Good morning, everyone. Thanks for joining to this Banco Santander 2020 full year earnings presentation. As every Q4 with full year presentation. We have today our Executive Chairman, Ann Abbotin, who will address with the CEO the performance of 2020 and the different regions and some of the countries' review. Then the Executive Chairman will make show on the progress on the transformation and the next steps that we will kick off from 2021 to conclude with medium term outlook and key takeaways before jumping into the Q organization.
With no further delays, Ana, please.
So thank you, Sergio, and good morning, everybody. And I want to start by saying I hope you and your close ones are safe and well. It's been a difficult year for everybody, and all of us have lost colleagues and friends. And so our thoughts are with everybody that has had that terrible experience. Hour.
Without further ado, again, welcome to our 2020 presentation. We will cover the results For the year, we will give you our views for the medium term and cover some of the strategic priorities that we will be focusing on For the next few
years.
Sorry, cost of credit at 1.28 and slightly better than the improved guidance that we last quarter. And finally, we have continued to generate very strong growth in organic capital, reached €1234,000,000 at the end of the year, which is above our target range. We, in November 2020, paid a dividend in new shares equivalent to €0.10 per share and the Board of Directors' intention is to go back to the 40% to 50% as soon as we can. We are also proposing to our shareholders in end of March a $0.0275 per share in cash Against 2020 results. Jose Antonio will review in more detail the full year results, hour.
But just to point out again that we delivered a EUR 5,000,000,000 underlying profit, that's after a 50% increase in provisions due to COVID, hour. With very good cost control, as you can see, and net operating income in constant euros, as I mentioned, which is up year on year, Again, these underlying results and provisions represent a prudent approach to the COVID related potential losses, which We have been guiding through the year. At the base of these strong underlying numbers is, again, our geographical Ant business diversification. It has shown its worth in previous crisis, again, in this one. We have delivered robust performance in the Americas.
I want to point out that North America has been our best performing region, the best ordering profit performance in 2020 with growth in loyal customers based on increased collaboration between Mexico and the U. S. Importantly, in the U. S, We delivered $1,200,000,000 net profit. That's a statutory attributable profit and a growth in the underlying profit for the year.
Europe, we are very much focused on transforming the business. What we call 1 Europe is a new operating model. We are very confident this will lead us to results that will be increasingly positive. We are basing our growth on In revenues and an increase in productivity, and importantly, we have generated EUR 1,000,000,000 net cost savings, excluding perimeter in the last two years. And South America remains the growth engine for the group.
We have delivered 19% RoTE, But very importantly, operating income increased 5% on a year on year basis in Brazil, And loyal customers and customer loans grew at 9% 15%. And finally, we're also increasingly diversified by businesses. You can see Here, CIB, very strong numbers. Wealth Management also and our digital consumer bank, which is the pro form a merger of Santander Consumer Europe, an Open Bank, which is already 16% of the total revenues. I mentioned at the beginning that COVID has been a challenge for all of us at the personal level.
We have very clear that Our priority throughout and continues to be our people. This is the best way that we can take care of our customers. We have supported 6,000,000 of our customers with moratoria lending €1,000,000,000 per day to SMEs and corporates. We have also supported our communities in a very important way with EUR 100,000,000 across the group in aid in different aspects, And this is something which we are very keen because we know that, that is at the base of our success for the future. We're also, during 2020, very focused on further embedding ESG across the bank.
It's something which is at the base, again, of our aim, and I define it as being a more responsible bank. We have continued supporting our customers in a transition to green. This is something which we are absolutely very focused on EUR 32,600,000,000 in green financing, as you can see, since 2019 and going green ourselves. So in 2020, we were net 0 in our own operations, and this is something we will continue going forward. We are promoting financial inclusion, especially in the Americas.
We supported about €500,000,000 credit to micro entrepreneurs and also supporting society through scholarships and our support for universities. Very importantly, we have continued to invest in our talent And also diversity, we are aiming to continue in this line. We're now close to 24% of women in leadership positions, very diverse board in terms of nationalities, backgrounds with 40% woman on the group board. Hour. And again, based at the base of all of our strategy is an increasingly strong culture, Which we have defined as being simple, personal and fair.
So after this introduction, I will pass over Jose Antonio to give you a summary of both the group and the businesses in 2020. Jose Antonio?
So excluding then, total income remained stable as the decrease in activity and lower interest rates were offset by higher volumes, The lower cost of deposits and good performance in Global Businesses. We accelerate our cost reduction, and we expect to keep on track year. As the result, net operating income in a very difficult year grew 2% year on year in constant euros. Higher loan loss provisions due to the COVID crisis with the cost of credit in line with our guidance during the year. All in all, underlying attributable profit reached the €5,000,000,000 I already mentioned.
We had a very positive 4th quarter. We improved our business activity, and customer revenue reached its highest figure in the last 8 quarters. Finally, we recorded in the year €13,900,000,000 negative net capital gains and provisions following the €12,600,000,000 impairment we announced in June. The bank has recorded charges of €1,100,000,000 in the 4th quarter. Discharges in the Q4 were mainly restructuring costs in Spain but also in other countries in Europe due to the transformation process we are implementing to increase productivity and efficiency.
In Europe, we expect total restructuring costs in 20202021 of around €1,500,000,000 and we expect savings of €1,000,000,000 in 20212022. Going through the P and L along the main lines of the P and L, Q4 customer revenue continued to consolidate this upward trend, Well, trending towards the pre COVID levels, 4% growth in NII versus Q3 with the highest NII in the last 2 years, mainly driven by Spain, U. K. And South America. Fee income grew 3%, primarily backed by South America.
Costs were up 4% in the quarter, partly affected by seasonality labor agreements in Argentina and Brazil, who are the main drivers and higher technology expenses, particularly in Mexico. Hour. As a result, net operating income decreased 3% quarter on quarter but was 3% higher than in Q4 2019. Hour. Taking a more detailed look at the customer revenue, INI increased from higher lending and deposit volumes, which more than offset The interest rate impact and negative regulatory impact in Brazil, particularly in Brazil and Poland.
Net fee income was affected by the COVID crisis. In this environment, our strategy remains focused on increasing customer loyalty and growth in higher value added services and products. Very positive quarter for CIB and Wealth Management and Insurance. Together, they represent 50% of the fee income of the bank. In cost, you see the trends.
The figures speak by themselves. In Europe, 6% decrease in North America, 2% down mainly in the U. S, 5% down. In South America, costs increased 1%, excluding Argentina due to the high inflation. We expect continue to reduce in cost and improving our efficiency ratio in 2021.
Going to the cash of credit. The cost of credit stood in line with our expectations and already mentioned the 1 100 and 28%, increasing the year due to expected higher expected macro scenario. The increase largely reflects the IFRS 9 forward looking view based on potential macroeconomic scenarios and collective and individual assessment to cover expected credit losses in these scenarios. However, the underlying trends in credit quality remained solid in 2020. NPL decreased 11 basis points.
Coverage increased 8 percentage points. Loan loss reserves increased €4,000,000,000 to more than €24,000,000,000 By stage, We increased the Stage 1, euros 22,000,000,000 due to the increase in the loan book. Stage 2, euros 21,000,000,000 and the Stage 3 remaining virtually flat. That speaks This classification speaks about the quality trends, the underlying quality trends in the loan book. When it comes to the moratorium, at some point, we got a we were very proactive in the moratorium.
Some of them were offered by the bank to the customers. Some were other were mandatory by the different governments. At some point, we have CHF112 1,000,000,000 In moratorium, so the majority of this has expired and just 3% of the spiked moratorium classified as Stage 3. 78% of the active moratorium that remain are secured and 83% It's concentrated in Europe, mainly in Portugal and in Spain. In Portugal, government mandated extension of all moratoria till September.
In Spain, longer initial terms than other countries, almost 95% of the one you have in the screen, Despite in the coming mouth out of yesterday, the Spanish government took some actions to extend some moratorium for a specific sector and vulnerable people. When it comes to capital, the capital ratio reached 12.3% after increasing 36% in the quarter and 69 basis points year. The 104 basis points of organic generation, partly offset by the impact of restructuring costs, corporate transactions and market performance. It also includes 9 basis points related to an accrual of 2020 dividend payments based on the limit established by the ECB data loss in maximum payment of €2.75 per share. The fully loaded core equity Tier 1 ratio was €11.89 tangible net asset value was €3.79 virtually stable since September outlook.
We took some restructuring cost charges as you had seen in the P and L. Going through the regions and making some comments about the 3 regions and the main countries. With the creation of 1 Europe, we are accelerating our business transformation To achieve with 2 main goals: achieve superior growth under a more and having a more efficient operating model. Regarding commercial activity, loans grew 4% boosted by SME and large corporates in Spain, mortgages in U. K.
And CIB. [SPEAKER IGNACIO CUENCA ARAMBARRI:] Portugal rose the loan book 8%. Deposit increased 6% and Mutual Funds 5%. This growth is remarkable in Europe. Moving to results.
Underlying attributable profit amounted to €2,700,000,000 in 2020, 45% less than in 2019, affected by higher loan loss provisions in all markets. So other points I want to mention is the cost decreases, well ahead of our schedule, I commented before. The total income, net interest income remained flat but improved in the later part of the year, partly driven by the recovery in commercial activity and consumer lending and improving the cost of funding. Before going into more detail into Santander Spain and U. K, I would like to highlight Santander Consumer Finance positive performance in the year, clearly outperforming the market, showing high resilience in results and a recovery in the second half of the year.
In Q4, profit increased 14% compared with an already solid Q3. This is a business that clearly reflects The benefits of the diversification. Ana will describe later our priority in digital and consumer demand in more detail. In Spain, We have been very active in supporting our customers, being very active with FICO funding, where we granted €31,000,000,000 Since the state of the land was declared, we have granted €100,000,000,000 to self employed people and corporates. Hour.
We made further progress in enhancing customer experience. We are escalating in net promoter score in relation with our competitors. The volumes grew. Loans grew 5% and customer funds 4%. In the net in the income statement, the profit for the year It was €517,000,000 60% lower year on year.
By line, the income fell basically due to the lower fee income in relation with the lockdowns we have had and also the reduced income from real estate performance in volumes, margin management and the positive contribution for TLTROs. We had another positive year in cash dropping 10%. Hour. Lastly, loan loss provisions doubled, driven by the expected potential losses in our macro scenario arising from the pandemia and several qualitative assessments in the most vulnerable sectors. That said, Our portfolio's credit quality remained solid.
NPL decreased 71 basis points. Rias remain at lower levels than pre COVID, provided the different support programs in place. The areas are €1,800,000,000 in December versus 3 point €7,000,000,000 in February. Coverage increased 6 percentage points. Loan loss reserves increased by €1,000,000,000 and the different stages.
Stage 1 grew €16,000,000,000 Stage 2 €3,000,000,000 and Stage 3, a little bit less than €1,000,000,000 morning to U. K. Our transformation program is gaining traction and beginning to show results. Volumes increased year on year. Loans plus 3 percent customer funds plus 8%.
2020 profit, as it cannot be other way, was heavily affected by COVID-nineteen and regulatory changes, particularly in relation with overdrafts, which was somewhat offset by better NII plus 2% And lower cost, minus 6%. Profit fell year on year but increased 18% quarter on quarter, continuing the recovery that began in Q3. Thanks to the NII that increased NII due to increase in the NIM by 11 basis points in the quarter due to lower funding costs and hiring from book margin. Costs improved 3% minus 6% year on year. Loan loss provision has started to normalize in the year.
Cost of risk is relatively low, 28 basis points. Coverage increased by 11 percentage points. In constant euros, Stage 2 increased by €6,000,000,000 and Stage 3 plus €600,000,000 For 2021, we expect good operating performance based on our funding costs new business message, improving productivity through our transformation program. In North America, it's the region that has delivered the best ordinary profit performance across the group in 2020. We grew the volumes, loans plus 4% and customer phones plus 19%.
Profit just decreased just 3% despite the pandemic related provisions driven by net operating income. Efficiency improved significantly. By country, Santander U. S. Focused on preserving the strength of its balance sheet and its sustained improvement in profitability.
Volume loans grew 6% and deposits grew 20%. Profit increased 4% year on year with resilient NII, hour. We reinforced coverage, plus 50 percentage points to 210. In constant euros, Stage 2 increased €3,000,000,000 and Stage 3 remained flat. In Mexico, the loan book remained flat.
It had a spike at the middle of the year and normalized work. Customer funds grew 14%, particularly strong growth in demand deposits from individuals that grew 24%. [SPEAKER JOSE MARIA ALVAREZ DE TEJADA:]
Regarding results, positive trends
in revenue and net operating income, costs by 5% due to IT Investments. NPL ratio increased 62 basis points and the coverage decreased 7 percentage points to 121%. [SPEAKER IGNACIO CUENCA ARAMBARRI:] In constant euros, Stage 2 increased by €2,000,000,000. Stage 2 remained basically flat, grew €200,000,000 South America. Volumes gradually recovered during the second half of the year.
Loans grew 15% year on year and customer funds, 18%. Deposits, particularly strong growth in deposits plus 30% in the region. The region was the main driver of, as Ana said, of the top line with higher revenues in all countries. Net operating income rose 5% as a result of the positive revenue and improvement cost to income. Full year 2020 underlying attributable profit Fell just 4% due to COVID related provisions.
NPL ratio fell 47 basis points and coverage increase 9 percentage points. By country, Brazil recorded an excellent year. I will explain later. In Chile, we ranked number 1 in NPS with a record growth in current accounts plus 42%. Full year 2020, hour.
Net operating income increased 4%, boosted by higher NII and cost control. Argentina, Uruguay, Peru and Colombia achieved higher profits due to performance in revenue and efficiency improvement. Going to Brazil. Brazil economy performed better, significantly better than expected. Santander has once again recorded an excellent year, both in terms of results and volumes, while we remain focused on capturing growth opportunities.
Commercial activity in the second half of the year exceed pre COVID-nineteen levels, boosting revenue growth in the year and achieving double digit increases in volumes. Launch grew 19% and customer funds 16%. Full year 2020 net operating income increased 3%, [SPEAKER IGNACIO CUENCA ARAMBARRI:] Driven by Brazilian revenue and efficiency improvement, higher volumes offset the significant margin pressures and lower interest rates. High provisions with net credit quality indicators at very controlled levels. NPL ratio fell 73 basis points.
Coverage increased by 13 percentage points. Underlying attributable profit decreased 5%, but return on tangible equity remained high 19%. For 2020 1, we remain optimistic about Brazil, focusing on increasing our customer base, maximizing revenues across our business segment. I'm maintaining high profitability levels and volumes growth with a good asset quality and continue to gain market share in many of the most important segments in the country. Taking a look to the global business, Corporate Investment Banking had an excellent year.
Hour. We continue to support our customers increasing our market share. Income grew 15%. Profit was 23% Higher, driven by 15% growth in the income I mentioned and 3% cost reduction. We group double digit in our core business, particularly in Global Markets and Global Debt Financial.
In Q4, Profit declined as the improvement performance as the improved performance in NII and FIB was broadly offset by lower trading gains due to CBA and lower volatility than in the Q3 and higher provisions related with COVID-nineteen on specific names. Wealth Management Insurance business performed well in the year. The assets under margin amounted to €370,000,000,000 in line with December 2019 in constant euros. In the quarter, growth was 4%. Total income.
Total fee income generated accounted for 31% of the group's total. Underlying attributable was up 2%, thanks to 3% growth in revenues. In Private Banking, positive sales and business growth fees grew 9 Santander Asset Management, a strong volume rebound from the loss in May and further progresses in our ESG study. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Lastly, in insurance, underlying profit rose 18%. It's the main growth driver continue to be non credit related business.
And now we can move to Ana to continue with the presentation.
So thank you so much, Jose Antonio. Allow me now To say, 1st of all, again, that I am really proud of the progress we have made since 2014. I am excited about the opportunities ahead. Hour. And I would like to start by saying again that our EMAN values remain the same as we've said for several years.
Hour. They provide very strong foundations for the Santander of tomorrow, whilst allowing us to deliver today. Our aim is to be the best open financial service platform by acting responsibly and earning the lasting loyalty of all our stakeholders. Just a few minutes to show you how we have delivered results following this strategy for a number of years. Again, Our teams and our approach to capital management discipline have been key.
If we look back to the last 6 years, '14 to 'nineteen. Of course, 2020 was an outlier. We have double profits improved If we look back to our performance over the last 6 years, 2020 was a clear outlier. I just want to remind ourselves that we have doubled profits, improved our underlying return on tangible equity by more than 400 basis points. In 11.8% in 2019, 12.34% today.
[SPEAKER MARCO TRONCHETTI PROVERA:] Very importantly, and I think these numbers show the transformation of our model, our capital base Has grown by €29,000,000,000 that's a 70% increase with only a 13% increase in RWAs, again, testament to a radical change in the model, which will continue into the future, and that's what gives us confidence again for the next few years. Hour. If we look ahead, we will continue following the strategy, which has served us well, allocating resources efficiently, focusing on the profitable growth, which makes us very different from many of our peers and, of course, shareholder value creation. We will continue to grow our RORWA organically. Again, most of this growth will continue from our businesses in the Americas.
In terms of segments, we'll continue to invest and expand on our fee based and capital light businesses, Corporate Investment Banking, Wealth Management and Payments through PagoNEXT and of course, the Digital Consumer Bank, Which is, as I will explain again in a few minutes, the pro form a merger of Santander Consumer and Openbank. This should lead us to growth in earnings per share and tangible NAV per share, hour. Which in turn would underpin cash dividend growth, bringing us to the path of the 40 to 50 cash payout as soon as regulators allow us. Hour. To capture organic profitable growth, we will continue to invest in the higher return on capital light geographies and businesses.
We have made progress again in 2020 in accretive capital rebalancing, First, by re weighting our capital to these more profitable geographies, mainly the Americas, to higher return and capital light businesses, CIB, Wealth Management, Insurance and Payments. We have been setting minimum profitability thresholds in all segments. Also and very, very important, we have a lot of focus on faster asset rotation, and We have aligned top management remuneration with these profitability goals. As a result, in 2020, This is an important number in what has been, again, a difficult year. About 40% of our capital has delivered double digit underlying return on tangible equity.
So as we look to the Santander of tomorrow, we have three priorities for this profitable growth. There is no doubt that our industry is going to continue to be challenging even in a post COVID world, low interest rates, increasing competition. But we have very clear three strategic priorities to build on our foundations, including The One Santander, a new operating model second, Pagonext and third, a digital consumer bank. Again, Think of this of further leveraging our scale and using technology to strengthen customers' loyalty, But also to access new fee based revenue pools. I will go now through each one of these.
So what do we mean when we say 1 Santander? What we're really saying is that we're aiming to create a much better bank for our customers to drive growth, To drive profitable growth. We have made huge progress in the last few years. I just shared with you the numbers of these 5, 6 years, We'd show that. But we want to accelerate this transformation.
We created the regions. Now with the 1 Santander, We are redefining again our operating model. We want to make sure that we can leverage 147,000,000 customers and also based on clear principles. The first one is simplify. It's the key word here, simplify our mass market value proposition, redefine how we interact with our customers and further leverage the capacity we have across Europe and Then across the group, to build together and create a common model to share processes and do this across markets.
This is not just in the 1 Europe. We are doing that across the Americas, and this is what will allow us to reach top NPS top 3 NPS in 9 countries. Over 50% of total sales will be digital and to further reduce our efficiency ratio improve our efficiency ratio to about 40%. We will follow very clear milestones as we execute along these three priorities. If I turn first to the 1 Europe, The 1 Europe goal is to go to 10% to 12% underlying return on tangible equity and an efficiency ratio of 45%.
We will work across all regions, but especially in Europe, to leverage the payments platform, the Pagonex Global Solutions that I have referred to. In North America, continued focus on collaboration between The two countries, we are seeing 30% increase in revenues in 2020 in areas like Commercial Banking and CIB I'm targeting 11% to 13% return on tangible equity and 40% efficiency in the medium term. South America, We're expanding Getnet and Superdigital to other countries. We did announce yesterday afternoon in Brazil The listing of Getnet Brazil, I will comment on that later. And our aim is to deliver an underlying return on tangible equity of 19% to 21% compared to the 18% for the region this year and 35% efficiency.
So allow me to turn to the 2nd priority, which is PagoNEXT. PagoNEXT is a global payments company where we're bringing together different assets across the group. Initially, it's going to focus very much on 2 segments. 1st is the merchant acquiring and second, the SMEs, but we'll also be looking to the consumer segment. Payments is not a new strategy.
It's not a new priority. Payments has always been at the core of our loyalty strategy, and this is what allows us to earn the loyalty of our customers. Santander has the scale to become one of the top global payment platforms in the world. Merchant Acquiring is a global revenue pool of €80,000,000,000 It's a fast growing market, especially on the e commerce, globally growing at 11%. International Trade, again, a global revenue pool of EUR 350,000,000,000 also growing globally.
We already have significant scale in these businesses, so we have a very strong starting point. In Merchant Acquiring, for example, we have more than 1,000,000 active merchants and business customers and 60,000,000 active credit and debit. [SPEAKER MARCO TRONCHETTI PROVERA:] In trade, we will leverage our more than 4,000,000 SME customers. This is probably one of the biggest in the banking world And over 200,000 SMEs that are trading internationally. Think of PagoNEXT as the backbone, the technology backbone that will allow our banks, the 1 Santander, to leverage our scale.
To really have 147,000,000 customers in one place with common products. This is what PagoNex is aiming for. And to build those products that are essential to our customers, most important to our customers. It will allow us to grow faster, but very importantly, to deliver a better customer experience. The aim is that this be a single autonomous company and will probably be one of the largest private fintech companies in the world.
Again, we announced yesterday the listing during 2021 of Getnet Brazil, so you can have much better visibility about All these revenues that are high growth revenues inside our business. So I already mentioned focus on Merchant and Trade Solutions. I just want to point out here that this is not starting from scratch. And this is just two examples where we are building our own software, our own solutions. And this is Brazil and Spain where, as you can see here, market share growing from 12% to 15% In Brazil, in Spain, from 12% to 17%, growing at 40%, where we also bought back our acquiring stake from Elavon.
So again, we believe we can build better solutions ourselves. We have the scale, and we have proven it works. We are now going to bring all of these together, and we will bring together GetNet Brazil with our GetNet global platform, with Wildcard, With Semmes in a single company for acquiring. Our vision on the trade side is to deliver fast and efficient Trade Finance, Supply Chain and FX Payments. Again, this is not starting from scratch.
We've made significant investments and progress. We already have 300,000 customers onboarded into what is a global platform, and Ebori is at the heart of this trade strategy. Ebori has generated more than £100,000,000 in net revenues, 270,000 transactions. Even in a challenging environment, they have grown the number of transactions per customer and growing about 3% on the year. Another of the key assets for trade is the payments hub.
Again, this is an internal development. It went live and became the main SEPA provider for Ebori last quarter. In December 2020, our payments have processed over €30,000,000 in incoming payments. We've reached agreements to become the main payments engine for all our corporate bank in London, Paris, Milan, Frankfurt, Hong Kong, New York. It is already servicing 3rd parties outside Santander.
And finally, Mercury is the platform that has allowed us to finance EUR 6,600,000 of which 60% of the trades were done digitally. Again, more than 7,000 customers Have already been onboarded. And just interesting fact is that in 2020, many of these imports were related to medical supplies. So the 3rd priority, the way Santander is going to become open financial services platform. How we're going to grow and every time and I'm sure I'll get a question from you In terms of are we going to do M and A?
Well, we do not need to do banking M and A. We aim to grow in new markets through our digital consumer bank. This is the pro form a merger of Santander Consumer in Europe and OpenBank. OpenBank is the 1st European bank running fully on the cloud approved end to end by the ECB. We are very confident that this is a strategy that will deliver great results.
The reason for that is that OpenBank includes already very successful strategy in terms of cross selling. But as you can see here, we are going to merge that with very significant consumer operation. So Santander Consumer brings 55,000 merchant POS Open bank, 1,200,000 customers, 6,000,000 new consumers per year in 15 markets in the case of Santander Consumer and also the Santander Auto, where we're servicing 75,000 dealers and with a very high quality growth franchise. We are aiming that the Digital Consumer Bank will run on a digital banking API model, a SaaS model, And this is crucial as it will allow us to fully leverage the data for both sides of the business and generate growth Grow revenues and double PAT in the medium term, reaching 15% underlying return on tangible. This is something which will take a few years, but it's really a new paradigm.
We will be using common app's single streamlined operating model, simplified license. We have already started on this as we launched Open Bank in Germany, Holland and Portugal, and a very different way of running the business. Will enable new auto consumer lending, but also new products to the consumer customers. I want to point out and Jose Antonio gave some facts, Santander Consumer Finance. In 2020, and this goes back to the diversification, delivered 3% revenue growth in a very challenging year, 12.5 percent underlying return on tangible in 2020.
As I said, our ambition is now bigger. We aim for 39% efficiency and 15% underlying returns. We have painted this as a flywheel because I think this is the best way to picture how The combination of these two businesses is going to really power growth. It's a virtuous circle. And if you start What we have built over the years, our significant customer base at the top through 23,000 merchants, They offer consumer financing at checkout to customers.
Merchants go from large to small across industries. Many started as an offline, but now are adding online capabilities. And of course, we have a very fast growth in online only businesses. This generates about 4,500,000 contracts. We actually already have 700,000 digital customers, And we're now expanding to other sectors such as Telecom and Education.
These new digital customers are a target for other lending products, insurance. We believe there's significant growth opportunity for both our lending and our digital banking services. And of course, this gives us significant data at the point of the first transaction, which gives us very valuable insights into these customers' current and future financial needs. Then these new customers are candidates for other banking products through OpenBank. These are one click sign ups even for a loan, one click.
New current account customers, of course, generate new deposits. These are loyalty strategy providing, in turn, low funding for lending. I mentioned already that our digital bank averages 4.5 products per customer. But let me say also that in 2020, we grew by more than 100% new customers year on year. Again, the API services in turn attract new merchants, in turn add new customers.
Again, the flywheel spins, creating data depth and insights and, of course, revenue growth. So just to end, Wanted to reiterate that based on the latest IMF OECD outlook, our goals are costincome ratio below 47% for 2021, cost of credit trending downwards from 1.28 9% to 10% underlying return on tangible. For the medium term, mid single digit revenue growth in constant euros, best in class NPS. Again, this is the goal for the new operational model. And we want to reiterate the following goals that we communicated in 2019 of 13% to 15% underlying return on tangible equity, 11% to 12% CET1 And the board's intention to restore the payout of 40% to 50% on underlying.
So in summary, we have delivered in 2020, again, strong underlying results That show the resiliency of our model. Diversification, again, has proved that it has value. It has delivered robust performance in the Americas, solid growth in our global businesses, providing balance against a more challenging environment in Europe. Robust credit quality, deteriorating by just 28 basis points, thanks active risk management. We have continued to build organic capital, reaching the 12% 34% above our target.
[SPEAKER IGNACIO CUENCA ARAMBARRI:] We have a strong capital position. We are comfortable with these current capital levels and buffers, and especially, we are well placed to continue allocating capital 2, the internal significant opportunities for profitable growth to create value. And we have a clear strategy going forward for 2021 that I just review, which gives us a high degree of confidence that we will deliver on our medium term goals. So thank you again very much, And we're now available for questions.
Yes, indeed. Thank you, Ana, Jose Antonio. Please, now we have time for Q and A, so go ahead. We can go ahead with the Q and A session.
Thank you very much. The first question comes from Jernej Omahen from Goldman Sachs. Please go ahead.
Sir. Yes. First of all, good morning from my side. I'm just going to ask 2 questions, please. The first one Is on the return on tangible equity target and how that could translate into tangible book value per share growth.
I guess we've seen Santander record, considering the circumstances, high levels of underlying profitability, but The tangible book value per share went backwards this year for reasons that we're all familiar with. I mean, what gives you the confidence that if you meet the targets that you've set yourself for this year that they will translate into tangible book value per share growth as well. And then the second question I have is on the EBA stress tests. They've announced The underlying assumptions for these tests and some of them seem to be very, very severe. I'm just forecasting a perpetual recession pretty much.
And I was wondering to what extent, if at all, do you expect the results of the tests to drive The supervisory decisions around capital return dividends, buybacks, etcetera. Thank you very much.
So thank you so much. So this year, tangible NAV, as you've seen and you said it, has been very affected by exchange rates. We're working very hard on continuing and accelerating the change in the model, which we have really done a lot of that in the last 5, 6 years. At the end, it's about reallocating capital to profitable growth, 1st. 2nd, ensuring diversification.
U. S. Has been has given us a very good return in dollars. We need to ensure a proper balance between higher volatility currencies And the more, let's say, stable currencies like the dollar and the euro, I say this maybe the pound also. So that is really the main way we are planning to improve the tangible NAV, continuous capital reallocation to the higher growth and profitability, ensuring the balance and diversification through the cycle.
If we look at the 13% to 15% medium term target, I can say first, it's based on revenue growth. So we are saying mid single digit revenue growth. At the basis of that, if we look at the shorter term in terms of 'twenty one, we're looking to volume growth Based on volumes, especially in the Americas, we are looking at positive assets repricing. We're looking at delivering half of the EUR 1,000,000,000 so EUR 500,000,000 additional reduction in cost in Europe and the cost of credit that trends downwards. So Again, really doing everything we've done this year, but just doing it a bit more and a bit better for 2021.
And for the medium term, focusing on these three priorities. This year, we have already seen I think Jose Antonio mentioned that it's not just The Corporate Investment Bank and Wealth Management, which are now close to 40%. Again, these are higher, let's say, higher return on capital businesses, but acquiring on payments through PagoNEXT should also help us a lot on this change in the model. On the EPA stress test, yes, there are some issues there that maybe Jose Antonio wants to comment. However, we feel that our capital buffers And our diversification, the fact that our pre provision profit this year, which is around €24,000,000,000 we could double provisions, double provisions of 2020 and still not eat into capital.
The buffers we have even after that of €17,000,000,000, €18,000,000,000 All of that gives us confidence that whatever happens with the stress test, which I don't know if you want to give some details [SPEAKER MARCO TRONCHETTI PROVERA:] There are some issues in the stress test that mean that we might be penalized, but I don't know how you want to comment
on that.
Well, As you know, Jernik, in the stress test, we've been performing very well. We were a top performer there. Our capital depletion was lower than our conservation buffer. So and well, We have P2G on top of this, yes? So we expect we expect to continue to perform well there, although the scenarios are more severe.
And there are 2 issues that we've been raising over time that particularly affect emerging market exposure, like our case, that is the static balance sheet that is Probably, as you know, in Emerging Markets, loan books particularly are very short run. And in 1 year, You renewed the whole balance sheet, but it's what it is. And the second one that is new, somehow new is The provisions on the emerging markets are not allowed to depreciate with the depreciation of the currency. That, well, [SPEAKER IGNACIO CUENCA ARAMBARRI:] Technically speaking, it's not very natural, but it is what it is. Having said that, we continue to respect during our diversification and the resilience of our business model and the stronger we have, the stronger pre provision profit in the industry, We continue to perform well, and our capital depreciation will be among the lowest in the industry.
Yes. If I may add just another. For context, we have had, In 10 years, probably 2 of the biggest global crisis that have happened in decades. And just to understand The stability in our model. If we look at our performance in underlying profit in 2020, about EUR 5,000,000,000, that's more than double what we had at the low point in 2,008 in 2013, in the 2,008 crisis.
Again, it shows that we've made a lot of progress, and of course, this with 70% more capital than we had then. So again, The stability in our earnings diversification and how we perform under stress, I think, is evident from what we have done in 2 global crisis so far.
Thanks, Irene. Next question, please.
Thank you. The next question comes from Ignacio Olargu from Exane BNP Paribas. Please go ahead.
Hour. Hi. Good morning, everyone. Thanks for taking the questions. I just have two questions.
One is on the fee strategy And just wanted to get a bit of your thoughts on how do you see these sort of like new business additions on Payment, Wealth Management Or Investment Banking push to be helping to make a bit more dynamic performance on fees. So I mean, I do see a very clear tailwind from the bit of the unwinding of the 1, 2, 3 strategy in terms of funding costs, and that is being very visible in NII in the UK Also in Spain, so I mean just want to get a bit of your thoughts on how do you see fees into the next couple of years? And I mean what is the relevance Of the payments business on that process. And also second question is on the Brazilian business and It has been a very good performance, much better than what we expected at the beginning of the year in this pandemic. I mean, which levers do you plan to take, just to continue improving the contribution of the country to the group.
Thanks.
So the growth in fees would continue to come from CIB, Wealth Management, of course. Also, Retail is incredibly important insurance. So the 1 Europe strategy, but also in the Americas, retail fees are also a big driver. It is clear that there's still uncertainty over the next few months. So we could have, in the first half, Not a great performance in fees.
That's yet something which will depend a lot on the health situation. But what we have seen is that once and we see that in the second half of the year, Once things open up a bit, the performance is much better. On the payments, you will see, again, with the listing of GetNet Brazil, Just a flavor of what we can do in this space. The key thing here is that we already have performed incredibly well in acquiring in Brazil or Spain within a couple of years of having our own, let's say, payments factory. Once we extend this to other countries, You asked about the timing.
That's always difficult, but I would say a few years. We've said medium term, you should see a very significant increase coming from these areas. You want to answer on Brazil? I mean, Brazil, I think it's every time in Brazil or we have a crisis, there's always uncertainty as to the performance, but [SPEAKER MARCO TRONCHETTI PROVERA:] It actually has done a very good job. And again, remember that Brazil has historically low rates.
So we now have a bit steeper interest rate curve, which is also positive. And we are looking to growth in volumes and positive assets repricing for I think I said that already for 2021. And cost of risk trending downward in general in all our geographies, once more than others and there could be variations there. But I think that's really the picture for Brazil. And of course, the lower rates mean that, that helps customers pay for payments And good performance, I think, as they exit moratoriums.
Is that roughly Yes.
It's basically We rely on volumes. We expect to be growing double digit in Brazil as we did in 2020. So this is probably the main labor. Margins more stable than the ones we had in 2020. In 2020, remember that we have the regulatory impact of the what they call the personnel check that this kind of overdraft that affected significantly the NIM and NII.
And well, at the end, the driver is market share gains and our capacity to keep growing the number of customers. You see the number of Customers in the country have been booming in the last 3, 4, 5 years, yes? So and we are still there. And I already mentioned GetNet, but We can go to auto finance, where our market share is 25%. You can go to agro business, where we've gone from 2% market share to 9% market share.
And we keep counting. In corporate world, our cost of risk went down. In CIB, we are a market leader. So Well, the franchise has very good momentum, and we expect to continue this stance, yes.
Thanks, Ignacio. Next question, please.
Hour. Thank you. The next question comes from Ignacio Cerezo from UBS. Please go ahead.
Yes. Hi, good morning. Thank you for the presentation. Two questions from me. The first one, if you can clarify or give us some colors around regulatory headwinds on capital in 2021 2022?
And the second question is on the U. S. Business. Obviously, the cost of risk performance has been very positive in the year, again, much lower than could be anticipated probably at the beginning of the year. There's a new stimulus plan coming with probably the possibility of cash and checks actually being handed again to customers.
Do we have to still expect an increase of provisions in SCUSA in particular? Or do you think the level of provisions in 2020 is sustainable for the future? Thank you.
So let me answer the U. S. And then I'll pass over to you, Jose Antonio. So in terms of the U. S, We have and we've been reviewing this in line with the peers that have presented results.
We're very much aligned with our peers, regional and even the large Banks, if we compare likes for likes in terms of portfolios, we believe we're being prudent provisioning. So I would expect That's to continue into 2021. The stimulus is going to be obviously very important for this, and so there's really nothing there Which should be out of line with the rest of our peers. Again, if you compare portfolios of the same type of segments, I mean, some of the larger banks have more C and I than we do, and that's why you've seen some reversals. That is not the case for us.
And in terms of the consumer lender, again, we're in the range Of our peers. But it has performed very well. We believe that will continue to be the case into 2021. In terms of do you want to answer the other question?
Yes. In terms of capital regulatory headwinds in 2020. We were the impact of the different Regulatory changes were around slightly above 40 basis points. In 2021, you mentioned 20212022. What?
In 2021, that I have more visibility, we still continue to see some impacts coming from basically all the TRIM review of the models, low default portfolios, all these issues that probably will come Difficult to say always when you face this, but we expect to be lower the impact than the one we had in 2020. That, I remember, was Slightly above 40 basis points. And in 2022, while probably the trend is downwards. Clearly, we expect when the TRIM goes and all the review of the models and all these things, We will capture significant risk weighted asset reduction in some models that we are building.
Thanks, Ignacio. Next question, please.
Thank you. Your next question comes from Francisco de Kel from Alantra. Please go ahead.
Yes. Thank you for taking my questions. First one, I wonder if you can comment a bit more on the GET net listing in Brazil, if you plan to offload more assets from PIVO next into this unit. And what are your ambitions with this listing if you plan to eventually monetize this asset or not? And second question is a follow-up on the U.
S. Business. You mentioned operationally,
I wonder
if you update strategically your views about the U. S. Retail business. I have also seen that you have front loaded some restructuring expenses. If you can also comment on this cost cutting plans here.
Thank you.
So at the moment, we have just announced the listing of Getnet Brazil. This is not selling of shares. It's just a listing of Getnet Brazil. We are, as I explained on PagoNex, we'll be giving more information during the course of 2021. The goal is that PagoNex include 3 types of businesses, but really mainly 2.
1 is acquiring business where we will be bringing together GetNet Brazil with GetNet Global Platform And eventually, Wirecard, which we closed just a few days ago, and Semmes. So that would be a global merchant acquirer eventually, but Getnet, It's about a listing. In terms of the trade, it's also going to be part of PagoNEXT. So there, we have Ebury, Mercury, Payments Hub and probably other products related to trade. So we have all of that in the global platform.
We believe that is a very interesting business. It's a high growth business in payments related activities. In some cases, we're already giving service to third parties like in the payments hub. So that is really the goal with PagoNEXT and GetNet.
Well, the second question about the U. S. Strategy. Yes, the U. S.
And I may take the cost cutting in the U. S. Yes. We're going to continue to naturally to improve efficiency in the U. S.
Well, we have 2 angles there, yes? Probably there is more efficiency gains to make in the bank while Screws are growing And probably the cost will go up. Overall, in the U. S, I will say the cost going forward will be quite flattish, yes, in the whole U. S, but not specific restructuring costs in the way we are doing in Europe.
No, this is not in our vision for in our plans for 2021.
Yes. In terms of the strategic view of the U. S, first The U. S. Market is the best risk return market probably in the world, aside from being large and a source of talent and innovation, institutional stability.
There are strong and increasing connections to not just to LATAM, but to Europe. And What's very important is that both Santander Consumer and SBNA are working increasingly together. A lot of the origination in Santander Consumer is financed by SBNA. So we look at the U. S.
As a country, not as pieces of a different business. This is not different, by the way, to what we do in Brazil or Europe. And Again, this year, it has we have had some positive one offs. But even in constant currency, we have Had an increase in profits from the U. S.
And the adjusted returns, once we adjust for excess capital, which will not be there forever, Actually, at or even a bit above the cost of equity, depending how you see that, of 8.5%. So there are no plans to sell the business. And we are working, as in the 1 Europe, with increasing connectivity, not just in terms of working With customers across different Santander countries, again, I think I mentioned in Corporate Investment Bank and Commercial, we are seeing 30% increases year on year, but also in building together. And so this is incredibly important. It was not an option a few years ago.
Today, You can leverage the same way you can build for Poland, U. K. And Spain. You can build for Mexico, U. S.
And eventually, Why not Brazil or Europe? So this is really the very different approach to the management of the business, Which is what we are calling the 1 Santander new operating model. So again, we are very focused on growing in a profitable way and building on the foundations over the last few years.
Thanks, Paco. Next question, please.
The next question comes from Carlos Cobo from Societe Generale. Please go ahead.
Hello. Thank you very much for the presentation and the extra detail on your vision for the future. Going a little bit back to the numbers of the quarter. Could you touch on the regulatory impact 2021, again, sorry to insist. You said below the 40 basis points in 2020.
The last guidance that I had was an impact of 10 to 15 basis points in 2021. Are you still comfortable with that? Or there is some room for slightly higher impact just to fine tune the model. And then two quick questions, more strategic. If payment is a global business and that's how you presented, why listing the Brazilian subsidiary?
Just for me to understand Why starting that? Why not being more global in the distance? And the second question would be on COVID losses. Could you try to help us to gain a little bit more confidence on what's the vision on the outlook for 2022? What's the scenario of defaults that you've covered for 2022?
Because without the regulatory forbearance hour. And the support from the states rolling over the grace period from capital amortization and on the restructuring of credits, We don't really have any visibility. It doesn't feel like 2021 is the year to see the big increase in NPLs. So what's the scenario that you have for 2022 where we should assume further progress in the cost of risk reduction? What's the percentage of total, say, Stage 2 loans is set to default?
How much of that has been covered already? Thank you very much.
So I will take the strategic ones, and then I will You can answer the capital and COVID. But in terms of the GetNet listing in Brazil, this is a first step. The reason for that is Exactly that what you said was the goal is to create a global platform, which would be, let's say, parallel to the banks. So think about the 1 Santander, the banks as owning customer relationships. Think about PagonEX as a global platform for acquiring, Which provides the backbone, let's say, product factory for payments.
This is really how we think about it. And so this is just a first step To create that global acquiring platform, which should allow us to add value to not just do payments. Our vision is that payments will happen. We will not actually do payments, but there will be the cornerstone of value added services. So Again, it's not about a processing business.
It's about a value added services business to our customers built, of course, on the eventually on the processing, but it's more than that. And to do that, we actually need to have it all together outside our listed banks, but also outside and non listed banks. I hope that answers the question. We are we will be giving more information and adding to this during 20 2021 and a lot more a year from now. Again, these are assets we have been building individually for the last 5 years.
We have shown they work, and now we want to make sure we take it to the next level. We have been rightly so challenged by investors and analysts, you guys. Why do you not work better across countries? Well, we have done that in CIB, in Wealth Management. We are now going to do that For mass market and SMEs.
So think of PagoNEXT and our payments businesses as providing a global platform where we can truly leverage the 147,000,000 customers that we have in retail, that we have in SMEs, 4,000,000 of them that we have in merchants. And again, we'll provide further clarity, but this is really the division. So I think the second question was again on the regulatory headwinds, I believe, for 2021 and COVID losses.
Yes. The first one, 2021, while I already elaborate on On the regulatory capital impact in 2021 that we expect to be lower than the one in 2020, the main impact comes from the TRIM and from the models. And well, we expect like 2 stages there. The first stage is To go up and to have an impact in 2021 and the second stage, once we get more models approved, remember that we still have significant amount of Our portfolio understand our model. Some other models, our risk weighting is higher than our competitors.
And at some point, we will converge with this in the medium term. So in the short run, the numbers I gave you is lower than in 2020. In the medium term, we expect some positives from this side. Probably to split this, I. R.
Can talk to you in the small numbers and in more detail on this. On the COVID losses, if I understood you well, you are asking about 2022, Okay. So we guide you in 2021 to this is an area naturally, this is an area of uncertainty, and everything is based on models. We still have the health crisis going on. What do we expect with a as Anna mentioned before, we are working with kind of IMF scenario, yes?
So with this scenario, we expect this year the cost of risk to go down from the 128% we had and start the convergence towards the 1%. In 2020
[SPEAKER IGNACIO CUENCA ARAMBARRI:] 2, I don't have any reason to think
if we were right in anticipating our scenarios In the IFRS 9, forward looking, we built EUR 4,000,000,000 of capital provisions that, till now, we In our balance sheet that we expect this to cover the majority, if not all, the losses that arise Can we be wrong in the scenario? Maybe. You may be more negative or more positive. But we are relatively comfortable with this. And we evening in the quarter, we keep reviewing our scenarios, our portfolios and building provisions accordingly with a conservative and prudent approach.
[SPEAKER MARCO TRONCHETTI PROVERA:] And I do think from the 1, 'twenty eight, I will bet on reduction in 'twenty one and reduction again in 'twenty 2022. So this will be my initial expectation.
Thank you, Carlos. Next question, please.
Thank you. The next question comes from Alvaro Serrano from Morgan Stanley. Please go ahead.
Hello, good morning. I've got a couple of questions, I guess, on capital allocation. The first one, hopefully, the capital build journey is now over. When I think about going forward, it sounds like clearly, the emphasis of growth is still Americas, but it sounds like it will be a bit more balanced than previously. If I think about the Bionex, the digital and the consumer bank initiatives, obviously, getting there was a tremendous success because basically you returned Back to your natural market share.
With the acquisitions like White Card in Germany and the push to become a global payments platform, So how should we think about you achieving sort of growth outside your natural footprint? What gives you that confidence? And second, on OpenBank and ConsumerBank, You're into double profits, I think it is, which is quite I mean, it feels ambitious. Maybe you can talk us through which regions you expect to grow most. And again, some of it is outside your natural sort of footprint like Germany, although you've got the consumer bank there clearly, but what are the growth sources, what regions there?
And the second question also is more sector level is around, obviously, the sectors the inability to distribute Is accumulating capital not just for you but across Europe? And I would love to hear your thoughts on Do you think this is going to have long lasting effects in terms of competition? Do you think it can trigger sort of M and A and even cross border M and A? And in that sort of sense. I've heard you loud and clear several times that you don't need to do M and A, but what would it take for Santander to be open Cross border M and A or M and A in general, what would you be looking for?
[SPEAKER IGNACIO CUENCA ARAMBARRI:] So you have heard me say, and I will repeat loud and clear, we're not interested in cross border M and A in Europe. We need further significant changes On the regulatory side, for that to begin to be something we might look at, We are and as you've seen in the last months, we are much more active on the digital and payment side. We believe that we already have enough customers, enough scale. There's a lot of talk about scale. You need scale.
We have achieved 47% cost income. We're guiding Across Europe and the Americas, in terms of number of customers, this is the scale that matters. 2nd, our revenues with Stable revenues in a year like 2020, I think that is remarkable. And so that is the scale we are aiming for. We have guided to single sorry, mid single digit revenue growth for the medium term, even in 2021.
And again, there's lots of uncertainty in the 1st few months, and that could affect our revenues in the 1st few months, especially on fees. But We feel confident that after what we've done in 2020 that we have the scale to drive revenues and we have the scale to drive With PagoNEXT, with the digital consumer bank to drive profitable growth. So again, not planning to M and A, cross border M and A, but rather looking at additional digital opportunities. In terms of doubling the profit on the digital consumer bank, that is going to be driven a lot by revenues, I. E, 18,000,000 active Customers in Santander Consumer Europe, 6,000,000 new consumer customers every year.
I encourage you to look at the flywheel. And again, any questions, please, very happy if you come back to us. But this is very important because we have the data, we have The customers and now we have a go to model, which I don't think any of our peers have, which is the OpenBank. So think of OpenBank as Giving us the know how to offer new banking products to customers that we don't need to invest to Because we're already acquiring them, by the way, profitably on the consumer side. This is crucially important.
This is the virtuous circle that I described in the flywheel. And that's what gives us confidence that we can do that. Now it's going to take a few years, so it's not going to be in 2021 or 2022. But 3, 4 years down the road, what you're going to see is a change in the paradigm in terms of how we run our consumer business And how that consumer business that is there, it's real. It's over €1,000,000,000 in profits, I believe, this year in 2020.
Lots of customers and the OpenBank Tech Stack, which is modern, runs fully on the cloud. And it's not just about the customer experience. It's also about how we run the business in all the support functions. We can expand to Holland. We can expand to Germany With very limited cost increases, actually, in all these support functions in a way that is very prudent Under Control.
So that's the reason we are, again, not putting a date on this, but you should be seeing in the next few years. And finally, on PagoNEXT and the acquisitions. So [SPEAKER IGNACIO CUENCA ARAMBARRI:] It should all come together in again, it will take a few years because there are several assets across Europe and the Americas. And the goal there again is to increase growth. And the way we're looking to do that is by value added Services and payments by delivering, for example, for SMEs, a much better cross border experience for SMEs that trade.
SMEs that trade at the higher growth SMEs, we have 200,000 of those. We are already testing, for example, with Ebury. We have a great partnership With Ebury, we're able to offer services we were not offering before and vice versa. We are helping Ebury, for example, to run the business in the way we run it in some areas, which is very important these days. So we think it's a win combination.
And that's where we will be looking to integrate so we can grow faster.
Hour. Thank you. The next question comes from Tyra Queen from KBW. Please go ahead.
Hour. Hi, good morning. Thanks for taking my questions. It's Dara from KBW. One question just on The capital targets and dividends, you've generated capital this year And headed back towards your targets, presumably even if we forecast cash dividends, You would still be looking to generate capital organically.
Could you just say maybe how that would change or not your outlook for The level of capital you think you should be holding in the future. And then on the dividend, You can just confirm that there won't be that you're not planning any scrip dividends in the future because obviously that has been one of the headwinds in the past to 10,000,000 per share growth. And on the business side of things, Maybe just if you could give a quick comment on the margin in 2 geographies, 1 in the U. K, We've just seen quite a strong improvement in margin and NII over the last couple of quarters as you've changed the pricing policy on the 123 account. If you could just comment on where things go from here in the outlook for 2021 in the U.
K. And on the U. S, Excluding the consumer business, it looks like it's just been very ongoing weak margin NII performance from the banking business. Maybe if you could just provide a little bit of color of what's going on there and what your outlook is.
So on capital, our targets are to be between 11% and 12%. There is We believe going forward, we're going to have more capital flexibility as you've sort of hinted at. We are planning to go back to the 40% to 50% on an underlying profit distribution on an underlying basis As soon as we're allowed to do that. And the most important thing is that even in a difficult year, we have made further progress in what we call the transformation of the model. It happens at an operating level, which is what's driving the financial transformation.
The operational goal. The 1 Santander new operating model is actually building, for example, a common mobile app across Europe, just built once and used On a financial level, it means that we grow our earnings whilst growing capital, But we grow less our balance sheet and lending in proportion to that growth. And again, that's what's going to allow us Generate more organic capital and better profitability. We are not the script is I know we've gone back in 2020 to a script. And again, we need to keep a balance between institutional investors and also retail.
And the script was the only way we could give some And also retail, and the script was the only way we could give some dividend even though it was in shares to our retail. The board management intention, as we have said many times for the last 6 years, is to go to 100% cash. This is what we are intending for 2021. Hour. And we will get news on what is the recommendation from the ECB for European banks in Q4.
We'll be accruing a cash dividend this year. Hopefully, we can return that to shareholders in sometime in Q4 or Q1 of next year. In terms of the business and how that's performing, I'll let Jose Antonio answer that. But I would say that both the more challenging region this year has been, without doubt, Europe. But U.
K. And Spain, which have been the hardest hit from an economic point of view and therefore we have customers and therefore we have also reflected that, But the last couple of quarters have been quite encouraging. There is a lot of uncertainty, but remember, we've seen lockdowns In Spain, being very, very, I'd say, probably at the level of the more difficult ones right now. So we know what happens in a lockdown. We know what happens to activity, to the top line.
And both the U. K. And Spain have shown On a quarter on quarter basis, 5% to 6% increase in net interest income and doing much better also on fees. So and the transformation of the U. K.
Is not just about revenues. And by the way, U. K. Has done really well in terms of mortgage Growth growing £4,500,000,000 in mortgages and actually more or less the same on business loans. So again, volumes have done well.
Margins are improving and very importantly, very, very strong performance in cost. Again, not just the U. K, Spain year on year is reducing costs by 10%. I want to stress that our focus in both the U. K.
And Spain is going to be growth in revenues, but of course, better through better experience for our customers. But the new operating model would obviously is going to be also reducing our cost. We think of it as productivity. And I said I believe that we will be our aim is to reduce 500 €1,000,000 of the €1,000,000,000 additional cost we announced in 2021. So in the SBNA, as I said, is part of the U.
S. Business with consumer and Net interest income in 2021 has gone up by 4%. Total SBNA has gone up by 2%, Santander Consumer by 8. So in spite of the lower rates, doing well in net interest income. If you want to think about the retail side separate from the consumer side, even though increasingly they're working together, I would also say that [SPEAKER IGNACIO CUENCA ARAMBARRI:] For the last few years, we've been more concentrated on regulatory remediation controls, setting up the structural basis for growth.
So you should start seeing a different behavior of our business in the next couple of years. Again, we are Very proud that in a year like this, the U. S. Has been, I can say, our best performing country, at least in terms of the bottom line and growth in profits. Do you want to add anything on the business, U.
K? I think I covered that. No.
It's done, yes.
Okay. So thank you.
And last question, please.
Thank you. The next question comes from Fernando de Santibane from Barclays. Please go ahead.
Hello. Good morning. Thank you for taking my questions and thank you for the presentation. A quick question on Spain NII and And the trends, I mean, how much are you accruing on TLTRO? And how much do you think this will affect going forward in 20
That is a question for Jose Antonio.
So I don't have the numbers.
So Jose Antonio is going to take give it to our CFO. Thank you, Jose. And we have some others in the room, so
Yes, we currently have a total of around €75,000,000,000 in TLTRO. And Obviously, we believe that we can apply the new conditions described recently, That will mean an increase in 2021 relative to 2020 of around EUR 300,000,000 of which EUR 250,000,000 will come in Spain,
More or
less. I think we're not looking for questions. We need to leave it here already. So thanks very much, everyone. Thanks, Ana Jose Antonio.
And obviously, the IR team is at their disposal.
Yes. Sorry, it was a bit longer presentation. We usually get feedback more time for questions. We try to answer all questions you've asked. That last one really was quite something.
I'm very happy to have Jose Thank you so much, everybody. And we're very proud of our results. Again, any further questions, Sergio, Jose are at your disposal. And stay healthy and safe. Thank you.
Thank you. Bye.