Annual Report and Accounts

Banco Santander Central Hispano SA
29 January 2003


FOR IMMEDIATE RELEASE


 SANTANDER CENTRAL HISPANO RECORDED €2,247 MLN NET ATTRIBUTABLE PROFIT IN 2002
                                    (-9.6%)


  • Operating income - €5.57 billion - was the highest among Euro zone banks

  • Solid results across the board: retail banking Europe net income rose
    12.5% and Latin America recorded net attributable income of €1,383 million
    (-8.2%)

  • BIS ratio of 12.64% places the Group among the best capitalized
    international banks, while unrealized capital gains stood at €2.6 billion

  • Efficiency ratio improved 1.7 points to 52.3%

  • Highly conservative provisioning policy: €4.3 billion set aside

  • Dividend maintained at €0.2885/share, providing a yield of 4.4% at
    year-end

  • Progress made in corporate governance and corporate social responsibility


Madrid, January 29, 2003 - Santander Central Hispano (SAN:MC, STD:N) recorded
net attributable income of €2,247.2 million in 2002, down 9.6% on 2001 but in
line with objectives set last June in a period marked by slower growth, market
uncertainty and Latin American currency depreciation.

In this generally negative international context, which has translated into
widespread profit declines among Euro zone banks, the Group's priorities were
recurring income business, conservative risk management and provisioning, cost
control, and a strong balance sheet and capital base.

Earnings summary

The evolving situation in Argentina and currency depreciation in Latin America
had a negative impact on net interest income, which was 8.8% lower at €9,358.7
million. However, excluding these factors, there was a 6.8% increase due to
higher core business income from Europe and leading Latin American countries. In
Spain, volume growth compensated for tighter customer margins.

A 7.2% decline in fee and commission income reflects the impact of lower
revenues from Argentina, without which there would be a 1.7% rise (+8.3% if the
exchange rate factor is eliminated). Mutual and pension funds stand out with a
1% rise in this category, despite a negative market environment, as well as
portfolio management (+7.2%) and insurance (+41%).

The largest increase came from retail banking in Europe. Measures taken over the
past few months resulted in strong commission growth from Santander Central
Hispano retail banking, which rose 5.9%, Portugal which rose 12.5% and Consumer
Finance, which was up 52.5%.


Market volatility was responsible for a 48% fall in net trading gains,
reflecting in a decline in portfolio valuations. As a result, net operating
revenue came to €14,004.2 million, down 10.0% on 2001, but 4.3% higher if
Argentina and the exchange rate effect are excluded. Of this, 89% came from
retail banking in Spain and abroad.

Cost control efforts were rewarded in a 12.8% drop in general administrative
expenses which, added to revenue generation programmes under way in the Group,
led to a 1.7 point improvement in efficiency ratio to 52.3%. The Group continues
to count on additional cost reduction potential and has developed a number of
measures that will be rolled out over the coming year and which will ensure
sustained efficiency gains in the future.

Operating income came to €5,565.8 million, a fall of 6.4%, but up 1.5% if
Argentina is excluded. This latter figure is built on a 15.6% rise in retail
banking Europe, and on recurring business in general. Excluding Argentina and
based on constant exchange rates, operating income rose 11.7%.

The Group dedicated special attention to balance sheet improvement. Total loan
loss provisions came to €1,648.2 million, a rise of 3.9% over 2001 while
goodwill amortization came to €1,358.6 million, of which €703 million was
accelerated amortization for Banespa and Colombia. Goodwill outstanding for
Banespa has been reduced to €1.77 billion from the initial €3.8 billion at the
time of its acquisition.

Net attributable income came to €2,247 million, a decline of 9.6%, or one of
7.6% if Argentina is excluded. Retail banking activities contributed 84% to this
result, (49% retail banking Europe and 35% retail banking Latin America), asset
management and private banking 10%, global wholesale banking 5% and industrial
holdings, excluding capital gains, 1%.

Retail banking Europe recorded the best performance, with improved recurring
income (mainly in commissions) and cost control translating into a 15.6% rise in
operating income to €2,810.2 million. Net attributable income was 12.5% higher
at €1,565.7 million.

In Spain, both the Santander Central Hispano and Banesto networks succeeded in
maintaining growth in business volumes and in profit. Despite a weak economic
environment, the Group achieved net attributable income in Portugal of €223.1
million. Consumer finance recorded sizeable increases in all margins and a net
attributable income of €209.1 million.

Results in Latin America were affected by heavy currency depreciation and market
volatility. The Group accordingly focused on recurring business, restructuring
its presence in less profitable markets and expanding in profitable ones.
Despite the negative factors, net attributable income came to €1,382.7 million,
with especially strong performance from Brazil, Mexico and Chile.


As previously announced, the Group has provisioned its entire investment in
Argentina (including goodwill), as well as cross-border intra-group risk and
provisionable cross-border risk with third parties, as required by the
regulatory authorities. Argentina results have been neutralized in
consolidation, and therefore make a zero contribution to Group results.

Group objectives for Brazil, set at the time of the Banespa purchase, have been
surpassed. Despite a volatile environment, which was met by tight risk control,
net attributable income rose 20.5% to €801.9 million, thanks to positive trends
in recurring business (+41.6% if the exchange rate impact is excluded).

Excellent results were achieved also in Mexico, where net attributable income
rose 16.4% to €681.4 million. Further major business opportunities will open up
as a result of the integration of Banco Mexicano and Banca Serfin under the new
brand Santander Serfin, and of the agreement to sell 24.9% of the group to Bank
of America. In Chile, net attributable income of Banco Santander Chile, the
leading group in the country following the merger with Banco Santiago, came to
€228 million.

Balance sheet strength and quality

Two factors negatively affected Group funds, both on and off balance sheet:
depreciation of Latin American currencies and the US dollar against the euro,
and the impact of Argentina. This acted as a counterweight to the favourable
trends in retail banking Europe.

Loan volume declined 6.3% to €167,911 million (+3.2% excluding Argentina and
exchange rate factors). In Spain there was a 15.2% rise in loans to the public
sector and one of 4.9% to other resident sectors. In this category, mortgage
loans rose 12.9% (+16% eliminating the securitization effect).

Total customer funds declined 8.0% to €304,893 million (+3.7% if Argentina and
the exchange rate effect are excluded). There was a notable rise (6.1%) in
deposits in Spain, with increases also in current, savings and especially term
accounts (+11.3%) following the success of innovative new products launched
during the year. Market share improved as a result by 1.7 percentage points in
term deposits and 0.5 points in all deposits.

Mutual funds also showed a positive trend, with 6.6% volume growth in the
domestic market over the 12 months, consolidating the Group's leading market
share of 28%. In Spain, personal pension funds rose 7.3%, maintaining first
place in the rankings with a market share of above 19%.

Santander Central Hispano intensified its traditionally prudent risk policies,
in line with a strategy of coordinating locally-managed entities. These policies
enable a Group of its size to maintain local risks rather than global ones.
Total credit risk is at the same time well diversified, with 81% in OECD
countries and only 5% in non-investment grade countries.

As a result, NPL ratios and provision cover were maintained at levels of the
previous year (1.89% and 139.9%, respectively). Excluding Argentina, NPL ratio
stood at 1.68% (0.92% in Spain and 3.07% in Latin America) while cover rate was
152% (191% in Spain and 140% in Latin America).

Solvency ratios improve

Eligible capital under BIS criteria came to €23,417 million at the end of 2002,
giving a BIS ratio of 12.64%, one of the highest among the leading Euro zone
banks, while Tier I capital came to 8.01% and core capital ratio to 5.1%. Under
Bank of Spain criteria, the solvency ratio was 10.95%.

The Group carried out several operations with a positive impact on capital
ratios, which allowed it to absorb the impact of the depreciation of Latin
American currencies and the US dollar on Group reserves.

Dividends

Two interim dividend payments for 2002 were made on August 1 and November 1 of
€0.0775 and €0.0751 respectively. A third interim payment of €0.0751 is expected
to be made on February 1 and, following approval by Shareholders, a final
payment will be made. The Group expects to distribute a total 2002 dividend of
€0.2885 per share, giving a yield of 4.4%.

Consolidated income statement
                                                     2002               2001             02/01
                                                  mln euros          mln euros             %

NET INTEREST REVENUE                               9,358.7            10,256.8           (8.76)
Net fees and commissions                           4,289.3            4,621.7            (7.19)
BASIC REVENUE                                      13,647.9           14,878.5           (8.27)
Trading gains                                       356.3              685.1            (48.00)
Net operating revenues                             14,004.2           15,563.6          (10.02)
Personnel and general expenses                    (7,322.1)           (8,401.0          (12.84)
a) Personnel                                      (4,521.7)          (5,258.3)          (14.01)
b) General expenses                               (2,800.3)          (3,142.7)          (10.89)
Depreciation and other results                    (1,116.3)          (1,218.2)           (8.36)
NET OPERATING INCOME                               5,565.8            5,944.5            (6.37)
Income from equity accounted holdings               279.9              521.9            (46.37)
Earnings from Group transactions                   1,008.9            1,169.4           (13.73)
Net provisions for loan losses                    (1,648.2)          (1,586.0)            3.92
Goodwill amortization                             (1,358.6)          (1,873.0)          (27.46)
Other income                                       (339.1)              60.5               --
Income before taxes                                3,508.7            4,237.3            17.19
Corporate Tax                                      (723.1)            (910.4)           (20.57)
Net consolidated income                            2,785.6            3.326.9           (16.27)
Minority interests                                  137.8              340.3            (59.51)
Dividend - preferred shareholders                   400.7              500.3            (19.91)

NET ATTRIBUTABLE INCOME                            2,247.2            2,486.3            (9.62)


    Data excluding Argentina


    Net interest income                            9,307.9            9,551.3             (2.55)
    Net fees, commissions                          4,138.1            4,068.1              1.72
    Basic revenue                                 13,446.1           13,619.4             (1.27)
    Income from Group transactions                   338.6              789.0            (57.09)
    Net operating revenues                        13,784.7           14,408.4             (4.33)
    General administrative expenses               (7,141.5)          (7,819.8)            (8.67)
      Net operating income                         5,567.3            5,485.0              1.50
    Net writedowns*                               (2,356.5)          (1,909.2)            23.43
      Net attributable income                      2,247.2            2,432.4             (7.62)

    Net operating income excl. dividends
    and trading gains                              4,756.2            4,162.0             14.28

    * Includes earnings from Group transactions, loan loss provisions, goodwill
    amortization and other income


Customer funds
                                                           2002               2001          02/01
                                                          mln euros          mln euros         %

Public sector                                               12,126.1          14,466.9    (16.18)
Private sector                                              78,432.1          71,891.3       9.10
Demand deposits                                             21,743.6          21,252.2       2.31
Savings accounts                                            16,057.7          15,472.4       3.78
Time deposits                                               21,326.5          19,155.9      11.33
REPOS                                                       19,194.7          15,928.3      20.51
Other accounts                                                 109.7              82.6      32.82
Non-resident sector                                         75,723.0          90,923.7    (16.72)
Deposits                                                    67,394.8          80,656.0    (16.44)
REPOS                                                        8,328.2          10.267.7    (18.89)
Total customer deposits                                    166,281.2         177,281.9     (6.21)
Debt securities                                             30,465.2          40,376.0    (24.55)
Subordinated debt                                           12,450.2          12,996.0     (4.20)
Total customer funds on-balance sheet                      209,196.6         230,653.8     (9.30)
Total managed funds (off-balance sheet)                     90,793.7          91,716.2     (1.01)
Mutual funds                                                68,017.1          68,227.0     (0.31)
Spain                                                       52,729.7          49,487.6       6.55
Abroad                                                      15,287.4          18,739.5    (18.42)
Pension funds                                               15,091.7          15,619.6     (3.38)
Spain                                                        5,839.5           5,443.8       7.27
Individuals                                                  5,073.4           4,698.0       7.99
Abroad                                                       9,252.2          10,175.8     (9.08)
Managed portfolios                                           7,684.9           7,869.6     (2.35)
Spain                                                        2,199.1           2,432.0     (9.58)
Abroad                                                       5,485.8           5,437.6       0.89
Total customer funds - excl. Argentina                     299,990.2         322,370.0     (6.94)
Total customer funds - Argentina                             4,902.7           9,008.9    (45.58)
Total customer funds on-balance sheet                      304,893.0         331,378.9     (7.99)


Loans
                                            31.12.2002          31.12.2001          02/01
                                             mln euros          mln euros             %

Public sector                                  4,897.1              4,249.7          15.24
Private sector                                88,876.1             84,721.7           4.90
Secured loans                                 37,273.8             33,028.3          12.85
Other loans                                   51,602.4             51,693.4         (0.18)
Non-resident sector                           71,826.4             85,799.7        (16.29)
Secured loans                                 19,493.7             23,308.7        (16.37)
Other loans                                   52,332.7             62,491.0        (16.26)
Gross loans (ex-Argentina)                   165,599.7            174,771.1         (5.25)
Less: net allowance for loan losses            4,716.4              5,068.7         (6.95)
(ex-Argentina)
Net loans - ex-Argentina                     160,883.2            169,702.4         (5.20)
Net loans - Argentina                          2,089.7              4,119.7        (49.27)
Net loans - total                            162,973.0            173,822.0         (6.24)
Note: doubtful loans                           3,699.7              3,894.5         (5.00)
Public sector                                      3.6                  4.5        (20.01)
Private sector                                 1,000.3                931.0           7.44
Non-residents                                  2,695.9              2,959.0         (8.89)



Shareholders' equity and capital ratios*

                                                           31.12.2002          31.12.2001        02/01
                                                            mln euros           mln euros          %

Subscribed capital stock                                       2,384.2             2,329.7       2.34
Paid-in surplus                                                8,979.7             8,651.0       3.80
Reserves (including net reserves in consolidated               5,373,5             7,012.3      23.37
companies)
Total primary capital                                         16,737.4            17,933.0      (6.98
Net attributable income                                        2,247.2             2,486.3     (9.62)
Treasury stock                                                  (14,7)              (21.4)    (31.02)
Distributed interim dividend                                   (727.8)             (685.4)       6.19
Shareholders' equity at period end                            18,242.1            19,772.5     (7.74)
Interim dividend pending distribution                          (358.2)             (350.0)       2.34
Final dividend                                                 (289.6)             (294.0)     (1.51)
Shareholders' equity after
Allocation of period end results                              17,594.2            19,128.4     (8.02)
Preferred shares                                               5,436.8             5,979.0     (9.07)
Minority interests                                             1,138.4             1,394.9    (18.39)
Shareholders' equity & minority interests                     24,169.4            26,502.4     (8.80)
Basic Capital (Tier I)                                        14,834.2            16,357.9     (9.31)
Supplementary Capital                                          8,583.2             8,239.1       4.18
Eligible capital                                              23,417.4            24,597.0     (4.80)
Risk-weighted assets (BIS criteria)                          185,290.0           204,310.5     (9.31)
BIS ratio* (1)                                                   12.64               12.04
Tier I (1)                                                        8.01                8.01
Excess (amount)                                                8,594.2             8,252.2     (4.14)


    * The impact of amortization in 2002 of preferred stock is reflected in 2001
    end year accounts.


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