1st Quarter Results 2003

Banco Santander Central Hispano SA
28 April 2003



   Santander Central Hispano recorded 1st qtr net attributable income of €612
                                 million, -8.7%


  • Profit figure was 16.6% above 4th qtr 2002 and the highest of the last 3
    quarters, .16.6% above 4th qtr 2002

  • (The retail drive) Commercial impetus in Spain led to 14.9% profit rise at
    Santander Central Hispano branch network

  • Strong business performance in Latin America offsetbscured by previous
    year on year currency impact

  • Effective cost control took efficiency ratio below 50% for first time

  • NPL ratio again fell to 1.79%, provision cover 140%

  • Gains from sale of 24.9% of Santander Serfin to accelerated goodwill
    amortization

  • Capital ratios strengthened: BIS ratio 13.5%, core capital 6%. Composition
    improved through reduced weighting of preferred stock

  • International best practices adopted in disclosure and corporate
    governance

Madrid, April 28th 2003 - Santander Central Hispano recorded a net attributable
income of €612 million in the first quarter of 2003, an 8.7% decline over the
same period last year that reflects the maximum impact of currency depreciation
in Latin America and also dollar weakness against the euro.


The currency impact, as well as declining interest rates, obscured a strong
underlying business performance which was responsible for a 16.6% rise in first
quarter net income over the fourth. Return on equity rose to 13.4%, one point
above the 2002 figure.


In fact, the first quarter of 2003 has beenwas the strongest of the last four,
while in Latin America the signs are that the worst is over with risk premiums
falling and capital flows returning. ., Tthe decline over the first three months
of 2002 reflects being due that period having been the most favourable for Latin
American currencies in that year.


Commenting on the results, Santander Central Hispano chairman Emilio Botin said:
'The Group's business drive, high asset quality, efficiency and solid capital
base are justify our being optimistic regarding prospects for 2003.'



Core activities again underpinned results, with commercial banking accounting
for 90% of net operating revenue and 86% of net attributable income (Europe 489%
and Latin America 37%), with asset management and private banking providing 9%
and global wholesale banking 65%.


However, the impact of Argentina and currency depreciation was felt throughout
the income statement, especially in net interest income which fell 22.9% to
€1.89 billion (excluding these factors a 2.1% increase). Net operating revenue
fell 16.9% to €3.17 billion but was 5.3% higher excluding currency impacts. and
Nnet attributable income would have risen 20.5% but for this factor.




At the same time, the impact of lower interest rates was partially offset by
higher volumes and effective management of spreads. Elsewhere, steps taken to
increase the weight of commissions led to an improved ratio of recurringent
revenues (63.2% against 56.6% in the same period last year).


Overall, commissions fell 9.2% in the 12 months but were slightly above the
fourth quarter.


Strong performance was seen infrom cards (+16.2%), insuranccne (+47%), funds
(+4.4%) and securities (+9.3%). The strongest results were registered by
Commercial Banking Europe (+16.2%), within this divisionwhere Santander Central
Hispano network rose 14.7%, Portugal 25.1%, and consumer finance doubled. Those
from Latin America fell 34.1% but rose 6.3% excluding currency impact. Trading
gains showed an 8.9% improvement to €268 million, returning to normal quarterly
levels.


Continued success in cost control led to an 18.9% drop in general expenses
(-0.4% at constant exchange rates, but nevertheless in the face of strong
inflation in some countries). This positive result, which includes a 7.1%
reduction in personnel costs at the Santander Central Hispano branch network in
Spain, enabled a drop below 50% in the efficiency ratio (49.8% against 52.3% for
2002 as a whole). Cost reductions in Commercial Banking Latin America fell
39.3%, and even if the favourable impact of currency depreciation is eliminated
there was still a 1.9% decline despite average inflation in excess of 12% in the
major countries.


The Group set aside €369 million for provisions and measures to strengthen the
balance sheet, (excluding ordinary goodwill amortization of €159 million), a
rise of 11.1% over the same period last year. This includes €3332.8 million for
loan loss provisions, a decline of 32.3%, which is in line with the drop in NPL
ratio to 1.79% from 1.89% in the year 2002. The , and a provision cover rate
isof 140%.


In addition, a total of €840 million was assigned to goodwill amortization,
against €153 million a year ago,. This included including€681 million,
practically the same level as the €701 million registered in capital gains in
the period, of which €618 millionwhich the majority was accounted for by the
sale of 24.9% of Santander Serfin to Bank of America (€681 million).
Additionally, this sale meant the elimination of €318 million in goodwill.
Goodwill outstanding in Latin America is now €4.27 billion, concentrated in the
priority markets of Brazil, Mexico and Chile. In all, €8.18 billion remains
pending amortization.


Latin America


A focus on recurringent business in key markets (Brazil, Mexico, Chile,
Venezuela and Puerto Rico) helped offset the impact of currency depreciation.
Thus net attributable income was 13.2% lower at €385 million, but 34.1% higher
at constant exchange rates. Of this total, €325 million corresponds to
commercial banking.


In the main countries, Brazil obtained net attributable income of €197 million,
down 18% but 26% higher excluding the currency effect, and concentrated efforts
on adjusting the risk profile, in particular by reducing the public debt
portfolio. Of the total, 91% is from commercial banking. Mexico achieved a €158
million profit, a fall of 22.7% (+8.3% eliminating the currency effect), with
the sale to Bank of America having been felt for one month. In Chile, where the
Group has integrated its two bank brands, net attributable income fell 50.8% to
€376 million as a result of significant loan loss provisions related to the
application of stricter risk criteria. Savings from the merger of Santander
Chile and Banco Santiago have yet to filter down.



Business performance


Volumes were adversely affected by Latin American currency depreciation and that
of the dollar against the euro, cutting 9.5 percentage points off loan growth
and 13 points off customer funds. Loans declined 4.5% to €168.7 billion and
customer funds by 8.4% to €307.0 billion (+5.1% and +3.4%, respectively,
excluding currency impact).


However, activity in Spain remained buoyant with loan growth of 9.24% at the
Santander Central Hispano network and 16.81% at Banesto, and mortgages in
particular roseising 31% and 43%, respectively. Careful margin management
enabled customer spreads to offset the impact of lower interest rates.


At the same time, a strategy of deposit-taking directed towards maximizing
margins saw non-remunerated sight deposits rise 5.57%, mutual funds and
structured products 7.98.1% and pension funds 9.7%, while remunerated sight and
term deposits declined 20.12%.


A new guaranteed fund campaign (Superseleccion), attracteding €2.65 billion in
the quarter, confirminged the Group's mutual fund leadership with a market share
exceeding 28%, founded on a combination of the reliable and profitable products
and the strength of the Santander Central Hispano branch network. In this
regard, customers have been offered the possibility of taking cover against
rising interest rates on their mortgages. Banesto continued to reap the rewards
of restructuring carried out over the past few years, with market share gains
and a 4.9% rise in customer funds.


In Latin America, the climate has begun to improve after four consecutive years
of slower growth, but an average decline of 47% of Latin American currencies
against the euro in the 12 months to March 2003 had a major impact on balances.
Loans were 36% lower at €320.251 billion (-5% excluding currency effect), due
mainly to Argentina and a restructuring of the business in Peru. Customer funds
were 321.85% down at €627.518 billion, again affected by Argentina, but less
than 1% lower excluding the currency impact.


In Brazil, where the Group is focussing on raising product/customer ratios for
its 5 million customer base in its priority markets of Sao Paulo and Rio Grande
do Sul states, deposits rose 26% and loans 16% in local currency terms. In
Mexico, with 2.8 million customers and 3 million pension fund affiliates,
Santander Serfin made use of its commercial agility to increase deposits by 4%
and loans by 26%. In Chile, where the Group already has a dominant market share
of 24.5% in loans and 22.3% in customer funds, the focus was on maximizing
profitability. Loans declined 8% and deposits by 12%.


Capital ratios


The Group has substantially improved capital ratios during the quarter, through
prudent risk decisions, accelerated goodwill amortization and high natural
capital generation capacity, and they now stands among the highest among the
major international banks.


At the end of March, eligible capital under BIS criteria stood at €25.72
billion, representing a surplus of €10.49 billion over minimum required levels.
BIS ratio was 13.5%, with a Tier I of 8.7% and core capital of 6%. These ratios
represent an increase of nearly a point over December 2002, as well as an
improved composition due to a decreased weighting of preferred stock.



The Santander Central Hispano share


A third interim dividend for 2002 of €0.0751 was paid on February 1, and Oon May
1, and fourth and final payment of €0.0607 will be made, bringing the total
dividend for 2002 to €0.2885, unchanged on the previous year.


During the quarter, the Santander Central Hispano share declined 10.5%, in line
with most financial sector indices. However, the subsequent market improvement
has seen an accumulated appreciation for the year of 6.1%. Market capitalization
stood at €33.09 billion (date!), confirming the Group as the leading financial
institution in Spain, second in the Euro zone and 14th worldwide, by this
measure.


Corporate governance commitment


The 2002 annual report contains a complete account of corporate governance,
including the opinion of the Board and its determination to progress in efforts
to achieve equal treatment for shareholders and proper disclosure to the
markets, in particular regarding remuneration for board members and senior
executives.


In this regard, at the upcoming Shareholders Meeting an amendment to the
Statutes will be proposed to eliminate the anti-takeover clauses and modify the
by-laws for the shareholders meeting.


These measures, together with other initiatives includes in the Corporate Social
Responsibility Plan, make Santander Central Hispano an international leader in
corporate governance and respect for human rights and environmental issues.


                --------------------------------------------------

Note:





Tables:

-- Consolidated income statement

-- Customer funds, loans

-- Shareholders' equity and capital ratios



Note:





Consolidated income statement
                                                       Jan-Mar 2003    Jan-Mar 2002      03/02

                                                         mln euros         mln euros          %
NET INTEREST REVENUE                                      1,899.0           2,461.6      (22.85)
Net fees and commissions                                   998.5            1,099.7         (9.20)
BASIC REVENUE                                             2,897.5           3,561.2        (18.64)
Trading gains                                              267.9             246.1          (8.88)
NET OPERATING REVENUE                                     3,165.4           3,807.3        (16.86)
Personnel and general expenses                           (1,575.5)         (1,943.6)       (18.94)
a) Personnel                                              (990.3)          (1,225.6)       (19.20)
b) General expenses                                       (585.2)           (718.0)        (18.49)
Depreciation and other results                            (220.9)           (298.0)         (25.9)
NET OPERATING INCOME                                      1,369.0           1,565.8        (12.57)
Income from equity accounted holdings                      124.2             176.8         (29.75)
Earnings from Group transactions                           701.3             65.0           978.25
Net provisions for loan losses                            (332.6)           (451.4)        (32.28)
Accelerated goodwill amortization                         (681.1)             --              --
Other income                                              (55.8)            (98.5)         (43.36)
Income before taxes (cash basis*)                         1,125.0           1,217.8         (7.61)
Corporate Tax                                             (205.7)           (237.9)        (13.54)
Net consolidated income (cash basis*)                      919.4             979.9          (6.17)
Minority interests                                         58.9              41.7           41.03
Dividend - preferred shareholders                          88.9              114.7         (22.47)
NET ATTRIBUTABLE INCOME (cash basis*)                      771.6             823.4          (6.30)
Ordinary goodwill amortization                            (159.1)           (152.9)          4.07
Net attributable income                                    612.5             670.5          (8.66)



Data excluding Argentina

Net interest revenue                                      1,900.0           2,360.7        (19.52)
Net fees and commissions                                   969.0            1,039.9         (6.81)
Basic revenue                                             2,869.0           3,400.6        (15.63)
Trading gains                                              275.6             235.7          16.91
Net operating revenue                                     3,114.6           3,636.3        (13.52)
General administrative expenses                          (1,541.8)         (1,868.9)       (17.50)
Net operating income                                      1,387.2           1,484.5         (6.55)
Net writedowns and..**.                                   (388.6)           (443.6)        (12.38)
Net attributable income (cash-basis*)                      771.6             823.4          (6.30
Ordinary goodwill amortization                            (159.1)           (152.9)          4.07
Net attributable income                                    612.5             670.5          (8.66)


(*) - Before ordinary goodwill amortization

(**) - Includes loan loss provisions, writeoffs, accelerated goodwill
amortization, earnings from group operations and other income





Customer funds
                                              31.03.2003     31.03.2002      03/02        31.12.02

                                              mln euros       mln euros        %          mln euros
Public sector                                     12,595.0         9,994.1      26.02          12,126.1
Private sector                                    78,327.5        76,693.6       2.13          78,432.1
Demand deposits                                   21,085.7        21,630.3     (2.52)          21,743.6
Savings accounts                                  16,008.5        15,631.8       2.41          16,057.7
Time deposits                                     20,749.5        21,702.7     (4.39)          21,326.5
REPOS                                             20,298.7        17,487.8      16.07          19,194.7
Other accounts                                       185.1           241.1    (23.25)             109.7
Non-resident sector                               74,070.9        96,395.4    (23.16)          77,257.6
Deposits                                          66,159.3        81,427.3    (18.75)          68,929.3
REPOS                                              7,911.6        14,968.1    (47.14)           8,328.2
Total customer deposits                          164,993.4       183,083.1     (9.88)         167,815.8
Debt securities                                   34,071.8        40,705.5    (16.30)          31,289.1
Subordinated debt                                 12,171.3        13,006.6     (6.42)          12,450.2
Total customer funds on-balance sheet            211,236.5       236,795.2    (10.79)         211,555.1
Total managed funds (off-balance sheet)           95,766.3        98,189.0     (2.47)          93,337.9
Mutual funds                                      69,987.2        72,037.3     (2.85)          68,139.5
Spain                                             54,921.8        51,221.8       7.22          52,729.7
Abroad                                            15,065.4        20,815.6    (27.62)          15,409.8
Pension funds                                     17,785.6        18,463.0     (3.67)          17,513.5
Spain                                              5,883.9         5,576.6       4.61           5,839.5
Individuals                                        5,081.2         4,814.9       5.53           5,073.4
Abroad                                            11,951.6        12,886.3     (7.25)          11,674.0
Managed portfolios                                 7,993.6         7,688.7       3.97           7,684.9
Spain                                              2,343.5         2,306.5       1.60           2,199.1
Abroad                                             5,650.1         5,382.2       4.98           5,485.8
Total customer funds                             307,002.8       334,984.2     (8.35)         304,893.0
Total customer funds - Argentina                   5,451.5        5,5541.4     (1.62)           4,902.7
Total customer funds excl. Argentina             301,551.3       329,442.8     (8.52)         299,990.2

Loans
                                              31.03.2003     31.03.2002      03/02        31.12.02

                                              mln euros       mln euros        %          mln euros
Public sector                                      4,913.9         4,120.4      19.26           4,897.1
Private sector                                    89,765.3        84,261.9       6.53          88,876.1
Secured loans                                     39,054.1        33,527.4      16.48          37,273.8
Other loans                                       50,711.2        50,734.5     (0.05)          51,602.4
Non-resident sector                               73,982.3        88,125.8    (16.05)          74,137.9
Secured loans                                     21,659.5        23,668.7     (8.49)          19,774.4
Other loans                                       52,322.7        64,457.1    (18.83)          54,363.6
Gross loans                                      168,661.5       176,508.1     (4.45)         167,911.2
Less: net allowance for loan losses                4,774.4         5,369.8    (15.34)           4,938.2
Net loans                                        163,887.1       170,868.3     (4.09)         162,973.0
Net loans - Argentina                              2,037.1         4,209.0    (51.60)           2,089.7
Net loans - without Argentina                    161,850.0       166,659.3     (2.89)         160,883.2
Note: doubtful loans                               3,518.4         4,003.8    (12.12)           3,699.7
Public sector                                          3.2             7.1    (54.21)               3.6
Private sector                                       988.5           986.0       0.26           1,000.3
Non-resident sector                                2,526.6         3,010.8    (16.08)           2,695.9













Shareholders' equity and capital ratios
                                               31.03.2003      31.03.2002       03/02       31.12.02

                                               mln euros        mln euros         %        mln euros
Subscribed capital stock                        2,384.2          2,329.7         2.34       2,384.2
Paid-in surplus                                 8,979.7          8,651.0         3.80       8,979.7
Reserves (includes net reserves at
consolidated companies)                         7,651.0          9,080.5       (15.74)      5,373.5
Total primary capital                           19,014.9        20,161.2        (5.22)      16,737.4
Net attributable income                          612.5            670.5         (8.66)      2,247.2
Treasury stock                                   (9.4)           (12.0)        (21.47)       (14.7)
Distributed interim dividend                   (1,086.0)        (1,035.4)        4.89       (727.8)
Shareholders' equity at period end              18,532.0        19,684.3        (5.85)      18,242.1
Interim dividend pending distribution              --              --             --        (358.2)
Final dividend                                  (289.6)          (294.0)        (1.51)      (289.6)
Shareholders' equity after
Allocation of period end results                18,242.4        19,390.3        (5.92)      17,594.2
Preferred shares                                5,140.0          6,157.6       (16.53)      5,436.8
Minority interests                              1,650.6          1,125.4        46.67       1,138.4
Shareholders' equity & minority interests       25,033.0        26,673.3        (6.15)      24,169.4
Basic Capital (Tier I)                          16,475.3        16,569.7        (0.57)      14,834.2
Supplementary Capital                           9,243.9          8,543.1         8.20       8,583.2
Eligible capital                                25,719.2        25,112.8         2.41       23,417.4
Risk-weighted assets (BIS criteria)            190,380.2        206,477.2       (7.80)     185,290.0
BIS ratio*                                       13.51            12.16                      12.64
Tier I                                            8.65            8.02                        8.01
Excess (amount)                                 10,488.8         8,594.6        22.04       8,594.2






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