UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2023

Commission File Number: 000-55899

BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO

(Exact Name of Registrant as Specified in Its Charter)

Avenida Prolongación Paseo de la Reforma 500

Colonia Lomas de Santa Fe

Alcaldía Álvaro Obregón

01219, Ciudad de México

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F

BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO

TABLE OF CONTENTS

ITEM
1.	First quarter 2023 earnings release of Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México
2.	First quarter 2023 earnings presentation of Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BANCO SANTANDER MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO SANTANDER MÉXICO

By:	/s/ Hector Chávez Lopez
	Name:	Hector Chávez Lopez
	Title:	Executive Director of Investor Relations

Date: April 27, 2023

Item 1

TABLE OF CONTENTS

I.Key Highlights for the Quarter	2
II.CEO Message	3
III.Analysis of 1Q23 Consolidated Results	3
IV.Responsible Banking	17
V.Relevant Events and Activities	18
VI.Awards and Recognitions	19
VII.Credit Ratings	19
VIII.1Q23 Earnings Call Dial-In Information	21
IX.Definition of Ratios	21
X.Consolidated Financial Statements	24
XI.Notes to Consolidated Financial Statements	32

Earnings Release | 1Q.2023

Banco Santander México

Banco Santander México Reports First Quarter 2023 Net Income of Ps.7,626 Million

Total loans grew 5.2% YoY, with strong increase in individual loans, mainly due to double-digit growth in credit cards, payroll and auto loans.

In terms of total deposits, we had solid growth of 14.6% YoY, driven by the good performance of term deposits, on the back of a higher interest rate environment. Meanwhile, contribution of individuals in total deposits represented 40.1%, compared with 24.2% in 2016.

Net income increased 49.2% YoY, mainly due to the solid increase in NII and fees, despite increases in provisions and expenses. Thus, demonstrating that our strategy has significant potential in this current environment.

Mexico City – April 26^th, 2023, Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (NYSE: BSMX; BMV: BSMX), (“Banco Santander México” or “the Bank”), today announced financial results for the three-month period ending March 31^st, 2023.

Banco Santander México reported net income of Ps.7,626 million in 1Q23, representing a YoY increase of 49.2% and a QoQ of 21.5%.

HIGHLIGHTS
Results (Million pesos)	1Q23	4Q22	1Q22	%QoQ	%YoY
Net interest income	20,172	19,945	16,416	1.1	22.9
Fee and commission, net	5,290	5,118	4,876	3.4	8.5
Core revenues	25,462	25,063	21,292	1.6	19.6
Provisions for loan losses	4,512	4,712	3,874	(4.2)	16.5
Administrative and promotional expenses	10,352	12,310	9,475	(15.9)	9.3
Net income	7,626	6,277	5,111	21.5	49.2
Net income per share¹	1.12	0.92	0.75	21.7	49.3

Balance Sheet Data (Million pesos)	Mar-23	Dec-22	Mar-22	%QoQ	%YoY
Total assets	1,995,143	1,844,169	1,734,268	8.2	15.0
Total loans	810,655	810,081	770,440	0.1	5.2
Deposits	901,955	837,389	787,057	7.7	14.6
Shareholders´ equity	174,175	166,308	166,102	4.7	4.9

Key Ratios (%)	1Q23	4Q22	1Q22	bps QoQ	bps YoY
Net interest margin	5.26	5.28	4.59	(2)	67
Net loans to deposits ratio	87.59	94.39	94.99	(680)	(740)
ROAE	17.92	15.12	12.32	280	560
ROAA	1.59	1.44	1.21	15	38
Efficiency ratio	40.84	48.01	47.28	(717)	(644)
Capital ratio	22.06	19.38	20.21	268	185
NPLs ratio	1.96	1.88	2.79	8	(83)
Cost of Risk	1.62	1.56	2.41	6	(79)
Coverage ratio	146.29	145.82	114.63	47	—

Operating Data	Mar-23	Dec-22	Mar-22	%QoQ	%YoY
Branches	1,034	1,037	1,036	(0.3)	(0.2)
Branches and offices²	1,346	1,345	1,345	0.1	0.1
ATMs	9,781	9,689	9,522	0.9	2.7
Customers	20,282,987	20,238,104	19,032,490	0.2	6.6
Employees	26,461	25,990	25,342	1.8	4.4

Accumulated EPS, net of treasury shares (compensation plan) and discontinued operations. Calculated by using weighted number of shares.

Includes cash desks (espacios select, box select and corner select) and SMEs business centers. Excluding brokerage house offices.

Earnings Release | 1Q.2023

Banco Santander México

Felipe García, Banco Santander México CEO, commented: “I am pleased to share with you that we started the year with very strong results, with a net income of Ps.7.6 billion pesos during 1Q23, slightly more than 49% compared to the same period of the previous year, demonstrating the good results of our strategy, as well as excellent and consistent risk management. Consequently, our ROE was 17.9%, 560 bp higher than the previous year.

During the first quarter, total loans grew more than 5% year on year, with strong performance mainly in individual loans supported by double-digit growth in credit cards, payroll, and auto loans.

In terms of deposits, we had significant growth of 14.6% compared to 1Q22, mainly due to the good performance of term deposits, which grew close to 52% year-on-year, thanks to our strategy focused on increasing the deposit balance of our clients and attracting resources from the competition. However, our main opportunity continues to be increasing our share of individual demand deposits.

On the other hand, the asset quality of the portfolio remained at excellent levels despite the significant growth of individual loans. NPL ratio stood at 1.96%, improving 83 bps compared to 1Q22, while the cost of risk decreased 79 bps annually, to settle at 1.62%. These good results are due to the correct management of the portfolio carried out by the risk team, in coordination with all the bank’s business units.

Looking ahead, we will continue advancing in our multiple growth initiatives, promoting the bank's transformation, digitization and simplifying our product offering and processes to offer the best experience to our customers”.

Earnings Release | 1Q.2023

Banco Santander México

III. Analysis of 1Q23 Consolidated Results

(Amounts expressed in millions of pesos, except where otherwise stated)

Net income

Banco Santander México reported 1Q23 net income of Ps.7,626 million, representing an increase of 49.2% YoY, and 21.5% sequentially. The YoY increase was mainly due to the solid increase in NII and fees, despite increases in provisions and expenses.

Consolidated statement of comprehensive income
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Net interest income	20,172	19,945	16,416	1.1	22.9
Provisions for loan losses	(4,512)	(4,712)	(3,874)	(4.2)	16.5
Net interest income after provisions for loan losses	15,660	15,233	12,542	2.8	24.9
Commission and fee income, net	5,290	5,118	4,876	3.4	8.5
Net gain (loss) on financial assets and liabilities	654	1,028	1,039	(36.4)	(37.1)
Other operating expense	(767)	(449)	(2,291)	70.8	(66.5)
Administrative and promotional expenses	(10,352)	(12,310)	(9,475)	(15.9)	9.3
Operating income	10,485	8,620	6,691	21.6	56.7
Equity in results of associated companies	79	-	107	100.0	(26.2)
Operating income before income taxes	10,564	8,620	6,798	22.6	55.4
Income taxes (net)	(2,938)	(2,343)	(1,687)	25.4	74.2
Net income	7,626	6,277	5,111	21.5	49.2
Effective tax rate (%)	27.81	27.18	24.82

Other comprehensive income	375	1,423	(3,127)	(73.6)	112.0
Valuation of financial instruments to collect or sell	651	1,677	(3,028)	(61.2)	121.5
Valuation of derivatives financial instruments for cash flow hedges	(269)	98	(85)	—	—
Remeasurement of defined benefit obligation	(7)	(352)	(14)	98.0	(50.0)

Participation in OCI of other entities	-	-	-	—	—

Integral result	8,001	7,700	1,984	3.9	—

Net result attributable to:	7,626	6,277	5,111	21.5	49.2
controlling interest	7,626	6,277	5,111	21.5	49.2
Non-controlling interest	-	-	-	—	—

Comprehensive income attributable to:	8,001	7,700	1,984	3.9	—
controlling interest	8,001	7,700	1,984	3.9	—
Non-controlling interest	-	-	-	—	—

Basic earnings per common share	1.12	0.92	0.75	21.7	49.3

1Q23 vs 1Q22

The 49.2% year-on-year increase in net income was principally driven by:

A 22.9%, increase in net interest income, supported by strong loan growth in individuals along with higher interest rates enviroment. During 1Q23, Banxico increased the reference rate by 75 bps to 11.25%. Moreover, the average reference rate has increased +497 bps YoY from the 5.81% in 1Q22 to 10.78% in 1Q23;

Earnings Release | 1Q.2023

Banco Santander México

ii)

A 8.5%, increease commission and fee income, mainly due to increases in fees of debit and credit card, insurance, foreign trade, collection services and account management, couple with lower other commissions and fees paid; and

iii)

A 66.5%, decrease in other operating expense, as a result of income from the sale of acquirer business contracts, lower legal expenses and portfolio recovery costs, and lower provisions for legal and tax contingencies.

The increase in net income was partially offset by:

A 74.2%, increase in income taxes, which resulted in a 27.81% effective tax rate for the quarter, compared to 24.82% in 1Q22;

ii)

A 37.1%, decrease in net gains on financial assets and liabilities related to exchange losses driven by the appreciation of the peso;

iii)

A 26.2%, decrease in the results of associated companies due to the recognition of GetNet México investment.

iv)

A 16.5%, increase in provisions for loan losses, reflecting retail loan portfolio growth; and

A 9.3%, increase in administrative and promotional expenses, by an increase in personnel salaries and benefits, depreciation and amortization and taxes and duties.

Gross operating income

Banco Santander México’s gross operating income for 1Q23 totaled Ps.26,116 million, representing increases of 16.9% YoY, and 0.1% QoQ. The YoY increase was driven by the solid performance in net interest income, supported by the the greater focus of the Bank on individual loans and higher fees, which more than offset lower market related income.

Gross operating income is broken down as follows.

Breakdown gross operating Income (%)
				Variation (bps)
	1Q23	4Q22	1Q22	QoQ	YoY
Net Interest Income	77.24	76.44	73.51	80	373
Net Commissions and Fees	20.26	19.62	21.84	64	(158)
Market related revenue	2.50	3.94	4.65	(144)	(215)
Gross Operating Income*	100.00	100.00	100.00

*Does not include other income

Return on average equity (ROAE)

ROAE for 1Q23 increased 560 basis points to 17.92%, from 12.32% reported in 1Q22 and increased 280 basis points from 15.12% in 4Q22. ROAE was driven by increases in core revenues along with excellent risk management.

Customer evolution

The Bank continues to increase the number of its digital and mobile clients by 9% YoY and 11%, respectively. Besides, the ratio of loyal customers continues to grow, now loyal clients represent 45% of active clients (vs 42% in the same quarter of 2022). Moreover, digital transactions now account for more than 79% of total transactions, increasing by 190 bps compared to March 2022. As of March 2023, 66% of product sales were made through digital channels, compared to 62% a year ago.

Earnings Release | 1Q.2023

Banco Santander México

Customers
(Thousands)				% Variation
	Mar-23	Dec-22	Mar-22	QoQ	YoY
Loyal Customers¹	4,457	4,329	4,015	3.0	11.0
Digital Customers²	6,202	6,029	5,668	2.9	9.4
Mobile Customers³	5,948	5,772	5,383	3.1	10.5

Loyal customers = Clients with non-zero balance and depending on the segment should have between two and four products and between three and ten transactions in the last 90 days.

Digital customers = Clients with at least one digital transaction per month in SuperNet or SuperMóvil.

Mobile customers = Clients using Supermóvil and/or Superwallet in the last 30 days.

Loan portfolio

As of March 2023, the evolution of the total loan portfolio reflected solid YoY growth, showing strong performance in individual loans, mainly due to double-digit growth in credit cards, payroll and auto loans. Mortgage loans continued expanding at a solid pace organically. While loan volumes in the commercial portfolio were impacted by corporates prepayments. As a result, total loan portfolio increased 5.2% YoY, to Ps.810,655 million in March 2023. On a sequential basis, total loan portfolio slightly increased 0.1%.

Portfolio Breakdown
Million pesos				% Variation
	Mar-23	Dec-22	Mar-22	QoQ	YoY
Commercial	441,960	450,168	446,392	(1.8)	(1.0)
Middle-market	232,594	216,946	220,051	7.2	5.7
Corporates	58,741	83,358	72,093	(29.5)	(18.5)
SMEs	51,146	51,063	55,790	0.2	(8.3)
Government & Financial Entities	99,479	98,801	98,458	0.7	1.0

Individuals	368,695	359,913	324,048	2.4	13.8
Consumer	156,323	149,106	126,673	4.8	23.4
Credit cards	66,925	64,350	54,136	4.0	23.6
Other consumer	89,398	84,756	72,537	5.5	23.2
Mortgages	212,372	210,807	197,375	0.7	7.6
Total	810,655	810,081	770,440	0.1	5.2

Loan portfolio breakdown by stages
Million pesos
	Mar-23	%	Dec-22	%	Mar-22	%
Stage 1
Commercial	417,360	51.5	423,276	52.3	421,136	54.7

Individuals	344,695	42.5	337,449	41.7	301,764	39.2
Consumer	344,695	42.5	141,916	17.5	120,173	15.6
Credit cards	147,947	18.3	60,731	7.5	50,824	6.6
Other consumer	62,378	7.7	81,185	10.0	69,349	9.0
Mortgages	85,569	10.6	195,533	24.1	181,591	23.6
Total stage 1	196,748	24.3	760,725	93.9	722,900	93.8

Stage 2
Commercial	19,433	2.4	21,742	2.7	15,520	2.0

Individuals	13,244	1.6	12,376	1.5	10,533	1.4
Consumer	3,872	0.5	3,448	0.4	3,025	0.4
Credit cards	2,073	0.3	1,872	0.2	1,504	0.2

Earnings Release | 1Q.2023

Banco Santander México

Other consumer	1,799	0.2	1,576	0.2	1,521	0.2
Mortgages	9,372	1.2	8,928	1.1	7,508	1.0
Total stage 2	32,677	4.0	34,118	4.2	26,053	3.4

Stage 3
Commercial	5,167	0.6	5,150	0.6	9,736	1.3

Individuals	10,756	1.3	10,088	1.2	11,751	1.5
Consumer	4,504	0.6	3,742	0.5	3,475	0.5
Credit cards	2,474	0.3	1,747	0.2	1,808	0.2
Other consumer	2,030	0.3	1,995	0.2	1,667	0.2
Mortgages	6,252	0.8	6,346	0.8	8,276	1.1
Total stage 3	15,923	2.0	15,238	1.9	21,487	2.8

Total loan portfolio
Commercial	441,960	54.5	450,168	55.6	446,392	57.9

Individuals	368,695	45.5	359,913	44.4	324,048	42.1
Consumer	156,323	19.3	149,106	18.4	126,673	16.4
Credit cards	66,925	8.3	64,350	7.9	54,136	7.0
Other consumer	89,398	11.0	84,756	10.5	72,537	9.4
Mortgages	212,372	26.2	210,807	26.0	197,375	25.6
Total loan portfolio	810,655	100.0	810,081	100.0	770,440	100.0

As of March 2023, commercial loans decreased 1.0% YoY, due to decreases of 18.5% in corporate loans, 8.3% in SMEs and 2.0% in government entities. On a sequential basis, the commercial loan portfolio contracted 1.8%.

It is worth noting that auto loans continued showing a strong performance, increasing 36.5% YoY, in March 2023 and a 7.5%, sequentially. This was a result of the Bank’s alliances with leading automakers in Mexico and supported by the “Super Auto Santander” platform. In addition, with the aim of expanding the business further, the Bank has been very active in the used cars segment of the market. As of today, used car loans represent 10% of the total auto loan portfolio. According to the last information published by CNBV, market share of the Bank in the auto business expanded +270 bps to 16.2% in February ’23.

Credit card loans continued growing at a solid pace, expanding 23.5% YoY, and 3.9% QoQ, reflecting an average usage increase of 30% YoY, and supported by the Bank’s successful product “Like U”. Currently, more than 18.4% of total billing comes from “Like U” credit cards.

Payroll loans delivered a solid performance, increasing 20.0% YoY, in March 2023 and a 3.4%, sequentially, while personal loans increased 12.7% YoY, due to the Bank’s improving offer, processes and benefits programs, among others.

Mortgage loans continued showing strong growth, increasing 7.6% YoY, and 0.7%, sequentially, due to the Bank’s innovative and competitive offering in mortgages. The “Hipoteca Plus” product remains the main driver behind this strong performance, accounting for 52% of total mortgage origination in the quarter, which also helps the Bank to increase cross-selling of other products, as well as build customer loyalty. In addition, the digital onboarding platform for mortgages, “Hipoteca Online”, has allowed the Bank to be more efficient in terms of response times and eliminating the need for our customers to visit a branch, all resulting in a much better customer experience. During 1Q23, 98% of the mortgages were processed through this digital platform.

Earnings Release | 1Q.2023

Banco Santander México

However, the total mortgage loan portfolio is still affected by the run-off of acquired portfolios, excluding this effect, the mortgage portfolio would have increased 9.9% YoY.

Total Deposits

Total deposits in March 2023 stood at Ps.901,955 million, an increase of 14.6%. On a sequential basis, total deposits grew 7.7%. Demand deposits reached Ps.581,090 million, a slight increase of 0.9% YoY, while time deposits increased 52.1% YoY. On a sequential basis, demand deposits increased 5.3% QoQ, while time deposits increased 12.4% QoQ. Deposits from individuals expanded 21.9% YoY while corporates increased 10.2% YoY. The Bank continued working to improve its funding costs, prioritizing individual deposits and foregoing certain expensive corporate deposits. It is worth noting that although we have increased the contribution of individuals to 40.1% as of 1Q23 compared to 24.2% in 2016, we had a deterioration in the weight of demand deposits going from 73.2% in 1Q22 to 64.4% in 1Q23, derived from the strong growth in term deposits.

Net interest income

Net interest income in 1Q23 totaled Ps.20,172 million, increasing 22.9% YoY, and 1.1% QoQ.

The 22.9% YoY increase in net interest income resulted from the combination of:

A 56.1%, increase in interest income, to Ps.44,121 million; and

ii)

A 102.2%, increase in interest expense, to Ps.23,949 million.

The net interest margin ratio (NIM), calculated using daily average interest-earning assets for 1Q23, stood at 5.26%, compared to 4.59% in 1Q22 and 5.28% in 4Q22. The YoY increase in NIM was principally driven by the expansion of retail volumes in loans and deposits, as well as higher interest rates.

Net interest income
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Interest on funds available	1,343	1,154	495	16.4	—
Interest on margin accounts	417	371	115	12.4	—
Interest and yield on securities	10,257	8,732	6,251	17.5	64.1
Interest and yield on loan portfolio – excluding credit cards	23,681	22,797	16,996	3.9	39.3
Interest and yield on loan portfolio related to credit cards	4,325	4,241	3,069	2.0	40.9
Commissions collected on loan originations	155	153	132	1.3	17.4
Interest and premium on sale and repurchase agreements and securities loans	3,943	3,325	1,203	18.6	—
Interest income	44,121	40,773	28,261	8.2	56.1

Daily average interest- earnings assets	1,533,203	1,509,601	1,430,420	1.6	7.2

Interest from customer deposits – demand deposits	(4,255)	(3,434)	(2,238)	23.9	90.1
Interest from customer deposits – time deposits	(8,137)	(6,077)	(2,942)	33.9	—
Interest from credit instruments issued	(1,425)	(1,500)	(1,318)	(5.0)	8.1
Interest on bank and other loans	(1,330)	(1,112)	(582)	19.6	128.5
Interest on subordinated capital notes	(382)	(402)	(420)	(5.0)	(9.0)
Otros	(169)	(192)	(175)	(12.0)	(3.4)
Interest and premium on sale and repurchase agreements and securities loans	(8,251)	(8,111)	(4,170)	1.7	97.9
Interest expense	(23,949)	(20,828)	(11,845)	15.0	102.2

Daily average interest-bearing liabilities	1,360,250	1,331,714	1,251,495	2.1	8.7
Net interest income	20,172	19,945	16,416	1.1	22.9

Earnings Release | 1Q.2023

Banco Santander México

Interest Income

Total average interest earning assets in 1Q23 amounted to Ps. 1,533,203 million, increasing 7.2% YoY, mainly due to increases in average volume of 101.2% in securities lending and repurchase agreements, 7.1% in the total loan portfolio and 10.1% in margin accounts, partially offset by decreases in average volume of 6.9% in investment securities and 15.9% in cash and cash equivalents.

Banco Santander Mexico's interest income consists mainly of interest on the loan portfolio and commissions for the initial granting of credit, which in 1Q23 generated Ps.28,161 million and represented 63.8% of total interest income. The remaining balance of interest income of Ps.15,960 million is broken down as follows: 23.2% from investments in securities, 8.9% from securities lending and repurchase agreements, 3.0% from cash and cash equivalents, and 0.9% from margin accounts.

Banco Santander México’s interest earning assets are broken down as follows:

Average Assets (Interest-Earnings Assets)
Breakdown (%)
	1Q22	2Q22	3Q22	4Q22	1Q23
Loan portfolio	53.0	52.8	52.8	53.8	52.9
Investment in securities	34.6	33.1	31.6	29.3	30.1
Funds available	4.7	4.3	4.0	3.8	3.7
Repurchase agreements	6.4	8.4	10.2	11.7	12.0
Margin accounts	1.4	1.4	1.4	1.4	1.4
Total	100.0	100.0	100.0	100.0	100.0

The average interest yield on interest-earning assets in 1Q23 stood at 11.51%, increasing 361 basis points from 7.90% in 1Q22. Sequentially, the average interest yield on interest-earning assets increased 94 basis points from 10.57% in 4Q22.

Interest income
Million Pesos	1Q23			1Q22			Var YoY
	Average Balance	Interest	Yield (%)	Average Balance	Interest	Yield (%)	Average Balance	Interest (%)	Yield (bps)
Funds available	56,037	1,343	9.59	66,661	495	2.97	(15.9)	171.3	662
Margin accounts	21,393	417	7.80	19,422	115	2.37	10.1	262.6	543
Investment in securities	460,943	10,257	8.90	495,249	6,251	5.05	(6.9)	64.1	385
Loan portfolio	811,638	28,006	13.80	758,025	20,065	10.59	7.1	39.6	321
Commissions collected on loan originations	—	155	—	—	132	—	—	17.4	—
Sale and repurchase agreements and securities loans	183,192	3,943	8.61	91,063	1,203	5.28	101.2	227.8	333
Interest income	1,533,203	44,121	11.51	1,430,420	28,261	7.90	7.2	56.1	361

Interest expense

Total average interest-bearing liabilities amounted to Ps.1,360,250 million, increasing 8.7% YoY, and were driven by increases of 34.4% in time deposits, 15.4% in bank and other loans, 8.4% in repurchase agreements and 0.9% in demand deposits, partially offset by decreases of 17.2% in debt securities issued and 9.0% in subordinated debentures.

Banco Santander México’s interest-bearing liabilities are broken down as follows:

Earnings Release | 1Q.2023

Banco Santander México

Average liabilities (interest-bearing liabilities)
Breakdown (%)
	1Q22	2Q22	3Q22	4Q22	1Q23
Demand deposits	42.2	41.9	38.7	39.0	39.2
Sale and repurchase agreements and securities loans	25.3	25.7	27.9	28.1	25.3
Time deposits	20.6	20.3	21.3	22.3	25.4
Credit instruments issued	6.8	6.9	7.1	6.0	5.2
Bank and other loans	3.0	3.2	3.0	2.7	3.1
Subordinated capital notes	2.1	2.0	2.0	1.9	1.8
Total	100.0	100.0	100.0	100.0	100.0

The average interest rate on interest-bearing liabilities in 1Q23 stood at 7.04%, increasing 325 basis points from 3.79% in 1Q22. Sequentially, interest rate on interest-bearing liabilities increased 92 basis points from 6.12% in 4Q22.

Interest expense
Million pesos	1Q23			1Q22			Var YoY
	Average Balance	Interest	Yield (%)	Average Balance	Interest	Yield (%)	Average Balance	Interest (%)	Yield (bps)
Demand deposits	533,082	4,255	3.19	528,104	2,238	1.70	0.9	90.1	149
Time deposits	345,574	8,137	9.42	257,217	2,942	4.58	34.4	176.6	484
Credit instruments issued	70,654	1,425	8.07	85,357	1,318	6.18	(17.2)	8.1	189
Bank and other loans	43,007	1,330	12.37	37,253	582	6.25	15.4	128.5	612
Subordinated capital notes	24,257	382	6.30	26,653	420	6.30	(9.0)	(9.0)	0
Sale and repurchase agreements and securities loans	343,676	8,251	9.60	316,911	4,170	5.26	84	97.9	434
Other interest expenses	—	169	—	—	175	—	—	(3.4)	—
Interest expense	1,360,250	23,949	7.04	1,251,495	11,845	3.79	8.7	102.2	325

Provisions for loan losses and asset quality

During 1Q23, provisions for loan losses amounted to Ps.4,512 million, which represented increase of 16.5% YoY, and a 4.2% decrease on a sequential basis. The YoY increase reflected strong individuals loan portfolio growth.

The stage 3 total loan portfolio in March 2023 stood at Ps.15,923 million, reflecting healthy trends across the loan portfolio compared to Ps. 21,487 as of March 2022 and slightly above the Ps.15,238 million as of December 2022.

The non-performing loans led to an NPL ratio of 1.96% in March 2023, a 2.79% in March 2022 and 1.88% in December 2022.

Finally, the coverage ratio as of March 2023 stood at 146.29%, 114.63% in March 2022 and 145.82% in December 2022.

Loan Loss Reserves
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Commercial	565	374	1,063	51.1	(46.8)
Consumer	3,622	3,308	2,310	9.5	56.8
Mortgages	325	1,030	501	(68.4)	(35.1)
Total	4,512	4,712	3,874	(4.2)	16.5

Earnings Release | 1Q.2023

Banco Santander México

Cost of risk ( %)
Million pesos				Variation (bps)
	1Q23	4Q22	1Q22	QoQ	YoY
Commercial	(0.45)	(0.34)	1.29	(11)	(174)
Consumer	9.06	8.55	8.80	51	26
Mortgages	0.99	1.09	0.91	(10)	8
Total	1.62	1.56	2.41	6	(79)

The breakdown of the stage 3 total loan portfolio is as follows: mortgage loans 39.3%, commercial loans 32.4% and consumer loans (including credit cards) 28.3%.

Non-Performing loan ratio (%)
				Variation (bps)
	Mar-23	Dec-22	Mar-22	QoQ	YoY
Commercial	1.17	1.14	2.18	3	(101)
SMEs	1.52	1.70	2.10	(18)	(58)
Others	1.12	1.07	2.19	5	(107)

Individuals
Consumer	2.88	2.51	2.74	37	14
Credit Card	3.70	2.71	3.34	99	36
Other consumer	2.27	2.35	2.30	(8)	(3)
Mortgages	2.94	3.01	4.19	(7)	(125)
Total	1.96	1.88	2.79	8	(83)

Commission and fee income, net

In 1Q23, net commission and fee income totaled Ps.5,290 million, which represented an increase of 8.5% YoY, and 3.4% sequentially

Net commissions and fees went up 8.5% YoY, in 1Q23, mostly as a result of:

A 21.2%, increase in debit an credit card, mainly driven by the solid performance of the "LikeU" credit card and strong usage performance;

ii)

A 13.9%, increase in foreign trade;

iii)

A 10.1%, increase in insurance, supported by the insurance policies of individuals, mainly auto insurance;

iv)

A 9.4%, increase in Collection services and 7.7% in account management;

A 47.9% decrease in other commissions and fees paid

Earnings Release | 1Q.2023

Banco Santander México

Commission and fee income, net
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Commission and fee income
Debit and credit card	2,917	2,952	2,367	(1.2)	23.2
Account management	780	755	724	3.3	7.7
Collection services	689	555	630	24.1	9.4
Investment funds	457	495	446	(7.7)	2.5
Insurance	1,591	1,574	1,444	1.1	10.2
Purchase-sale of securities and money market transactions	274	237	274	15.6	0.0
Checks trading	37	41	38	(9.8)	(2.6)
Foreign trade	500	281	439	77.9	13.9
Financial advisory services	391	293	502	33.4	(22.1)
Other	292	255	238	14.1	22.7
Total	7,928	7,438	7,102	6.6	11.6

Commission and fee expense
Debit and credit card	(1,430)	(1,533)	(1,140)	6.7	25.4
Insurance	(1)	0	0	100.0	100.0
Purchase-sale of securities and money market transactions	(59)	(58)	(99)	1.7	40.4
Checks trading	(18)	(17)	(16)	5.9	12.5
Financial advisory services	(7)	(36)	(87)	80.6	92.0
Bank Correspondents	(170)	(151)	(199)	12.6	14.6
Other	(953)	(525)	(685)	81.5	39.1
Total	(2,638)	(2,320)	(2,226)	13.7	18.5

Commission and fee income, net
Debit and credit card	1,487	1,419	1,227	4.8	21.2
Account management	780	755	724	3.3	7.7
Collection services	689	555	630	24.1	9.4
Investment funds	457	495	446	(7.7)	2.5
Insurance	1,590	1,574	1,444	1.0	10.1
Purchase-sale of securities and money market transactions	215	179	175	20.1	22.9
Checks trading	19	24	22	(20.8)	(13.6)
Foreign trade	500	281	439	77.9	13.9
Financial advisory services	384	257	415	49.4	(7.5)
Bank Correspondents	(170)	(151)	(199)	12.6	(14.6)
Other	(661)	(270)	(447)	144.8	47.9

Total	5,290	5,118	4,876	3.4	8.5

The main contributors to net commissions and fees were insurance fees, which accounted for 30.1% of the total, followed by credit and debit card fees, account management and collection services fees, which accounted for 28.1%, 14.7% and 13.0% of total commissions and fees, respectively.

Net commisions and fees
Breakdown (%)
	1Q23	4Q22	1Q22
Insurance	30.1	30.8	29.6
Debit and credit card	28.1	27.7	25.2
Account management	14.7	14.8	14.8
Collection services	13.0	10.8	12.9
Foreign trade	9.5	5.5	9.0
Investment funds	8.6	9.7	9.1

Earnings Release | 1Q.2023

Banco Santander México

Financial advisory services	7.3	5.0	8.5
Purchase-sale of securities and money market transactions	4.1	3.5	3.6
Checks trading	0.3	0.5	0.5
Bank correspondents	(3.2)	(3.0)	(4.0)
Other	(12.5)	(5.3)	(9.2)
Total	100.0	100.0	100.0

Net gain (loss) on financial assets and liabilities

In 1Q23, Banco Santander México reported a Ps.654 million net gain from financial assets and liabilities, which compares with a gain of Ps.1,039 million in 1Q22 and a gain of Ps.1,028 million in 4Q22. The YoY decrease in net gains on financial assets and liabilities was related to exchange losses driven by the appreciation of the peso.

Net gain (loss) on financial assets and liabilities
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Valuation
Foreign exchange	2,159	(8,248)	674	126.2	—
Derivatives	3,012	(2,830)	2,465	—	22.2
Equity securities	(9)	166	(72)	(105.4)	(87.5)
Debt instruments	(5)	2,273	(2,903)	(100.2)	(99.8)
Valuation result	5,157	(8,639)	164	—	—

Purchase / sale of securities
Foreign exchange	(1,705)	8,389	(87)	(120.3)	—
Derivatives	(2,995)	956	804	—	—
Equity securities	31	0	21	100.0	47.6
Debt instruments	166	322	137	(48.4)	21.2
Purchase -sale result	(4,503)	9,667	875	(146.6)	—

Total	654	1,028	1,039	(36.4)	(37.1)

Other operating expense

Other operating expense in 1Q23 totaled Ps.767 million, which compares with an expense of Ps.2,291 million in 1Q22 and with an expense of Ps.449 million reported in 4Q22.

The Ps.1,524 million YoY decrease in other operating expense in 1Q23, was mainly due to Ps.784 million in income from the sale of acquiring business contracts, a decrease of 60.2% in legal expenses and portfolio recovery costs, and a decrease of 74.9% in provisions for legal and tax contingencies.

Other operating expense
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY

Cancellation of liabilities and reserves	32	50	40	(36.0)	(20.0)
Interest on personnel loans	82	81	64	1.2	28.1
Fair value registration foreclosed assets	94	196	0	(52.0)	100.0
Allowance for losses on foreclosed assets	(44)	(36)	(7)	22.2	528.6
Profit from sale of foreclosed assets	14	7	16	100.0	(12.5)
Technical advisory and technology services	36	51	46	(29.4)	(21.7)

Earnings Release | 1Q.2023

Banco Santander México

Portfolio recovery legal expenses and costs	(229)	719	(576)	(131.8)	(60.2)
Premiums paid on guarantees for SMEs loans portfolio	(207)	(211)	(328)	(1.9)	(36.9)
Write-offs and bankruptcies	(165)	(145)	(145)	13.8	13.8
Provision for legal and tax contingencies	(115)	(74)	(459)	55.4	(74.9)
Income from sale of acquiring business contracts	784	0	0	100.0	100.0
Contributions to IPAB	(1,064)	(1,005)	(984)	5.9	8.1
Others	15	(82)	42	118.3	(64.3)

Total	(767)	(449)	(2,291)	70.8	(66.5)

Administrative and promotional expenses

Administrative and promotional expenses in 1Q23 totaled Ps.10,352 million, compared to Ps.9,475 million in 1Q22 and Ps.12,310 million in 4Q22, increasing 9.3% YoY. Sequentially, the decrease was 15.9%.

The 9.3% YoY increase was mainly due to increases of 14.3% in personnel salaries and benefits, 11.5% in depreciation and amortization and 14.5% in taxes and duties.

The efficiency ratio for the quarter improved 644 basis points YoY and 717 basis points QoQ to 40.84%. The YoY decrease reflected robust revenue growth and strict cost controls, despite inflantionary pressure.

The recurrence ratio for 1Q23 was 51.10%, down from 51.46% in 1Q22 and up from 41.58% reported in 4Q22.

Administrative and promotional expenses
Million pesos				% Variation
	1Q23	4Q22	1Q22	QoQ	YoY
Salaries and employee benefits	5,182	6,181	4,535	(16.2)	14.3
Credit card operation	13	47	22	(72.3)	(40.9)
Professional fees	281	335	263	(16.1)	6.8
Leasehold	566	670	535	(15.5)	5.8
Promotional and advertising expenses	115	220	149	(47.7)	(22.8)
Taxes and duties	783	410	684	91.0	14.5
Technology services (IT)	1,340	2,022	1,261	(33.7)	6.3
Depreciation and amortization	1,366	1,051	1,225	30.0	11.5
Cash protection	145	404	276	(64.1)	(47.5)
Others	561	970	525	(42.2)	6.9

Total	10,352	12,310	9,475	(15.9)	9.3

Banco Santander México’s administrative and promotional expenses are broken down as follows

Administrative and promotional expenses
Breakdown (%)
	1Q23	4Q22	1Q22
Personnel	50.1	50.2	47.9
Depreciation and amortization	13.2	8.5	12.9
Technology services (IT)	12.9	16.4	13.3
Taxes and duties	7.6	3.3	7.2
Leasehold	5.5	5.5	5.6
Others	5.4	7.9	5.6
Professional fees	2.7	2.7	2.8

Earnings Release | 1Q.2023

Banco Santander México

Cash protection	1.4	3.3	2.9
Promotional and advertising expenses	1.1	1.8	1.6
Credit card operation	0.1	0.4	0.2
Total	100.0	100.0	100.0

Profit before taxes

Profit before taxes in 1Q23 was Ps.10,564 million, reflecting increase of 55.4% YoY and 22.6% QoQ, reflecting the strong performance of the Bank core business.

Income taxes

In 1Q23, Banco Santander México reported a tax expense of Ps.2,938 million compared to Ps.1,687 million in 1Q22 and Ps.2,343 million in 4Q22. The effective tax rate for the quarter was 27.81%, compared to 24.82% reported in 1Q22 and 27.18% in 4Q22.

Capitalization and liquidity

Capitalization
Million pesos	Mar-23	Dec-22	Mar-22
CET1	149,383	103,348	115,297
Tier 1	161,997	117,004	129,221
Tier 2	24,519	26,827	27,188
Total capital	186,516	143,832	156,409

Risk-weighted assets
Credit risk	546,384	476,538	507,336
Credit, market and operational risk	845,566	742,079	774,090

Credit risk ratios:
CET1 (%)	27.34	21.69	22.73
Tier 1 (%)	29.65	24.55	25.47
Tier 2 (%)	4.49	5.63	5.36
Capitalization ratio (%)	34.14	30.18	30.83

Total capital ratios:
CET1 (%)	17.67	13.93	14.89
Tier 1 (%)	19.16	15.77	16.69
Tier 2 (%)	2.90	3.61	3.52
Capitalization ratio (%)	22.06	19.38	20.21

Banco Santander México’s capital ratio at March 2023 was 22.06%, compared to 20.21% and 19.38% at March 2022 and December 2022, respectively. The 22.06% capital ratio was comprised of 17.67% of fundamental capital (CET1), 1.49% of additional capital (AT1), and 2.90% of complementary capital (Tier 2).

As of February 2023, Banco Santander México was classified in Category 1, in accordance with Article 134 Bis of the Mexican Banking Law, and the Bank remains in this category per the preliminary results dated December 31^st, 2022, which is the most recent available analysis.

Earnings Release | 1Q.2023

Banco Santander México

Liquidity coverage ratio (LCR)

Pursuant to the regulatory requirements of Banxico and the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or “CNBV”), the average Liquidity Coverage Ratio (LCR or CCL by its Spanish acronym) for 1Q23 was 212.24%, which compares to 187.34% in 1Q22 and 181.17% in 4Q22. (Please refer to note 24 of this report).

Leverage ratio

In accordance with CNBV regulatory requirements, effective June 14, 2016, the leverage ratio was 9.01% for March 2023, 7.13% for December 2022, 6.85% for September 2022, 7.13% for June 2022, and 7.97% for March.

This ratio is defined by regulators and is calculated by dividing core capital (according to Article 2 Bis 6 (CUB)) by adjusted assets (according to Article 1, II (CUB)).

BSMX Issuances

Information regarding the Bank’s certificados bursátiles bancarios, senior international debt and subordinated notes issued by Banco Santander México.

BSMX Issuances
Ticker	Amount	ISIN	Type of instrument	Issuance Date	Maturity Date	Term
BSMX 16-3	Ps.3,000 million	MX94BS0300A9	Certificados Bursátiles Bancarios	September 13, 2016	September 1, 2026	3,640 days, equivalent to 10 years
BSMX 19-2	Ps.7,150 million	MX94BS060035	Certificados Bursátiles Bancarios	April 8, 2019 and a first reopening on June 17, 2019.	March 30, 2026	2,548 days, equivalent to 7 years
BSMX 21	Ps. 3,500 million	MX94BS060043	Certificados Bursátiles Bancarios	November 30, 2021	November 25, 2025	1,456 days, equivalent to 4 years
BSMX 21-2	Ps. 6,500 million	MX94BS060050	Certificados Bursátiles Bancarios	November 30, 2021	November 21, 2028	2,548 days, equivalent to 7 years
BSMX 22	Ps. 7,100 million	MX94BS060068	Certificados Bursátiles Bancarios	April 4, 2022	March 29, 2027	1,820 days, equivalent to 5 years
BSMX 22-2	Ps. 2,790 million	MX94BS060076	Certificados Bursátiles Bancarios	April 4, 2022	March 26, 2029	2,548 days, equivalent to 7 years
BSMX 22-3	Ps. 5,000 million	MX0000000333	Certificados Bursátiles Bancarios	July 14, 2022	July 9, 2026	1,456 days, equivalent to 4 years
BSMX 23	Ps. 3,170 million	MX94BS060092	Certificados Bursátiles Bancarios	March 31, 2023	March 26, 2027	1,456 days, equivalent to 4 years
BSMX 23-2	Ps. 3,230 million	MX94BS0600A2	Certificados Bursátiles Bancarios	March 31, 2023	March 18, 2033	3,640 days, equivalent to 10 years
Senior notes	Usd.1,750 million	US05969BAD55 (144A) and USP1507SAH06 (RegS)	Senior Unsecured Notes	April 17, 2020	April 17, 2025	1,826 days, equivalent to 5 years
Subordinated Debt (Tier 2)	Usd.1,300 million	US05969BAC72 (144A) and USP1507SAG23 (RegS)	Tier-2 Subordinated Preferred Capital Notes	October 1, 2018	October 1, 2028	3,653 days, equivalent to 10 years
Subordinated Debt (AT1)	Usd.700 million	USP1507SAJ61	Subordinated, Non-Preferred, Contingent Convertible AT1 Capital Notes	September 15, 2021	Perpetual	n/a

Earnings Release | 1Q.2023

Banco Santander México

IV. Responsible Banking

For Santander, being sustainable means considering the communities where we are present –the people and companies that make them up–, in order to generate continuous and profitable social progress at an economic, environmental, and ethical level. Santander Mexico's commitments to Responsible Banking are an example of its continuous efforts to guarantee a sustainable future for all. Operations are carried out in an ethical and transparent manner to ensure proper compliance with commitments. The Bank focuses on promoting financial inclusion, equity, the social development of communities, education, and care for the environment.

The Bank seeks to become a leading participant in contributing to the progress of people and companies in Mexico and all the countries where it operates. In this regard, it works on two main challenges: New Business Environment and Inclusive and Sustainable Growth.

The objective of the New Business Environment is for Santander employees to feel in a responsible, simple, diverse, and inclusive work environment, where leadership and commitment follow the Simple, Personal, and Fair culture while designing products focused on the client.

The goal to achieve Inclusive and Sustainable Growth aims to invest in the Bank’s community, financially empowering people, supporting higher education through scholarships and leaving a minimal environmental footprint while incentivizing ESG products across all business units.

For more details, please visit the Responsible Banking section on the investor relations website.

As a result of these efforts, Banco Santander Mexico has achieved the following recognitions throughout the year:

On January 2023, Banco Santander Mexico obtained the Customer Protection Certification at the Silver level assigned by the MicroFinanza Rating (MFR) for its TUIIO initiative, making it the only financial inclusion and microfinance initiative with this certification of customer protection policies.

Banco Santander Mexico received the “HRC Equidad MX 2023” Certification, which accredits it as one of the best places to work for LGBTQ+ equality, due to its inclusion and equity policies. Santander was awarded for having met all the categories criteria that were required for this year, reaching the 100 points established by the Global Labor Equity Program in Mexico.

Santander has been named Bank of the Year in Financial Inclusion by The Banker magazine, which recognizes the entity's initiatives in responsible and sustainable banking to grow by serving "people and companies without access to financial services throughout the world with its initiative “Finanzas for All”, a comprehensive set of services that combines digitization with financial education,” according to the magazine.

Banco Santander collaborated with the Secretary of Security of the State of Mexico to bring financial tools to people deprived of their liberty. The objective of the workshop "Tools for the family economy" is to provide basic education for the inmates of the Penitentiary Modelo in Nezahualcóyotl City and provide them with sufficient economic-financial knowledge allowing personal and family decisions about their daily finances to be made in a responsible and informed manner.

On September, 2021, the Bank launched LikeU, an innovative payment method in the market that, in addition to offering customers the simplicity, security and digital experience of our products, incorporated a different component linked to our Responsible Banking agenda. One year after its launch, from September 2021 to the same month in 2022, the amount donated to allied organizations that serve the causes amounts to more than Ps.18 billion pesos. In one year, Banco Santander has benefited more than 125,000 people through different projects.

Banco Santander is committed to providing access to financial services to 10 million people between 2019 and 2025 through microfinance products, financial education programs and other tools that provide access to financial services based on three main pillars: access, financing and resilience. One of these tools is “Superdigital”, a 100% digital platform developed with Santander's own technology for financial inclusion in

Earnings Release | 1Q.2023

Banco Santander México

Brazil, Mexico, Chile, Argentina, Uruguay, Peru and Colombia. This mobile platform allows people to access financial products and services for the first time, make deposits and withdrawals of cash, payments and receive credit.

These are some indexes and recognitions that evaluate the Bank’s performance across economic, environmental, and social issues:

These are only some examples of the Bank’s effort to become a more responsible bank. For further information about Banco Santander México as a Responsible Bank go to:

https://servicios.santander.com.mx/comprometidos/eng/index.php

V. Relevant Events and Activities

Relevant Events

Annual General Ordinary and Special Shareholders’ Meetings

On April 24, 2023, Banco Santander México held its Annual General Ordinary and Special Shareholders’ Meetings, and approved among other items:

The integration of the Board of Directors as indicated below

Series “F” Independent Directors
Laura Renné Diez Barroso Azcárraga	Chairwoman
Cesar Augusto Montemayor Zambrano	Director
Juan Ignacio Gallardo Thurlow	Alternate Director
Ángel Alverde Losada	Alternate Director
José Antonio Pérez Antón	Alternate Director
Series “F” Non-Independent Directors
Felipe Francisco García Ascencio	Director
Daniel Barriuso Rojo	Director
Magdalena Sofía Salarich Fernández de Valderrama	Director
Ángel Rivera Congosto	Director
Didier Mena Campos	Alternate Director
Pablo Fernando Quesada Gómez	Alternate Director
Emilio de Eusebio Saiz	Alternate Director
Series “B” Independent Directors
Antonio Purón Mier y Terán	Director
Guillermo Jorge Quiroz Abed	Director
María de Lourdes Melgar Palacios	Director
Melanie Elizabeth Devlyn Gómez	Director
Alberto Torrado Martínez	Alternate Director
Rogelio Zambrano Lozano	Alternate Director
Joaquín Vargas Guajardo	Alternate Director
Guillermo Francisco Vogel Hinojosa	Alternate Director

Earnings Release | 1Q.2023

Banco Santander México

Banco Santander Mexico, informed about the material facts announced in connection with the Tender Offer

On April 10 and 13, 2023, Banco Santander México announced that Banco Santander, S.A., its Parent Company, published the preliminary and final results, respectively, following the closing of the cash Tender Offer. As a result of the foregoing, Banco Santander’s shareholding in Santander Mexico increased from 96.2% to 99.8% of Santander Mexico’s share with the minority shareholders holding the remaining 0.2%. As previously announced, it is intended to cancel the listing of the shares.

On March 1, 2023 Banco Santander México announced that Banco Santander, S.A., its Parent Company, issued a material fact to announce its decision to extend the expiration date of the Tender Offer until April 10, 2023.

On February 17, 2023, Banco Santander Mexico informed that its Board of Directors, after considering the different opinions, agreed that the Tender Offer complied with the requirements established by Mexican law, including the provisions of the Securities Market Law (Ley del Mercado de Valores). The Board of Directors agreed to be neutral with respect to the Offer. As of that date, the members of the Board of Directors and senior management did not own any shares of the Bank.

On February 7, 2023, Banco Santander México announced that Banco Santander, S.A., its Parent Company, issued a material fact to announce the offer price to shareholders tendering their shares which was Ps.24.52 pesos for each share and the U.S. dollar equivalent of Ps.122.6 per American Depositary Shares. This announcement followed the one published on October 21, 2022.

Banco Santander México was designated a Level III Domestic Systemically Important Financial Institution by the Mexican National Banking and Securities Commission for the eighth consecutive year

On April 4, 2023, Banco Santander México was designated a Level III Domestic Systemically Important Financial Institution by the Mexican National Banking and Securities Commission (CNBV), for the eighth consecutive year. The Bank already complies with this regulatory requirement.

Organizational changes

On January 17, 2023, Banco Santander Mexico announced the following appointments:

Juan Villafuerte, as Deputy General Director of Commercial Network, reporting to the Vice-presidency of Consumer, Commercial and Institution Business Banking, led by Fernando Quesada.

Oscar Hernando Moliner, as Deputy General Director of Operations and Processes, Oziel Sandoval Macías, as Deputy General Director of Corporate Resources and Recoveries, and Daniel Concepción Pérez, promoted to Deputy General Director of Technology, all of whom will continue to report to the Vice President of Administration and Finance, headed by Didier Mena.

VI. Awards and Recognitions

Santander Private Banking Mexico, named "Best Private Bank" according to Euromoney magazine

On March 30, 2023, Santander Private Banking Mexico was recognized for the sixth consecutive year by the prestigious Euromoney magazine as "Best Private Bank".

The Euromoney awards, established in 1992 and the first of their kind in the industry, recognize the performance of the private banking sector based on a survey of more than 2,000 participants in the financial sector, including banks, fund managers and family offices.

VII. Credit Ratings

On January 20 and 31, 2023, Fitch Ratings withdrew Santander Consumo's counterparty and Primary Servicer ratings, respectively. At the date of the withdrawal, the outlook on the ratings was Stable. The ratings were withdrawn because Santander Consumo effectively extinguished due to the merger with the Bank.

Earnings Release | 1Q.2023

Banco Santander México

Banco Santander México	Fitch Ratings	Moody’s
Global scale
Foreign currency
Long term	BBB+	Baa1

Short term	F2	P-2

Local currency
Long term	BBB+	Baa1

Short Term	F2	P-2

National scale
Long term	AAA(mex)	Aaa.mx

Short Term	F1+(mex)	Mx-1

Rating viability (VR)	bbb-	N/A

Shareholder Support Rating	bbb+	N/A

Counterparty risk Assessments (CR)
Long Term	N/A	A3 (cr)

Short Term	N/A	P-2 (cr)

Standalone BCA	N/A	baa2

Standalone Adjusted BCA	N/A	baa1

Outlook	Stable	Stable

International Issuances

Tier 2 Subordinated Capital Notes due 2028	BBB-	Baa3 (hyb)

Long Term Senior Unsecured Global Notes due 2025	BBB+	Baa1

Long Term Senior Unsecured Global Notes due 2022	BBB+	Baa1

Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (AT1)
Global Scale
Foreign currency
Long term	BB	Ba1 (hyb)

Santander Inclusión Financiera	Fitch Ratings
National Scale
Long term	AAA (mex)

Short Term	F1+ (mex)

Outlook	Stable

Notes:

§ BCA = Baseline Credit Assessment

§ SSR = Shareholder Support Rating

§ VR = Viability Rating

§ SCP = Standalone Credit Profile

§ CR= Counterparty Risk Assessments

N/A = Not applicable

Earnings Release | 1Q.2023

Banco Santander México

VIII. 1Q23 Earnings Call Dial-In Information

Date:	Thursday, April 27^th, 2023
Time:	10:00 a.m. (MCT); 12:00 p.m. (US ET)
Dial-in Numbers:	1-844-826-3035 US & Canada 1-412-317-5195 International & Mexico
Access Code:	Please ask for Santander México Earnings Call
Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1610715&tp_key=3d1cf0b35d
Replay:	Starting: Thursday, April 27^th, 2023 at 3:00 p.m. (US ET)
	Ending: Thursday, May 11^th, 2023 at 11:59 p.m. (US ET)
ET Dial-in number:	1-844-512-2921 US & Canada; 1-412-317-6671 International & Mexico Access Code: 10178174

IX.Definition of Ratios

ROAE: Annualized net income divided by average equity

Efficiency: Annualized administrative and promotional expenses divided by annualized gross operating income (before administrative and promotional expenses and allowances).

Recurrency: Annualized net fees divided by annualized administrative and promotional expenses (net of amortizations and depreciations).

NIM: Financial margin divided by daily average interest earnings assets.

Cost of risk: Annualized provisions for loan losses divided by average loan portfolio

Note:

Annualized figures consider

Quarterly ratio = 1Q23*4

Average figures are calculated using 1Q22 and 1Q23

Earnings Release | 1Q.2023

Banco Santander México

ABOUT BANCO SANTANDER MÉXICO (NYSE: BSMX; BMV: BSMX)

Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México (Banco Santander México), one of Mexico’s leading banking institutions, provides a wide range of financial and related services, including retail and commercial banking, financial advisory and other related investment activities. Banco Santander México offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of March 31^st, 2023, Banco Santander México had total assets of Ps.1,995 billion under Mexican Banking GAAP and more than 20.2 million customers. Headquartered in Mexico City, the Company operates 1,346 branches and offices nationwide and has a total of 26,461 employees.

We, the undersigned under oath to tell the truth declare that, in the area of our corresponding functions, we prepared the information of Banco Santander México contained in this quarterly report, which to the best of our knowledge reasonably reflects its situation.

FELIPE GARCIA ASCENSIO		DIDIER MENA CAMPOS
Chief Executive Officer		Vice-president of Administration and Finance
EMILIO DE EUSEBIO SAIZ	JUAN CARLOS GARCÍA CONTRERAS	PABLO AGOTE ALIQUE
Deputy General Director Financial Accounting and Control	Executive Director of Intervention	Chief Audit Executive

The financial information presented in this report has been obtained from the non-audited financial statements prepared in accordance with accounting principles and regulations prescribed by the CNBV applicable to Credit Institution which are subject to the supervision of the CNBV on accounting procedures, published in the Federal Official Gazette on January 31st, 2011. The exchange rate used to convert foreign currency transactions US$ to Mexican pesos is Ps.18.0415

INVESTOR RELATIONS CONTACT

Héctor Chávez Lopez – Managing Director - IRO

+ 52 (55) 5269-1925

hchavez@santander.com.mx

Investor Relations Team

investor@santander.com.mx

www.santander.com.mx

Earnings Release | 1Q.2023

Banco Santander México

LEGAL DISCLAIMER

Banco Santander México cautions that this presentation may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in various places throughout this presentation and include, without limitation, statements regarding our intent, belief, targets or current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion of our distribution network; financing plans; competition; impact of regulation and the interpretation thereof; action to modify or revoke our banking license; exposure to market risks including interest rate risk, foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk; projected capital expenditures; capitalization requirements and level of reserves; investment in our information technology platform; liquidity; trends affecting the economy generally; and trends affecting our financial condition and our results of operations. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, many important factors could cause actual results to differ substantially from those anticipated in forward-looking statements. These factors include, among other things: changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de México); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes and tax laws; competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of allowance for impairment losses and other losses; increased default by borrowers; our inability to successfully and effectively integrate acquisitions or to evaluate risks arising from asset acquisitions; technological changes; changes in consumer spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations or their interpretation; and certain other risk factors included in our annual report on Form 20-F. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could adversely affect our business and financial performance. The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “forecast” and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. We undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this presentation because of new information, future events or other factors. In light of the risks and uncertainties described above, the future events and circumstances discussed herein might not occur and are not guarantees of future performance.

Note: The information contained in this presentation is not audited. Nevertheless, the consolidated accounts are prepared on the basis of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in millions of Mexican pesos, unless otherwise indicated. Historical figures are not adjusted by inflation.

Earnings Release | 1Q.2023

Banco Santander México

X. Consolidated Financial Statements

Banco Santander México

§ Consolidated statement of financial position

§ Consolidated statement of comprehensive income

§ Consolidated statement of changes in stockholders’ equity

§ Consolidated statement of cash flows

§ Summary of changes due to the initial recognition of 2022 accounting principles

The information contained in this report and the financial statements of the Bank subsidiaries may be consulted on the Internet website: www.santander.com.mx or through the following direct access:

http://www.santander.com.mx/ir/english/financial/quarterly.html

There is also information on Santander México on the CNBV website: https://www.gob.mx/cnbv

Earnings Release | 1Q.2023

Banco Santander México

Consolidated statement of financial position
Million pesos
	2023	2022
	Mar	Dic	Sep	Jun	Mar
Assets
Cash and cash equivalents	83,843	93,353	77,121	79,146	98,783

Margin accounts (derivatives financial instruments)	2,677	6,530	5,039	4,413	4,353

Investments in financial instruments	468,908	470,914	432,737	481,124	496,918
Trading financial instruments	113,814	134,212	94,476	111,098	120,451
Financial instruments to collect or sell	287,069	314,550	328,408	358,432	364,951
Financial instruments to collect principal and interest (securities)(net)	68,025	22,152	9,853	11,594	11,516

Debtors under sale and repurchase agreements	241,552	121,859	224,118	80,451	23,614

Derivatives financial instruments	235,489	238,644	268,556	226,069	197,770
Trading purposes	223,934	228,516	252,394	213,370	187,150
Hedging purposes	11,555	10,128	16,162	12,699	10,620

Valuation adjustment for hedged financial assets	(22)	(27)	(44)	(29)	9

Loan portfolio with credit risk stage 1
Commercial loans	417,360	423,276	431,052	421,633	421,136
Commercial or business activity loans	317,981	324,932	336,077	325,353	323,485
Loans to financial entities	11,315	13,761	14,847	9,908	7,821
Loans to government entities	88,064	84,583	80,128	86,372	89,830
Consumer loans	147,947	141,916	134,104	127,040	120,173
Mortgage loans	196,748	195,533	191,067	187,165	181,591
Medium and residencial	187,637	186,366	181,631	177,762	171,725
Social interest	787	586	268	31	4
Loans acquired from Infonavit or Fovissste	8,324	8,581	9,168	9,372	9,862
Total loan portfolio with credit risk stage 1	762,055	760,725	756,223	735,838	722,900

Loan portfolio with credit risk stage 2
Commercial loans	19,433	21,742	17,618	16,754	15,520
Commercial or business activity loans	19,333	21,636	14,594	15,752	15,520
Loans to financial entities	100	106	0	1,002	0
Loans to government entities	0	0	3,024	0	0
Consumer loans	3,872	3,448	3,270	3,143	3,025
Mortgage loans	9,372	8,928	9,114	7,710	7,508
Medium and residencial	9,038	8,643	8,859	7,347	7,136
Social interest	34	5	0	0	0
Loans acquired from Infonavit or Fovissste	300	280	255	363	372
Total loan portfolio with credit risk stage 2	32,677	34,118	30,002	27,607	26,053

Loan portfolio with credit risk stage 3
Commercial loans	5,167	5,150	4,587	8,536	9,736
Commercial or business activity loans	5,167	4,799	4,236	7,810	8,929
Loans to financial entities	0	351	351	726	765
Loans to government entities	0	0	0	0	42
Consumer loans	4,504	3,742	3,984	3,801	3,475
Mortgage loans	6,252	6,346	7,523	7,684	8,276
Medium and residencial	5,641	5,745	6,872	7,016	7,556
Social interest	6	5	5	6	6
Loans acquired from Infonavit or Fovissste	605	596	646	662	714
Total loan portfolio with credit risk stage 3	15,923	15,238	16,094	20,021	21,487

Loan portfolio	810,655	810,081	802,319	783,466	770,440

(+/-) Deferred items	2,623	2,532	2,180	2,060	1,811

Allowance for loan losses	(23,293)	(22,220)	(21,498)	(24,264)	(24,630)

Loan portfolio (net)	789,985	790,393	783,001	761,262	747,621

Acquired collection rights (net)	0	0	0	0	0

Total loan portfolio (net)	789,984	790,393	783,001	761,262	747,621

Earnings Release | 1Q.2023

Banco Santander México

Other receivables (net)	115,131	62,840	87,282	87,415	114,320

Foreclosed assets (net)	998	962	436	438	202

Long-life assets held for sale or for distribution to owners	0	1,586	1,586	0	0

Advance payments and other assets (net)	3,420	3,199	4,442	4,553	4,065

Property, furniture and fixtures (net)	13,237	13,622	12,174	12,462	12,326

Rights of use assets for property, furniture and equipment (net)	6,297	6,264	5,509	5,811	5,999

Long-term investment in shares	123	90	90	1,652	1,577

Deferred income tax assets (net)	23,149	23,258	21,008	19,499	17,667

Intangible assets (net)	8,621	8,947	7,500	7,274	7,309

Goodwill	1,735	1,735	1,735	1,735	1,735

Total assets	1,995,143	1,844,169	1,932,290	1,773,275	1,734,268

Consolidated statement of financial position
Million pesos
	2023	2022
	Mar	Dic	Sep	Jun	Mar
Liabilities
DepositS	979,786	909,890	860,514	880,816	873,136
Demand deposits	578,755	549,515	520,079	556,153	573,918
Time deposits – general public	248,805	223,048	189,954	188,793	181,395
Time deposits – money market	72,060	62,428	53,145	44,376	29,592
Credit instruments issued	77,831	72,501	94,959	89,206	86,079
Global Account uptake without movements	2,335	2,398	2,377	2,288	2,152

Interbank loans and other organizations	46,403	30,806	26,446	35,478	52,164
Demand loans	16,164	324	1,568	11,280	24,679
Short-term loans	16,727	16,629	15,574	14,295	17,207
Long-term loans	13,512	13,853	9,304	9,903	10,278

Creditors under sale and repurchase agreements	189,397	211,878	225,744	190,364	183,196

Securities lending	1	1	0	0	0

Collateral sold or pledged as guarantee	130,921	116,104	199,271	79,047	26,484
Repurchase agreements	107,468	87,442	174,130	49,983	1,675
Securities loans	23,453	28,662	25,141	29,064	24,809

Derivative financial instruments	227,452	235,456	259,723	219,701	190,922
Trading purposes	223,588	230,995	256,109	215,266	184,026
Hedging purposes	3,864	4,461	3,614	4,435	6,896

Valuation adjustment of financial liabilities hedging	0	(14)	(33)	(36)	(17)

Lease liabilities	7,023	6,965	6,212	6,477	6,648

Other payables	194,324	115,913	144,514	151,047	188,375
Creditors from settlement of transactions	121,771	43,731	62,088	73,023	117,853
Payable for margin accounts	121	189	46	221	156
Payable for cash collateral received	28,825	26,861	40,227	36,811	31,790
Contributions payable	1,315	1,621	1,491	1,113	1,042
Sundry creditors and other payables	42,292	43,511	40,662	39,879	37,534

Financial instruments that qualify as liabilities	36,032	39,384	40,240	40,643	39,763
Subordinated credit notes	36,032	39,384	40,240	40,643	39,763

Employee benefits	9,354	11,324	10,110	9,202	7,063

Deferred revenues and other advances	275	154	265	361	432

Earnings Release | 1Q.2023

Banco Santander México

Total liabilities	1,820,968	1,677,861	1,773,006	1,613,100	1,568,166

Stockholders' equity

Paid-in capital	34,702	34,702	34,702	34,702	34,702
Capital stock	29,799	29,799	29,799	29,799	29,799
Share premium	4,903	4,903	4,903	4,903	4,903

Other capital	139,432	131,542	124,542	125,432	131,370
Capital reserves	28,200	28,200	28,200	28,200	26,940

Accumulated results	119,924	112,409	106,999	107,562	111,094
Retained earnings	109,233	82,868	83,735	92,486	102,918
Updating Results from previous years	3,065	3,065	3,065	3,065	3,065
Net income	7,626	26,476	20,199	12,011	5,111

Other comprehensive income	(8,692)	(9,067)	(10,657)	(10,330)	(6,664)
Valuation of financial instruments to collect or sell	(5,661)	(6,312)	(8,156)	(8,268)	(5,119)
Valuation of derivatives financial instruments for cash flow hedges	(683)	(414)	(512)	(87)	314
Remeasurement of defined benefit obligation	(2,357)	(2,350)	(1,998)	(1,984)	(1,868)
Cumulative translation effect	9	9	9	9	9
Total controlling interest	174,134	166,244	159,244	160,134	166,072

Total non-controlling interest	41	64	40	41	30

Total stockholders´equity	174,175	166,308	159,284	160,175	166,102

Total liabilities and stockholders´ equity	1,995,143	1,844,169	1,932,290	1,773,275	1,734,268

Consolidated statement of financial position
Million pesos
	2023	2022
	Mar	Dec	Sep	Jun	Mar
Memorandum accounts

Contingent assets and liabilities	140	134	119	143	122
Credit commitments	314,305	309,298	304,917	281,539	267,930
Assets in trust or under mandate	195,117	193,187	188,056	192,596	195,137
Trusts	192,592	190,185	185,837	190,903	194,055
Mandates	2,525	3,002	2,219	1,693	1,082
Assets in custody or under administration	1,755,162	1,751,075	1,750,349	1,724,515	1,788,495
Collateral received	269,617	154,833	257,346	117,717	134,178
Collateral received and sold or pledged as guarantee	105,437	93,143	170,930	46,870	78,775
Investment banking transactions for third parties (net)	208,344	367,299	381,284	307,764	133,083
Uncollected accrued interest derived from loan portfolio with credit risk stage 3	726	704	912	930	975
Other record accounts	1,969,461	2,018,740	1,969,467	1,904,803	1,860,010
	4,818,309	4,888,413	5,023,380	4,576,877	4,458,705

These consolidated financial statements were approved by the Board of Directors and signed on its behalf by

FELIPE GARCIA ASCENSIO		DIDIER MENA CAMPOS
Chief Executive Officer		Vice-president of Administration and Finance
EMILIO DE EUSEBIO SAIZ	JUAN CARLOS GARCÍA CONTRERAS	PABLO AGOTE ALIQUE
Deputy General Director Financial Accounting and Control	Executive Director of Intervention	Chief Audit Executive

Earnings Release | 1Q.2023

Banco Santander México

The accompanying notes are part of these consolidated financial statements

www.santander.com.mx

Consolidated statement of comprehensive income
Million pesos
	2023	2022
	1T	12M	4T	3T	2T	1T
Interest income	44,121	135,856	40,773	35,605	31,217	28,261
Interest expense	(23,949)	(63,848)	(20,828)	(17,235)	(13,940)	(11,845)
Net interest income	20,172	72,008	19,945	18,370	17,277	16,416

Provisions for loan losses	(4,512)	(12,227)	(4,712)	(785)	(2,856)	(3,874)
Net interest income after provisions for loan losses	15,660	59,781	15,233	17,585	14,421	12,542

Commission and fee income	7,928	29,358	7,438	7,450	7,368	7,102
Commission and fee expense	(2,638)	(8,814)	(2,320)	(2,179)	(2,089)	(2,226)
Net gain (loss) on financial assets and liabilities	654	4,186	1,028	1,056	1,063	1,039
Other operating expense	(767)	(6,874)	(449)	(2,225)	(1,909)	(2,291)
Administrative and promotional expenses	(10,352)	(42,313)	(12,310)	(10,400)	(10,128)	(9,475)
Operating income	10,485	35,324	8,620	11,287	8,726	6,691

Equity in results of associated companies	79	324	0	0	217	107

Operating income before income taxes	10,564	35,648	8,620	11,287	8,943	6,798

Current income taxes	(2,940)	(12,162)	(4,952)	(4,065)	(2,299)	(846)
Deferred income taxes (net)	2	2,990	2,609	966	256	(841)

Income from continuing operations	7,626	26,476	6,277	8,188	6,900	5,111

Discontinued operations	0	0	0	0	0	0

Consolidated net income	7,626	26,476	6,277	8,188	6,900	5,111

Other comprehensive income	375	(5,697)	1,423	(327)	(3,666)	(3,127)
Valuation of financial instruments to collect or sell	651	(4,388)	1,677	112	(3,149)	(3,028)
Valuation of derivatives financial instruments for cash flow hedges	(269)	(813)	98	(425)	(401)	(85)
Remeasurement of defined benefit obligation	(7)	(496)	(352)	(14)	(116)	(14)

Participation in OCI of other entities	0	0	0	0	0	0

Integral result	8,001	20,779	7,700	7,861	3,234	1,984

Net result attributable to:	7,626	26,476	6,277	8,188	6,900	5,111
controlling interest	7,626	26,476	6,277	8,188	6,900	5,111
Non-controlling interest	0	0	0	0	0	0

Comprehensive income attributable to:	8,001	20,779	7,700	7,861	3,234	1,984
controlling interest	8,001	20,779	7,700	7,861	3,234	1,984
Non-controlling interest	0	0	0	0	0	0
Basic earnings per common share	1.12	3.90	0.92	1.21	1.02	0.75

Earnings Release | 1Q.2023

Banco Santander México

These consolidated financial statements were approved by the Board of Directors and signed on its behalf by

FELIPE GARCIA ASCENSIO		DIDIER MENA CAMPOS
Chief Executive Officer		Vice-president of Administration and Finance
EMILIO DE EUSEBIO SAIZ	JUAN CARLOS GARCÍA CONTRERAS	PABLO AGOTE ALIQUE
Deputy General Director Financial Accounting and Control	Executive Director of Intervention	Chief Audit Executive

The accompanying notes are part of these consolidated financial statements

www.santander.com.mx

Earnings Release | 1Q.2023

Banco Santander México

Consolidated statements of changes in stockholders’ equityh
From January 1^st to March 31^st, 2023
Million pesos
	Paid-in capital				Other capital
CONCEPT	Capital stock	Additional paid-in capital	Capital reserves	Accumulated results		Valuation of Financial Instruments to collect or sell	Valuation of derivative financial instruments for cash flow hedges	Employee defined benefit measures	Cumulative effect from conversion	Total controlling interest	Non-controlling interest	Total stockholders' equity

BALANCE AS OF DECEMBER 31^st, 2022	29,799	4,903	28,200	112,409		(6,312)	(414)	(2,350)	9	166,244	64	166,308

OWNER MOVEMENTS
TOTAL	0	0	0	0		0	0	0	0	0	0	0
RESERVE MOVEMENTS
TOTAL	0	0	0	0		0	0	0	0	0	0	0
INTEGRAL RESULT
Net income				7,626						7,626		7,626
Other comprehensive income
Valuation of Financial Instruments to collect or sell						651				651		651
Valuation of derivative financial instruments for cash flow hedges							(269)			(269)		(269)
Interest on Subordinated debentures Perpetual Non-Preferred Contingent Convertible				(111)						(111)		(111)
Employee defined benefit measures								(7)		(7)		(7)
Non-controlling interest										0	(23)	(23)


TOTAL	0	0	0	7,515		651	(269)	(7)	0	7,890	(23)	7,867

BALANCE AS OF MARCH 31^ST, 2023	29,799	4,903	28,200	119,924		(5,661)	(683)	(2,357)	9	174,134	41	174,175

These consolidated financial statements were approved by the Board of Directors and signed on its behalf by

FELIPE GARCIA ASCENSIO		DIDIER MENA CAMPOS
Chief Executive Officer		Vice-president of Administration and Finance
EMILIO DE EUSEBIO SAIZ	JUAN CARLOS GARCÍA CONTRERAS	PABLO AGOTE ALIQUE
Deputy General Director Financial Accounting and Control	Executive Director of Intervention	Chief Audit Executive

The accompanying notes are part of these consolidated financial statements

www.santander.com.mx

Earnings Release | 1Q.2023

Banco Santander México

Consolidated statement of cash flows
From January 1^st to March 31^st, 2023
Million pesos

Net Income before Tax		10,564
Adjustments for items associated with investing activities
Exchange differences in cash and cash equivalents	(883)
Depreciation of property, furniture and fixtures	592
Amortizations of intangible assets	774
Provisions	221	704

Adjustments for items associated with financing activities
Expense interest from	1,224
Interest associated with financial instruments that qualify as a liability	381
Interest associated with financial instruments that qualify as capital	111	1,716

Changes in operating items
Changes in Bank and other loans	14,373
Changes in Margin accounts (financial derivatives instruments)	3,853
Changes in Investments in financial instruments	(6,933)
Changes in Debtors under sale and repurchase agreements	(119,693)
Changes in Derivatives (asset)	4,582
Changes in Loan portfolio (net)	351
Changes in Other receivables (net)	(54,067)
Changes in Foreclosed assets	(35)
Changes in Other operating assets (net)	(266)
Changes in Deposits	69,896
Changes in Creditors under sale and repurchase agreements	(22,481)
Changes in Collateral sold or pledged as guarantee	14,817
Changes in Derivatives (liability)	(7,408)
Changes in Other operating liabilities	(1,777)
Change in hedging derivative financial instruments (of hedged items related to operating activities)	5,356
Changes in Employee benefits	(1,970)
Changes in Other payables	79,961
Payments of income taxes	(578)	(22,019)

Net cash from (used in) operating activities		(9,035)

Investing Activies
Proceeds from disposal of property, furniture and fixtures	2
Payments for adquisition of property, plant and equipment	(206)
Payments for adquisition of intangible assets	(448)
Payments for the adquisition of associates, joint ventures and other permanent investments	(33)
Cash dividend receipts	391
Proceeds from disposal of long-lived assets available for sale or for distribution to owners	1,948

Net cash provided by (used in) investing activities		1,654

Financing Activities:

Net cash used in financing activities		0

Net changes in cash and a cash equivalents		(7,381)

Exchange differences in cash and cash equivalents		(2,129)

Cash and a cash equivalents, beginning of the year		93,353
Cash and a cash equivalents		83,843

These consolidated financial statements were approved by the Board of Directors and signed on its behalf by:

Earnings Release | 1Q.2023

Banco Santander México

FELIPE GARCIA ASCENCIO		DIDIER MENA CAMPOS
Chief Executive Officer		Vice-president of Administration and Finance
EMILIO DE EUSEBIO SAIZ	JUAN CARLOS GARCÍA CONTRERAS	PABLO AGOTE ALIQUE
Deputy General Director Financial Accounting and Control	Executive Director of Intervention	Chief Audit Executive

The accompanying notes are part of these consolidated financial statements

www.santander.com.mx

XI.Notes to Consolidated Financial Statements

§ Significant accounting policies

§ Earnings per share

§ Consolidated statement of financial position by Segments

§ Consolidated statements of comprehensive income by Segments

Earnings Release | 1Q.2023

Banco Santander México

§ Annex 1. Loan portfolio rating

§ Annex 2. Financial ratios according to CNBV

§ Notes to consolidated financial statements

The information contained in this report and the financial statements of the Bank subsidiaries may be consulted on the Internet website: www.santander.com.mx or through the following direct access:

http://www.santander.com.mx/ir/english/financial/quarterly.html

There is also information on Santander México on the CNBV website: https://www.gob.mx/cnbv

Earnings Release | 1Q.2023

Banco Santander México

Significant accounting policies

New accounting pronouncement

MFRS issued by the CINIF

The new accounting pronouncements issued by the Mexican Council of Financial Information Standards (CINIF for its acronym in Spanish) that will enter into force on January 1, 2023 are described below. It is considered that these new accounting pronouncements will not have a significant impact on the financial information that presents the Bank.

MFRS A-1 Conceptual Framework of Financial Reporting Standards

In 2018 the IASB published an update to the IFRS Conceptual Framework. Consequently, the CINIF considered it convenient to update the Conceptual Framework of the MFRS to preserve the highest possible convergence with international regulations. Additionally, since the issuance of the MFRS Conceptual Framework in 2005, a large number of particular NIFs have been issued, which also generated the need to update it to ensure that it continues to be functional.

The MFRS Conceptual Framework published in 2005 was made up of a package of eight individual standards; during the process of its update, the CINIF considered it more practical and functional to include it in a single MFRS divided into 9 chapters

MFRS B-14 Earnings per-share

Since the issuance of Bulletin B-14 Earnings per-share in 1997 and the modifications made to said Bulletin, other MFRs have been issued or modified whose concepts must be updated in this NIF. The issuance of this NIF also seeks convergence with International Accounting Standard 33 Earnings per-Share (IAS 33) published by the IASB.

This MFRS does not generate accounting changes in its initial application, since only clarifications were made that facilitate the determination of earnings per-share (UPA). Additionally, the structure of the standard is modified to clarify the determination of the EPS, distinguishing the standards applicable to the attributable profits and the actions to be considered within the calculation of the weighted average of basic and diluted EPS.

Earnings Release | 1Q.2023

Banco Santander México

Improvements to MFRS 2023

MFRS B-11 Disposal of long-lived assets and discontinued operations

MFRS C-11 Shareholders' equity

Long-lived assets held to distribute to the owners, that is, they will be used to pay dividends or capital reimbursements, are valued at the lower of their net book value and their fair value less disposal costs under the terms of the MFRS B-11. Additionally, in the case of dividends and refunds, MFRS C-11 Stockholders' Equity establishes the bases for the recognition of a liability at the time they are decreed, requiring affecting retained earnings; However, it was necessary to specify in MFRS B-11, what the accounting recognition should be in case there is a difference between the liability and the value of said long-lived assets. Therefore, with this improvement, adjustments are made to MFRS B-11 to establish that said difference should also affect retained earnings, to require the disclosure of certain information about these transactions and to include the bases for conclusions the analysis carried out on the aforementioned modifications.

MFRS B-15, Foreign Currency Conversion

MFRS B-15 Foreign Currency Conversion includes a practical solution in the form of an exception whereby financial statements can be issued in a reporting currency that is the same as the recording currency, even when both are different from the functional currency, without carry out the translation to the functional currency. It is explained in the bases for conclusions of MFRS B-15 that the previous exception is allowed for practical reasons so that the financial statements that are used for legal and fiscal purposes can be prepared in a reporting currency that is the same as the recording currency.

The CINIF considered it convenient to make some clarifications to ensure a clear understanding and application of the practical solution.

MFRS B-10 Effects of inflation

Derived from the comments received by the CINIF regarding the fact that the reference in MFRS B-10 Effects of inflation, to the annual average inflation of 8%, has generated confusion to consider that the economic environment is inflationary, when in reality what What must be taken into account is if the accumulated inflation of the three previous annual exercises is equal to or greater than 26%, said reference is eliminated and the paragraphs in which it is mentioned are modified.

The CINIF clarifies that when MFRS B-10 was issued, the mention of 8% was included because it was the annual average to determine the 26% accumulated in three years.

MFRS C-2 Investment in financial instruments

An introductory paragraph is added in order to point out the difference that exists between MFRS C-2 Investment in financial instruments and IFRS 9 Financial Instruments, with respect to the initial valuation of an investment in financial instruments when the fair value is significantly different from the price. of the consideration and said fair value is not based on observable data

MFRS C-3 Accounts Receivable

It is specified in the scope of the standard that it is also applicable to other accounts receivable and references to the concept of commercial accounts receivable are eliminated, a term that is no longer used in this MFRS.

Earnings Release | 1Q.2023

Banco Santander México

Earnings per share

Earnings per ordinary share and earnings per diluted share
(Millions of pesos, except shares and earnings per share)

	March 2023			March 2022			March 2021

		shares	Earnings		shares	Earnings		shares	Earnings
	Earnings	-weighted-	per share	Earnings	-weighted-	per share	Earnings	-weighted-	per share


Earnings per share	7,626	6,781,322,904	1.12	5,111	6,781,322,904	0.75	3,279	6,775,594,960	0.48

Treasury stock		5,671,453			5,671,453			11,399,397

Diluted earnings per share	7,626	6,786,994,357	1.12	5,111	6,786,994,357	0.75	3,279	6,786,994,357	0.48

Plus loss / less (profit):

Discontinued operations
Continued fully diluted earnings per share	7,626	6,786,994,357	1.12	5,111	6,786,994,357	0.75	3,279	6,786,994,357	0.48


Balance outstanding shares as of March 31^st, 2023	6,781,322,904

Earnings Release | 1Q.2023

Banco Santander México

Consolidated statement of financial position by Segments
Million pesos
	As of March 31, 2023			As of March 31, 2022
	Retail Banking	Corporate & Investment .Banking	Corporate Activities	Retail Banking	Corporate & Investment Banking	Corporate Activities
Assets
Cash and cash equivalents	44,398	23,390	16,055	44,903	44,115	9,765
Margin accounts (derivatives financial instruments)	0	2,677	0	0	4,353	0
Investments in financial instruments	0	110,960	357,948	0	118,482	378,436
Debtors under sale and repurchase agreements	0	241,552	0	0	23,614	0
Derivatives financial instruments	0	223,935	11,555	0	187,150	10,620
Valuation adjustment for hedged financial assets	0	0	(22)	0	0	9
Total loan portfolio	701,624	109,030	0	655,359	115,081	0
(+/-) Deferred items	2,561	62	0	1,769	42	0
Allowance for loan losses	(22,705)	(588)	0	(20,785)	(3,845)	0
Loan portfolio (net)	681,480	108,504	0	636,343	111,278	0
Other receivables (net)	0	97,912	17,218	450	96,126	17,744
Foreclosed assets (net)	998	0	0	202	0	0
Long-life assets held for sale or for distribution to owners	0	0	0	0	0	0
Advance payments and other assets (net)	668	515	2,237	794	612	2,659
Property, furniture and fixtures (net)	11,658	1,268	311	10,808	1,231	287
Rights of use assets for property, furniture and equipment (net)	5,608	613	76	5,271	590	138
Long-term investment in shares	0	0	123	0	0	1,577
Deferred income tax assets (net)	0	0	23,150	0	0	17,667
Intangible assets (net)	1,684	1,299	5,638	1,428	1,101	4,780
Goodwill	1,735	0	0	1,735	0	0
Total assets	748,229	812,625	434,289	701,934	588,652	443,682

Liabilities
Deposits	745,922	99,037	56,996	677,390	90,763	18,904
Credit instruments issued	0	3,489	74,342	0	2,242	83,837
Bank and other loans	16,727	1,386	28,290	17,207	0	34,957
Creditors under sale and repurchase agreements	10,252	179,145	0	8,436	174,760	0
Securities lending	0	1	0	0	0	0
Collateral sold or pledged as guarantee	0	130,921	0	0	26,484	0
Derivatives financial instruments	0	223,588	3,864	0	184,026	6,896
Valuation adjustment of financial liabilities hedging	0	0	0	0	0	(17)
Lease liabilities	6,200	660	163	5,852	645	151
Other payables	33,016	159,563	1,752	28,093	159,028	1,254
Subordinated credit notes	0	0	36,032	0	0	39,763
Employee benefits	9,191	0	163	6,877	0	186
Deferred revenues and other advances	275	0	0	432	0	0
Total liabilities	821,583	797,790	201,602	744,287	637,948	185,931
Total stockholders' equity	54,739	17,598	101,831	62,088	22,363	81,651
Total liabilities and stockholders' equity	876,322	815,388	303,433	806,375	660,311	267,582

Earnings Release | 1Q.2023

Banco Santander México

Consolidated statement of comprehensive income by Segments
Million pesos
	3M23			3M22
	Retail Banking	Corporate & Investment Banking	Corporate Activities	Retail Banking	Corporate & Investment Banking	Corporate Activities
Net interest income	17,978	1,763	431	14,702	1,188	526
Provisions for loan losses	(4,577)	65	0	(3,575)	(299)	0
Net interest income after provisions for loan losses	13,401	1,828	431	11,127	889	526
Commission and fee income (net)	4,755	535	0	4,394	485	(3)
Net gain (loss) on financial assets and liabilities	329	815	(490)	290	979	(230)
Other operating expense	(1,107)	(139)	479	(1,528)	(119)	(644)
Administrative and promotional expenses	(9,178)	(1,029)	(145)	(8,249)	(1,021)	(205)
Operating income	8,200	2,010	275	6,034	1,213	(556)

Segment information has been prepared according to the classifications used in Santander México at secondary level, based in the type of developed business:

Retail banking

The Retail Banking segment encompasses the entire commercial banking and asset management business. Our Retail Banking segment’s activities include products and services for individuals, private banking clients, SMEs, middle-market corporations and government institutions.

Corporate & Investment Banking

The Corporate & Investment Banking segment reflects the returns on the corporate banking business, including managed treasury departments and the equities business. Our Corporate & Investment Banking segment provides comprehensive products and services relating to finance, guarantees, mergers and acquisitions, equity and fixed income, structured finance, international trade finance, cash management services, collection services and e-banking, including structured loans, syndicated loans, acquisition financing and financing of investment plans, among others.

Corporate activities

The Corporate Activities segment is comprised of all operational and administrative activities that are not assigned to a specific segment or product mentioned above. The Corporate Activities segment includes the financial management division, which manages structural financial risks arising from our commercial activities, mainly liquidity risk and interest rate risk, provides short- and long-term funding for our lending activities and calculates and controls transfer prices for loans and deposits in local and foreign currencies. The financial management division also oversees the use of our resources in compliance with internal and regulatory limits regarding liquidity and regulatory capital requirements.

Earnings Release | 1Q.2023

Banco Santander México

Annex 1. Loan portfolio rating

As of March 31^st, 2023
Million pesos
	Loan Portfolio		Allowance for loan losses
Category	Loan Portfolio	Commercial		Non-revolving consumer loans	Credit card and other revolving loans	Mortgages	Total

Risk “A”	804,575	1,542		423	2,862	497	5,324
Risk “A-1	732,277	1,210		272	1,539	399	3,420
Risk "A-2"	72,298	332		151	1,323	98	1,904
Risk "B."	88,565	589		1,590	943	175	3,297
Risk "B-1"	49,023	129		860	540	71	1,600
Risk "B-2"	20,347	67		502	209	71	849
Risk "B-3"	19,195	393		228	194	33	848
Risk "C"	27,975	424		500	1,176	1,052	3,152
Risk "C-1"	14,983	323		205	434	203	1,165
Risk "C-2"	12,992	101		295	742	849	1,987
Risk "D"	13,021	921		307	2,010	1,361	4,599
Risk "E"	10,210	2,645		2,041	1,232	746	6,664
Total rated portfolio	944,346	6,121		4,861	8,223	3,831	23,036

Provisions created							23,036
Complementary provisions							257

Total							23,293

Notes:
1.	The figures used for rating and creation of allowance for loan losses, correspond to the ones as of the last day of the month of the balance sheet as of March 31^st, 2023.

2.	Loan portfolio is rated according to the methodology issued by the CNBV in chapter V of Title II of the General Rules Applicable to Credit Institutions, can be rated by internal methodology approved by the CNBV. We use the methodology established by the CNBV, which have been incorporated or modified according to the following schedule: As of September 2011, te Bank apply the rules for rating the states and municipalities loan portfolio. As of June 2013, the Bank apply the new rules for rating the commercial loan portfolio. As of October 2016, the Bank updated the rules for rating the revolving consumer loan portfolio. As of September 2017, the Bank updated the rules for rating the non-revolving consumer and mortgage loan portfolios. As of November 2018, the Bank began to report the allowance for loans losses with their IRB methodology for middle-market and mortgages broker’s loans. As of February 2020, the Bank concluded the parallel exercise and began to report the allowance for loan losses with their internal ratings based (IRB) model for Corporate and Investment Banking and Financial Institutions segments. As of February 2020, the Bank informs to the CNBV, the constitution of Ps.900 million additional provisions for the organic mortgage portfolio due to the coming-up implementation of their internal rating base (IRB) model for that portfolio. CNBV was informed about additional provisions given the environment generated by COVID-19. Credit Institutions use risk ratings: A-1; A-2; B-1; B-2; B-3; C-1; C-2; D and E, to classify allowance for impairment losses according to the portfolio segment and percentage of the provisions representing the outstanding balance of the loan, established in Section Fifth of “De la constitución de reservas y su clasificación por grado de riesgo”, contained in chapter 5 of Title II of such regulation.

Earnings Release | 1Q.2023

Banco Santander México

Annex 2. Financial ratios according to CNBV

Percentages	1Q23	4Q22	1Q22	3M23	3M22

Past due loans ratio	1.96	1.88	2.79	1.96	2.79

Past due loans coverage	146.29	145.82	114.63	146.29	114.63

Operative efficiency	2.16	2.61	2.25	2.16	2.25

ROE	17.92	15.42	12.32	17.92	12.32

ROA	1.59	1.33	1.21	1.59	1.21

Capitalization ratio:
Credit Risk	34.14	30.18	30.83	34.14	30.83
Credit, Market and operational risk	22.06	19.38	20.21	22.06	20.21

Liquidity	79.25	95.70	94.87	79.25	94.87

NIM (Net Interest Margin)	3.94	3.85	3.27	3.94	3.27

Note: ratios are prepared according to the general rules applicable to financial information of credit institutions, issued by the CNBV, according to Annex 34.

NPL ratio = Balance of past due loans portfolio as of the end of the quarter / Balance of loans portfolio as of the end of the quarter.

Coverage ratio= Balance of provision for loan losses as of the end of the quarter / Balance of past due loans portfolio as of the end of the quarter.

Efficiency ratio = Administration and promotion expenses of the quarter, annualized / Total Average Assets.

ROAE = Annualized quarterly net earnings/ Average stockholders’ equity.

ROAA = Annualized quarterly net earnings /Total average assets.

Breakdown of capitalization ratio: (1)=Net Capital/ Assets subject to credit risk. (2)=Net Capital / Assets subject to credit, market and operation risk.

Liquidity = Current Assets/ Current Liabilities.

Where: Current Assets = Availabilities + securities for trade + securities available for sale.

Current liabilities= Demand deposits + bank loans and loans from other entities, payable on demand, + short term bank loans and loans from other entities.

NIM = Quarterly Net Interest Margin, adjusted by annualized credit risks / Average interest-earning assets.

Where: Average interest-earning assets = availabilities, investments in securities, transactions with securities and derivatives and loan portfolio.

Notes:

Average = ((Balance of the corresponding quarter + balance of the previous quarter) / 2).

Annualized figures = (Flow of the corresponding quarter * 4).

Notes to consolidated financial statements

Notes to financial statements as of March 31^st 2023
Million pesos, except for number of shares

1. Investment in securities

Earnings Release | 1Q.2023

Banco Santander México

1. Investments in Financial Instruments
Investments in Financial Instruments are constituted as follows:

	Book Value
Negotiable financial instruments:
Bank securities	5,418
Government securities	99,497
Private securities	5,411
Shares	3,488
	113,814
.
Financial instruments to collect or sell:
Government securities	286,194
Private securities	235
Shares	640
	287,069


Financial instruments to collect principal and interest (securities)(net):
Government securities	65,844
Government securities (special cetes)	2,181
	68,025
Total	468,908

2. Sale and repurchase agreements
The sale and repurchase agreements transactions are constituted as follows:
	Net balance
Debit balances
Bank securities	3,000
Government securities	238,552
Total	241,552

Credit balances
Bank securities	3,953
Government securities	185,190
Private securities	254
Total	189,397
	52,155

3. Investment in securities

3. Investment in securities different to government securities

3. Investment in securities different to government securities
At March 31^st, 2023 the investments in debt securities with the same issuer (other than government), are less than 5% of of the Institution’s net capital.

Earnings Release | 1Q.2023

Banco Santander México

4. Derivatives
The nominal value of the different derivative financial instruments agreements for trading and hedging purposes, as of March 31^st, 2023, are as follows:
Trading:
Swaps

Interest rate	7,685,450
Cross currency	1,087,801
Equity	450

Futures	Buy	Sell
	Buy	Sell
Interest rate	32	64
Foreign currency	4,601	17,467
Index	757	-

Forward contracts
Foreign currency	466,054	14,605
Equity	3,900	4,403

Options	Long	Short
Interest rate	67,759	95,927
Foreign currency	95,599	97,030
Indexes	585	2,141
Equity	2,775	3,955

Total trading derivatives	9,415,763	235,592

Hedging:
Cash flow
Cross currency swaps	35,929
Foreign Exchange Forwards	37,249

Fair value
Interest rate swaps	125,734
Cross currency swaps	21,098

Total hedging derivatives	220,010

Total derivative financial instruments	9,635,773	235,592

5. Credit Portfolio by Sector
V. Identification of the portfolio by stages of credit risk, as well as by type of credit and by type of currency.
2022
	Stage 1	Stage 2	Stage 3	Total
By loan type:
Commercial, financial and industrial loans	329,296	19,434	5,167	353,897
Public sector loans	88,064	-	-	88,064
Mortgage loans	196,748	9,371	6,252	212,371
Installment loans to individuals	147,947	3,872	4,504	156,323
Revolving consumer credit card loans	62,376	2,073	2,475	66,924
Non-revolving consumer loans	85,571	1,799	2,029	89,399
	762,055	32,677	15,923	810,655

5a. Loan Portfolio Stage 1 and Stage 2
The loan portfolio, by type of loan and currency, as of March 31^st, 2023, is constituted as follows:

	Amount
Stage 1	Pesos	USA Dlls	UDIS	Euros	Total

Commercial or business activity	259,152	55,865	2,508	456	317,981
Financial entities	10,764	551	-	-	11,315
Government entities	70,647	17,417	-	-	88,064
Commercial loans	340,563	73,833	2,508	456	417,360
Consumer loans	147,947	-	-	-	147,947

Earnings Release | 1Q.2023

Banco Santander México

Media and residential	186,003	222	1,412	-	187,637
Of social interest	787	-	-	-	787
Credits acquired from INFONAVIT or FOVISSSTE	8,324	-	-	-	8,324
Mortgage loans	195,114	222	1,412	-	196,748
Total loan portfolio Stage 1	683,624	74,055	3,920	456	762,055

Stage 2	Pesos	USA Dlls	UDIS	Euros	Total

Commercial or business activity	17,004	2,329	-	-	19,333
Financial entities	100	-	-	-	100
Commercial loans	17,104	2,329	-	-	19,433
Consumer loans	3,872	-	-	-	3,872
Media and residential	8,728	37	273	-	9,038
Of social interest	34	-	-	-	34
Credits acquired from INFONAVIT or FOVISSSTE	300	-	-	-	300
Mortgage loans	9,062	37	273	-	9,372
Total loan portfolio Stage 2	30,038	2,366	273	-	32,677

6. Loan Portfolio Stage 3
	Amount
	Pesos	USA Dlls		UDIS	Total

Commercial or business activity	4,416	751		-	5,167
Financial entities	4,416	751		-	5,167
Commercial loans	4,504	-		-	4,504
Consumer loans	5,498	25		118	5,641
Media and residential	6	-		-	6
Of social interest	605	-		-	605
Credits acquired from Infonavit or Fovissste	6,109	25		118	6,252
Mortgage loans	15,029	776		118	15,923
Total loan portfolio Stage 3	4,416	751		-	5,167

The analysis of movements in non-performing loans from December 31^st, 2022 to March 31^st, 2023, is as follows:

Balance as of December 31^st, 2022							15,238

Plus: Transfer from performing loan portfolio to non-performing loan portfolio						8,016

Collections
Cash			(155)
Transfer to performing loan portfolio			(2,776)
Proceeds from foreclosure proceedings			(193)

Write-offs							(4,264)
Adjustment for exchange rate							0

Balance as of March 31^st, 2023							15,866

7. Allowance for loan losses
The movement in the allowance for loan losses, from January 1^st to March 31^st, 2023, is as follows:

Balance as of January 1^st, 2023	22,220
Allowance for loan losses	4,512
Write-offs	(4,252)
Foreign exchange result	813

Earnings Release | 1Q.2023

Banco Santander México

Balance as of March 31^st 2023	23,293

The table below presents a summary of write-offs by type of product as of March 31^st, 2023:

Product	Charge-offs	Debit Relieves	Total	%

First quarter
Commercial loans	823	177	1,000	23.5
Mortgage loans	430	20	450	10.6
Credit card loans	1,214	101	1,315	30.9
Consumer loans	1,448	39	1,487	35.0
Total	3,915	337	4,252	100.0


Accumulated 2022
Commercial loans	823	177	1,000	23.5
Mortgage loans	430	20	450	10.6
Credit card loans	1,214	101	1,315	30.9
Consumer loans	1,448	39	1,487	35.0
Total	3,915	337	4,252	100.0

8. Problematic loans

Loans portfolio was graded according to the general provisions issued by the National Banking and Securities Commission. The management considers that problematic loans are the ones graded as “D” and “E”, due to their low possibility for the collection of the full amount of principal.

9. Programs of benefits to bank debtors with the support of the Federal Government
Breakdown of special CETES , of which Ps.2,181 millon correspond to the early extinction of debtor support programs:
						Amount
Government Securities
Special CETES for housing loan debtor support programs						2,270

Total securities held to maturity (no reserve)						2,270
Minus-
Reserve for Special CETES						(89)
Total securities held to maturity , net						2,181

The remaining balance and expiration date Special Cetes that were not repurchased by the Federal Government and therefore the Financial Group holds in its balance sheet at December 31^st, 2022, is as follows:
	Issue	Trust	Securitie Number	Due date	Price (MXN)	Amount
	B4-270701	423-2	15,292,752	01-jul-27	148	2,270
						2,270

10. Average interest rates paid on deposits
The average interest rates paid on deposits during March 2023, is as follow:
	Pesos	USD
Average balance	468,650	64,432
Interest	4,251	4
Rate	3.63%	0.02%

Earnings Release | 1Q.2023

Banco Santander México

11. Bank and other loans
As of March 31^st, 2023, banks and other loans are constituted as follows:

Liabilities	Amount	Average Rate (%)	Maturity

Loans in pesos

Call money	13,050	11.19	From 1 to 3 days
Local bank loans	5,047	8.07	To 5 years
Public fiduciary funds	17,678	11.18	To 7 years
Development banking institutions	4,713	11.08	To 13 years
Total	40,488

Loans in foreign currency

Call money	2,703	4.25	From 1 to 3 days
Public fiduciary funds	2,788	4.80	From 1 day to 8 years
Development banking institutions	94	6.28	From 1 to 9 months
Total	5,585

Total loans	46,073
Accrued interests	330
Total bank and other loans	46,403

12. Current and deferred taxes

Current taxes are composed as follows at March 31^st, 2023

Income taxes	2,902
Deferred taxes	101	⁽¹⁾
Total Bank	3,003
Current and-deferred taxes from other subsidiaries	(65)
Total consolidated Bank	2,938

(1) Deferred taxes are composed as follows:

Global provision	(1,095)
Fixed assets and deferred charges	(92)
Net effect from financial instruments	374
Accrued liabilities	666
Others	248
Total Bank	101	⁽¹⁾
Allowance for loan losses of subsidiaries, net	0
Others, subsidiaries	(103)
Total deferred tax, consolidated Bank	(2)


As of March 31^st, 2023, deferred assets and deferred liabilities are registered at 100%

Remainder of global provisions and allowances for loan losses	12,896
Other	10,253
Total deferred income tax (net)	23,149
Deferred taxes registered in balance sheet accounts	23,149
Deferred taxes registered in memorandum accounts	0

Earnings Release | 1Q.2023

Banco Santander México

13. Employee profit sharing
As of March 31^st, 2023, the deferred Employee profit sharing “EPS” is compromised as follows:

Asset per deferred EPS:

Allowance for loan losses deducting outstanding	1,319
Fixed assets and deferred charges	334
Accrued liabilities	160
Capital losses carryforward	218
Commissions and interests early collected	75
Foreclosed assets	32
Labor obligations	95
Derivative financial transactions of exchange rate	136
Net effect from financial instruments	212
Deferred EPS asset:	2,581

Deferred EPS liability:

Advance payments	(129)
Deferred EPS liability	(129)

Less - Reserve	-
Deferred EPS asset (net)	2,452

14. Capitalization Ratio

14. Capitalization Ratio

Table I.1

Form of disclosure of the capital integration without considering the phase in in the application of regulatory adjustments

Reference	Capital Description	Capital
	Level 1 (CET 1) Ordinary capital: Instruments and reserves
1	Ordinary shares that qualify for level 1 Common Capital plus corresponding premium	34,702
2	Earnings from previous fiscal years	112,037
3	Other elements of other comprehensive income (and other reserves)	27,384
4	Capital subject to gradual elimination of level 1 ordinary capital (only applicable for companies that are not lined to shares)
5	Ordinary shares issued by subsidiaries held by third parties (amount allowed in level 1 ordinary capital)
6	Level 1 ordinary capital before adjustments to regulation	174,123
	Level 1 Ordinary capital: adjustments to regulation
7	Adjustments due to prudential valuation
8	Goodwill (net of its corresponding deferred profit taxes debited)	1,735
9	Other intangibles other than rights to mortgage rights (net of its corresponding deferred profit taxes debited)	8,606
10	Deferred taxes to profit credited relying on future income excluding those that derive from temporary differences (net of deferred profit taxes debited)	0
11	Results of valuation of cash flow hedging instruments	0
12	Reserves to be constituted	0
13	Benefits surplus of securitization transactions	0
14	Losses and gains caused for the changes in credit rating of liabilities assessed at a reasonable value	N/A
15	Pension plan for defined benefits	0
16	Investments in proprietary shares	0
17	Reciprocal investments in ordinary capital	0
18	Investments in capital of banks, financial institutions and insurance companies out of the reach of the regulation consolidation, net of short eligible positions, wherein the institution does not hold more than 10% of the issued capital (amount that exceeds the 10% threshold)	11

Earnings Release | 1Q.2023

Banco Santander México

19	Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital (amount that exceeds the 10% threshold)	0
20	Rights for mortgage services (amount exceeding the 10% threshold)	0
21	Deferred taxes assets resulting from temporary differences (amount exceeding the 10% threshold, net of deferred taxes debited)	4,583
22	Amount exceeding the 15% threshold.
23	of which: significant investments wherein the institution holds more than 10% of ordinary shares of financial institutions
24	of which: rights for mortgage services
25	of which: Taxes to profit Deferred credited deriving from temporary differences
26	National regulation adjustments	4,311
A	of which: Other elements of other comprehensive income (and other reserves)	0
B	of which: investments in subordinated debt	0
C	of which: profit or increase in the value of assets from the purchase of securitization positions (Originating Institutions)	0
D	of which: investments in multilateral entities	0
E	of which: investments in related corporations	517
F	of which: investments in risk capital	0
G	of which: Stakes on investments funds	0
H	of which: Funding for the purchase of proprietary shares	0
I	of which: Transactions in breach of provisions	0
J	of which: Deferred charges and installments	3,351
K	of which: Positions in First Losses Schemes	0
L	of which: Worker's Deferred Profit Sharing	0
M	of which: Relevant Related Persons	0
N	of which: Pension plan for defined benefits	0
O	of witch: Adjustment for capital acknowledgment	0
P	of which: investments in Clearing Houses	443
27	Regulation adjustments that apply to level 1 common stock due to level 1 capital shortage and level 2 capital to cover deductions	0
28	Total regulation adjustments to level 1 Common Capital	24,740
29	Level 1 Common Capital (CET1)	149,383
	Level 1 additional capital: instruments
30	Instruments directly issued that qualify as level 1 additional capital, plus premium	12,614
31	of which: Qualify as capital under the applicable accounting criteria	12,614
32	of which: Qualify as liability under the applicable accounting criteria
33	Capital instruments directly issued subject to gradual elimination of level 1 additional capital	N/A
34	Instruments issued of level 1 additional capital and level 1 Common Capital instruments that are not included in line 5 issued by subsidiaries held by third parties (amount allowed at additional level 1)	N/A
35	of which: instruments issued by subsidiaries subject to gradual elimination
36	Level 1 additional capital before regulation adjustments	12,614
	Level 1 additional capital: regulation adjustments
37	Investments in held instruments of level 1 additional capital
38	Investments in reciprocal shares in level 1 additional capital instruments.
39	Investments in capital of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, net of short eligible positions, wherein the institution holds more than 10% of the issued capital

Earnings Release | 1Q.2023

Banco Santander México

40	Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital
41	National regulation adjustments	0
42	Regulation adjustments that apply to level 1 common stock due to level 1 capital shortage and level 2 capital to cover deductions
43	Total regulation adjustments to level 1 additional Common Capital	0
44	Level 1 additional capital (AT1)	12,614
45	Level 1 capital (T1 = CET1 + AT1)	161,997
	Level 2 capital: instruments and reserves
46	Instruments directly issued that qualify as level 2 capital, plus premium	23,418
47	Capital instruments directly issued subject to gradual elimination of level 2 capital.
48	Level 2 capital instruments and level 1 Common Capital instruments and level 1 additional capital that has not been included in lines 5 or 34, which have been issued by subsidiaries held by third parties (amount allowed in level 2 completer capital)	N/A
49	of which: instruments issued by subsidiaries subject to gradual elimination	N/A
50	Reserves	1,101
51	Level 2 capital before regulation adjustments	24,519
	Level 2 capital : regulation adjustments
52	Investments in own instruments of level 2 capital
53	Reciprocal investments in level 2 capital instruments
54	Investments in capital of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, net of short eligible positions, wherein the institution does not hold more than 10% of the issued capital (amount exceeding the 10% threshold)
55	Significant investments in ordinary shares of banks, financial institutions and insurance companies out of the scope of the regulation consolidation, nets of eligible short positions, wherein the institutions holds more than 10% of the issued capital
56	National regulation adjustments	0
57	Total regulation adjustments to level 2 capital	0
58	Level 2 capital (T2)	24,519
59	Total stock (TC = T1 + T2)	186,516
60	Total Risk Weighted Assets	845,566
	Capital reasons and buffers
61	Level 1 Common Capital (as percentage of assets weighted by total risks)	0
62	Level 1 Stock (as percentage of assets weighted by total risks)	0
63	Total capital (as percentage of assets weighted by total risks)	0
64	Institutional specific buffer (must at least consist of: the level 1 Common Capital requirement plus the capital maintenance buffer, plus the countercyclical buffer, plus D-SIB buffer; expressed as percentage of the total risk weighted assets)	0
65	of which: Buffer of capital preservation	0
66	of which: Buffer of specific bank countercyclical
67	of which: Buffer of systematically important local banks (D-SIB)	0
68	Level 1 Common Capital available for hedging the buffers (as percentage of total risk weighted assets)	0
	National minimums (if other than those of Basel 3)
69	National minimum reason of CET1 (if different than the minimum established by Basilea 3)
70	National minimum reason of T1 (if different than the minimum established by Basel 3)

Earnings Release | 1Q.2023

Banco Santander México

71	National minimum reason of TC (if different than the minimum established by Basel 3)
	Amounts under the deduction thresholds (before weighting by risk)
72	Non-significant investment in the capital of other financial institutions
73	Significant investment in the capital of other financial institutions
74	Rights for mortgage services (net of Deferred profit taxes debited)
75	Deferred profit taxes credited derived from temporary differences (net of Deferred profit taxes debited)	20,981
	Applicable limits to the inclusion of reserves in level 2 capital
76	Eligible reserves to be included in level 2 capital with respect to expositions subject to standardized methodology (prior application of limit)
77	Limit in the inclusion of level 2 capital provisions under standardized methodology
78	Eligible reserves for its inclusion on level 2 capital regarding exposure subject to credit risks (before the limit application).
79	Limit in the inclusion of reserves in level 2 capital under internal rating methodology
	Capital instruments subject to gradual elimination (applicable only between January 1, 2018 and January 1, 2022)
80	Current limit of CET1 instruments subject to gradual elimination
81	Amount excluded from CET1 due to limit (excess over the limit after amortization and maturity periods)
82	Current limit of AT1 instruments subject to gradual elimination
83	Amount excluded from AT1 due to limit (excess over the limit after amortization and maturity periods)
84	Current limit of T2 instruments subject to gradual elimination
85	Amount excluded from T2 due to limit (excess over the limit after amortization and maturity periods)

I.2

Notes to Table I.1 “Form of disclosure of the capital integration without considering the phase in in the application of regulatory adjustments”

Reference	Description
1	Elements of capital contributed pursuant to fraction I item a) numbers 1) and 2) of Article 2 Bis 6 hereof
2	Results from previous fiscal years and their corresponding updates.
3	Capital reserves, net result, result per assessment of titles available for sale, accrued effect per conversion, result per assessment of cash flow, result from non-monetary assets holding, and the measuring balance from defined benefits to the employees considering on each concept its updates.
4	Does not apply. The capital stock of credit institutions in Mexico is represented by representative certificates or shares. This concept only applies for entities where such capital is represented by representative certificates or shares.
5	Does not apply for the capitalization scope in Mexico which is on a non-consolidated basis. This concept will only apply for entities with a consolidated scope.
6	Sum of concepts 1 through 5.
7	Does not apply. In Mexico the use of internal models for calculating capital requirements per market risk is not allowed.
8	Goodwill, net of owed differed profit taxes pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof.
9	Intangibles, other than commercial credit, and if applicable to mortgage service rights, net of owed deferred profit taxes, pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof.

Earnings Release | 1Q.2023

Banco Santander México

10*	Credited deferred profit taxes from losses and fiscal credits pursuant to the provisions of fraction I item p) of Article 2 Bis 6 hereof.
10*	This is a more conservative approach than the one established by the Basel Committee on Banking Supervision in its document "Basel III: Global legal framework for the reinforcement of banks and banking systems" published on June 2011, given that it does not allow to set off with owed differed profit taxes.
11	Result from assessment of cash flow hedging instruments corresponding to hedged entries that are not assessed at reasonable value.
12*	Reserves pending constitution pursuant to the provisions of fraction I item k) of Article 2 Bis 6 hereof.
12*	This is a more conservative approach than the one established by the Basel Committee on Banking Supervision in its document "Basel III: Global legal framework for the reinforcement of banks and banking systems" published on June 2011, given that deducts from level 1 common stock the preventive reserves pending constitution, according to the provisions of Chapter V of the Second Title hereof, as well as those constituted charged to accounting accounts that are part of the result entries or shareholders' equity and not only the positive difference between the Aggregate Expected Losses minus the Aggregate Admissible Reserves, in the event the Institutions use methods based in internal qualifications in the determination of their capital requirements.
13	Benefits surplus of securitization transactions pursuant to the provisions of fraction I item c) of Article 2 Bis 6 hereof.
14	Does not apply
15	Investments made by the benefit pension fund defined corresponding to resources to which the Institution does not have unrestrictive or unlimited access. These investments are considered as net of the plan's liabilities and owed differed taxes to profit that correspond that have not been applied in any other regulatory adjustment.
16*	The amount of investment in any own action the institution acquires : in accordance with the provisions of the Act in accordance with the provisions of section I subsection d) of Article 2 Bis 6 of these provisions ; through rates predicted values of section I subsection e ) of Section 2 Bis 6 of these provisions and through investment in funds established in section I point i) of article 2 bis 6.
16*	This treatment is more conservative than the one established by the Committee on Banking Basel Supervision in its document " Basel III : A global regulatory framework for more resilient banks and banking systems " published in June 2011 because the deduction for this concept is made of common equity tier 1 capital , regardless of the level of capital which has been invested
17*	Investments, in capital of corporations, other than financial entities referred to by item f) of Article 2 Bis 6 hereof, that are in turn, directly or indirectly, shareholders of the institution itself, of the fund
17*	This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made in the level 1 common stock, irrespective of the capital level where it has been invested, and in addition because any type of entity is considered, not only financial entities.
18*	Investments in shares, where the Institution owns up to 10% of the capital stock of the financial entities referred to by Articles 89 of the Law and 31 of the Law Regulating Financial Groups pursuant to the provisions of fraction I item f) of Article 2 Bis 6 hereof, including those investments made through investment funds referred to by fraction I item i) of Article 2 Bis 6. The previous investments exclude those made in the capital of development and promotion multilateral organizations of an international nature that have a credit Qualification assigned by any of the issuer's Qualifying Institutions, equal or greater than long term Risk Degree 2.
18*	This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made in level 1 common stock, irrespective of the capital level in which it is invested, and additionally because it is deducted from the aggregate amount registered of the investments.

Earnings Release | 1Q.2023

Banco Santander México

19*	Investments in shares, where the Institution owns up to 10% of the capital stock of the financial entities referred to by Articles 89 of the Law and 31 of the Law Regulating Financial Groups pursuant to the provisions of fraction I fraction f) of Article 2 Bis 6 hereof, including those investments made through investment funds referred to by fraction I item i) of Article 2 Bis 6. The previous investments exclude those made in development and promotion multilateral organizations of an international nature that have a credit Qualification assigned by any of the issuer's Qualifying institutions, equal or greater than long term Risk Degree 2.
19*	This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the deduction for this concept is made from level 1 common stock, irrespective of the level of capital where it has been investment, and additionally because the aggregate amount registered of investments is deducted.
20*	Mortgage service s rights shall be deducted from the aggregate amount registered in the event these rights exist.
20*	This is a more conservative approach to the one established by the Basel Committee on Banking Supervision in its documents "Basel III: Global regulatory framework for the reinforcement of banks and banking systems" published on June 2011 given that the aggregate amount registered of rights is deducted.
21	Deferred taxes assets resulting from temporary differences minus the corresponding owed differed profit taxes not considered to set-off other adjustments, exceeding 10% of the difference between the reference 6 and the sum of references 7 through 20.
22	Does not apply. Concepts were deducted from the aggregate capital. See notes of references 19, 20 and 21.
23	Does not apply. Concepts were deducted from the aggregate capital. See note of references 19.
24	Does not apply. Concepts were deducted from the aggregate capital. See note of reference 20.
25	Does not apply. Concepts were deducted from the aggregate capital. See note of reference 21.
26	National adjustments considered as the sum of the following concepts.
A.	The sum of the accrued effect for conversion and result for ownership of non-monetary assets considering the amount of each of these concepts with a sign different than the one considered to include them in reference 3, namely, if positive in this concept shall be entered as negatives and vice versa.
B.	Investments in subordinated debt instruments, pursuant to the provisions of fraction I item b) of Article 2 Bis 6 hereof.
C.	The amount resulting if on account of the purchase of securitization positions, the originating Institutions register a profit or increase in the value of their assets with respect to the assets previously registered in its balance, pursuant to the provisions of fraction I item c) of Article 2 Bis 6 hereof.
D.	Investments in capital of development or promotion multilateral organizations of an international nature pursuant to the provisions of fraction I item f) of Article 2 Bis 6 hereof, that have a credit Qualification assigned by any of the issuer's Qualifying Institutions, equal or better to long term Risk Degree 2.
E.	Investments in shares or corporations related to the Institution under the terms of Articles 73, 73 Bis and 73 Bis 1 of the Law, including the amount corresponding to investments in investment funds and investments indices pursuant to the provisions of fraction I item g) of Article 2 Bis 6 hereof.
F.	Investments made by development banking institutions in risk capital, pursuant to the provisions of fraction I item h) of Article 2 Bis 6 hereof.
G.	Investments in shares, other than fix capital, in listed investment funds wherein the Institutions holds more than 15 per cent of shareholder's equity of the aforementioned investment funds, pursuant to fraction I item i) of Article 2 Bis 6, that have not been considered in the preceding references.
H.	Any type of contribution which resources are destined to the purchase of shares in the financial group's holding company, of the other financial entities that comprise the group to which the Institution belongs or of the financial affiliates of the latter pursuant to the provisions of fraction I item l) of Article 2 Bis 6 hereof.
I.	Transactions that infringe the provisions, pursuant to the provisions of fraction I item m) of Article 2 Bis 6 hereof.
J.	Differed charges and early payments, net of owed differed profit taxes, pursuant to the provisions of fraction I item n) of Article 2 Bis 6 hereof.
K.	Positions pertaining to the First Losses Scheme where the risk is preserved or credit protection is provided up to a certain limit of a position pursuant to fraction I item o) of Article 2 Bis 6.
L.	Worker's participation in credited differed profits pursuant to fraction I item p) of Article 2 Bis 6 hereof.
M.	The added amount of Transactions Subject to Credit Risk owed by Relevant Related Persons pursuant to fraction I item r) of Article 2 Bis 6 hereof.

Earnings Release | 1Q.2023

Banco Santander México

N.	The difference between the investments made by the benefit pension funds defined pursuant to Article 2 Bis 8 minus reference 15.
O.	Adjustment for the acknowledgment of Net Capital . The amount shown corresponds to the amount registered in box C1 of the form included in section II hereof.
P.	The investments or contributions, directly or indirectly, in the corporation's capital or in the trust estate or other type of similar figures that have the purpose to set off and liquidate Transactions executed in the stock market, except for such corporation's or trust's share in the former pursuant to item f) fraction I of Article 2 Bis 6.
27	Does not apply. There are no regulatory adjustments for additional level 1 capital nor for ancillary capital. All regulatory adjustments are made from the level 1 common stock.
28	Sum of lines 7 through 22, plus lines 26 and 27.
29	Line 6 minus line 28.
30	The amount corresponding to titles representing the capital stock (including its share sale premium) that had not been considered in Fundamental Capital and Capital Instruments, that meet the conditions established in fraction II of Article 2 Bis 6 hereof.
31	Amount of line 30 qualified as capital under the applicable accounting standards.
32	Does not apply. Instruments directly issued that qualify as additional level 1 capital, plus its premium are registered for accounting purposes as capital.
33	Subordinated obligations computed as Non-Fundamental Capital, pursuant to the provisions of Article Third Transitory of Resolution 50th that amends the general provisions applicable to Credit Institutions, (Resolution 50th)
34	Does not apply. See note to reference 5.
35	Does not apply. See note to reference 5.
36	Sum of lines 30, 33 and 34.
37*	Does not apply. Deduction is made in aggregate level 1 common capital.
38*	Does not apply. Deduction is made in aggregate level 1 common capital.
39*	Does not apply. Deduction is made in aggregate level 1 common capital.
40*	Does not apply. Deduction is made in aggregate level 1 common capital.
41	National adjustments considered:
	Adjustment for the acknowledgment of Net Capital. The amount shown corresponds to the amount registered in box C2 of the form included in section II hereof.
42	Does not apply. There are no regulatory adjustments for ancillary capital. All regulatory adjustments are made from the level 1 common stock.
43	Sum of lines 37 through 42.
44	Line 36, minus line 43.
45	Line 29, plus line 44.
46	The amount corresponding to titles representing the capital stock (including its share sale premium) that had not been considered in Capital Fundamental nor in Non-Fundamental Capital and Capital Instruments, that comply with Exhibit 1-S hereof pursuant to the provisions of Article 2 Bis 7 hereof.
47	Subordinated obligations computed as ancillary capital, pursuant to the provisions of Article Third Transitory, of Resolution 50th
48	Does not apply. See note to reference 5.

Banco Santander Mexico S.A., Institucion de Banca Multiple, Grupo Financiero Santander Mexico 6-K