sheet, conceptually, loan volumes are still declining, the funding side (00:59:16) is stable, and Popular deposits have even increased, which means that you're carrying higher cash balances. How do you intend to manage that in the future? Maybe you can give us an idea of your ECB deposits and the ALCO management outlook? And then secondly, on the NPAs, what impact do you think the current political situation will have on the NPA disposal market? Is that going to be reflected in lower prices or less interest? José Antonio Álvarez Álvarez - Banco Santander SA: Well, loan volume, you mentioned, the loan volume not growing and deposits growing. As a result, the cash balance increasing. That's the case, and there's some embedded cost that is in the Corporate Centre. Yeah, in the Corporate Centre, we are running significant amounts, large amounts of cash in our balance sheet, that costs us money at this point of time. In the future, well, in the future, it depends what you call future. Future, I expect the rates to start to normalize somehow in the future. In the meantime, we need to match properly both assets and liabilities. That means that in some cases, we need to reprice downwards some liabilities, particularly wholesale liabilities that we probably have are still going to reduce the cost of those liabilities. NPA, non-performing assets disposal, are up to what point the effect of the political situation going on in Spain may affect the disposal of those assets? Probably to close a deal in this stage is difficult, but I said before, if I didn't say it before, I think that the situation is going to settle rather sooner than later. And we're going to go to back to normal business, and we're going to continue to dispose. The market is in pretty good shape. The demand is there. And all the news this morning, we got the employment survey and the numbers were simply good in the third quarter. Yeah? So, the underlying economic situation before this crisis was extremely good, probably this affecting 20, 30 basis points, 40 basis points, but the growth continue to be good and the real estate continue to be in good situation to dispose us. And we've seen even this month in the middle of the crisis some companies going to market I think with pretty good demand. Sergio Gámez Martínez - Banco Santander: Thank you, Britta. Next question?

Thank you. The next question comes from Stefan Nedialkov from Citigroup. Please go ahead, sir.

Hi, guys. Good morning. Stefan from Citi. A couple of questions were asked already on margins. I just wanted to dig a little bit deeper. Mexico, Brazil, U.S. margins, it looks like the client component is either stable or improving, but in terms of the sort of non-client component with wholesale funding, also wholesale income from ARPU portfolios, very different trends. So just looking for example at Mexico, it looks like the net interest margin increased a lot more compared to what the client margin would have suggested. Can you just give us some color? Is that driven by a much better wholesale funding cost, or is it something else? In the U.S., similarly, you did mention that the yields in Santander Consumer should be trending down because of the lower risk in the portfolio, but it does look like the NIM actually fell a lot more compared to what the loan yields would have suggested. So that just makes me think wholesale funding costs for Santander Consumer are going up quite significantly. Again, if you can give us some color on that and what that means for the future? And lastly, in Brazil, client margin stable, ALCO gains seem to basically have driven pretty much the entire improvement in the margins. When would ALCO gains taper off? Are we talking once the SELIC (01:03:40) basically reaches constant level of around 7%? Are we talking later than that or sooner, next year, year after, et cetera? So, just any color on these three components for Mexico, U.S. and Brazil on the NIM side of things would be great. José Antonio Álvarez Álvarez - Banco Santander SA: Starting with Mexico that you mentioned before, in Mexico, the main driver of the NII has been the liability side, yeah. So, we've been…

Thank you. The next question comes from Rohith Chandra-Rajan from Barclays. Please go ahead, sir.

Hi. Good morning. I've got three fairly quick ones hopefully. The first one was just on Brazil. I mean, you've talked about the margin and the credit quality quite a lot. I just wanted to check on fees where you indicated the 20% growth unlikely to be sustained but fees were pretty much flat quarter-on-quarter. I was just wondering if there's any particular seasonality there that we should think about. So, that was the first one. Second one, on UK cost of risk. Again, you sort of explained the NPL ratio increases relating to a single corporate exposure. I guess you probably have a fairly good line of sight over the next couple of quarters and the UK economy looks in reasonable shape. So I was wondering if there's any reason to think that the cost of risk would rise from the low-single-digit basis points that you're currently still seeing in the UK, at least in the next few quarters. And then, the final question was just on Blackstone. You deconsolidated the assets. But as far as I understand, the deal has been agreed, but not yet completed. I just wonder if there's any risks there that we should be aware of in terms of the completion of that deal and the assets of staying off balance sheet? Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: The final question I don't see any reason not finish the deal with Blackstone. The first one, you elaborate about the fee income in Brazil, where we're growing at 20%. Naturally, we're going to keep growing our goods relating fees, but not at 20%. And those fees related with the volumes, for example, in mutual funds we are optimistic, in insurance we are optimistic, not that much – I see lower growth…

Thank you. The next question comes from Marta Sanchez Romero from Bank of America Merrill Lynch. Please go ahead.

Hello. Good morning. I've got two questions. The first one is on the SCUSA. You have almost €3 billion of goodwill. Is there a risk of impairment in Q4? And an impairment would be capital neutral, of course, but with the fact that the headline payout ratio of 30% to 40%, does the supervisor look at you on this basis or you think it's irrelevant given that the impairment has no impact on capital? The second question is on Santander Consumer Europe. We've seen some negative headlines over the past couple of weeks from auto lenders and producers in Germany. I'm trying to understand the potential risk at Santander Consumer. How big is your leasing portfolio? How big is the portfolio where you assume the residual value of the cars? Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Well. SCUSA, €3 billion goodwill, we review. As I said before, I think that we review the goodwill of our every subsidiary in the fourth quarter in November. If something arise, we charge at the end of the year as we've been doing for years. So, you mentioned specifically to SCUSA. I am not in a position to tell you if SCUSA or if any other subsidiaries may have a goodwill charge. That may be the case, may not. The payout, well, it's true that we are now in an exercise in which we are generating capital and we deploy this capital in three parts, one third each one. One-third goes to dividends, one-third go to grow the business, one-third to build capital for the existing business. Naturally, I expect to be above 11% at the end of 2018. And beyond that, we gain flexibility on capital, yeah. Flexibility means that we can grow faster the business or who can pay more dividends but it's too early to call at this stage. And leasing in Europe, we don't have residual values in Europe, yeah, in the car finance business. We do have in the States, in SCUSA, where the portfolio of leasing is, I think, speaking by memory, $8 billion or something like that. While in Europe, we don't have residuals values in the car business. Sergio Gámez Martínez - Banco Santander: Thanks, Marta. And last question now.

Thank you very much. The last question comes from Andrea Unzueta from Credit Suisse. Please go ahead. Andrea Unzueta - Credit Suisse Securities (Europe) Ltd.: Hi. Good morning. Most of my questions have been answered, but I just wanted you to go over your volume expectations in Spain again. You mentioned that SMEs have grown by €1 billion for Santander stand-alone but the loan book is still declining, so I was wondering when you expect stabilization. And also, if you couldn't reiterate the underlying tax rate in Brazil, please. José Antonio Álvarez Álvarez - Banco Santander SA: Well, volumes in Spain – well, let me to split the loan book in two parts. One part that is a non-institutional, non-GCB business, that is already growing and I'm more optimistic on this. Probably, we are heading into some growth (01:15:16) from the beginning of the year €1 billion, €1.5 billion in this part of the balance sheet. While in the institutional lending and GCB, and it's for different reasons, in institutional lending because there's a substitution by the government of our positions, as you know, and this keep going down. And GCB because we are – I said in the presentation, we want to have a lighter capital business model. Well, in this sense, we don't have as a target to grow this book. Probably, this part of the book continues to go down, at best flat, probably down, at best flat. And on the other part of business, I am more optimistic to start to show some growth. The other question was tax rate in Brazil. In Brazil, since we bought Banco Real, we had a large chunk of goodwill that was tax deductible in Brazil and this came to an end, I don't know if in March this year or when, in March this year and that's the reason why our tax rate is going up in Brazil. Naturally, this is Brazilian GAAP and we are looking here at the numbers under IFRS. To see the tax rate, how this evolve, you should look at the Brazilian GAAP numbers in which you see clearly this effect. Sergio Gámez Martínez - Banco Santander: Okay. We need to leave it here. Thanks, everyone, for joining this call, and obviously, the IR team is at your disposal for any follow up. Thank you. José Antonio Álvarez Álvarez - Banco Santander SA: Thank you.